Alcon and its subsidiaries are parties to a variety of other legal proceedings arising out of the ordinary course of business, including proceedings relating to product liability and patent infringement. The Company believes that it has valid defenses and is vigorously defending the litigation pending against it.

Alcon and its subsidiaries are obligated to comply with the laws of each of the many countries in which we operate, covering a broad range of activities. Despite our efforts, any failure to comply with law could lead to substantial liabilities that may not be covered by insurance, and could affect our business and reputation.

The Company is subject to various legal proceedings, including legal proceedings relating to Novartis's January 2010 merger proposal. The Company may also be subject to additional legal proceedings in the future. Such proceedings could relate to, among other things, product liability, commercial disputes, employment and wrongful discharge, antitrust, securities, sales and marketing practices, health and safety, environmental, tax, privacy, intellectual property matters and the proposed merger with Novartis. Such proceedings are inherently unpredictable, and large verdicts sometimes occur. As a consequence, the Company may in the future incur judgments or enter into settlements of claims that could have a material adverse effect upon our business if we are unsuccessful in the implementation. We have incurred debt that we must continue to service, and we may need additional financing in debt or equity.

We also may be adversely affected by changes in inventory levels or fluctuations in buying patterns by our large distributor and retail customers. If we overestimate demand and produce too much of a particular product, we face a risk of inventory obsolescence. In addition, for certain materials, components and services, we rely on ~~its~~sole or limited sources of supply. Our customer relations could be negatively impacted by the loss of our significant suppliers or the inability of any such supplier to meet certain specifications or delivery schedules. Further, we have developed strong relationships with numerous healthcare providers and rely on them to recommend our products to their patients and to other members of their organizations. Consumers in the eye health industry have a tendency not to switch products regularly and are repeat consumers, meaning that a physician's initial recommendation of our products, and a consumer's initial choice to use our products, have an impact on the success of our products. Therefore, it is important to our business and results of operations to retain and grow these relationships.

Given our global presence, our operations and business results are also influenced and affected by the global economic and financial environment, including unpredictable political conditions that currently exist in various parts of the world. Additionally, a portion of our operations are conducted in emerging markets and are subject to risks and potential costs such as economic, political and social uncertainty, as well as relatively low average income levels and limited government reimbursement for the cost of healthcare products and services. Our operations and business results are also affected by

the varying degrees of governmental regulation in the countries in which we operate, making the process of developing new products and obtaining necessary regulatory marketing authorization lengthy, expensive and uncertain. The manufacture of our products is also highly regulated. Any changes or new requirements related to the regulatory approval process or postmarket requirements applicable to our products in any jurisdiction could be costly and onerous to comply with.

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

Components of results of operations

Net sales to third parties

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

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

Other revenues

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

Inventories

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

Research & development

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

Critical accounting policies and estimates

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

Given the uncertainties inherent in our business activities, we must make certain estimates and assumptions that require difficult, subjective and complex judgments. Because of uncertainties inherent in such judgments, actual outcomes and results may differ from our assumptions and estimates, which could materially affect our Consolidated Financial Statements. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of COVID-19 using information reasonably available to us at this time. The inherent uncertainties of COVID-19 including the duration, scope, and severity of the pandemic may result in actual outcomes that differ materially from our current assumptions and estimates.

Application of the following accounting policies requires certain assumptions and estimates that have the potential for the most significant impact on the Consolidated Financial Statements.

Impairment of goodwill and intangible assets

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

A cash generating unit to which goodwill has been allocated (reportable segments) is considered impaired when its carrying amount, including the goodwill, exceeds its recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. If the recoverable amount of the reportable segment is less than its carrying amount, an impairment loss shall be recognized.

An intangible asset other than goodwill is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. Usually, Alcon applies the fair value less costs of disposal method for its impairment assessment. In most cases, no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of fair value less costs of disposal is based on net present value techniques utilizing post-tax cash flows and discount rates. In the ~~price~~limited cases where the value in use method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

Fair value less costs of ~~Alcon's common shares may~~disposal reflects estimates of assumptions that market participants would be ~~affected~~expected to use when pricing the asset or cash generating units, and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset. The estimates used in calculating net present values involve significant judgment by ~~speculation concerning~~management and include assumptions with measurement uncertainty, such as the ~~potential outcome~~following:

•Amount and timing of ~~legal proceedings.~~projected cash flows;

•Long-term sales forecasts for up to 25 years including sales growth rates;

~~The Company is subject~~•Timing and probability of regulatory and commercial success;

•Royalty rate for the Alcon brand name;

•Terminal growth rate; and

•Discount rate.

Generally, for intangible assets with a definite useful life Alcon uses cash flow projections for the whole useful life of these assets. For goodwill and the Alcon brand name, Alcon generally utilizes cash flow projections for a five-year period based on management forecasts, with a terminal value based on cash flow projections considering the long-term expected growth rates and impact of demographic trends of the population to ~~governmental oversight~~which Alcon products are prescribed, for later periods. Probability-weighted scenarios are typically used.

Discount rates used consider Alcon estimated weighted average cost of capital adjusted for specific country and associated civil and criminal enforcement relating to drug and medical device advertising, promotion and marketing, and such enforcement is evolving and intensifying. Other parties, including private plaintiffs, also are commonly bringing suit against pharmaceutical and medical device companies, alleging off-label marketing and other violations. Given the significantcurrency risks associated with cash flow projections to approximate the weighted average cost of capital of a comparable market participant.

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

For additional information on intangible assets and impairment charges recognized, see Note 10 to the Consolidated Financial Statements included elsewhere in this Annual Report.

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

Business combinations

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

estimates used in calculating fair values involve significant judgment by management and include assumptions with measurement uncertainty, such ~~enforcement~~as the following:

•Amount and ~~suits,~~timing of projected cash flows;

•Long-term sales forecasts;

•Timing and probability of regulatory and commercial success; and

•Discount rate.

Alcon may elect on a transaction-by-transaction basis to apply the ~~Company has adopted enhanced compliance controls~~optional concentration test to assess whether a trans-action qualifies as a business. Under the test, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, Alcon will account for the transaction as an asset purchase and not a business combination.

If the concentration test is not met, or Alcon elects not to apply this optional test, Alcon will perform an assessment focusing on the existence of inputs and processes that have the ability to create outputs to determine whether the transaction is an asset purchase or a business combination.

Contingent consideration

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

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

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

The effect of unwinding the discount over time is recognized in "Interest expense" in the Consolidated Income Statement.

Taxes

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

Research & development

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

Factors affecting comparability of period to period results of operations

The comparability of the period to period results of our ~~advertising,~~operations can be significantly affected by the COVID-19 pandemic, our Spin-off from Novartis, the issuance and refinancing of financial debts and acquisitions. Our net sales, operating results and cash flows in 2021 and 2020 were adversely affected by COVID-19. Additionally, in 2021 we acquired the US commercialization rights of Simbrinza. In 2020, one transaction of significance was the issuance of senior notes due in 2030. The transactions of significance during 2019 included the acquisition of PowerVision, Inc., Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders, and refinancing of the bridge and term loans which had been issued in April 2019. Refer to Note 4 to the Consolidated Financial Statements for details related to each of these significant transactions.

Results of operations

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

Key figures


	2021 compared to 2020				2020 compared to 2019
			Change %			Change %
($ millions unless indicated otherwise)	2021	2020	$	cc(1)	2019	$	cc(1)

Net sales to third parties	8,222	6,763	22	20	7,362	(8)	(8)
Gross profit	4,652	2,940	58	56	3,662	(20)	(19)
Operating income/(loss)	580	(482)	nm	nm	(187)	(158)	(138)
Operating margin (%)	7.1	(7.1)			(2.5)
Net income/(loss)	376	(531)	nm	nm	(656)	19	24
Basic earnings/(loss) per share ($)	0.77	(1.09)	nm	nm	(1.34)	19	24
Diluted earnings/(loss) per share ($)	0.76	(1.09)	nm	nm	(1.34)	19	24

Core results(1)
Core operating income	1,443	789	83	78	1,265	(38)	(35)
Core operating margin (%)	17.6	11.7			17.2
Core net income	1,063	512	108	102	925	(45)	(42)
Core basic earnings per share ($)	2.17	1.05	107	101	1.89	(44)	(42)
Core diluted earnings per share ($)	2.15	1.04	107	101	1.89	(45)	(42)

nm = not meaningful

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

All comments below focus on constant currencies (cc) movements for the year ended December 31, 2021 compared to 2020 unless otherwise noted. Commentary for the year ended December 31, 2020 compared to 2019 may be found in Item 5 of the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission ("SEC") on February 23, 2021 ("2020 Form 20-F").

Net sales by segment


	2021 compared to 2020				2020 compared to 2019
			Change %			Change %
($ millions unless indicated otherwise)	2021	2020	$	cc(1)	2019	$	cc(1)

Surgical
Implantables	1,522	1,126	35	34	1,210	(7)	(6)
Consumables	2,388	1,952	22	21	2,304	(15)	(15)
Equipment/other	793	632	25	24	660	(4)	(3)
Total Surgical	4,703	3,710	27	25	4,174	(11)	(11)

Vision Care
Contact lenses	2,139	1,838	16	15	1,969	(7)	(7)
Ocular health	1,380	1,215	14	12	1,219	—	1
Total Vision Care	3,519	3,053	15	14	3,188	(4)	(4)
Net sales to third parties	8,222	6,763	22	20	7,362	(8)	(8)

(1)Constant currencies is a non-IFRS measure. Refer to "Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures" section for additional information.

Surgical

Surgical net sales were $4.7 billion (+27%, +25% cc), with increases in all three categories as sales in the prior year period were heavily impacted by COVID-19. Market improvements in the current year reflect strong recovery in the United States with varied paces of recovery in international markets. Implantables net sales increased (+35%, +34% cc), reflecting market improvements and ongoing adoption of advanced technology intraocular lenses, including the launch of Vivity and continued demand for PanOptix. Consumables net sales increased (+22%, +21% cc), primarily due to market improvements over the prior year period. Equipment/other net sales increased (+25%, +24% cc), primarily driven by demand for cataract and refractive equipment and other refractive products.

Vision Care

Vision Care net sales were $3.5 billion (+15%, +14% cc), with increases in both categories as sales in the prior year were heavily impacted by COVID-19. Contact lenses net sales increased (+16%, +15% cc), reflecting strong recovery in the United States with varied paces of recovery in international markets and growth in silicone hydrogel daily contact lenses including Precision1, Precision1 for Astigmatism and Dailies Total1. Ocular health net sales increased (+14%, +12% cc), led by Systane, growth of Pataday, primarily due to the recent launch of Pataday Extra Strength, and sales of Simbrinza following our recent acquisition of the US commercialization rights.

Operating income/(loss)


	2021 compared to 2020				2020 compared to 2019
			Change %			Change %
($ millions unless indicated otherwise)	2021	2020	$	cc(1)	2019	$	cc(1)

Gross profit	4,652	2,940	58	56	3,662	(20)	(19)
Selling, general & administration	(3,076)	(2,694)	(14)	(13)	(2,847)	5	5
Research & development	(842)	(673)	(25)	(25)	(656)	(3)	(3)
Other income	43	235	(82)	(82)	55	nm	nm
Other expense	(197)	(290)	32	33	(401)	28	28
Operating income/(loss)	580	(482)	nm	nm	(187)	(158)	(138)
Operating margin (%)	7.1	(7.1)			(2.5)

Core results(1)
Core gross profit	5,216	4,092	27	26	4,663	(12)	(12)
Core operating income	1,443	789	83	78	1,265	(38)	(35)
Core operating margin (%)	17.6	11.7			17.2

nm = not meaningful

(1) Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures" section for additional information and reconciliation tables.

Operating income was $580 million, compared to a $482 million loss in the prior year period which was heavily impacted by COVID-19. Higher sales, lower amortization for intangible assets as certain intangible assets have become fully amortizedand lower separation costs were partially offset by higher marketing and ~~promotional activities, among~~selling expenses to support higher sales as markets recover and to support new product launches, increased investment in research and development, higher associate short-term incentive benefits in line with company performance, higher intangible asset impairments and an increase in legal items. The prior year period was impacted by unabsorbed fixed overhead costs and labor inefficiencies of $120 million and increased provisions for expected credit losses due to COVID-19, increased inventory provisions and losses for manufacturing asset retirements. The prior year period benefited from a $154 million net gain on post-employment benefit plan amendments and a gain relating to an extinguishment of certain potential liabilities under the employee matters agreement executed at Spin-off. There was a positive 0.4 percentage point impact on operating margin from currency.

Adjustments to arrive at core operating income in the current year were $863 million, mainly due to $529 million of amortization, $225 million in impairments of intangible assets, $68 million of transformation program costs, an increase of $50 million in legal items and $36 million of separation costs, partially offset by a $42 million benefit from fair value adjustments of contingent liabilities. Adjustments to arrive at core operating income in the prior year period were $1.3 billion, mainly due to $1.0 billion of amortization, $217 million of separation costs, $167 million in impairments of intangible assets and $49 million of transformation program costs, partially offset by a $154 million net gain on post-employment benefit plan amendments and a $63 million benefit from fair value adjustments to contingent liabilities.

Core operating income was $1.4 billion (+83%, +78% cc), compared to $789 million in the prior year period which was heavily impacted by COVID-19. Higher sales were partially offset by higher marketing and selling expenses to support higher sales as markets recover and to support new product launches, increased investment in research and development and higher associate short-term incentive benefits. The prior year period was impacted by unabsorbed fixed overhead costs and labor inefficiencies of $120 million and provisions for expected credit losses due to COVID-19 and higher inventory provisions. There was a positive0.3 percentagepoint impact on core operating margin from currency.

Segment contribution

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


	2021 compared to 2020				2020 compared to 2019
($ millions unless indicated otherwise)			Change %			Change %
	2021	2020	$	cc(1)	2019	$	cc(1)

Surgical segment contribution	1,184	672	76	72	957	(30)	(28)
As % of net sales	25.2	18.1			22.9
Vision Care segment contribution	604	419	44	41	580	(28)	(25)
As % of net sales	17.2	13.7			18.2
Not allocated to segments	(1,208)	(1,573)	23	23	(1,724)	9	9
Operating income/(loss)	580	(482)	nm	nm	(187)	(158)	(138)
Core adjustments(1)	863	1,271			1,452
Core operating income(1)	1,443	789	83	78	1,265	(38)	(35)

nm = not meaningful

(1)Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures" section for additional information and reconciliation tables.

Surgical

Surgical segment contribution was $1.2 billion (+76%, +72% cc), compared to $672 million in the prior year period which was impacted by COVID-19. Segment contribution margin increased with improved operating leverage from higher sales, partially offset by higher associate short-term incentive benefits. The prior year period segment contribution margin was impacted by unabsorbed fixed overhead costs and labor inefficiencies and increased provisions for expected credit losses due to COVID-19. There was a positive0.3 percentage point impact on segment contribution margin from currency.

Vision Care

Vision Care segment contribution was $604 million (+44%, +41% cc), compared to $419 millionin the prior year period which was impacted by COVID-19. Segment contribution margin increased with improved operating leverage from higher sales, partially offset by higher marketing and selling expenses, including support for new product launches and key products, and higher associate short-term incentive benefits. Gross margin in the prior year period was impacted by unabsorbed fixed overhead costs and labor inefficiencies due to COVID-19 and higher inventory provisions. There was a positive0.2 percentage point impact on segment contribution margin from currency.

Not allocated to segments

Operating loss not allocated to segments totaled $1.2 billion (+23%,+23% cc), compared to $1.6 billion in the prior year period. The decrease in amounts not allocated was primarily driven by lower amortization and separation costs in the current year period, partially offset by higher intangible asset impairments and an increase in legal items. The prior year period also included a benefit from a net gain on post-employment benefit plan amendments.

Non-operating income & expense


	2021 compared to 2020				2020 compared to 2019
			Change %			Change %
($ millions unless indicated otherwise)	2021	2020	$	cc(1)	2019	$	cc(1)

Operating income/(loss)	580	(482)	nm	nm	(187)	(158)	(138)
Interest expense	(120)	(124)	3	3	(113)	(10)	(11)
Other financial income & expense	(42)	(29)	(45)	(41)	(32)	9	6
Income/(loss) before taxes	418	(635)	nm	nm	(332)	(91)	(81)
Taxes	(42)	104	nm	nm	(324)	nm	nm
Net income/(loss)	376	(531)	nm	nm	(656)	19	24
Basic earnings/(loss) per share ($)	0.77	(1.09)	nm	nm	(1.34)	19	24
Diluted earnings/(loss) per share ($)	0.76	(1.09)	nm	nm	(1.34)	19	24

Core results(1)
Core taxes	(218)	(124)	(76)	(72)	(195)	36	34
Core net income	1,063	512	108	102	925	(45)	(42)
Core basic earnings per share ($)	2.17	1.05	107	101	1.89	(44)	(42)
Core diluted earnings per share ($)	2.15	1.04	107	101	1.89	(45)	(42)

nm = not meaningful

(1)Core results and constant currencies are non-IFRS measures. Refer to "Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures" section for additional information and reconciliation tables.

Interest expense

Interest expense was $120 million, compared with $124 million in the prior year period. The current year period had more favorable interest rates and lower interest expense from discounting of long-term contingent consideration liabilities, partially offset by interest for the senior notes issued in May 2020.

Other financial income & expense

Other financial income & expense, consisting primarily of hedging costs and foreign currency exchange gains and losses, was anet expense of $42 million, compared with $29 million in the prior year period.

Taxes

Tax expense was $42 million, compared to a tax benefit of $104 million in the prior year period, primarily due to profitability in the current period compared to the prior period loss. The current period tax expense benefited from the pre-tax loss in the United States, which includes an impairment of intangible assets and legal items, partially offset by pre-tax income in other ~~areas. However, there remains substantial risk~~jurisdictions. The current period was also impacted by a benefit associated with an agreement for the deductibility of a statutory expense in Switzerland related to fiscal year 2021. It is uncertain whether Alcon will obtain a similar benefit for the deductibility of this ~~area given evolving enforcement theories~~statutory expense in Switzerland in future years.

Adjustments to arrive at core tax expense in the current year period were $176 million, compared to $228 million in the prior year with the impact in both periods primarily driven by tax associated with operating income core adjustments.

Core tax expense was $218 million, compared to $124 million in the prior year period. The average core tax rate was 17.0% compared to 19.5% in the prior year period, primarily due to a favorable mix of pre-tax income/(loss) across geographical tax jurisdictions and ~~increasing claims brought~~a benefit associated with an agreement for the deductibility of a statutory expense in Switzerland.

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

Net income was $376 million, compared to a net loss of $531 million in the prior year period. The change was mainly attributable to the current year period operating income compared to the prior year period operating loss, partially offset by ~~governmental~~the tax expense in the current period compared to the prior period tax benefit.The associated basic and ~~private parties.~~diluted earnings per share were $0.77 and $0.76, respectively, compared to basic and diluted loss per share of $1.09 in the prior year period.

Core net income was $1.1 billion, compared to $512 million in the prior year period, primarily due to higher core operating income, partially offset by core tax expense. The associated core basic earnings per share were $2.17 compared to $1.05 in the prior year period, and core diluted earnings per share were $2.15 compared to $1.04 in the prior year period.

~~While~~

Effects of currency fluctuations

We prepare our Consolidated Financial Statements in US dollars. As a result, fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on our results of ~~the aforementioned contingencies cannot be predicted with certainty, management believes that the ultimate liability, if any, will not have a material adverse effect~~operations as well as on the ~~Company's consolidated financial position or~~reported value of our assets, liabilities and cash flows. This in turn may significantly affect reported earnings (both positively and negatively) and the comparability of period-to-period results of operations. ~~Litigation contingencies~~

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

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

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

The hyperinflationary economies in which we operate are Argentina and Venezuela which were both hyperinflationary for all years presented. Refer to Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report for additional information.

Foreign exchange rates for foreign currency translation

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


	Average for year			As of December 31
($ per unit unless indicated otherwise)	2021	2020	Change %	2021	2020	Change %
AUD	0.752	0.690	9	0.726	0.771	(6)
BRL	0.186	0.196	(5)	0.180	0.193	(7)
CAD	0.798	0.746	7	0.785	0.784	—
CHF	1.094	1.066	3	1.093	1.135	(4)
CNY	0.155	0.145	7	0.157	0.153	3
EUR	1.183	1.141	4	1.130	1.229	(8)
GBP	1.376	1.284	7	1.351	1.365	(1)
JPY (100)	0.912	0.937	(3)	0.868	0.970	(11)
RUB (100)	1.358	1.390	(2)	1.336	1.337	—


	Average for year			As of December 31
($ per unit unless indicated otherwise)	2020	2019	Change %	2020	2019	Change %
AUD	0.690	0.695	(1)	0.771	0.701	10
BRL	0.196	0.254	(23)	0.193	0.249	(22)
CAD	0.746	0.754	(1)	0.784	0.767	2
CHF	1.066	1.006	6	1.135	1.032	10
CNY	0.145	0.145	—	0.153	0.144	6
EUR	1.141	1.120	2	1.229	1.121	10
GBP	1.284	1.277	1	1.365	1.313	4
JPY (100)	0.937	0.917	2	0.970	0.920	5
RUB (100)	1.390	1.546	(10)	1.337	1.613	(17)

The following table shows information concerning the rate of exchange of US dollar per Swiss franc based on ~~settlements~~exchange rate information found on Bloomberg Market System. The exchange rate in effect on February 10, 2022 as found on Bloomberg Market System was CHF 1.00 = USD 1.08.


($ per CHF)	Low(1)	High(1)
January 2021	1.12	1.13
February 2021	1.10	1.11
March 2021	1.06	1.06
April 2021	1.09	1.10
May 2021	1.11	1.12
June 2021	1.08	1.09
July 2021	1.10	1.11
August 2021	1.09	1.10
September 2021	1.07	1.07
October 2021	1.09	1.10
November 2021	1.08	1.09
December 2021	1.09	1.10
January 2022	1.07	1.08
February 2022 (through February 10, 2022)	1.08	1.08

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

Currency impact on key figures

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


	2021 compared to 2020			2020 compared to 2019
	Change %		Percentage point currency impact	Change %		Percentage point currency impact
	$	cc(1)		$	cc(1)

Net sales to third parties	22	20	2	(8)	(8)	—
Gross profit	58	56	2	(20)	(19)	(1)
Operating income/(loss)	nm	nm	nm	(158)	(138)	(20)
Net income/(loss)	nm	nm	nm	19	24	(5)
Basic earnings/(loss) per share ($)	nm	nm	nm	19	24	(5)
Diluted earnings/(loss) per share ($)	nm	nm	nm	19	24	(5)

Core results(1)
Core operating income	83	78	5	(38)	(35)	(3)
Core net income	108	102	6	(45)	(42)	(3)
Core basic earnings per share ($)	107	101	6	(44)	(42)	(2)
Core diluted earnings per share ($)	107	101	6	(45)	(42)	(3)

(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—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures" section for additional information.

A 1% movement in the USD versus our basket of currencies would have resulted in a $43 million change in annual net sales and a $18 million change in both annual operating income and core operating income.

SUPPLEMENTARY INFORMATION - DEFINITIONS AND RECONCILIATIONS OF NON-IFRS MEASURES

Non-IFRS measures as defined by the Company

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

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

Core results

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

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

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

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

Constant currencies

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

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

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

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

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

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

EBITDA

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

Free cash flow

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

Net (debt)/liquidity

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

Growth rate and margin calculations

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

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

Reconciliation of IFRS results to core results

2021


($ millions except earnings per share)	IFRS results	Amortization of certain intangible assets(1)	Impairments(2)	Separation costs(3)	Transformation costs(4)	Post-employ- ment benefits(5)	Legal items(6)	Other items(7)	Core results
Gross profit	4,652	520	45	—	—	—	—	(1)	5,216
Operating income	580	529	225	36	68	(16)	50	(29)	1,443
Income before taxes	418	529	225	36	68	(16)	50	(29)	1,281
Taxes(8)	(42)	(95)	(51)	(6)	(13)	2	(12)	(1)	(218)
Net income	376	434	174	30	55	(14)	38	(30)	1,063
Basic earnings per share ($)	0.77								2.17
Diluted earnings per share ($)	0.76								2.15
Basic - weighted average shares outstanding (millions)(9)	490.0								490.0
Diluted - weighted average shares outstanding (millions)(9)	493.4								493.4

Adjustments to arrive at core operating income
Selling, general & administration	(3,076)	—	—	19	—	—	—	—	(3,057)
Research & development	(842)	9	180	—	—	—	—	(29)	(682)
Other income	43	—	—	—	—	(16)	—	(2)	25
Other expense	(197)	—	—	17	68	—	50	3	(59)

Refer to the associated explanatory footnotes at the end of the 'Reconciliation of IFRS results to core results' tables.

2020


($ millions except (loss)/earnings per share)	IFRS results	Amortization of certain intangible assets(1)	Impairments(2)	Separation costs(3)	Transformation Costs(4)	Post-employ-ment benefits(5)	Other items(7)	Core results
Gross profit	2,940	1,001	106	13	—	—	32	4,092
Operating (loss)/income	(482)	1,021	167	217	49	(154)	(29)	789
(Loss)/income before taxes	(635)	1,021	167	217	49	(154)	(29)	636
Taxes(8)	104	(172)	(34)	(37)	(10)	38	(13)	(124)
Net (loss)/income	(531)	849	133	180	39	(116)	(42)	512
Basic (loss)/earnings per share ($)	(1.09)							1.05
Diluted (loss)/earnings per share ($)	(1.09)							1.04
Basic - weighted average shares outstanding (millions)(9)	489.0							489.0
Diluted - weighted average shares outstanding (millions)(9)	489.0							491.8

Adjustments to arrive at core operating income
Selling, general & administration	(2,694)	—	—	22	—	—	—	(2,672)
Research & development	(673)	20	61	—	—	—	(25)	(617)
Other income	235	—	—	—	—	(166)	(36)	33
Other expense	(290)	—	—	182	49	12	—	(47)

Refer to the associated explanatory footnotes at the end of the 'Reconciliation of IFRS results to core results' tables.

Reconciliation of IFRS results to core results (continued)

2019


($ millions except (loss)/earnings per share)	IFRS results	Amortization of certain intangible assets(1)	Separation costs(3)	Transformation costs(4)	Legal items(6)	Other items(7)	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(8)	(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 (millions)(9)	488.2						488.2
Diluted - weighted average shares outstanding (millions)(9)	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)

Explanatory footnotes to IFRS to Core reconciliation tables

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

(2)Includes impairment charges related to intangible assets.

(3)Separation costs, primarily related to IT and third party consulting fees, following completion of the Spin-off.

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

(5)Includes impacts from pension and other post-employment benefit plan amendments.

(6)For 2021, includes an increase in provisions for legal matters. For 2019, includes legal settlement costs and certain external legal fees.

(7)For 2021, Gross profit includes fair value adjustments to contingent consideration liabilities. Research & development includes fair value adjustments to contingent consideration liabilities of $41 million, partially offset by $12 million for the amortization of option rights. Other income and Other expense include fair value adjustments of financial assets.

For 2020, Gross profit includes $35 million primarily for losses on disposal of property, plant & equipment, partially offset by $3 million in fair value adjustments to contingent consideration liabilities. Research & development includes $60 million in fair value adjustments to contingent consideration liabilities, partially offset by $35 million in expenses primarily related to the amortization of option rights. Other income includes a gain relating to an extinguishment of certain potential liabilities under the employee matters agreement executed at Spin-off and fair value adjustments of financial assets.

For 2019, Gross profit includes $37 million in fair value adjustments to 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 to 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.

(8)For 2021, total tax adjustments of $176 million include tax associated with operating income core adjustments of $863 million with an average tax rate of 20.4%.

For 2020, total tax adjustments of $228 million include tax associated with operating income core adjustments and discrete tax items. Tax associated with operating income core adjustments of $1.3 billion totaled $221 million with an average tax rate of 17.4%. Core tax adjustments for discrete items totaled $7 million.

For 2019, total tax adjustments of $129 million include tax associated with operating income core adjustments and discrete tax items. Tax associated with operating income core adjustments of $1.5 billion totaled $215 million with an average tax rate of 14.8%. Core tax adjustments for discrete items totaled $344 million, primarily including $304 million in non-cash tax expense for re-measurement of deferred tax balances as a result of Swiss tax reform, tax expense related to rate changes in the US following legal entity reorganizations executed related to the Spin-off, non-cash tax expense related to the re-measurement of deferred tax assets and liabilities following a tax rate change in India, and net changes in uncertain tax positions.

(9)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.

5.B. LIQUIDITY AND CAPITAL RESOURCES

Our sources of funds have consisted principally of cash flows from operations, issuance of senior notes, bank debt and credit facilities with lenders. Our uses of those funds (other than for operations) have consisted principally of dividend payments, investments in capital expenditures, cash paid for acquisitions and associated expenses and other obligations.

We believe that we have adequate liquidity to meet our needs. At December 31, 2021, we had cash and cash equivalents of $1.6 billion, in line with December 31, 2020. At December 31, 2021, we had current financial debt of $114 million, compared to $169 million at December 31, 2020, consisting of bank and other financial debt. At December 31, 2021, we had non-current financial debt of $4.0 billion, compared to $3.9 billion at December 31, 2020, consisting of bank debt and senior notes primarily as a result of the Spin-off.

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

Potential future ~~litigation~~uses of our liquidity include capital expenditures, acquisitions, debt repayments, dividend payments, and ~~infringement claims,~~other general corporate purposes. As of December 31, 2021, we had commitments for purchases of property, plant & equipment of $186 million. In addition, we completed the acquisition of Ivantis, Inc. on January 7, 2022. Cash paid for the acquisition, net of cash acquired, was $475 million. The agreement also includes amounts to be potentially paid upon achievement of a development milestone and commercial milestones calculated as a percentage of sales in excess of defined targets that expire in calendar year 2024.

We use the US Dollar as our reporting currency and are therefore exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs, and emerging market currencies. We manage our global currency exposure by engaging in hedging transactions where management deems appropriate (forward contracts and swaps) to preserve the value of assets. As of December 31, 2021 unsettled derivative positions included $3 million in unrealized gains and $7 million in unrealized losses.

All comments in this section relate to the year ended December 31, 2021 compared to 2020. Commentary for the year ended December 31, 2020 compared to 2019 may be found in Item 5 of the 2020 Form 20-F.

Free cash flow (non-IFRS measure)

The following is a summary of free cash flow for 2021, 2020 and 2019, together with a reconciliation to net cash flows from operating activities, the most directly comparable IFRS measure.


($ millions)	2021	2020	2019
Net cash flows from operating activities	1,345	823	920
Purchase of property, plant & equipment	(700)	(479)	(553)
Proceeds from sale of property, plant & equipment	—	6	—
Free cash flow	645	350	367

Free cash flow amounted to an inflow of $645 million in 2021, compared to an inflow of $350 million in the prior year period, driven by increased cash flow from operating activities, partially offset by increased purchases of property, plant and equipment.

For additional information refer to Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures".

Cash flow and net (debt)/liquidity


($ millions)	2021	2020

Net cash flows from operating activities	1,345	823
Net cash flows used in investing activities	(1,198)	(572)
Net cash flows (used in)/from financing activities	(123)	466
Effect of exchange rate changes on cash and cash equivalents	(6)	18
Net change in cash and cash equivalents	18	735
Change in derivative financial instrument assets	—	2
Change in equity securities of public companies	3	—
Change in current and non-current financial debts	38	(639)
Change in net (debt)	59	98
Net (debt) at January 1	(2,558)	(2,656)
Net (debt) at December 31	(2,499)	(2,558)

Net cash flows from operating activities amounted to $1.3 billion in 2021, compared to $823 million in the prior year period. The current year cash flows benefited from higher sales, lower separation spending and lower transformation payments, partially offset by increased discretionary spending and increased taxes paid due to timing of payments and increased profitability. Both periods were impacted by changes in net working capital and semi-annual interest payments.

Changes in net working capital in the current year were mainly driven by increases in inventories and trade receivables, partially offset by the net change in other operating liabilities and increases in trade payables. The increase in inventories was primarily associated with new product launches as well as to meet expected upcoming demand and to support supply chain continuity. The increase in trade receivables was primarily driven by new receivables from higher sales outpacing collections. The net change in other operating liabilities was primarily related to accruals for associate short-term incentive benefits and revenue deductions, partially offset by payments for Value Added Tax ("VAT") and other payables. The increase in trade payables was primarily driven by increased discretionary spending. Changes in net working capital in the prior year period were mainly due to increases in inventories, partially offset by changes in other operating assets. The increase in inventories was primarily driven by inventory builds for new product launches and decreased demand due to the COVID-19 pandemic, while the reduction in other operating assets was due to decreases in the current portion of long-term receivables and finance lease agreements from customers and other receivables. There were also decreases in trade payables related to operating activities due to management of discretionary spending and decreases in trade receivables as collections outpaced new sales. The net change in other operating liabilities was driven by decreased accruals for associate short-term incentive benefits and for obligations under the employee matters agreement executed at Spin-off, partially offset by increases in accruals for taxes other than income taxes.Refer to Note 21 to the Consolidated Financial Statements for additional details regarding changes within net working capital.

Net cash flows used in investing activities amounted to $1.2 billion in 2021, compared to $572 million in the prior year period, primarily due to the acquisition of exclusive US commercialization rights to Simbrinza and increased capital expenditures, including new contact lens manufacturing lines. Refer to Notes 4 of the Consolidated Financial Statements for additional information on the Simbrinza US commercialization rights acquisition.

Net cash flows used in financing activities amounted to $123 million in 2021, compared to net cash flows from financing activities of $466 million in the prior year period. Cash outflows in the current year primarily include lease payments, dividends paid, payment of certain local debt facilities and withholding taxes paid upon net settlements of equity-based compensation, partially offset by net proceeds from refinancing of local debt facilities in Japan. Cash inflows in the prior year period include the issuance of senior notes in May 2020, partially offset by repayments of current financial debts, realized foreign exchange losses, lease payments and withholding taxes paid upon net settlements of equity-based compensation. Refer to Notes 4, 17 and 21 of the Consolidated Financial Statements for additional information.

Balance sheet

Assets

Total non-current assets were $22.6 billion as of December 31, 2021, in line with December 31, 2020. Property, plant, and equipment increased $286 million primarily due to capital expenditures, partially offset by depreciation and foreign currency translation effects. There was a decrease of $332 million in Intangible assets other than goodwill primarily due to recurring amortization and asset impairments, partially offset by the acquisition of exclusive US commercialization rights to Simbrinza.

Total current assets were $5.4 billion as of December 31, 2021, an increase of $399 million when compared to $5.0 billion as of December 31, 2020. Inventories increased $255 million primarily associated with new product launches as well as to meet expected upcoming demand and to support supply chain continuity. Trade receivables increased $135 million primarily driven by higher sales.

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

The gross trade receivables from these countries at December 31, 2021 amounted to $252 million ($211 million at December 31, 2020), of which $10 million are past due for more than one year ($14 million at December 31, 2020) and for which provisions of $11 million have been recorded ($15 million at December 31, 2020). At December 31, 2021, amounts past due for more than one year are not significant in any of these countries.

The following table summarizes the aging of trade receivables as of December 31, 2021 and 2020:


($ millions)	2021	2020
Not overdue	1,273	1,137
Past due for not more than one month	96	109
Past due for more than one month but less than three months	74	67
Past due for more than three months but less than six months	43	36
Past due for more than six months but less than one year	23	31
Past due for more than one year	42	49
Provisions for doubtful trade receivables	(55)	(68)
Total trade receivables, net	1,496	1,361

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

Liabilities

Total non-current liabilities were $6.3 billion as of December 31, 2021, a decrease of $249 million when compared to $6.5 billion as of December 31, 2020. Provisions and other non-current liabilities decreased $120 million primarily related to reductions in pensions and post-employment benefit obligations and contingent consideration liabilities. Deferred tax liabilities decreased $170 million primarily related to recurring amortization of intangible assets and asset impairments.

Total current liabilities were $2.5 billion as of December 31, 2021, an increase of $214 million when compared to $2.3 billion as of December 31, 2020. Provisions and other current liabilities increased $207 million primarily related to accruals for associate short-term incentive benefits, legal items and revenue deductions, partially offset by VAT payments, settlement of contingent consideration obligations and other payables. Current income tax liabilities increased $38 million primarily driven by increased profitability, partially offset by tax payments. Trade payables increased $27 million primarily due to increased discretionary spending, partially offset by foreign currency translation effects. Current financial debts decreased $55 million primarily due to the payment of certain local debt facilities and the refinancing of local debt facilities in Japan.

Equity

Equity was $19.3 billion as of December 31, 2021, an increase of $434 million when compared to $18.8 billion as of December 31, 2020.

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

The following is a summary of net (debt) as of December 31, 2021 and December 31, 2020, together with a reconciliation to total financial debt, the most directly comparable IFRS measure.


($ millions)	2021	2020

Current financial debt	(114)	(169)
Non-current financial debt	(3,966)	(3,949)
Total financial debt	(4,080)	(4,118)

Less liquidity:
Cash and cash equivalents	1,575	1,557
Equity securities of public companies	3	—
Derivative financial instruments	3	3
Total liquidity	1,581	1,560
Net (debt)	(2,499)	(2,558)

Net debt of $2.5 billion as of December 31, 2021 decreased $59 million compared to $2.6 billion as of December 31, 2020. Alcon's liquidity amounted to $1.6 billion as of December 31, 2021, in line with December 31, 2020. Total financial debt amounted to $4.1 billion as of December 31, 2021, in line with December 31, 2020. The average maturity of financial debts outstanding as of December 31, 2021 is 8.0 years.

The $1 billion revolving credit facility remained undrawn as of December 31, 2021 and February 15, 2022. For additional information regarding net (debt)/liquidity, which is a non-IFRS measure, see the explanation of non-IFRS measures in "Item 5.A. Operating Results—Supplementary Information—Definitions and Reconciliations of Non-IFRS Measures".

Additional COVID-19 considerations

Associate safety

To protect our associates, we have implemented a response framework with required COVID-19 prevention, containment and mitigation measures. We are continuing to manage return to the workplace protocols in line with local conditions and CDC guidelines, and our sales and customer service teams are equipped with the tools to keep them healthy and safe, including pre-visit checklists and appropriate personal protective equipment (“PPE”). In addition, we encourage our associates to be vaccinated.

Net sales trends

Following a low point in the second quarter of 2020 due to the pandemic, net sales have improved with total net sales in 2021 showing growth compared to both 2020 and 2019, with a strong recovery in the United States and varying paces of recovery in international markets. We are encouraged by current trends in surgical procedures with the improved adoption of safety measures and the availability of vaccines. However, uncertainty remains as we expect the pace of recovery will continue to vary on a market by market basis, depending on existing capacity, differences between private and public channels, hospital and non-hospital settings, the nature of patient needs and sense of safety and availability of vaccines. Based on these factors, we believe we will likely see some lingering impact from COVID-19 through mid-2022.

Supply chain continuity

To protect our customers and the patients who depend on our products, we continue to manufacture and supply our products and are actively working to mitigate any potential supply chain disruptions. Prior to the current crisis, we

developed a diverse manufacturing footprint, which has enabled us to maintain sufficient inventory on hand. We have enhanced our business continuity plans to ensure our supply chain is maintained. We have increased the levels of certain raw materials on hand for supply chain continuity. We generally target at least 12 weeks of customer-ready products in our supply chain and, for most of our products, we are at or close to this level. We are experiencing and expect to continue to experience inflationary pressures in electronic components, freight, labor, resins and plastics, which we continue to manage but anticipate may impact operating margin in 2022 despite price increases and productivity initiatives. We have also encountered supply chain challenges in certain components including microchips, resins and plastics, PPE, metals and filters. Our procurement teams are staying in close contact with our critical suppliers to maintain access to raw materials and other components. When necessary, we are also utilizing alternative methods of product distribution and supplier sourcing, as well as alternative shipping options where possible. We expect these supply chain challenges to continue through 2022. In addition, we have partnered with industry trade groups and the medical community as they developed new protocols to serve patients safely during the pandemic.

Financial measures

We ended 2021 with $1.6 billion in cash and cash equivalents. Further, collections and trade receivables have stabilized. However, we may see delays or reductions in collections in the coming months as we continue to work with our customers during this pandemic.

Because we believe the COVID-19 conditions are transitory, we are not making structural changes to our operational costs that could impede our ability to fully ramp up with the recovery across allgeographic markets. We will continue to monitor trends and manage our discretionary spending in line with sales recovery.

Key assumptions

Management has assessed the past and potential impact of the adverse effects of COVID-19 on Alcon’s results of operations, cash flows and liquidity. The preparation of financial statements requires management to make certain estimates and assumptions, either at the balance sheet date or during the period that affects the reported amounts of assets and liabilities as well as revenues and expenses. In particular, the Consolidated Financial Statements for the period ended December 31, 2021 required the use of significant estimates and assumptions pertaining to the impact of COVID-19 on Alcon's operations, results and liquidity. Key assumptions include:

•Customers in some geographies will continue to face COVID-19 challenges, including a resurgence of the virus and its variants;

•Global markets will grow over 2021 in line with historical averages;

•We will retain our associates and meet supplier obligations while managing discretionary costs; and

•Transformation and strategic investment priorities will continue.

Actual outcomes and results could differ materially from our estimates and assumptions. For example, extended or new COVID-19 related shut-down periods or slower recovery periods could result in supply chain disruptions, labor shortages, an inability to manufacture products, reduced sales, incremental provisions for expected customer credit losses and inventory, incremental costs, reduced cash on hand and increased debt or impairments of assets. We use the US Dollar as our reporting currency and are therefore also exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs and emerging market currencies.

Financial debts

Our financial debts do not have any major maturities before 2024 and do not contain any financial covenants. Our $1 billion revolving credit facility remained undrawn as of February 15, 2022 and there are no current limitations on our ability to borrow under the facility.

EBITDA (non-IFRS measure)


($ millions)	2021	2020	2019
Net income/(loss)	376	(531)	(656)
Taxes	42	(104)	324
Depreciation of property, plant & equipment	323	293	267
Depreciation on right-of-use assets	81	79	66
Amortization of intangible assets	590	1,078	1,084
Impairments of property, plant & equipment, and intangible assets	225	173	8
Interest expense	120	124	113
Other financial income & expense	42	29	32
EBITDA	1,799	1,141	1,238

Liquidity and financial debt by currency

The following table summarizes liquidity and financial debts by currency as of December 31, 2021 and 2020.


	Liquidity (%)(1)		Financial debts (%)(2)
	2021	2020	2021	2020
USD	91	90	87	86
EUR	4	3	10	11
CHF	—	1	—	—
JPY	—	—	3	2
Other	5	6	—	1
Total	100	100	100	100

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

(2)Financial debts includes non-current and current financial debts.

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

Alcon research & development spending totaled $842 million, $673 million and $656 million for the years 2021, 2020 and 2019, respectively. As described in the "Risk Factors" section and elsewhere in this Annual Report, we are subject to varying degrees of governmental regulation in the countries in which we operate, which makes the process of developing new products and obtaining necessary regulatory marketing authorization lengthy, expensive and uncertain. See "Item 3. Key Information—3.D. Risk Factors". For further information on Alcon research and development policies and additional product information, as well as a description of the regulatory approval process, see "Item 4. Information on the Company—4.B. Business Overview".

5.D. TREND INFORMATION

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

5.E. OFF-BALANCE SHEET ARRANGEMENTS

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

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. DIRECTORS AND SENIOR MANAGEMENT

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

6.B. COMPENSATION

Introduction

Dear Shareholder

On behalf of the Alcon Board of Directors ("Board") and Compensation Committee ("CC"), I am pleased to present the 2021 Compensation Report. This report outlines Alcon’s overall 2021 compensation framework and philosophy for the members of the Board as well as for the members of the Executive Committee of Alcon ("ECA") and provides a general outlook for our 2022 compensation structure.

This Compensation Report covers the financial year 2021 from January to December.

2021 in Review

We employ a strong pay-for-performance compensation system that motivates our senior executives to create long-term value for the Company and its shareholders.

Business Overview

2021 was a very successful year for Alcon. Despite continuing challenges from the COVID-19 pandemic, the Company delivered outstanding financial performance as a result of our innovative product offerings and strong commercial execution.

Our efforts to retain and protect our associates in 2020 paid off; the Company was well positioned as the markets recovered in 2021. We benefited from our share positions as the US market recovered and although we continue to see varying paces of recovery in our international markets, our associates have carefully navigated these trends to ensure growth alongside careful cost management. Highlights from the year are outlined below:

•Net Sales reached $8.2 billion in 2021, representing a growth of +12% compared to a pre-COVID and unaffected 2019, despite the continued market disruption created by the COVID-19 pandemic

•Robust product innovation for Alcon, with the launch of 11 new products, including Vivity, Vivity Toric, PRECISION1 for Astigmatism, TOTAL30 Sphere and Pataday Once Daily Extra Strength

•Product innovation and strong commercial execution which enabled both Franchises to grow ahead of the market compared to 2019; sales of Contact Lenses grew +9% while the market grew in low single digits; the Surgical business grew an impressive +13% while the overall global procedures were ~10% below 2019 levels

•Net cash flows from operating activities grew significantly, from $920 million in 2019 to $1,345 million in 2021; likewise, Free Cash Flow1 increased from $367 million in 2019 to $645 million in 2021 as income growth substantially improved

•In 2021, Alcon's share price increased by 32% and outperformed industry peers and relevant indices resulting in an $11 billion increase in shareholder value with our market capitalization reaching $44 billion by year-end; in addition, Alcon paid its first dividend to shareholders in May 2021

We approached an uncertain year with enthusiasm for the products that help people See Brilliantly and the financial discipline to execute 2021 in line with our long-term goals.

2021 Annual General Meeting Vote and Engagement with Shareholders

At our 2021 Annual General Meeting (“AGM”), our 2020 Compensation Report received support from 44% of the votes cast. The Board and the CC took the outcome of this vote seriously and, as a result, members of our Board and management team conducted broad shareholder outreach during the second half of 2021 engaging with and gathering feedback from

1 Free Cash Flow is a non-IFRS measure. Refer to "Item 5.A. Operating Results—Supplementary Information—Definitions and

Reconciliations of Non-IFRS Measures" section for additional information.

our shareholders regarding our executive compensation programs in order to better understand and appropriately respond to their concerns.

Our engagement team included Mr. Ball, our Board Chair, our Chief Human Resources Officer, General Counsel and Head of Investor Relations. We heard directly from investors on a range of important topics tied to the executive compensation programs as well as broader ESG matters. We discussed and took their feedback on a number of items related to 2021 AGM results, our use of discretion in determining the payout of our Short-Term Incentive ("STI") plan for 2020, CEO compensation during 2020, the level of transparency in the payouts under our STI and Long-Term Incentive ("LTI") plans contained in our 2020 Compensation Report, our peer group and Board compensation. While we were encouraged to hear that shareholders broadly supported our overall executive compensation program, we noted certain specific concerns and we have addressed them through an increased level of transparency in this report. Specifically, we have provided increased disclosure of the following topics:

•the targets for each of the metrics of the 2021 STI plan;

•increased disclosure of the Individual Performance Factor (IPF) impacting 2021 STI payout including linking of specific ESG objectives to ECA compensation;

•the structure of the Share of Peers and Innovation metrics in our LTI plan;

•the rationale for our blended peer group; and

•the underlying philosophy regarding the quantum of compensation for our CEO and ECA.

Additionally, we have enhanced these disclosures to provide an increased understanding of Alcon's compensation and retention philosophies, which are grounded in our pay-for-performance principles that align directly with shareholder interests. For your convenience, we have included a table in the Compensation at a Glance section of this Compensation Report that details the input received from our shareholders and how our CC has addressed each of these matters.

2022 Annual General Meeting

In line with the Articles of Incorporation, we will ask our shareholders to cast a binding vote on the maximum aggregate amount of compensation for members of the Board for their term of office from the 2022 AGM to the 2023 AGM. We will also ask our shareholders to cast a binding vote on the maximum aggregate amount of compensation for members of the ECA for the 2023 financial year. In addition, we will ask our shareholders to endorse this 2021 Compensation Report in an advisory vote.

We are not requesting an increase to the Say-on-Pay budget for the ECA in 2023 or the Board compensation from 2022-2023 AGM as compared to prior year.

On behalf of the Board and the members of the CC, we thank you for your trust and investment in Alcon as well as your feedback and support.

Sincerely,

Karen May

Chair of the Compensation Committee

Compensation at a Glance

Shareholder Outreach and Consideration of 2021 AGM Vote

As a result of the voting outcome at our 2021 AGM, we undertook a robust shareholder outreach effort to understand the perspectives of our shareholders. While we were encouraged to hear that shareholders strongly supported our management team and our overall executive compensation program, we noted certain specific concerns. The following table highlights the primary concerns expressed by shareholders and actions we have taken to address them:

Exhibit 1

Discretion

Concerns regarding the use of discretion in the 2020 STI Payout.

Background

In 2020, the CC used positive discretion to payout 75% STI to executives during an extraordinary year marred by the impacts of the global pandemic. In making the decision to utilize discretion, the committee took into consideration a number of factors, including company actions taken to mitigate the business impacts of the pandemic, market share gains, stock price performance, continued delivery of innovation pipeline, associate experience as well as shareholder feedback. We previewed our planned use of discretion during our shareholder outreach in late 2020 and incorporated the feedback we received into our final decision and the associated disclosures. No discretion was applied to any mid-cycle LTI awards. Targets set prior to the impacts of the pandemic were not altered.

Outcome

No discretion was applied for the 2021 STI plan. In 2020, the CC made a discretionary adjustment in the extraordinary circumstances of the global pandemic. We maintained full employment of, and did not furlough associates as well as maintained pay levels, including paying approximately 85% STI to all associates, and did not accept any government funding. The current compensation program remains well-suited to effectively align pay and performance.

Disclosure

Desire for additional disclosure of the STI and LTI Plan targets as well as Alcon’s actual performance against the goals—while acknowledging the potential competitive sensitivity of this data.

Background

The CC attempts to balance the need to prevent competitive harm from disclosing targets with our shareholders’ need for reassurance regarding the strength of the link between our pay and our performance and have sought to achieve this balance in making changes for 2021.

Outcome

In the current 2021 Compensation Report, we have provided a full description of performance achieved on each metric during the previous fiscal year to allow shareholders to assess the rigor of our performance assessment.

We have disclosed the specific STI targets for 2021 STI payments. We have increased disclosure of Individual Performance KPIs (including ESG related objectives) that directly impact the STI payout.

We have also enhanced disclosures for the target setting methodology and achievement level determination of Share of Peers and Innovation metrics that each comprise 25% of the long-term incentive plan metrics for our LTI plan.

CEO Compensation

Concerns with the magnitude of the 2020 CEO target pay increase.

Background

In 2019, the Board reviewed the CEO's compensation and it was significantly below the median of our peer group. In 2020, the Board set the CEO’s total compensation opportunity below the median CEO compensation of our peer group. This increase in pay opportunity was achieved through an increase solely in performance share units with a 3-year cliff vest. We note that we implemented this action prior to the pandemic.

In alignment with our pay-for-performance compensation philosophy, we will continue to monitor our CEO's target compensation versus the peer group.

Outcome

In 2021, the CEO received a 3% base salary increase in line with the average base salary increase received by all other Alcon associates, and no other increases. We note that we made this adjustment before the 2021 AGM.

In 2022, the CEO will not receive any increase to his compensation, including base salary and STI and LTI targets.

2021 ECA Compensation-Summary

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

In 2021, Ms. Lin was appointed as a new ECA member after Mr. Onuscheck departed. No extraordinary payments were made to Mr. Onuscheck upon his departure nor any special payments or equity awards were made to Ms. Lin upon the start of her new role. Mr. Bell and Mr. Narayanan assumed new roles in the Company (continuing on the ECA) effective September 1, 2021. Each individuals’ compensation was adjusted to be commensurate with their new roles.

The CC exercised no discretion with regard to our STI and LTI plans during 2021.

Exhibit 2

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 insurance in line with local market practices and benefits associated with global mobility and international relocation

Payment

Cash

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, 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

Fixed in proportion of pay

Total Compensation for 2021

From January 1, 2021 to December 31, 2021, we awarded the ECA members the amounts set out below. For more detailed information, see section "ECA Compensation 2021" in this 2021 Compensation Report.

Exhibit 3


Compensation	Fixed compensation		Variable compensation		Additional comp.	Totals in USD	Totals in CHF3
From January 1, 2021 to December 31, 2021	Annual base salary	Pension and insurance benefits	2021 STI award	2021-2023 LTI awards 1	Other benefits	Total compen-sation	Total compen-sation
David J. Endicott, CEO	1,289,196	141,563	2,747,937	5,613,848	1,116,719	10,909,263	9,974,666
Other ECA members	4,291,981	745,431	5,709,969	8,427,040	4,160,531	23,334,952	21,335,847
Totals in USD2	5,581,177	886,994	8,457,906	14,040,888	5,277,250	34,244,215
Totals in CHF3	5,103,038	811,005	7,733,317	12,838,005	4,825,148		31,310,513

1Performance Stock Units.

2Includes the CEO and six other ECA members.

3The amounts were converted at the rate of 1.0 CHF : 1.093697 USD.

2021 Board of Directors Compensation-Summary

We paid our Directors a fixed fee for services covering the term of their office from the 2021 Annual General Meeting ("2021 AGM") to the 2022 Annual General Meeting ("2022 AGM"). No changes have been made to Board compensation since Alcon's spin-off from Novartis in April 2019.

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

Exhibit 4



Board function	CHF	USD1
Annual base fee:
Board Chair	950 000	1,039,012
Board member base fee (Board retainer fee)	200 000	218,739
Additional fees:
Vice Chair	40 000	43,748
Chair of the Audit and Risk Committee	70 000	76,559
Chair of the Compensation Committee	50 000	54,685
Chair of the Governance and Nomination Committee	50 000	54,685
Chair of the Innovation Committee	50 000	54,685
Member of the Audit and Risk Committee	35 000	38,279
Member of the Compensation Committee	25 000	27,342
Member of the Governance and Nomination Committee	25 000	27,342
Member of the Innovation Committee	25 000	27,342

1The Board fees are paid in Swiss Francs (CHF), converted at the rate of 1.0 CHF : 1.093697 USD.

Alcon Board Fee Payments in 2021

In 2021, Alcon paid the members of the Board the following total amounts.

Exhibit 5


	Payment in cash	Tax and other cash	Payment in shares	Number of shares	Other payments	Total fees
Total fees paid in 20211 in USD	325,374	635,811	2,481,228	32,490	52,057	3,494,470
Total fees paid in 2021 in CHF2	297,499	581,341	2,268,661	32,490	47,597	3,195,099

1Represents 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.

2The payments in cash were made in Swiss Francs (CHF). For consistency all compensation payments are reported in USD in this report. The amounts were converted at the rate of 1.0 CHF : 1.093697 USD. All amounts are before deduction of the social security contributions and income tax due by the Board member.

For more details regarding the compensation paid to the individual members of the Board, see section "Board of Directors Compensation 2021" in this Compensation Report.

Corporate Governance

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

The Board is responsible for approving the Compensation Report and for the proposal of the aggregate budget of Board compensation and ECA compensation to the shareholders at the AGM. The Corporate Governance Report contained in our 2021 Annual Report in "Item 6.C. Board Practices" provides further details regarding the responsibilities of the CC.

2022 Compensation Outlook

ECA Compensation

The CC is committed to a pay-for-performance compensation framework to align Company and executive performance with shareholder interests. Our executive compensation framework will continue to be benchmarked against a carefully selected peer group, consisting of European and North American companies designed, in aggregate, to be representative of Alcon's size, industry and geographies. The inclusion of European and North American companies reflects our global footprint, business mix and sources of management talent.

Based on the Company’s business strategy, compensation philosophy and the analysis of peer group compensation practices, below are the key features of ECA compensation for 2022:

•No compensation increase for the CEO including base salary and short and long term incentive targets;

•Same overall structure of ECA compensation as compared to 2021 (base pay, STI, LTI and benefits);

•Continuation of robust share ownership requirements; and

•No material changes to benefits provisions.

Board Compensation

The Board compensation framework will remain unchanged for the upcoming term of office from the 2022 AGM to the 2023 AGM, including:

•Board Chair and Board member fees unchanged compared to 2021; and

•Same mix of fees payable in cash and shares as in 2021, including the option to elect a higher percentage in shares in lieu of cash.

In 2021, the Board conducted a benchmarking study of Alcon's Board pay against other SMI companies and determined that our Board pay is below the median level of SMI companies. Nonetheless, the Board made the decision to not propose any compensation change at the 2022 AGM for the 2022-2023 AGM term. Our Board's pay has not changed in Alcon's history as a public Company. The CC and the Board will reconsider possible changes to Board compensation in 2023 for future terms.

Adherence to Strong Governance Practices

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

Exhibit 6


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 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 guaranteed compensation
•Award all equity grants at market value
•Conduct ongoing investor outreach

ECA Compensation 2021

Compensation Governance

Authority for ECA Compensation Decisions

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

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

Exhibit 9

Authority levels in ECA compensation

CEO

Board

AGM

ECA compensation policy and principles

CEO compensation and benefits

Other ECA member compensation and benefits

CEO performance targets and assessment of achievements

Other ECA members' performance targets and assessment of achievements

Share ownership requirements for the CEO and other members of the ECA

Maximum aggregate ECA compensation

Incentive plan design and rules

Compensation report of the Company

R Recommend P Propose A Approve

1binding vote

2advisory vote

Compensation Program

In the financial year 2021, Alcon’s ECA compensation framework includes the strategic objectives of:

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

•Pursuing value for shareholders over the long-term;

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

•Motivating and retaining executives for the long-term.

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

Pay-for-Performance

Variable compensation represents a majority of total compensation and affirms our pay-for-performance philosophy (see more information in Exhibits 12 and 22). Actual payout is contingent on the achievement of Company and individual performance goals. Performance metrics and goals are aligned with the Company’s business strategy and compensation philosophy as well as long-term value creation for shareholders and are approved annually by the CC and the Board.

Peer Group

External peer compensation is an important reference point for consideration of market competitive compensation for the members of the ECA, including our CEO.

The CC believes that a consistent and relevant set of peer companies that are similar to Alcon in size and scope in aggregate, enables shareholders to assess the appropriate levels and practices of compensation and allows for pay-for-performance comparisons. Alcon’s revenue and market capitalization are approximately at the median of the peer group companies.

Although Alcon is headquartered in Switzerland, a significant portion of our sales, management team and associate population are in the US. The US is the largest pool for both medical device and ophthalmology talent, and it is therefore critical that Alcon is able to attract and retain key talent from the US. As a result, our CC has selected a blended Peer Group of North American and European companies (58% US and 42% outside US) to balance the European compensation structure with a need to attract and retain US talent. While we do not pay as much as our US competitors, we desire to stay close to the median of the blended Peer Group. The 2021 Peer Group is outlined in Exhibit 7.

Exhibit 7


Global Peer Group
Agilent Technologies Inc.			Fresenius Medical Care
Align Technology Inc.			Givaudan
BauschHealthCompanies Inc.			Lonza Group
Baxter International Inc.			Merck KGaA
Becton Dickinson & Company			Smith & Nephew
Biogen Inc.			Stryker Corporation
Boston Scientific			The Cooper Companies Inc.
Dentsply Sirona Inc.			UCB
Edwards Lifesciences Corporation			Zimmer Biomet Holding Inc.
EssilorLuxottica
Revenue*			Market Capitalization*

*Revenue and Market Capitalization as of December 31, 2021

The annual total compensation of ECA members is targeted to the market median of benchmarks for comparable roles within this peer group. The CC considers compensation practices, structures and levels based on benchmarking information and advice provided by the committee’s independent external advisors (see more information under the section "Compensation Governance").

The CC and the Board review the compensation of the CEO and the other ECA members periodically and consider relevant benchmark information. The CC will also review periodically the peer group and make adjustments to its composition as appropriate.

Forfeiture and Claw-back Rules

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

Share Ownership Requirements for ECA Members

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

Exhibit 8


Leadership level			Share ownership requirement
David J. Endicott, CEO			5 times annual base salary
Other members of the ECA			3 times annual base salary

All members of the ECA must meet these requirements within five years of service from the later of the date of the Spin-off from Novartis or commencement of ECA level role. If any of the ECA members fail to meet the requirement, or if they are not on track with the requirements, the CC may take several actions such as prohibiting the sale of Alcon shares until such time the requirement is met. At the end of 2021, each member of the ECA has met or is on track to meet the applicable ownership requirement.

Compensation Elements

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

•fixed and variable compensation elements;

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

•Company and individual performance.

Exhibit 10

Annual Base Salary


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

Exhibit 11

Variable Compensation


Short-Term Incentive			The 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
Long-Term Incentive			The 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 (i.e., 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 cash at the end of the performance period based on the number of PSU vested

Variable compensation represents a large majority of total direct compensation for ECA members. At target opportunity, the variable compensation represents 85% of the CEO’s total direct compensation. The average variable compensation of the other ECA members represents 71% of total direct compensation.

Exhibit 12

Mix of Fixed and Variable Compensation at Target


CEO						Other ECA members (excl. CEO)

CEO ratios and average ratios of other ECA members are based on 2021 values of ABS, target STI and target 2021-2023 LTI. Graphics exclude retirement savings and insurance benefits as well as any other benefits.

CEO Compensation

Our CEO’s compensation is aligned with Alcon’s pay - for - performance philosophy and is reflected in the pay mix for Mr. Endicott’s target direct compensation. Approximately 85% of his pay is at risk with 79% of his at risk pay tied to the achievement of long-term strategic goals.

Prior to the 2021 AGM, Mr. Endicott received a base salary increase of 3% in line with the average base salary increase received by all other Alcon associates with no increase to either his STI or LTI targets.

In 2022, Mr. Endicott will not receive any increase to his compensation, including base salary and short and long term incentive targets.

In alignment with our pay - for - performance compensation philosophy, we will continue to monitor our CEO's target compensation versus the peer group

Short-Term Incentive

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

Exhibit 13


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)	83	%	166	%

The financial metrics for the short-term performance in 2021 are set out in the Exhibit below. The payout of STI is calculated by multiplying the target award by the BPF and IPF.

Exhibit 14

Metric

Financial Metrics 1

Non-financial Metric

Third Party Net Sales

Core Operating Income

Free Cash Flow

Individual Performance

Definition

Measures the Company's Third Party Net Sales performance

Measures the Company’s profitability

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 profitability

Indicates the cash realized from operating activities

Considers individual contribution to the Company’s results

Weighting

40%

20%

100%

Performance

factors

BPF (total weightings of financial metrics 100%)

IPF

Payout formula

ABS

STI
Target

BPF

IPF

STI
Payout

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

Payout range

0 - 200%

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

In 2021, the Board and CC incorporated the achievement of ESG objectives in determining the IPF for ECA members and overall STI payout. Each ECA member has five individual performance goals with each having specific measurable objectives and initiatives. The five focus areas are as outlined below:

•Key strategic business and customer objectives;

•Advancing product innovation and delivery;

•Alcon's transformation program;

•ESG objectives, including environmental sustainability, diversity and inclusion, and company culture and values programs ; and

•Achieving a range of key financial and operational performance measures.

At the end of the year, the Board and CC assess each ECA member's achievement of performance objectives to determine their individual performance and Individual Performance Factor (IPF) which directly impacts the final STI payout amount.

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

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

Long-Term Incentive

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

Exhibit 15


LTI payout opportunity as a % of annual base salary	Below threshold	at target	at maximum1
David J. Endicott, CEO	0%	430%	860%
Other members of the ECA (average)	0%	165%	330%

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

The metrics for the measurement of long-term performance are set out in the Exhibit below. The payout is calculated by adding the weighted achievements of the individual targets in a range from 0-200% and multiplying the number of PSUs granted by the resulting performance factor. We intend to disclose the outcome of each LTI metric and the final LTI payout at the end of their respective performance period, in the applicable compensation report.

Exhibit 16

Metric

Third Party Net Sales CAGR1,2

Core EPS CAGR2

Share of Peers3

Innovation Scorecard4

Definition

Measures the Company's Third Party Net Sales performance

Measure of the profitability by the earnings per share

Measures the Company’s market performance versus competitors

Measure of key product pipeline and achievement of milestones

Rationale

Fosters the Company’s Sales 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%

Payout formula

Metric
1
25%

Metric
2
25%

Metric
3
25%

Metric
4
25%

ABS

LTI
Target

Addition of weighted metrics
= Performance Factor

Payout/Number of PSUs

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

Payout range

0-200%

1CAGR means Compound Annual Growth Rate.

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

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

4The innovation scorecard for 2020-2022 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 overall achievement of the 10 milestones, within the relevant performance period. The milestones established are approved by the Board’s Innovation Committee.

Net Sales CAGR - Measures Alcon’s Net Sales Third Party growth over a 3-year period. The goal setting process for the metric is defined by triangulating between Alcon’s internal strategic plan, expected market growth and investors' expectations.

Core EPS CAGR – Measures Alcon’s profitability growth over a 3-year period. Similar to Net Sales CAGR, goal setting process for this metric is also based on a triangulated approach of assessing Alcon’s internal strategic plan, expected market growth and investors' expectations.

Share of Peers - Measures Alcon’s market share of key product categories in the Surgical and Vision Care segments against a peer group of competitors. Market share performance is a relative performance measure based on independent, third-party market data, and is calculated as the change in share across the three-year period. Market share changes are weighted across multiple key product categories to develop a blended Alcon share change for the three-year cycle.

Innovation – This metric is comprised of 10 milestones per annual cycle, typically five in both Surgical and Vision Care. Milestones are linked to internal development programs, measuring against one of four performance areas:

•Timeline - measure the on-time completion of key product development activities

•Program cost - measure budget adherence

•Total product cost- measure the ability to meet unit cost targets

•Sales - measure new product revenue, typically in the first calendar year after launch

Each Innovation Scorecard cycle spans a rolling three-year period with performance milestones in each year. At the completion of each cycle, the Board's Innovation Committee evaluates milestone achievement against performance tiers set at the beginning of the cycle.

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

At the end of the three-year performance period of each LTI award, the Board and the CC determine the performance achievements of each metric against the targets originally set.

At the end of the performance period of each LTI award, the Company ~~from selling its products. The Company operates in an industry susceptible~~intends to ~~significant product liability claims. Product liability claims may be asserted against the Company~~disclose in the ~~future arising out of events not known to the Company at the present time.~~

~~While the results~~applicable compensation report details of the ~~aforementioned contingencies cannot be predicted~~final LTI payout.

Benefits

All ECA members except one are enrolled in local benefit plans providing for retirement income savings and insurance for disability and loss of life. These plans are in line with certainty, management believes that the ultimate liability, if any, will not have a material adverse effect on the Company's consolidated financial position or results of operations. Litigation contingencieslocal market practices and legislation and are subject to ~~change~~the Company's plan rules and policies. The ECA members and the Company pay statutory contributions. The sole ECA member with an employment contract governed by US law is enrolled in a Company-provided health plan.

Exhibit 17


Retirement savings and insurance contributions			Retirement and insurance benefits plan contributions provided in line with local market practice (most governed by legal provisions) - Company-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 •International benefits (e.g. relocation cost, cost of living adjustments, settling in allowance, international health insurance, housing, schooling/education fees) in line with Alcon’s global mobility policies

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

Compensation Payments to the ECA Members

ECA Compensation Payments FY 2021

The following Exhibit 18 sets forth the total compensation received by the CEO (highest paid member of the ECA) and the aggregate total compensation received by all of the other ECA members for the period from January 1, 2021 to December 31, 2021. 2021 ECA payments are larger than 2020 ECA payments due to the following reasons:

•Superior 2021 performance (148%) resulting in above target STI payout compared to below target (75%) STI payout in 2020 due to the impact of the pandemic;

•Change in ECA members, including the appointment of a new ECA member and movement of two others to new roles and associated relocation expenses; and

•Year over year exchange rate impact.

The competition for specialized talent in the fields necessary for Alcon’s success is significant and growing – particularly in the United States. Recent changes in the landscape for ophthalmic talent led the Company to assess potential vulnerabilities to competitive threats for talent. As a result of that assessment, Alcon made equity awards to certain key associates in its US organization, including an award to an ECA member, Sergio Duplan, based in the US. On February 17, 2021, the CC granted Mr. Duplan an award of Alcon Performance Share Units at a target opportunity equal to 1X his annual LTI award (USD 1,006,825). The award is 100% in Performance Share Units that cliff-vest after three years. The award is subject to the same performance conditions as our annual PSU award (sales growth; earnings growth; market share growth and achievement of key innovation metrics) and will forfeit if the executive is not employed by the company at the time of vesting. Alcon clawback/malus rules apply to the award.

The compensation Alcon paid to the ECA members in 2021 remained within the approved Say-On-Pay budget.

Exhibit 18


Compensation	Fixed compensation		Variable compensation		Additional compen-sation	Totals in USD	Totals in CHF
From January 1, 2021 to December 31, 2021	Annual base salary1	Pension and insurance2	2021 short-term incentive3	2021-2023 long-term incentive4,5	Other benefits6	Total compen-sation7	Total compen-sation7
David J. Endicott, CEO	1,289,196	141,563	2,747,937	5,613,848	1,116,719	10,909,263	9,974,666
Aggregate amount of 6 other ECA members	4,291,981	745,431	5,709,969	8,427,040	4,160,531	23,334,952	21,335,847
Totals in USD6	5,581,177	886,994	8,457,906	14,040,888	5,277,250	34,244,215
Totals in CHF	5,103,038	811,005	7,733,317	12,838,005	4,825,148		31,310,513

1The total of Annual Base Salaries paid for the period from January 1, 2021 to December 31, 2021, including increases effective throughout the year, if applicable.

2The retirement, pension and insurance benefits are the actual contributions paid to benefit plans for the period from January 1 to December 31, 2021. It also includes the amount of USD 52,507 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 643,390 paid by Alcon to the social security systems.

3The STI award disclosed is the amount earned for the performance year 2021. It will be paid in March 2022 in cash.

4The amounts of the 2021-2023 LTI awards represent the total value of the target number of PSUs granted to the six active ECA members on February 17, 2021. The value of the PSUs is based on ~~settlements~~the closing price of the underlying Alcon share on the date of grant of USD 72.05. Our President of Global Business and ~~court decisions.~~
Innovation departed Alcon on August 31, 2021 and all of his unvested LTI equity awards were forfeited upon his departure. No extraordinary payments were made upon his departure.

5Includes the value of the target PSUs of a special, one-time LTI retention award granted to Mr. Duplan on February 17, 2021, subject to the same performance conditions and vesting schedule as the 2021-2023 PSU awards.

6The 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 2021, including benefits for international assignment (e.g. housing, schooling, tax and social security equalization, benefit equalization and other international relocation benefits).

7Payments to ECA members were made in CHF and/or USD. The amounts were converted at the rate of 1.0 CHF : 1.093697 USD.

~~117~~Alcon reports the 2021-2023 Long-Term Incentive Awards at the value at the time of grant in accordance with Swiss market practice. The basis for disclosure is the target value of the PSU at grant, reflecting the assumption that the awards will vest at 100% achievement, excluding any share price movement that may occur over the performance period. The future payout will be determined only after the conclusion of the performance period in three years (i.e. at the end of 2023) and the awards will vest in February 2024. The payout range is between 0% and 200% of the target number of PSUs.

ECA Compensation Payments FY 2020

The following Exhibit 19 sets forth the total compensation received by the CEO (highest paid member of the ECA) and the aggregate total compensation received by all of the other ECA members for the period from January 1, 2020 to December 31, 2020.

The compensation Alcon paid to the ECA members in 2020 remained within the approved Say-On-Pay budget.

Exhibit 19


Compensation	Fixed compensation		Variable compensation		Additional compen-sation	Totals in USD	Totals in CHF
From January 1, 2020 to December 31, 2020	Annual base salary1	Pension and insurance2	2020 short-term incentive3	2020-2022 long-term incentive4	Other benefits5	Total compen-sation6	Total compen-sation6
David J. Endicott, CEO	1,225,049	160,771	1,102,544	4,975,110	635,708	8,099,182	7,603,010
Aggregate amount of 6 other ECA members	4,088,839	791,750	2,546,652	6,651,981	3,209,254	17,288,476	16,229,349
Totals in USD1,4	5,313,888	952,521	3,649,196	11,627,091	3,844,962	25,387,658
Totals in CHF1,4	4,988,348	894,168	3,425,639	10,914,792	3,609,412		23,832,358

1The total of Annual Base Salaries paid for the period from January 1, 2020 to December 31, 2020, including increases effective March 1 if applicable.

2The retirement pension and insurance benefits are the actual contributions paid to benefit plans for the period from January 1 to December 31, 2020. It also includes the amount of USD 37,303 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 1,138,868 paid by Alcon to the social security systems.

3The STI award disclosed is the amount earned for the performance year 2020. It was paid in March 2021 in cash.

4The amounts of the 2020-2022 LTI awards represent the total value of the target number of PSUs granted to the seven active ECA members on February 18, 2020. The value of the PSUs is based on the closing price of the underlying Alcon share on the date of grant of USD 63.00.

5The 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 2020, include benefits for international assignment (e.g. housing, schooling, tax and social security equalization, benefit equalization and other international relocation benefits).

6Payments to ECA members were made in CHF and/or USD. The amounts were converted at the rate of 1.0 CHF : 1.06526 USD.

Outcome of Performance Awards 2021

2021 Short-Term Incentive

Alcon’s operational and financial performance exceeded target level for all metrics. Sales in both Surgical and Vision Care franchises outperformed the target, driven by innovation, commercial execution and better than expected demand in certain markets.

In the Surgical franchise, Alcon’s leadership in AT-IOLs was further cemented in the year with the success of the Vivity launch and continued popularity of PanOptix. In addition, our Equipment & Consumable offerings were able to help eye care professionals meet the rebounding consumer demand with optimized patient and surgeon experience.

In the Vision Care franchise our newest daily lens, PRECISION1, drove global share gains, and DAILIES TOTAL1 remained a favorite premium daily lens of lens wearers. Systane remains a leading brand in the dry eye market, and Pataday continues to see growth following its OTC introduction in 2020.

Core operating income benefited from higher sales which outpaced increases in selling, general, and administrative expenses, resulting in improved operating leverage.

Free Cash Flow was above the target primarily due to the strong operating performance coupled with investments in manufacturing line expansion which led to improved inventory management.

Exhibit 20 shows the weighting, target, and payout level for the 2021 STI.

Exhibit 20


Performance metric	Weighting	2021 Target1 ($ millions)	Payout Level2	Weighted Payout3
Third Party Net Sales	40%	7,938	138%	55%
Core Operating Income4	40%	1,364	138%	55%
Free Cash Flow4	20%	620	187%	37%
STI payout	100%			148%

1 Target is expressed at the exchange rates prevalent at the time of Board approval.

2Financial achievement is measured in constant exchange rates to reflect operational performance. Impact of acquisitions, divestitures and certain non-recurring items may also be excluded from Actual achievement; in 2021, no discretion was applied in determining STI payout level.

3Rounded to the nearest whole %.

4Core Operating Income and Free Cash Flow are non-IFRS measures.

In 2021, the Board and CC incorporated the achievement of ESG objectives in determining the IPF for ECA members and their overall STI payout. Each ECA member has five individual performance goals with each having specific measurable objectives and initiatives. The five focus areas are as outlined below:

•Key strategic business and customer objectives;

•Advancing product innovation and delivery;

•Alcon's transformation program;

•ESG objectives, including environmental sustainability, diversity and inclusion, and company culture and values programs ; and

•Achieving a range of key financial and operational performance measures.

At the end of the year, the Board and CC assess each ECA member's achievement of performance objectives to determine their individual performance and IPF which directly impacts the final STI payout amount.

For 2021, the CEO’s individual performance goals assessment is outlined below:

•Gained market share and delivered growth compared to 2019 significantly above market in both Surgical and Vision Care franchises; the Surgical business grew +13% and sales of Contact Lenses grew +9%;

•Announced intention to acquire Ivantis (transaction closed January 7, 2022), a leader in the minimally invasive glaucoma surgery space and also the US commercialization rights to Simbrinza (from Novartis), deepening the Company's position in the glaucoma market;

•Advanced innovation through strategic investment in internal and external research and development with the launch of 11 new products, including Vivity, Vivity Toric, PRECISION1 for Astigmatism, TOTAL30 Sphere and Pataday Once Daily Extra Strength;

•Completed separation activities from Novartis on schedule and under expected expense targets while advancing Alcon’s transformation program to optimize cost structure and achieve greater organizational agility;

•Expanded access to eye care through physician training and education programs, advanced our environmental impact reduction strategies and delivered diversity and inclusion strategy and objectives to advance Alcon's ESG objectives; and

•Alcon's share price increased by 32% and outperformed industry peers and relevant indices resulting in an $11 billion increase in shareholder value with our market capitalization reaching $44 billion by year-end; in addition Alcon paid its first dividend to shareholders in May 2021.

Based on the Board and CC’s assessment of the CEO’s performance against his individual goals in 2021, Mr. Endicott's IPF was assessed at 120% resulting in an overall STI payout of 178% (148% BPF X 120% IPF) of target. An average IPF of 124% was determined for the other ECA members resulting in an average STI payout of 184% of target.

2019-2021 Long-Term Incentive

The 2019-2021 LTI awards for the CEO and other ECA members will vest in early 2022. As a result of Alcon being a division of Novartis prior to April 9, 2019, payouts under the program have been split into two periods (pre and post spin-off). For the first three month period while Alcon was a division of Novartis, ECA payouts were determined based upon overall Novartis performance, which is not disclosed in Alcon's 2021 Compensation Report.

For the thirty-three-month period from post spin-off to the end of the performance period in December 2021, PSUs were subject to Alcon stand-alone performance.

The Alcon LTI program for the ECA consists of 100% PSUs. Currently, performance for the PSU consists of the following four metrics: Sales CAGR, Core EPS CAGR, Share of Peers and Innovation weighted equally. At spin, Alcon underwent a rigorous goal setting process to establish the construction of ambitious goals while balancing against incentivizing excessive risk taking. The CC considers a number of factors, both external and internal such as Alcon's forward-looking strategic plan, shareholders’ and analysts’ expectations regarding our future performance, general market outlook and the performance of our direct competitors to set targets that are appropriately challenging and aligned with shareholder expectations.

Sales CAGR Metric

Our superior sales performance over the three-year performance period was driven by significant market share gains from PanOptix and Vivity in the global AT-IOL market. We also grew market share in contact lenses driven by the launches of PRECISION1 and PRECISION1 for Astigmatism. This was partially offset by slower market growth due to COVID-19.

Core EPS CAGR Metric

Core EPS was up over the three-year performance period but did not reach the payout threshold primarily due to Covid-19 impact.

Share-of-Peer Metric

Share-of-Peer metric measures Alcon’s market share of key product categories in the Surgical and Vision Care segments against a peer group of competitors. Market share performance is a relative performance measure based on independent, third-party market data, and is calculated as the change in share across the three-year period. For the 2019-2021 cycle, we significantly outperformed our targets and we continued to gain share in key product categories. In the global AT-IOL market, Alcon grew significantly ahead of peers driven by PanOptix and Vivity. In contact lenses, the launches of PRECISION1 and PRECISION1 for Astigmatism also helped us to take share in the fast-growing daily disposable SiHy segments. Alcon contact lenses have grown significantly ahead of the market since the first launch of PRECISION1 in late 2019.

Innovation Metric

We have continued to execute on our research and development strategy during the pandemic and meet innovation milestones of Sales, Timeline and Total Product Cost set out for the 2019-2021 cycle, bolstered, in part, by the success of Alcon's PanOptix and the launch of PRECISION1 and TOTAL30. For the 2019-2021 cycle, Alcon achieved a performance tier rating of “Exceeds Expectations” assigned by the Alcon Innovation Committee and a payout factor of 160%.

Exhibit 21


Performance metric	Weighting		Payout Level		Weighted Payout % (0-200%)
Third Party Net Sales CAGR1, 2	25	%	130	%	32.5	%
Core EPS CAGR1, 2, 3	25	%	0	%	0.0	%
Share of Peers	25	%	200	%	50.0	%
Innovation	25	%	160	%	40.0	%
PSU payout4					123.0	%

1 Financial achievement is measured in constant exchange rates to reflect operational performance.

2 Financial achievement is measured in constant exchange rates to reflect operational performance. Impact of acquisitions, divestitures and certain non-recurring items may also be excluded from Actual achievement.

3 Core EPS is a non-IFRS measure.

4 Rounded to the nearest whole %.

Based on our results, the performance factor for the 2019-2021 PSU award was 123%.

Fixed and Variable Compensation

The mix of fixed and variable compensation over the period from January 1, 2021 to December 31, 2021 is as follows:

Exhibit 22

Mix of Fixed and Variable Compensation at Actual 2021 STI Payout and 2021-2023 LTI at Grant

8.	~~DIVIDEND POLICY~~
CEO		Other ECA members (excl. CEO)

Average ratios are based on ABS, payout of 2021 STI (in March 2022) and grants of 2021-2023 LTI awards at grant value. Mix excludes retirement, pension and insurance benefits as well as any other benefits.

~~Under~~

Equity Instruments Granted to the ~~merger agreement with Novartis dated December 14, 2010, Alcon has agreed not~~ECA Members

Equity Instruments Granted in FY 2021

The LTI awards (in PSUs) for the performance period 2021-2023 were granted on February 18, 2021 to ~~pay dividends pending completion~~the CEO and the six other members of the ~~merger.~~ECA. The number of PSU are set out in Exhibit 23 below. The values of the awards are based on the closing price of the underlying Alcon share on the date of grant and disclosed in section "ECA Compensation Payments FY 2021", Exhibit 18.

Exhibit 23

B.	~~SIGNIFICANT CHANGES~~
Number of units granted to		2021 PSUs based on the 2021-2023 LTI target Award1,2,3
David J. Endicott, CEO		77,916
Other ECA members		116,961
Total		194,877

~~None.~~1The values of the awards in PSU are disclosed under "ECA compensation payments FY 2021" (Exhibit 18).

2Our President of Global Business and Innovation departed Alcon on August 31, 2021 and the target PSUs were forfeited upon his departure.

3Number of units includes the target PSUs of a special, one-time LTI retention award granted to Mr. Duplan on February 17, 2021, subject to the same performance conditions and vesting schedule as the 2021-2023 PSU awards.

Equity Instruments Granted in FY 2020

The LTI awards (in PSUs) for the performance period 2020-2022 were granted on February 18, 2020 to the CEO and the six other members of the ECA. The number of PSU are set out in Exhibit 24 below. The values of the awards are based on the closing price of the underlying Alcon share on the date of grant and disclosed in section "ECA Compensation Payments FY 2020", Exhibit 19.

Exhibit 24


Number of units granted to	2020 RSUs based on the 2019 STI Award1	2020 PSUs based on the 2020-2022 LTI target Award2
David J. Endicott, CEO	14,032	78,970
Other ECA members	19,320	105,587
Total	33,352	184,557

1Although these shares were granted based on 2019 STI awards, the number of RSUs that were to be granted to the ECA members were not available at the time the 2019 Compensation Report was published. They are included in Exhibit 24 for reference.

2The values of the awards in PSU are disclosed under "ECA compensation payments FY 2020" (Exhibit 19).

Share Ownership of the ECA Members

The number of Alcon shares or share-based units held by ECA members and “persons closely linked” (as defined below) to them as of each of December 31, 2021 and December 31, 2020 is set out in the Exhibit below. As of each of these dates, no ECA members, either individually or together with “persons closely linked”, owned 1% or more of the outstanding shares of Alcon.

Exhibit 25


Number of units	December 31	Vested shares	Unvested RSUs	Unvested target PSUs	Total
David J. Endicott	2021	98,448	20,468	209,365	328,281
	2020	88,953	21,162	150,013	260,128
Laurent Attias	2021	7,435	2,310	35,510	45,255
	2020	16,820	2,602	29,922	49,344
Ian Bell	2021	7,164	7,190	48,148	62,502
	2020	19,527	7,508	39,266	66,301
Leon Sergio Duplan Fraustro	2021	4,980	6,492	59,824	71,296
	2020	16,530	8,174	38,610	63,314
Sue-Jean Lin	2021	20,474	11,152	33,857	65,483
	2020	NA	NA	NA	NA
Rajkumar Narayanan	2021	13,761	2,639	36,782	53,182
	2020	10,622	2,795	31,046	44,463
Tim C. Stonesifer	2021	13,568	4,989	125,124	143,681
	2020	20,000	4,989	93,611	118,600
Total	2021	165,830	55,240	548,610	769,680
	2020	200,693	56,286	432,293	689,272

Additional Disclosures

Employment Agreements

The Company and the members of the ECA entered into employment agreements for an indefinite period of time. Six of seven ECA members’ employment agreements are governed by Swiss law. The seventh ECA member’s employment agreement is governed by US law.

All employment contracts with ECA members provide for advanced notice of termination of employment, none of which exceed a 12-month period in accordance with our Articles of Incorporation. None of the employment agreements with the ECA members provide for any severance payment.

Such employment agreements also prohibit the ECA member from competing against Alcon for a period up to 12 months after termination in accordance with our Articles of Incorporation.

Payments to Current or Former Members of the ECA

During 2021, no payments (or waivers of claims) other than those set out in Exhibit 18 (including the related notes) under section "ECA Compensation Payments FY 2021" were made to current or former members of the ECA or to “persons closely linked” to them. Our President Global Business and Innovation departed Alcon on August 31, 2021 and no extraordinary payments were made to him upon his departure and all of his unvested LTI equity awards were forfeited upon his departure.

Loans to Members of the ECA

Alcon’s Articles of Incorporation and corporate policies do not permit loans to current or former members of the ECA or to “persons closely linked” to them. As a result, no loans were granted in 2021, and none were outstanding as of December 31, 2021.

Persons Closely Linked

Persons closely linked to members of the ECA are (i) their spouse, (ii) their children below age 18, (iii) any legal entities that they own or otherwise control (iv) any legal or natural person who is acting as their fiduciary or agent and (v) family trusts.

Compensation Expense 2021

The total expense for the year 2021 for compensation awarded to ECA members, using International Financial Reporting Standards (IFRS) measurement rules, is presented in Note 25 to the Company’s audited Consolidated Financial Statements. The numbers for compensation expense in Note 25 may differ from the numbers reported in this 2021 Compensation Report due to the accounting and disclosure standards applied.

Alcon Share-Based Units Awarded to Alcon Associates in 2021

In the financial year 2021, the total of approximately 1.9 million restricted shares, RSUs and target PSUs (all unvested) were granted, and approximately 1.3 million Alcon shares vested and were delivered to Alcon associates under the various equity-based incentive or participation plans. Current unvested equity instruments (restricted shares, RSUs and target PSUs) represent approximately 1% of issued shares. Alcon delivers treasury shares to associates to fulfill these obligations.

Board of Directors Compensation 2021

Compensation Framework

The Board compensation was set at a level that allowed for the attraction and appointment of high-caliber talent for Board roles with the relevant background and skills, including global experience in the medical devices and ophthalmology industry. The Board is comprised of both Swiss and international members.

Non-executive Board members are awarded a base fee. Further, they are entitled to additional fees for their roles of Chair and/or member on the Board committees. The Vice Chair also receives an additional fee. The Board Chair does not receive additional fees for work in committees. David J. Endicott, the CEO of Alcon, does not receive any fees for his Board membership. Mr. Endicott is compensated as a member of the ECA and his compensation is disclosed in section "ECA Compensation 2021."

The following table sets out the compensation for the non-executive members of the Board from the 2021 AGM to the 2022 AGM:

Exhibit 26

~~ITEM 9.~~	~~THE OFFER AND LISTING~~

Board function		CHF	USD1
Annual base fee:
Board Chair		950 000	1,039,012
Board member base fee (Board retainer fee)		200 000	218,739
Additional fees:
Vice Chair		40 000	43,748
Chair of the Audit and Risk Committee		70 000	76,559
Chair of the Compensation Committee		50 000	54,685
Chair of the Governance and Nomination Committee		50 000	54,685
Chair of the Innovation Committee		50 000	54,685
Member of the Audit and Risk Committee		35 000	38,279
Member of the Compensation Committee		25 000	27,342
Member of the Governance and Nomination Committee		25 000	27,342
Member of the Innovation Committee		25 000	27,342

1Converted into USD at a rate of CHF 1.0 = USD 1.093697.

In 2021, the following framework applied to the compensation of non-executive Board members:

•Fifty percent of the total fees is paid in shares on a mandatory basis in two installments: September 2021 and March 2022;

•Fifty percent of the total fees is paid in cash in four installments: June, September and December 2021 and March 2022;

•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 on 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; and

•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.

100

The general principles of compensation of the members of the Board are defined in our Articles of Incorporation. According to our Articles of Incorporation, Alcon may enter into agreements with members of the Board relating to their compensation for a fixed term of up to one year.

Share Ownership Requirements for Members of the Board

Board members are committed to align their interests with those of shareholders. The Board has set forth share ownership requirements which apply to the non-executive members of the Board.

Each member of the Board, including the Board Chair, is required to own Alcon shares that represent the value of his or her annual base fee. This requirement must be met within four years in office.

Exhibit 27

A.	~~OFFER AND LISTING DETAILS~~
Board level		Share ownership requirement
Board Chair		1 times annual base fee, within 4 years
Other Board members		1 times annual base fee, within 4 years

Each member of the Board has met or is on track to meet the ownership requirement. Board members are prohibited from hedging or pledging their ownership positions in Alcon shares that are part of the share ownership requirement.

Compensation Governance

Authority for Board Compensation Decisions

Decisions regarding Board compensation are taken by the Board upon proposals from the CC. The CC's proposals are based on analysis and review of compensation practices, policies and benchmarking information provided by external compensation advisors.

The Board is responsible for approving the Compensation Report and for proposing the aggregate budget of Board compensation subject to a shareholders’ vote at the applicable AGM.

Exhibit 28

1.	~~EXPECTED PRICE~~
Authority levels in Board compensation		CC	Board	AGM
Board compensation policy and principles		P	A
Board Chair compensation		P	A
Other Board member compensation		P	A
Share ownership requirements for Board members		P	A
Maximum aggregate compensation of the Board members		R	P	A1
Compensation Report of the company		R	P	A2

R Recommend P Propose A Approve

~~Not Applicable.~~1binding vote

2advisory vote

The Corporate Governance Report in Item 6.C. Board Practices of this Annual Report provides further details to the authorities of the CC.

101

Independence of Members of the Compensation Committee

Each of the members of the CC meets the independence criteria set forth in our Board Regulations. Effective from the 2021 AGM, the CC has been comprised of the following three members: Karen J. May (Chair), Thomas H. Glanzmann, and Ines Pöschel. At each AGM, the shareholders elect the CC Chair and its members individually for a term of office of one year. Our Articles of Incorporation permit re-election. The 2021 Corporate Governance Report in Item 6.B. of the Alcon 2021 Annual Report provides details regarding the members of the Board and the independence criteria for Board members. The Board Chair, the CEO and the Secretary of the Board attend the CC meetings by invitation. None is present when decisions relating to their respective interests are taken.

The Compensation Committee’s External Advisors

During 2021, the CC retained Willis Towers Watson ("WTW") as its external compensation advisor. For the same period, the CC also retained HCM International (Switzerland) ("HCM") for advice with regard to Swiss compensation matters. The CC appointed each of them in 2019 following a thorough process of evaluating proposals from various consulting firms. During 2020, WTW provided additional services to Alcon related to, among other things, compensation programs, pension and benefit plans. During the same period, HCM did not provide additional services to Alcon.

At the end of 2021, the CC conducted a review of the support received from the selected external advisors and is satisfied with the result of the work completed in 2021. At least annually, the CC will evaluate the quality of the consulting services received and the need to use specific advisors.

Compensation of the Members of the Board of Directors

Board Compensation FY 2021

The following Exhibit 29 sets out the total compensation received by non-executive members of the Board during 2021.

The disclosed compensation represents (i) the fees paid to the members of the Board in March 2021, which was the last installment of the fees for their term of office up to the 2021 AGM, and (ii) the fees paid up to December 31, 2021 for their term of office from the 2021 AGM to the 2022 AGM.

The installment of the fees paid in March 2021 completed the delivery of all fees due for the term of office from 2020 AGM to the 2021 AGM. The total of fees paid for that term remained within the approved budget.

The fees paid between the 2021 AGM and December 31, 2021 to the members of the Board of Directors are only a part of the total fees they will receive for the service on the Board during the term of office from the 2021 AGM to the 2022 AGM (three of four installments). In accordance with our normal payout schedule, a further payment of fees in cash and shares will be made in March 2022. Total 2021 Board fees are higher than in 2020 primarily due to fees received by members of the Governance and Nomination Committee for the full year of 2021 as compared to a partial year in 2020. The board fee structure did not change from 2020 to 2021.

The CEO of Alcon, David J. Endicott, is not included in this Exhibit 29 as he is not compensated for his Board membership. Mr. Endicott is compensated as a member of the ECA and his compensation is disclosed in section "ECA Compensation 2021."

102

Exhibit 29


Board members, functions1	Payment in cash	Tax and other cash2	Payment in shares3	Number of shares4	Other payments5	Total fees 2021
F. Michael Ball Board Chair, member GNC	0	259,825	779,188	10,169	—	1,039,013
Lynn D. Bleil Member ARC and IC	106,635	53,335	159,937	2,152	—	319,907
Arthur B. Cummings Member IC	123,041	37,135	85,906	1,120	37,096	283,178
Thomas H. Glanzmann Chair IC, member GNC, CC	0	19,874	308,236	4,023	4,987	333,097
D. Keith Grossman Vice Chair, Chair GNC, member IC	0	89,579	268,607	3,518	—	358,186
Scott H. Maw Chair ARC	0	73,936	221,362	2,889	—	295,298
Karen J. May Chair CC, member ARC	0	78,005	233,699	3,050	—	311,704
Ines Pöschel Member GNC, CC	95,698	8,445	182,951	2,419	4,987	292,081
Dieter P. Spälti Member ARC	0	15,677	241,342	3,150	4,987	262,006
Total fees paid in 2021 in USD 6	325,374	635,811	2,481,228	32,490	52,057	3,494,470
Total fees paid in 2021 in CHF 7	297,499	581,341	2,268,661	32,490	47,597	3,195,099

1Board Committees: “ARC” Audit and Risk Committee; "CC" Compensation Committee; “GNC” Governance and Nomination Committee; “IC” Innovation Committee. F. Michael Ball does not receive an additional fee as a member of the GNC.

2These amounts represent the values of tax and, if applicable, social security due upon the allocation of shares, which were delivered in cash to the accounts. They were then deducted and paid to the applicable authorities. Further, the amounts include the residual amount of cash resulting from rounding down the number of shares to the next whole share.

3The amounts in USD represent the converted value in CHF based on the Alcon shares granted on March 11, 2021 at the closing price of CHF 64.10 per share on the date of grant and on September 3, 2021, at the closing price of CHF 77.24. The shares granted are listed on the SIX Swiss Exchange.

4The total number of shares reported were delivered to each Board member in (i) the second installment of the fee in shares in March 2021 (2020 AGM - 2021 AGM), and (ii) the first installment of the fee in shares (term 2021 AGM - 2022 AGM). The second and final installment in shares for the services from the 2021 AGM to the 2022 AGM will be delivered in March 2022.

5Includes (i) an amount of USD 19,948 for mandatory employer contributions paid by Alcon to governmental social security systems, which provides the relevant members of the Board with a right to the maximum future insured government pension benefit (this amount is a part of total mandatory employer contributions of USD 97,086 to the governmental social security systems) and (ii) USD 32,109 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).

6All amounts include the payments made and the shares delivered in March 2021 as installment of the fee for the term of office 2020 AGM - 2021 AGM.

7The payments in cash were made in Swiss Francs (CHF). For consistency they are reported in USD as all compensation in this 2021 Compensation Report. The amounts in CHF were converted to USD at the exchange rate of 1.0 CHF : 1.093697 USD. All amounts are before deductions of social security contributions and income tax paid by the Board members.

103

Board Compensation FY 2020

The following Exhibit 30 sets out the total compensation received by non-executive members of the Board during 2020.

The disclosed compensation represents (i) the fees paid to the members of the Board in March 2020, which was the last installment of the fees for their term of office up to the 2020 AGM, and (ii) the fees paid up to December 31, 2020 for their term of office from the 2020 AGM to the 2021 AGM.

The installment of the fees paid in March 2020 completed the delivery of all fees due for the term of office from spin-off on April 9, 2019 to the 2020 AGM. The total of fees paid for that term remained within the approved budget.

The fees paid between the 2020 AGM and December 31, 2020 to the members of the Board of Directors are only a part of the total fees they received for the service on the Board during the term of office from the 2020 AGM to the 2021 AGM (three of four installments). In accordance with our normal payout schedule, a further payment of fees in cash and shares was made in March 2021.

The CEO of Alcon, David J. Endicott, is not included in this Exhibit as he is not compensated for his Board membership.

Exhibit 30


Board members, functions1	Payment in cash	Tax and other cash2	Payment in shares3	Number of shares4	Other payments5	Total fees 2020
F. Michael Ball Board Chair, member GNC	126,500	189,784	569,213	10,476	—	885,497
Lynn D. Bleil Member ARC and IC	17,310	60,637	181,710	3,346	—	259,657
Arthur B. Cummings Member IC	119,842	37,220	82,623	1,522	59,603	299,288
Thomas H. Glanzmann Chair IC, member GNC, CC		16,405	289,857	5,339	4,794	311,056
D. Keith Grossman Vice Chair, Chair GNC, member CC, IC	38,616	64,639	193,687	3,564	—	296,942
Scott H. Maw Chair ARC		71,945	215,676	3,973	—	287,621
Karen J. May Chair CC, member ARC		75,927	227,673	4,194	—	303,600
Ines Pöschel Member GNC, CC	63,916	6,378	172,053	3,168	4,794	247,141
Dieter P. Spälti Member ARC		15,227	235,108	4,331	4,794	255,129
Total fees paid in 2020 in USD6	366,184	538,162	2,167,600	39,913	73,985	3,145,931
Total fees paid in 2020 in CHF7	343,751	505,193	2,034,808	39,913	69,453	2,953,205

1.Board Committees: “ARC” Audit and Risk Committee; "CC" Compensation Committee; “GNC” Governance and Nomination Committee; “IC” Innovation Committee. F. Michael Ball does not receive an additional fee as a member of the GNC.

2.These amounts represent the values of tax and, if applicable, social security due upon the allocation of shares, which were delivered in cash to the accounts. They were then deducted and paid to the applicable authorities. Further, the amounts include the residual amount of cash resulting from rounding down the number of shares to the next whole share.

3.The amounts in USD represent the converted value in CHF based on the Alcon shares granted on March 11, 2020 at the closing price of CHF 50.82 per share on the date of grant and on September 11, 2020, at the closing price of CHF 51.10 on September 10, 2020. The shares granted are listed on the SIX Swiss Exchange.

4.The total number of shares reported were delivered to each Board member in (i) the second installment of the fee in shares in March 2020 (term April 9, 2019 - 2020 AGM), and (ii) the first installment of the fee in shares (term 2020 AGM - 2021 AGM) . The second and final installment in shares for the services from the 2020 AGM to the 2021 AGM were delivered in March 2021.

5.Includes (i) an amount of USD 19,176 for mandatory employer contributions paid by Alcon to governmental social security systems, which provides the relevant members of the Board with a right to the maximum future insured government pension benefit (this amount is a part of total mandatory employer contributions of USD 87,533 to the governmental social security systems) and (ii) USD 54,809 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.All amounts include the payments made and the shares delivered in March 2020 as installment of the fee for the term of office April 9, 2019 - 2020 AGM.

104

7.The payments in cash were made in Swiss Francs (CHF). For consistency they are reported in USD as all compensation in this 2020 Compensation Report. The amounts in CHF were converted to USD at the exchange rate of 1.0 CHF : 1.06526 USD. All amounts are before deductions of social security contributions and income tax paid by the Board members.

Share Ownership of the Members of the Board of Directors

The number of Alcon shares held by members of the Board and “persons closely linked” to them as of December 31, 2021 are set out in the Exhibit below. As of this same date, no Board member, either individually or together with “persons closely linked”, owned 1% or more of the outstanding shares of Alcon. The CEO of Alcon and Board member, David J. Endicott, is not included in this Exhibit as his share ownership is disclosed in Exhibit 25.

The number of shares held as of December 31, 2020 is shown for comparison.

Exhibit 31


Board member	2021 Total shares	2020 Total shares
F. Michael Ball	33,847	23,678
D. Keith Grossman	7,998	4,480
Lynn D. Bleil	6,729	4,577
Arthur B. Cummings	3,429	2,309
Thomas H. Glanzmann	11,835	7,812
Scott H. Maw	8,567	5,678
Karen J. May	19,044	15,994
Ines Pöschel	6,746	4,847
Dieter P. Spälti	16,341	13,191
Total	114,536	82,566

Additional Disclosures

Loans to Board Members

Alcon’s Articles of Incorporation and corporate policies do not permit loans to current or former members of the Board or to persons closely linked to them. No loans were granted in 2021, and none were outstanding as of December 31, 2021.

Other Payments to Board Members

No payments (or waivers of claims) other than those set out in Exhibit 29 (including the related notes) under section "Board compensation FY 2021" were made to current Board members or to persons closely linked to them.

Persons Closely Linked

Persons closely linked to members of the Board are (i) their spouse, (ii) their children below age 18, (iii) any legal entities that they own or otherwise control (iv) any legal or natural person who is acting as their fiduciary or agent and (v) family trusts.

Payments to Former Board Members

None.

105

Outlook for 2022

Compensation Philosophy and Principles

The Company will continue to adopt a compensation philosophy which:

•Ensures a broadly competitive level of remuneration appropriate to each executives’ scale of responsibility and individual performance;

•Attracts, retains and motivates a world-class executive team to drive performance;

•Supports long-term value creation for shareholders;

•Considers the geographic and industry-specific nature of our talent pool and the medical device industry;

•Aligns the compensation program for the senior executives with the broader management and employee population;

•Fully embraces Swiss governance expectations and follows principles of simplicity and transparency; and

•Links pay to achievement of ESG objectives through the STI plan.

Exhibit 32

~~METHOD TO DETERMINE EXPECTED PRICE~~

~~Not Applicable.~~

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

3. Alignment with shareholders

~~PRE-EMPTIVE EXERCISE RIGHTS~~

•A significant part of compensation is delivered in Alcon equity

•Executives are expected to hold a meaningful level of Alcon shares

~~Not Applicable.~~

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

4. Motivation and retention

~~STOCK PRICE HISTORY~~

•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

ECA Compensation

The CC is committed to a pay-for-performance framework to align Company and executive performance with shareholder interests. Following a thorough review of Alcon's compensation structures during 2021, we have made refinements to our overall compensation structures to better reflect Alcon's status as an independent, stand-alone company.

Headquartered in Switzerland, Alcon operates on a truly global basis. Our main business competitors are found in both Europe and North America, which is where we compete for talent. Consequently, our executive compensation framework has been benchmarked against a carefully selected peer group, consisting of European and North American companies with a blend of similar size, industry and geographic characteristics to Alcon. The inclusion of European and North American companies reflects our global footprint, business mix and source for management talent. Although Alcon is headquartered in Switzerland, a significant portion of our sales, management team and our associate population are in the US. The US is the largest pool for both medical device and ophthalmology talent and it is therefore critical that Alcon is able to attract and retain key talent especially from the US. As a result, our CC has selected a blended Peer Group of North American and European companies (58% US and 42% outside US) to balance the European compensation structure with a need to attract and retain US talent. While we do not pay as much as our US competitors, we desire to stay close to the median of the blended Peer Group. Based on the Company’s business strategy, compensation philosophy and the analysis of peer group compensation practices, below are the key features of ECA compensation for 2022:

•No compensation increase for the CEO including base salary and short and long term incentive targets;

•Same overall structure of ECA compensation as compared to 2021 (base pay, STI, LTI and benefits);

•Broadly no significant change to the ECA members' compensation levels;

•Continuation of robust share ownership requirements; and

•No material changes to benefits provisions.

106

Board Compensation

The Board compensation framework will remain unchanged for the upcoming term of office from the 2022 AGM to the 2023 AGM, including:

•The overall framework of Board compensation from the 2021 AGM to the 2022 AGM will be carried forward to the term from the 2022 AGM to 2023 AGM;

•The Board Chair fee and Board member fees will remain unchanged; and

•The payment of fifty percent in shares (mandatory) and a voluntary election of a higher percentage in shares will continue.

In 2021, the Board conducted a benchmarking study of Alcon's Board pay against other SMI companies and determined that our Board pay is below the median level of SMI companies. Nonetheless, the Board made the decision to not propose any compensation change at the 2022 AGM for the 2022 - 2023 AGM term. Our Board's pay has not changed in Alcon's history as a public Company. The CC and the Board will reconsider possible changes to Board compensation in 2023 for future terms.

Shareholder Vote at the 2022 AGM

In accordance with Article 29 of the Articles of Incorporation (http://investor.alcon.com/governance//default.aspx), the Board will ask shareholders at the 2022 AGM meeting to cast a binding vote on:

•The aggregate amount of compensation payable to non-executive members of the Board for their term of office from the 2022 AGM to the 2023 AGM; and

•The aggregate amount of compensation payable to ECA members in the financial year 2023.

In addition, the Board will ask shareholders to cast an advisory vote on the 2021 Compensation Report.

The procedures of voting on the compensation of ECA members and the Board are defined in our Articles of Incorporation. Our Articles allow for an additional amount of compensation to be used when promoting or adding new members to the ECA.

The Exhibit below depicts the proposal for the 2022 AGM and the respective period of the compensation affected by the vote.

Exhibit 33

Compensation Proposals for Shareholder Approval at 2022 AGM

107

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108

6.C. BOARD PRACTICE

Corporate Governance

Group Structure and Shareholders

Operational Group Structure

The Company, with its registered office at Rue Louis-d’Affry 6, 1701 Fribourg, Switzerland, is a corporation organized under Swiss law and is the ultimate parent company of Alcon. As of December 31, 2021, the market capitalization of the Company was $42.696 billion (CHF 39.570 billion).

Alcon is the global leader in eye care with $8.2 billion in net sales during the year ended December 31, 2021. We research, develop, manufacture, distribute and sell a full suite of eye care products within two key businesses: Surgical and Vision Care. Our Surgical business is focused on ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. Our Vision Care business is comprised of various contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, glaucoma, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers. Further information is available under "Item 4. Information on the Company" and Note 5 to the Consolidated Financial Statements.

Listed and Non-listed Companies Belonging to the Alcon Group

The registered shares of the Company are listed on the SIX Swiss Exchange (Valor 43249246 / ISIN code CH0432492467) and the New York Stock Exchange (CUSIP code H01301128). The Company owns directly or indirectly all consolidated entities of Alcon, none of which has its shares otherwise listed.

The following table lists the ~~high~~most significant subsidiaries of the Company, including those entities with total assets or net sales to third parties in excess of 5% of the Company’s consolidated total assets or net sales to third parties, as applicable, at December 31, 2021. The referenced share capital may not reflect the taxable share capital and ~~low closing market prices for Alcon's common shares for~~does not include any paid in surplus. Further information regarding the ~~periods indicated as reported:~~

High Low
Year ended December 31,
2006                                                     $ 138.12 $ 93.24
2007                                                     153.91 109.80
2008                                                     175.47 67.98
2009                                                     166.00 76.34
2010                                                     170.18 135.00

Year ended December 31,
2009:  First quarter                                                     95.14 76.34
Second quarter                                             117.74 86.28
Third quarter                                             143.53 112.50
Fourth quarter                                             166.00 136.23

2010:  First quarter                                                     163.27 152.51
Second quarter                                             161.38 135.00
Third quarter                                             168.21 148.54
Fourth quarter                                             170.18 157.25

Month of:
September 2010                                                     168.21 162.98
October 2010                                                     170.18 166.60
November 2010                                                     168.00 157.25
December 2010                                                     164.10 160.38
January 2011                                                     163.70 162.28
February 2011                                                     165.43 163.82

~~118~~

Company’s subsidiaries is disclosed in Note 28 of the Consolidated Financial Statements. The combination of the Company’s subsidiaries disclosed in the table below and in Note 28 of the Consolidated Financial Statements does not cover all subsidiaries of the Company.

5.	~~TYPE AND CLASS OF SECURITIES~~
Country of Organization/ Entity Name		Equity Interest	Principal Place of Business	Share Capital
China
Alcon (China) Ophthalmic Product Co., Ltd.		100%	Beijing	USD 60,000,000
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 1,000
Alcon Vision, LLC		100%	Fort Worth, TX	USD 1,000

~~Not Applicable.~~

109

Significant Shareholders

According to the Alcon share register, the following nominee shareholders held more than 3% of the share capital of Alcon Inc. as of December 31, 2021:


Holder	Number of Shares	Percentage
Chase Nominee Ltd., London (UK)	38,272,135.00	7.65%
Cede & Co (DTC nominee), New York, NY (USA)	101,901,633.00	20.39%
Nortrust Nominees Limited, London (UK)	21,770,181	4.36%

In addition, according solely to disclosure of shareholdings notifications filed with (i) Alcon and the SIX Swiss Exchange ("SIX Threshold Notifications") pursuant to the obligations set forth in the Swiss Federal Act on Financial Market Infrastructure and Market Conduct in Securities and Derivatives Trading ("FMIA") and the rules and regulations promulgated thereunder or (ii) the SEC, there are two shareholders that held shares representing at least 3% of the Company’s total share capital as of December 31, 2021, but was not registered with the Alcon share register. These shareholders are identified in the table below.

The information required to be included in the SIX Threshold Notifications regarding this shareholder varies from the information required to be included in beneficial ownership statements filed with the SEC (“SEC Notification”).

Interested persons can access the relevant SIX Threshold Notifications online at the SIX Swiss Exchange: https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html#/

The below table shows the information available to the Company, based on both notification regimes, with respect to shareholders reported to have significant positions in Alcon’s share capital as of December 31, 2021:

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 Notification2

BlackRock, Inc.

c/o BlackRock Investment Management (UK) Limited

12 Throgmorton Ave, London, EC2N 2DL, UK

24,679,2313

5.06 %

N/A

WCM Investment Management, LLC
281 Brooks St
Laguna Beach, CA 92651 USA

N/A

26,016,5754

5.21%4

6.	~~LIMITATIONS OF SECURITIES~~

~~Not Applicable.~~

7.	~~RIGHTS CONVEYED BY SECURITIES ISSUED~~

~~Not Applicable.~~

B.	~~PLAN OF DISTRIBUTION~~

~~Not Applicable.~~

C.	~~MARKETS FOR STOCK~~

~~Alcon's common shares are listed for trading~~1 Percentages indicated in this column have been established based on the ~~NYSE and are traded under~~share capital of the ~~symbol "ACL".~~

D.	~~SELLING SHAREHOLDERS~~

~~Not Applicable.~~

E.	~~DILUTION FROM OFFERING~~

~~Not Applicable.~~

F.	~~EXPENSES OF OFFERING~~

~~Not Applicable.~~

~~ITEM 10.~~

~~ADDITIONAL INFORMATION~~

A.	~~SHARE CAPITAL~~

~~Not Applicable.~~

B.	~~MEMORANDUM AND ARTICLES OF ASSOCIATION~~

~~General~~

~~Alcon, Inc. is~~Company registered inwith the commercial register of the Canton of ~~Zug, Switzerland~~Fribourg on the date on which the respective disclosure obligation pursuant to the FMIA was triggered. Furthermore, according to the FMIA, this shareholder is required to notify Alcon and the SIX Swiss Exchange only at the time it reaches, exceeds or falls below any of the thresholds set forth in the FMIA; therefore, its shareholding as of December 31, 2021 may differ from the figures indicated as per the contents of the relevant SIX Threshold Notification.

2 In general, under ~~number CH-170.3.017.372-9.~~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, 2021. Information in this column is current as of February, 11, 2022.

3 Based solely on a SIX Threshold Notification dated November 9, 2019. This figure does not include its derivative position.

4 Based solely on a Schedule 13G filed with the SEC on February 10, 2022.

Cross-Shareholdings

Neither the Company nor any of its consolidated entities has any shareholdings exceeding 5% of the holdings of capital or voting rights in any entity that also has shareholdings exceeding 5% of the holdings of the capital or voting rights in the Company or any of its consolidated entities.

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Capital Structure

Share Capital

As of December 31, ~~2010, our issued~~2021, the share capital of Alcon Inc. was CHF 19,988,000, fully paid-in and divided into 499,700,000 registered shares, each with a nominal value of CHF 0.04.

Authorized and Conditional Share Capital

On January 29, 2019, the Company’s annual general meeting approved the creation of an authorized share capital. According to this shareholder resolution, the Board was authorized, at any time until January 29, 2021, to increase the Company’s share capital by a maximum of CHF 977,400 through the issue of up to 24,435,000 fully paid up new shares of CHF 0.04 nominal value each for the purpose of any share-based incentive or other participation plans, schemes or arrangements for directors, associates or advisors of the Company or its consolidated subsidiaries (“Employees Participation Plans”).

The Board resolved on November 19, 2019 to increase the share capital by CHF 120,000 through the issuance of 3,000,000 new registered shares under the authorized share capital in order to comply with Alcon’s obligations under the relevant Employees Participation Plans.

On November 10, 2020, the Board resolved to further increase the share capital by CHF 320,000 through the issuance of 8,000,000 new registered shares under the remaining authority available under the authorized share capital, i.e. 21,435,000 shares, in order comply with Alcon’s obligations under the relevant Employees Participation Plans.

The remaining authority to issue new registered shares under the authorized share capital expired on January 29, 2021. As of December 31, 2021, the Company did not have authorized share capital available.

The Company did not have any conditional share capital available on December 31, 2021.

Changes in Capital

The Company was formed on September 21, 2018 with a share capital of CHF 100,000 divided into 2,500,000 registered shares with a nominal value of CHF 0.04 each. In view of the contemplated Spin-off from the Novartis group, the Company’s share capital was increased on January 29, 2019 to CHF ~~61,008,996.60 on 305,044,983 common~~19,548,000 divided into 488,700,000 registered shares ~~at CHF 0.20~~with a par value ~~per common share.~~

~~Set out below is information concerning our shares~~of CHF 0.04 each. Following the two successive increases through the authorized share capital, as described above under “Authorized and ~~a brief summary of some~~Conditional Share Capital”, the share capital of the ~~significant provisions~~Company was, as of December 31, 2021, CHF 19,988,000 divided into 499,700,000 registered shares.

Shares, Participation Certificates and Profit-sharing Certificates

The Company has a single class of shares, being registered shares in the form of uncertificated securities (in the sense of the Swiss Code of Obligations). A portion of these uncertificated shares is issued as intermediated securities (titres intermédiés) within the meaning of the Swiss Federal ~~Code~~Intermediated Securities Act via the settlement system operated by SIX SIS, with the remaining shares directly held through Computershare Trust Company, N.A. in the US (including shares held through Computershare Trust Company, N.A. via DTC). All Alcon shares have equal voting rights and carry equal entitlements to dividends. No participation certificates (bons de participations) or profit-sharing certificates (bons de jouissance) have been issued.

Based solely upon shares registered in the Alcon share registry, as of ~~Obligations (Schweizerisches Obligationenrecht~~),December 31, 2021, approximately 17.3% of ~~our~~the Company's total share capital was held in Switzerland by 77,110 registered shareholders.

Limitations on Transferability and Nominees Registrations

The Articles of ~~Association (Statuten), and~~Incorporation of the ~~written regulations~~Company do not provide for any limitation on transferability of ~~our board of directors, known as Organizational Regulations (Organisationsreglement~~), the Articles of Association and the Organizational Regulations having been filed previously with the SEC. This description does not purport to be complete and is qualified by reference to our Articles of Association, our Organizational Regulations and the Swiss Federal Code of Obligations.

~~Common Shares~~

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

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~~Share Register~~

Our share register is kept by BNY Mellon Shareowner Services in New York, New York, which acts as transfer agent and registrar. The share register reflects only record owners of our shares; beneficial owners of common shares holding their shares through The Depository Trust Company, which we refer to as "DTC," are not recorded in our share register. Shares held through DTC are registered in our share register in the name of DTC's nominee. We are entitled to accept only those persons as shareholders, usufructuaries or nominees ~~who have been recorded in our share register,~~registration.

Convertible Bonds and to perform dividend payment and other obligations only to our shareholders of record, including DTC. A shareholder of record must notify BNY Mellon Shareowner Services of any change in address. Until notice of a change in address has been given, all of our written communication to our shareholders of record shall be deemed to have validly been made if sent to the address recorded in the share register.

~~Share Certificates~~

~~We issue certificates evidencing our common shares to our shareholders of record, unless shares are held in uncertificated position through the DTC's book-entry Direct Registration System.~~

~~Transfers of Common Shares~~

Beneficial owners of our common shares, as well as registered owners with uncertificated positions, may transfer their shares through the DTC's book-entry Direct Registration System. Common shares held of record represented by share certificates may be transferred only by delivery of the share certificates representing those common shares duly endorsed or accompanied by an executed stock power. A transferee who wishes to become a shareholder of record must deliver the duly executed certificate in a form proper for transfer to our transfer agent and registrar, BNY Mellon Shareowner Services, in order to be registered in our share register (~~Aktienregister~~).

~~Voting Rights~~

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

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

~~Preemptive Rights~~

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

~~Informational Rights~~

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

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

~~Preferred Shares~~

Options

As of December 31, ~~2010, no~~2021, Alcon ~~preferred shares were authorized, issued~~did not have any convertible bonds, warrants, options or ~~outstanding.~~

~~Future Share Issuances~~

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

~~Creation of Conditional Share Capital for the Amended 2002~~ Alcon ~~Incentive Plan~~

As of December 31, 2010, our share capital may be increased by a maximum aggregate amount of CHF 3,041,843.40 through the issuance of a maximum of 15,209,217 fully paid common shares, subject to adjustments to reflect share splits, upon the exercise of options to purchase common shares. New common shares will be issued upon the exercise of options which our management, employees and directors may be granted pursuant to the Amended 2002 Alcon Incentive Plan. The grant of these options and the issuance of the underlying common shares upon option exercises will not entitle our shareholders to preemptive rights. The exercise price of the stock options shall be no less than the market price of common shares upon the date of grant of the options. See "Management-~~Amended 2002 Alcon Incentive Plan."~~

At December 31, 2010, 12,625,084 common shares, including 1,028,693 common shares during 2010, had been issued cumulatively from conditional share capital pursuant to the exercise of stock options and restricted share units granted under the Amended 2002 Alcon Incentive Plan. Another 2,165,699 shares of conditional capital were issued in 2002 as contingent restricted shares; for which the last condition for vesting expired January 1, 2006.

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

~~Certain Provisions of Our Articles of Association, Organizational Regulations and Swiss Law~~

~~Business Purpose and Duration~~

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

~~Our Articles of Association do not limit our duration.~~

~~Notices~~

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

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~~Shareholders' Meetings~~

~~Annual General Meetings~~

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

~~The 2011 annual general meeting of shareholders is scheduled for April 7, 2011 in Zug, Switzerland.~~

~~Extraordinary General Meetings~~

Our board of directors is required to convene an extraordinary general meeting of shareholders, for among other reasons, if a shareholders' meeting adopts a resolution to that effect or if holders of common shares representing an

aggregate of at least 10% of our nominal share capital request in writing that it do so. An extraordinary general meeting is convened by publication of a notice as set forth above under "– Notices."

~~Powers and Duties~~

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

·	~~adoption and amendment of our Articles of Association;~~

·	~~election of members of our board of directors, statutory auditors and the special auditors;~~

·	~~approval of our annual report, our statutory financial statements and our consolidated financial statements;~~

·	~~payments of dividends and any other distributions to shareholders;~~

·	~~discharge of the members of our board of directors from liability for previous business conduct to the extent such conduct is known to the shareholders; and~~

·	~~any other resolutions which are submitted to a shareholders' meeting pursuant to law, our Articles of Association or by voluntary submission by our board of directors.~~

~~Proxies~~

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

~~Quorum~~

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

~~Action by Shareholders~~

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

·	~~amendments to our Articles of Association, unless the amendment is subject to the requirement that it be approved by holders of two-thirds of our common shares represented at a shareholders' meeting;~~

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·	~~elections of directors and auditors;~~

·	~~approval of our annual report, statutory financial statements and consolidated financial statements;~~

·	~~payment of dividends;~~

·	~~decisions to discharge the directors and management from liability for matters disclosed to the shareholders' meeting; and~~

·	~~ordering of an independent investigation into specific matters proposed to the shareholders' meeting (Sonderprüfung~~).

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

·	~~changes in our business purpose;~~

·	~~the creation of shares having different par values, each of which is entitled to one vote (i.e., dual-class common shares);~~

·	~~the creation of restrictions on the transferability of common shares;~~

·	~~the creation of authorized share capital or conditional share capital;~~

·	~~an increase in our share capital by way of capitalization of reserves (Kapitalerhöhung aus Reserven), against contribution in kind (Sacheinlage), for the acquisition of assets (Sachübernahme), as well as involving the grant of preferences;~~

·	~~a restriction or elimination of preemptive rights of shareholders in connection with a share capital increase;~~

·	~~a relocation of our place of incorporation;~~

·	~~the dissolution of the Company; and~~

·	~~a merger, a demerger or a conversion according to the Swiss Merger Act.~~

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

·	~~create or abolish any restrictions on the exercise of voting rights;~~

·	~~abolish any applicable restrictions on the transferability of shares;~~

·	~~convert registered shares into bearer shares and vice versa; and~~

·	~~modify any provisions in our Articles of Association requiring actions to be approved by a supermajority of the common shares represented at a shareholders' meeting.~~

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

~~Record Date~~

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

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

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

~~Net Profits and Dividends~~

Swiss corporate law requires us to retain at least 5% of our annual net profits as general reserves for so long as these reserves amount to less than 20% of our nominal share capital. All other net profits may be paid as dividends if approved by our shareholders.

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

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

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

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

~~Borrowing Powers~~

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

~~Conflicts of Interest~~

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

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~~Repurchases of Shares~~

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

~~Dissolution; Merger~~

We may be dissolved at any time with the approval of two-thirds of the common shares represented at a shareholders' meeting. Swiss law also requires the approval of two-thirds of the common shares represented at a shareholders' meeting in case of (i) a merger, (ii) a demerger or (iii) a conversion. Furthermore, our Independent Director Committee believes our Organizational Regulations provide that our board of directors may only approve a decision with respect to a merger, takeover, other business combination or related party transaction of Alcon with its majority shareholder if a majority of the Independent Director Committee so recommends; however, we cannot predict the outcome of any proceeding that might be initiated to interpret or challenge this position. Dissolution by court order is possible if we become bankrupt, or for cause at the request of shareholders holding at least 10% of our share capital. Under Swiss law, any surplus arising out of a liquidation, after the settlement of all claims of all creditors, is distributed to shareholders in proportion to the paid-up par value of shares held, subject to a Swiss withholding tax of 35% on the amount exceeding the paid-up par value. See "Taxation-~~Swiss Tax Considerations~~-~~Swiss Withholding Tax on Dividends and Similar Distributions."~~

Board of Directors

Composition

~~Number, Removal, Vacancies and Term~~

~~Our~~The Board consists of eight to 13 members according to the Articles of ~~Association provide that we will have at least seven directors at all times. All~~Incorporation. As of ~~our directors are elected by~~December 31, 2021, the ~~vote~~size of the ~~holders of a majority~~Board was 10 members and the Board was comprised of the common shares represented at a shareholders' meeting, and directors may be removed at any time with or without cause by the holders of a majority of the common shares represented at a shareholders' meeting. All vacancies on our board of directors must be filled by a vote of our shareholders. Each member of our board of directors must have nominal ownership of at least one common share, other than members of our board of directors who are representatives of a legal entity that owns common shares.following members:

Our Articles of Association provide that the term of office for each director is three years, with the interval between two annual general meetings being deemed a year for this purpose. The initial term of office for each director will be fixed in such a way as to assure that about one-third of all the members must be newly elected or re-elected every year. Swiss law permits staggered terms for directors. Non-executive directors currently may only be appointed for up to four terms of office. Our Organizational Regulations provide that directors will retire from office no later than the annual general meeting after their 72nd ~~birthday.~~

~~Powers and Duties~~

Pursuant to Swiss statutory law, our Articles of Association and Organizational Regulations, our board of directors is the corporate body responsible for our business strategy, financial planning and control, and supervision of executive management. Our Organizational Regulations contemplate that our board of directors is responsible for our business operations. Among other things, our board of directors as a whole has ultimate responsibility for: (i) the ultimate direction of Alcon and the issuance of the necessary guidelines; (ii) the determination of our organizational structure, including the enactment and amendment of the Organizational Regulations; (iii) the determination of our accounting principles, financial controls and financial planning; (iv) the appointment and removal of the secretary of the board of directors, members of board committees and our executive management, as well as the termination of their signatory power; (v) the ultimate supervision of our executive management; (vi) the preparation of our business report and financial statements, the preparation of shareholders' meetings and the implementation of resolutions adopted by our shareholders; (vii) the examination of the professional qualifications of our auditors; (viii) the

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notification of the court if our liabilities exceed our assets (art. 725 CO); (ix) the approval of certain significant transactions, details of which are set out in our Organizational Regulations; (x) the exercise of shareholder rights in our subsidiaries, as well as the ultimate control of the business activities of our subsidiaries; (xi) the establishment of our dividend policy; (xii) the review and approval of the recommendations of the board committees; and (xiii) the response to any approach regarding a takeover offer.

Our Organizational Regulations set forth that they may be amended with the approval of two-thirds of the members of our board of directors attending a meeting, except as otherwise provided in our Organizational Regulations with respect to the Independent Director Committee.

~~Certain Anti-Takeover Provisions~~

~~Business Combinations~~

Pursuant to our Organizational Regulations, certain mergers, takeovers or other business combinations involving us must be approved by a majority of the Independent Director Committee, which is charged with protecting the interests of minority shareholders, as well as by the full board of directors.

The Independent Director Committee is charged with protecting the interests of minority shareholders. It has to evaluate and decide upon (i) a proposed merger, takeover, business combination or related party transaction of Alcon with its majority shareholder or any group company of the majority shareholder, (ii) a proposed bid for the minority shareholdings of Alcon by any entity owning a majority of our outstanding voting rights or (iii) a proposed repurchase by us of all of our shares not owned by an entity owning a majority of the outstanding voting rights of Alcon. The Independent Director Committee believes our board of directors may only approve a decision with respect to any of these matters if a majority of the Independent Director Committee so recommends; however, we cannot predict the outcome of any proceeding that might be initiated to interpret or challenge this position.

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

~~Mandatory Bid Rules~~

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

~~Notification and Disclosure of Substantial Share Interests~~

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

~~Transfer and Paying Agents~~

~~Our transfer agent and paying agent for dividends and all other similar payments on our common shares is BNY Mellon Shareowner Services.~~

~~Auditors and Special Auditors~~

In May 2010, the shareholders re-elected KPMG AG as Auditors for a one-year term of office. KPMG AG meets the requirements of the Swiss Federal Code of Obligations for auditing Swiss public companies. To the extent necessary for a review of the U.S. GAAP financial statements of Alcon, Inc., KPMG AG will draw on the expertise

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and the resources of KPMG LLP, Fort Worth, Texas (USA). KPMG LLP also was retained for the filings to be made by Alcon, Inc. with the U.S. regulatory authorities. The shareholders re-elected OBT AG, Zurich, as special auditors for a one-year term of office. OBT AG meets the requirements of the Swiss Federal Code of Obligations for auditing Swiss public companies. The auditors and the special auditors are elected for a term ending at our next annual general shareholders' meeting.

~~Shares Eligible for Future Sale~~

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

C.	~~MATERIAL CONTRACTS~~
		F. Michael Ball, Chairman A seasoned healthcare executive with nearly four decades of experience with global healthcare companies, including nearly a decade as the CEO of medical device and pharmaceutical companies, F. Michael Ball brings extensive executive leadership experience as well as in-depth industry and Alcon-specific knowledge to the Board. He previously 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. 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. Mr. Ball has been a member of the board of directors of the Ophthalmology Foundation since 2021. He holds a Bachelor of Science and a Master of Business Administration from Queen’s University in Canada. Key Competencies: Global Business Operations, Healthcare Industry and Marketing
Age: 66 Citizenship: Canada and United States Year of initial appointment: 2019 Expiration of current term of office: 2022


			Lynn D. Bleil An experienced healthcare industry consultant with nearly three decades of experience as a Senior Partner at McKinsey & Company combined with her valuable experience as a director of publicly-held healthcare and life sciences companies, Lynn D. Bleil brings to the Board extensive US and Swiss experience, strategy and leadership. Ms. Bleil has been a member of the boards of directors of Stericycle, Inc. since 2015 (where she chairs the Nominating & Governance Committee), Sonova Holding AG since 2016 and Amicus Therapeutics, Inc. since 2018. She is a former member of the board of directors of DST Systems Inc. and Auspex Pharmaceuticals, Inc. (until their sale to SS&C Technologies Holdings, Inc. and Teva Pharmaceutical Industries, Ltd., respectively). From 1985 through 2013, Ms. Bleil was a Senior Partner at McKinsey & Company. Ms. Bleil holds a Bachelor of Science in Chemical Engineering from Princeton University and a Master of Business Administration from the Stanford Graduate School of Business, both in the United States. Key Competencies: Financial, Healthcare Industry and Regulatory/Public Policy
Age: 58 Citizenship: United States Year of initial appointment: 2019 Expiration of current term of office: 2022

~~Except as noted below, we are not party to any material contracts other than those entered into in the ordinary course of business.~~

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1.	~~The Company's $2.0 billion Commercial Paper Program (the "CP Program"), under which Nestlé guaranteed the commercial paper issued and assisted~~
		Arthur Cummings, M.D. As a native of South Africa with a large ophthalmology practice in ~~its management, was terminated prior~~Ireland whose opinion is frequently sought by innovators in ophthalmology, Arthur Cummings, M.D. brings to the ~~change~~Board an international perspective of ~~majority ownership. We paid Nestlé~~a physician entrepreneur and practical first-hand knowledge of the innovation that ophthalmologists seek. Dr. Cummings has been Consultant Ophthalmologist at Beacon Hospital, since 2007, and Owner and Medical Director at Wellington Eye Clinic, since 1998, both in Dublin, Ireland. Also, he has been Owner of Arthur Cummings Eye Clinic Ltd. since 2014. Dr. Cummings holds a Bachelor of Science in Medicine and Surgery (MB. ChB.) and a Master of Medicine in Ophthalmology (M. Med) from the University of Pretoria, South Africa. Dr. Cummings is a Fellow of the College of Surgeons in South Africa (FCS SA) in Ophthalmology and a Fellow of the Royal College of Surgeons of Edinburgh (FRCSEd) in Ophthalmology. Key Competencies: Healthcare Industry, Marketing and Technology
Age: 59 Citizenship: Ireland and South Africa Year of initial appointment: 2019 Expiration of current term of office: 2022


			David J. Endicott A lifelong healthcare executive with leadership experience at global pharmaceutical and medical device companies, David J. Endicott is the Chief Executive Officer of Alcon and brings to the Board an ~~annual fee based~~in-depth knowledge of Alcon as well as the healthcare industry. He joined the Alcon Division, when still operating under the Novartis group, in July 2016 as President, Commercial and Innovation, and Chief Operating Officer. Prior to joining the Alcon Division in 2016, Mr. Endicott was President of Hospira Infusion Systems, a Pfizer company. Before joining Hospira, Mr. Endicott served as an officer and executive committee member of Allergan, Inc. where he spent more than 25 years of his career in leadership roles across Europe, Asia and Latin America, as well as the U.S. Mr. Endicott served on the ~~average outstanding commercial paper balances. We believe that fees paid by us~~board of directors of Zeltiq, Inc. and Orexigen Therapeutics, Inc. He currently serves on the board of AdvaMed. He holds an undergraduate degree in Chemistry from Whitman College and a Master’s degree in Business Administration from the University of Southern California, both in the United States. Key Competencies: Global Business Operations, Healthcare Industry and Marketing
Age: 56 Citizenship: United States Year of initial appointment: 2019 Expiration of current term of office: 2022

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			Thomas Glanzmann Thomas Glanzmann, a venture capital investor with Medtech Ventures Partners where he evaluates and invests in medical device companies, brings those strategic insights and financial and risk management experience to ~~Nestlé for their guarantee of any indebtedness or for~~ the ~~management~~Board, as well as his decades long experience in the healthcare industry. Thomas Glanzmann is the Founder and has been a Partner at Medtech Ventures Partners since 2017. He has been a member of the ~~CP Program were comparable to~~board of directors of Grifols S.A. since 2006, including serving as Vice Chairman since 2017 and the ~~fees that would be paid in an arm's length transaction. Total fees paid to Nestlé for the years ended December 31, 2010, 2009 and 2008 were less than $1 million in each year.~~

In October 2005, the parties executed a Guarantee Fee and Commercial Paper Program Services Agreement (the "Services Agreement"), effective as of October 28, 2002, which is incorporated by reference as an exhibit to this annual report. Through this Services Agreement, the parties more formally documented the pre-existing CP Program. The Services Agreement stated that Nestlé would: (i) provide a guarantee in favor of the holders of notes issued by Alcon Capital Corporation, Alcon, Inc.'s indirect wholly owned subsidiary, as part of the CP Program and (ii) manage the CP Program. This agreement alsoPresident of its Sustainability Committee. He was ~~terminated prior to the change of majority ownership.~~

2.	~~All prior lending commitments under unsecured demand notes payable to various Nestlé affiliates were terminated prior to the change of majority ownership.~~

On January 1, 2004, the Company entered into an agreement whereby Nestec S.A., an affiliate of Nestlé, provided certain treasury and investment services for the Company for a fee that was comparable to fees that would be paid in an arm's length transaction. The agreement was terminated prior to the change of majority ownership. Total fees paid to Nestec S.A. for the years ended December 31, 2010, 2009 and 2008 were $1 million or less annually.

4.	~~On January 12, 2009, Alcon Laboratories, Inc. entered into an employment contract under which it is to employ Kevin J. Buehler as~~ President and Chief Executive Officer of ~~Alcon Laboratories,~~Gambro AB from 2006 to 2011 and Chief Executive Officer and Managing Director of HemoCue AB from 2005 to 2006. Mr. Glanzmann was Senior Advisor to the Executive Chairman and Acting Managing Director of the World Economic Forum from 2004 to 2005. From 1988 to 2004, Mr. Glanzmann worked in various positions at Baxter International Inc., including President of Baxter Bioscience, Chief Executive Officer of Immuno International Co., Ltd. and ~~Alcon,~~President of Europe Biotech Group. In 2004, he was a Senior Vice President and Corporate Officer of Baxter Healthcare Corporation and Baxter World Trade Corporation. He holds a Bachelor of Science in Political Science from Dartmouth College in the United States, a Master of Business Administration from the IMD Business School in Switzerland and a Board of Directors Certification from the UCLA Anderson School of Management in the United States. Key Competencies: Global Business Management, Healthcare Industry and Technology
Age: 63 Citizenship: Switzerland Year of initial appointment: 2019 Expiration of current term of office: 2022


			D. Keith Grossman D. Keith Grossman, with more than 35 years of experience with medical devices and supplies, including as Chief Executive Officer of publicly held healthcare companies, brings to the Board his executive and board leadership experience as well as operational and strategic planning expertise in the healthcare industry. He has been the Chairman, Chief Executive Officer and President of Nevro, Inc. since March 2019. He has also been Chairman of the board of directors of Outset Medical, Inc. since 2014. He was President and ~~subject~~Chief Executive Officer of Thoratec Corporation from 1996 to ~~shareholder approval,~~2006 and from 2014 to 2015 and was a member of the board of directors from 1996 to 2015. Mr. Grossman was Chief Executive Officer and a member of the board of directors at Conceptus, Inc. from 2011 to 2013. He was Managing Director and Senior Advisor at TPG Capital, L.P. from 2007 to 2011. Mr. Grossman also served as a member of the Alcon, Inc. board of directors. The agreement contains terms providing that Mr. Buehler will receive an annual base salary plus a performance bonus, assuming specified performance objectives are achieved. The agreement also provides that Mr. Buehler will be entitled to a lump sum payment if Alcon elects to terminate the agreement without cause or declines to renew the agreement. In addition, under the agreement, Mr. Buehler is entitled to receive an initial long term incentive grant.

5.	~~On January 15, 2009, Alcon, Inc. entered into a services agreement with Cary R. Rayment in which Alcon agreed to appoint Mr. Rayment as the non-executive chairman of its~~ board of directors ~~commencing~~of ViewRay, Inc. from 2018 to 2021, Zeltiq, Inc., as Lead Director, from 2013 to 2017, Intuitive Surgical, Inc. from 2004 to 2010 and Kyphon Inc. in 2007 and served on ~~April 1, 2009, following~~a number of private boards of directors. Mr. Grossman holds a Bachelor of Science in Animal Sciences from The Ohio State University and Master of Business Administration in Finance from Pepperdine Graziadio Business School at Pepperdine University, both in the United States. Key Competencies: Healthcare Industry, International Supply Chain and Technology
Age: 61 Citizenship: United States Year of initial appointment: 2019 Expiration of current term of office: 2022

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			Scott Maw An experienced financial executive with over two decades of experience at global companies, including Chief Financial Officer of Starbucks Corporation, Scott Maw contributes to the Board his ~~retirement as~~extensive understanding of complex financial analysis and reporting and internal controls over financial reporting of a global company. He has been a member of the ~~Company's~~board of directors of Avista Corporation since 2016, where he is the Chair of the Compensation Committee; Chipotle Mexican Grill Inc. since 2019, where he is the Lead Independent Director and Chair of the Audit Committee; and Root, Inc. since 2020. Mr. Maw is also member of the board of trustees of Gonzaga University. Previously, he was Executive Vice President and Chief ~~Executive Officer. The~~ Financial Officer at Starbucks Corporation from 2014 until the end of 2018, Senior Vice President in Corporate Finance from 2012 to 2013 and Senior Vice President and Global Controller from 2011 to 2012. From 2010 to 2011, he was Senior Vice President and Chief Financial Officer of SeaBright Holdings, Inc. From 2008 to 2010, he was Senior Vice President and Chief Financial Officer of the Consumer Bank at JP Morgan Chase and Company. Prior to this, Mr. Maw held leadership positions in finance at Washington Mutual, Inc. from 2003 to 2008 and GE Capital from 1994 to 2003. Mr. Maw holds a Bachelor of Business Administration in Accounting from Gonzaga University in the United States. Key Competencies: Financial, Global Business Operations and Consumer Industry
Age: 54 Citizenship: United States Year of initial appointment: 2019 Expiration of current term of the agreement commenced on April 1, 2009 and renews automatically on an annual basis thereafter unless or until terminated by either party upon thirty days written notice. Mr. Rayment was paid the customary Alcon, Inc. director compensation plus an additional amount relating to his duties as non-executive chairman of the board.office: 2022

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	~~On October 24, 2010, Mr. Rayment ceded his position as chairman~~
		Karen May Karen May, who possesses a unique combination of having been both a financial executive and a human resource executive of global companies, brings to the Board extensive operational, financial and human capital strategy experience. Ms. May has been a member of the board ~~and~~of directors of Ace Hardware Corporation, where she is Chair of the Audit Committee, since 2017. Previously, Ms. May was ~~appointed vice chairman. At the December 2010 meeting,~~on the board ~~approved extending Mr. Rayment's agreement~~of directors of MB Financial, Inc., where she served as Chair of the Compensation Committee until 2019. From 2012 to 2018, she was Executive Vice President and Chief Human Resources Officer at Mondelez International, Inc. (name changed from Kraft Foods, Inc. after the spin-off of select Kraft North American businesses in 2012). From 2005 to 2012, Ms. May was the Executive Vice President and Chief Human Resources Officer of Kraft Foods, Inc. Between 1990 and 2005, she held various positions in Human Resources and Finance at Baxter International Inc., including Corporate Vice President and Chief Human Resources Officer, Vice President, International Finance, and Vice President, Division Controller. Prior to Baxter International Inc., Ms. May was a Certified Public Accountant in the audit practice of Price Waterhouse. Ms. May holds a Bachelor of Science in Accounting from the University of Illinois in the United States. Key Competencies: Human Capital Management, Financial and Consumer Industry
Age: 63 Citizenship: United States Year of initial appointment: 2019 Expiration of current term of office: 2022

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			Ines Pöschel Ines Pöschel brings to the Board not only her deep experience as a Swiss lawyer, particularly in corporate governance, capital markets and mergers and acquisitions, but her extensive leadership roles in public policy with ~~the same remuneration~~her appointments on government and public commissions. Ms. Pöschel has been a ~~monthly basis for his service as vice chairman~~Partner at Kellerhals Carrard Zurich KIG since 2007. She has been a member of the board ~~until~~of directors of Implenia AG since 2016 and Graubündner Kantonalbank since 2018 and serves on the ~~next annual general meeting~~board of directors of several non-listed Swiss companies. Ms. Pöschel is also a member of the ~~shareholders.~~Swiss Federal expert commission for commercial register. From 2002 to 2007, Ms. Pöschel was a Senior Associate at Bär & Karrer AG. She was a Senior Manager at Andersen Legal LLC from 1999 to 2002. Ms. Pöschel has a Master in Law from the University of Zurich in Switzerland, and passed the Swiss Bar Exam in 1996. Key Competencies: Government Relations, Legal/Governance and Regulatory/Public Policy
Age: 53 Citizenship: Switzerland Year of initial appointment: 2019 Expiration of current term of office: 2022


			Dieter Spälti, Ph.D. As an executive of Spectrum Value Management Ltd., the family office of an iconic industrial Swiss family, Dr. Spälti oversaw all of its investments for nearly two decades, which allows Dr. Spälti to bring to the Board significant financial and operational experience in addition to his previous consulting experience with numerous industrial, financial and technology firms in Europe, the US and Southeast Asia. Dr. Spälti has been Vice Chair since May 2021 and a member of the board of directors at Spectrum Value Management Ltd., Switzerland since 2006 and Managing Partner from 2002 to 2006. He served as Chief Executive Officer of Spectrum Value Management Ltd., from 2006 through May 2021. He has been a member of the board of directors at Holcim Ltd. since 2003 and became its Vice Chair in May 2021. Dr. Spälti served, or continues to serve, on the board of directors of various non-listed Swiss and international companies, including several that are controlled by the same beneficial owner. Dr. Spälti was a Partner at McKinsey & Company from 1993 to 2001. He holds a Ph.D. in Law from the University of Zurich, Switzerland. Key Competencies: Financial, Legal/Governance and Technology
Age: 61 Citizenship: Switzerland Year of initial appointment: 2019 Expiration of current term of office: 2022

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Independence and Executive Function

The independence of Board members is a key element of Alcon’s corporate governance framework. Therefore, Alcon has developed a strong set of independence criteria for its board members based on international best practice standards, including the Swiss Code of Best Practices for Corporate Governance and the NYSE standards, which can be found in the Alcon Board Regulations, available under the investor relations portion of the Alcon website (https://investor.alcon.com/governance/governance/default.aspx).

The Board assesses the independence of its Board members on a regular basis, at least annually. As of December 31, 2021, all Board members qualified as independent according to Alcon independence criteria, except for F. Michael Ball, and David J. Endicott.

Other than Mr. Endicott, who currently serves as Alcon’s Chief Executive Officer, no Board member was a member of the management of the Company or any other Alcon consolidated subsidiary in the last three financial years up to December 31, 2021.

Mr. Ball, who previously served as Chief Executive Officer of the Alcon Division of Novartis and as a member of the Novartis Executive Committee from February 1, 2016 until June 30, 2018, served in an unofficial senior leadership role to Alcon during the period from June 30, 2018 until Alcon’s Spin-off from Novartis. Based on the foregoing, the Board made the determination that Mr. Ball was not independent as of December 31, 2021.

No Board member has a significant business relationship with the Company or with any other Alcon consolidated subsidiary.

Mr. Endicott is an executive member of the Board by reason of his function as Chief Executive Officer of Alcon. All other members of the Board are non-executive directors since none of them carries out operational management tasks within Alcon.

As of December 31, 2021, none of the Board members held any official government functions or political posts.

Limitations of Number of Mandates

No member of the Board may hold more than ten additional mandates in other companies, of which no more than four shall be in other listed companies. Chairs of the board of directors of other listed companies count as two mandates. Mandates in different legal entities which are under joint control are deemed one mandate. Further details can be found in Article 34 of the Articles of Incorporation, available under https://investor.alcon.com/governance/governance/default.aspx.

Elections and Terms of Office

The Board members, the Chair of the Board and the members of the Compensation Committee shall be elected individually by the General Meeting of Shareholders for a term of office lasting until completion of the next Annual General Meeting of Shareholders.

There is no mandatory term limit for Board members.

The rules in the Articles of Incorporation reflect the statutory legal provisions regarding the appointment of the Chairman, the members of the Board, the members of the Compensation Committee and the independent proxy.

Internal Organizational Structure

General Principles and Areas of Responsibilities

The Board constitutes itself in compliance with legal requirements and taking into consideration the resolutions of the General Meeting of Shareholders. It shall elect one or two Vice-Chairs. It shall appoint a secretary, who need not be a member of the Board.

The Board is the ultimate governance body of the Company, under the leadership of the Chair. F. Michael Ball has been the Chair of the Board since the Spin-off from Novartis. In this role, Mr. Ball leads the Board to represent the interests of all stakeholders. Notably, he (i) provides leadership to the Board, (ii) supports the CEO, (iii) ensures an efficient way of working with the Board's Committees, the CEO and the Executive Committee, (iv) leads the annual performance assessment and (v) ensures an effective communication with the shareholders, other stakeholders and the public.

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The Vice Chair is D. Keith Grossman, also acting in this role as Senior or Lead Independent Director. In this role, Mr. Grossman (i) leads the Board as long as the Chairman is incapacitated, (ii) chairs the sessions of the independent Board members, when necessary, and (iii) leads the independent board members in case of a crisis or matter requiring their separate consideration or decision.

The duties of Mr. Ball and Mr. Grossman in their respective functions are described in more detail in Articles 20 and 21, respectively, of the Alcon Board Regulations (https://investor.alcon.com/governance/governance/default.aspx).

The Board is responsible for the duties assigned to it by the Articles of Incorporation and the Alcon Board Regulations, which include the overall direction and supervision of management. It holds the ultimate decision-making authority for Alcon, with the exception of any decisions reserved to the shareholders. In performing its tasks, the Board follows the highest standards of ethics, integrity and governance. It undertakes annually a self-assessment process to evaluate its performance, the performance of its committees and the individual performance of its members.

Within the limits of the law and the Articles of Incorporation, the Alcon Board has delegated certain of its duties to the Executive Committee and the Board’s Committees.

Delegation to the Executive Committee

The Board has delegated to the Executive Committee the management of the business in accordance with the terms set forth in the Alcon Board Regulations. Such delegation has been formalized in Article 12 of the Alcon Board Regulations and further regulated in a set of internal regulations. Under the lead of the Chief Executive Officer, the Executive Committee is responsible for the management of the business and functions as a coordination committee, independent of any legal entity of the Alcon Group. A non-exhaustive list of the duties assigned to the Executive Committee can be found in Article 23 of the Alcon Board Regulations (https://investor.alcon.com/governance/governance/default.aspx).

Delegation to the Board’s Committees

The Board’s Committees enable the Board to work in an efficient and effective manner, ensuring a thorough review and discussion of matters, while giving the Board more time for deliberation and decision-making. For this purpose, the Board has delegated certain of its duties to each of its four permanent committees: the Audit and Risk Committee, the Compensation Committee, the Governance and Nomination Committee and the Innovation Committee.Details of the duties, responsibilities and decision-making powers of each committee can be found in the respective committee’s charter, contained in the Alcon Board Regulations, available under https://investor.alcon.com/governance/governance/default.aspx.

In 2021, the composition of the respective Board’s Committees was as follows:

Name

Audit and Risk Committee

Compensation Committee

Governance and Nomination Committee

Innovation Committee

F. Michael Ball

Member

Lynn D. Bleil

Member

Arthur Cummings

Member

David J. Endicott

Thomas Glanzmann

Member

Chair

D. Keith Grossman

Member1

Chair

Member

Scott Maw

Chair

Karen May

Member

Chair

Ines Pöschel

Member

Dieter Spälti

Member

1 Keith Grossman served as a member of the Compensation Committee until the Alcon Annual General Meeting held on April 28, 2021. He withdrew his candidacy for re-election prior to the Annual General Meeting and thus did not serve as a member of the Compensation Committee after the 2021 Annual General Meeting.

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Audit and Risk Committee

The Audit and Risk Committee consisted of four members in 2021, all of whom were determined by the Board to be independent and in possession of the financial literacy and accounting or related financial management expertise, as defined in the NYSE standards. The Audit and Risk Committee meets and consults regularly with the management, the Alcon Internal Audit function, the independent external auditors and external consultants. The Audit and Risk Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

•supervising external auditors and selecting and nominating external auditors for election at the Annual General Meeting of shareholders;

•overseeing internal auditors;

•overseeing accounting policies, financial controls and compliance with accounting and internal control standards;

•approving quarterly financial statements and financial results releases;

•overseeing internal control and compliance processes and procedures;

•overseeing compliance with laws and external and internal regulations;

•ensuring that Alcon has implemented and maintained 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; and

•reviewing with management, internal auditors and external auditors the identification, prioritization and management of risks; the accountabilities and roles of the functions involved in risk management; the risk portfolio; and the related actions implemented by management.

Compensation Committee

The Compensation Committee consisted of three members in 2021, all of whom were determined by the Board to be independent1. The Compensation Committee meets and consults regularly with management and external consultants. The Compensation Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

•developing a compensation philosophy in line with the principles set forth in the Articles of Incorporation and submit to the Board;

•providing oversight for Alcon's human capital strategy, including talent management, CEO and ECA succession planning, diversity and inclusion initiatives and pay equity measures;

•designing, reviewing and recommending to the Board compensation policies and programs;

•reviewing and approving a peer group of companies for executive compensation comparisons;

•advising the Board on the compensation of Directors and the Chief Executive Officer of Alcon;

•determining the compensation of ECA members;

•supporting the Board in preparing the proposals to the General Meeting of Shareholders regarding the compensation of the members of the Board and ECA;

•preparing the annual compensation report and submitting it to the Board for approval;

•establishing executive and director stock ownership guidelines and stock trading policies and monitoring compliance with such policies; and

•overseeing communication and engagement on executive compensation matters with shareholders and their advisors.

1The Compensation Committee operated with four members until the Alcon Annual General Meeting held on April 28, 2021, from which it then consisted of three members only.

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Governance and Nomination Committee

The Governance and Nomination Committee consisted of four members in 2021. The Governance and Nomination Committee meets and consults regularly with management and external consultants. The Governance and Nomination Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

•designing, reviewing and recommending corporate governance principles to the Board;

•overseeing Alcon's strategy and reputation regarding ESG matters and annually approve Alcon's Corporate Responsibility Report;

•establishing criteria and identifying candidates for election as Directors;

•assessing existing Directors and recommending to the Board whether they should stand for re-election;

•developing and reviewing an onboarding program for new Directors and an ongoing education plan for existing Directors;

•reviewing periodically the Articles of Incorporation with a view to reinforcing shareholder rights;

•reviewing periodically the composition and size of the Board and its committees;

•direct periodic assessments of the Board, directors and committees;

•reviewing annually the independence status of each Director; and

•reviewing directorships and agreements of Directors for conflicts of interest and dealing with conflicts of interest.

Alcon is committed to fostering a sustainable business that supports the well-being of our associates, customers, communities, and planet. The environmental, social, and governance (ESG) objectives of the Group are integrated into its decision-making to deliver long-term value for all of its stakeholders. ESG is of key importance within the Alcon governance framework and is subject to the oversight of the Board, acting principally through its Governance and Nomination Committee. Under the supervision of the Governance and Nomination Committee, the Alcon ESG Executive Steering Committee, supported by dedicated working groups, is tasked with the identification and management of environmental and social impacts. The implementation of the related strategy and day-to-day activities are conducted by subject matter experts across the enterprise, under the leadership of the Alcon Head of ESG.

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Innovation Committee

The Innovation Committee consisted of four members in 2021. The Innovation Committee meets and consults regularly with management. The Innovation Committee regularly reports to the full Board on its decisions and deliberations.

The primary responsibilities of this committee include:

•providing counsel to the Board and management in the area of technology, application of technology and new business models;

•reviewing and making recommendations to the Board on internal pipeline and external investments (e.g. potential acquisitions, equity investments, alliances and collaborations) relative to Alcon’s business portfolio, forecasted capital and operating capacity during the strategic and operating reviews;

•reviewing, evaluating and advising the Board on the strategic direction and competitiveness of the innovation pipeline through the evaluation of key innovation metrics;

•reviewing and recommending for approval any innovation goals/targets that may be incorporated into Alcon’s incentive compensation plans;

•assisting the Board with oversight, risk management and evaluation of management’s criteria for selecting major new R&D and BD&L projects, assessing progress against major milestones, budget execution and post-launch revenue impact;

•reviewing, discussing and informing the Board of significant emerging science, technology, programs, issues or trends relevant to Alcon; and

•reviewing such other matters in relation to Alcon research and development, technology and innovation programs as the committee may, in its own discretion, deem desirable in connection with its responsibilities.

Frequency, Duration and Attendance of the Meetings of the Board of Directors and its Committees

The Board and its Committees are convened as often as the conduct of the business may require.

In 2021, the Board and its Committees met as follows:


	Board of Directors	Audit and Risk Committee	Compensation Committee	Governance and Nomination Committee	Innovation Committee
Number of meetings1	8	9	7	5	6
Approximate average duration2	4 hrs 50 min	1 hrs 45 min	2 h 20 min	1 h 55 min	1 hrs 45 min
Overall attendance	100%	100%	100%	100%	100%

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During 2021, each Board member attended all of the meetings of the Board and each Committee on which he or she serves, as represented below:


Meeting attendance	Board of Directors	Audit and Risk Committee	Compensation Committee	Governance and Nomination Committee	Innovation Committee
	Number of Meetings 8	Number of Meetings 9	Number of Meetings 7	Number of Meetings 5	Number of Meetings 6
F. Michael Ball	8			5
Lynn D. Bleil	8	9			6
Arthur Cummings	8				6
David J. Endicott	8
Thomas Glanzmann	8		7	5	6
D. Keith Grossman	8		33	5	6
Scott Maw	8	9
Karen May	8	9	7
Ines Pöschel	8		7	5
Dieter Spälti	8	9

1 Thenumber of meetings includes physical meetings as well as meetings held through videoconference or conference call. In 2021, due to the ongoing COVID-19 pandemic, all but one meeting were held virtually.

2 The approximate average duration does not include dinners, lunches and breaks.

3 Keith Grossman served as a member of the Compensation Committee until the Annual General Meeting held on April 28, 2021 only.

Board Evaluation and Education

The Governance and Nomination Committee and the Chair of the Board coordinate an annual self-evaluation of the Board and its Committees, which includes individual interviews with the Board Chair and the completion of a confidential survey by Board members. The Chair summarizes for the Board the results of the evaluation, and any findings are appropriately addressed. In addition, each Committee conducts its own self-evaluation annually.

The Board recognizes the value of independent development and learning by its members. Therefore, it established a Director Education Program for its members, the purpose of which is to provide for internal and external speakers on trending topics, experiential learning of Alcon and its industry through site tours and product demonstrations and, at each Board member’s option, externally provided coursework. The intent of the Director Education Program is to ensure Board members are well-versed in matters related to Alcon, its business and the rapidly changing corporate governance environment.

Information and Control System of the Board vis-à-vis the Management

The Board ensures that it receives through several channels sufficient information from the Executive Committee to perform its supervisory duties and to make the decisions that are reserved to it by law, i.e. its non-delegable decisions.

Information to the Board of Directors

The Alcon Board Regulations confer to the members of the Board the right to have full and unrestricted access to management and employees of the Company and its subsidiaries in the execution of their duties. Also, the Chief Executive Officer regularly informs the Board on business developments, including significant transactions and risk issues. The Board and its Committees meet as often as required with the Chief Executive Officer and members of the Executive Committee or other members of the senior management. Further, the Board may invite, in accordance with the Alcon Board Regulations, external advisors to attend board or committee meetings in order to obtain a third party independent perspective on certain topics. Information is further communicated to the Board through regular reports (please refer to the section below “Alcon Management Information System”).

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Alcon Management Information System

The Board receives monthly reports on the financial performance of the Company, including the performance of the Surgical and Vision Care franchises. On a quarterly basis, prior to the release of each quarter’s results, the Board receives the Consolidated Financial Statement information and an outlook of the full-year results in accordance with IFRS and “core” results together with related commentary.

On an annual basis, the Board receives and approves the financial targets for the following year. Mid-year, the Board met for a strategic review of the business and approved the strategic plan for the next five years.

Additionally, throughout the year, the Board directly or through its Committees also received reports on, among other things:

•the enterprise risk management program and risk assessment reports;

•the compliance program;

•the internal audit function;

•manufacturing and technical operations;

•research & development and product pipeline;

•organic and inorganic innovation;

•commercial strategies and product launches;

•digital commerce opportunities;

•legal matters;

•competitive developments; and

•industry trends.

In matters of significance, the Board receives direct, immediate information.

Internal Audit

The purpose of the internal audit function is to review Alcon’s financial, operational, IT and compliance activities to review compliance with laws, regulations and internal policies. It also supports Alcon’s efforts to maintain accurate and timely financial reporting while seeking to add value by suggesting improvements to Alcon’s operations and to assist Alcon in achieving its strategic and financial objectives. Internal audit is led by the Chief Audit Executive (“CAE”) who functionally reports to the Audit and Risk Committee. The CAE is responsible for the development, review and modification of Alcon’s internal audit policies and procedures. The CAE shall ensure effectiveness and efficiency of the internal control framework with existing policies and regulations and proposes remediation actions where deficiencies were identified. The CAE periodically submits to the Audit and Risk Committee reports on the activities of the internal audit function. In 2021, internal audit was involved in a total of 36 audit engagements. The results and remediation status of these audit engagements are reported to the Audit and Risk Committee on a periodic basis. At the final meeting for the year 2021, the ARC reviewed and approved the Internal Audit plan for 2022.

Internal Control System

Alcon's internal control system is designed to provide reasonable assurance to the Board and management regarding the reliability of financial reporting and accounting policies and the preparation and the presentation of the Company’s financial statements. In 2021, the Alcon's internal controls framework has been fully tested for effectiveness. The Audit and Risk Committee has ultimate responsibility to oversee the adequacy and effectiveness of internal control over financial reporting.

Risk Management

The Audit and Risk Committee has the responsibility to ensure the implementation of an appropriate and effective risk management system and process and to foster a culture of risk-adjusted decision-making without constraining reasonable risk taking and innovation. It approves guidelines and reviews policies and processes. In addition, the Audit and Risk Committee reviews with management, internal auditors and external auditors, the identification, prioritization and management of the risks, the accountabilities and roles of the functions involved with risk management, the risk portfolio and the related actions implemented by management. The Audit and Risk Committee informs the Executive Committee

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and the Board on a periodic basis on the risk management system and on the most significant risks and how these are managed. The CAE supports the Audit and Risk Committee and perform appropriate reviews of Alcon's risk management strategy.

Alcon’s key risk management tool is the Enterprise Risk Management ("ERM") program, the purpose of which is to help execute on Alcon’s strategy within the boundaries of regulations and improve the probability for achieving Alcon’s strategic and financial objectives. Alcon’s vision is to design a sustainable and appropriately scaled ERM program to proactively manage existing and emerging threats and opportunities to the business. The ERM program aims in particular to provide the business with the following: (i) operation discipline and rigor to enable business continuity, creation and preservation of value, (ii) forums for frequent risk discussions and escalation of relevant items with leadership, and (iii) guidance, techniques and support to identify, assess (e.g. likelihood and impact), manage, monitor and report on major risks, including proper mitigation if necessary. The ERM program is under the supervision of a dedicated committee that is comprised of senior members of the management and the members of the Audit and Risk Committee.

Compliance Function

As part of its global control system, Alcon has also established a comprehensive global integrity and compliance program, under the supervision of the Audit and Risk Committee. The program is led by the Global Head, Integrity and Compliance under the functional leadership of Alcon’s General Counsel and is intended to help prevent, detect and mitigate compliance risk across the organization. The program is built on a culture and expectation of compliance at all levels. The fundamental elements of the program include dedicated resources to address compliance globally, formal compliance governance, a global intake process to receive questions and concerns (including through the Alcon's Ethics Helpline), written standards, communications, training, multiple levels of risk-based auditing and monitoring, review of alleged misconduct and corrective/disciplinary actions for violations. The Audit and Risk Committee of the Board receives periodic updates on the performance of the Integrity and Compliance program and compliance related matters. The program also includes compliance committees, which have been established at the corporate, regional and country-levels and include participation by the Executive Committee and other senior leadership to provide strategic direction and oversight relating to the management of compliance risks for Alcon. Policies are reviewed and updated on a regular basis to address changes in laws and regulations and to strengthen compliance.

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Executive Committee

Composition of the Executive Committee

As of December 31, 2021, the Executive Committee of Alcon was composed of the following members:


			David J. Endicott, Chief Executive Officer Please refer to the biography set forth under "Board of Directors."
Age: 56 Citizenship: United States


			Tim C. Stonesifer, Chief Financial Officer Tim Stonesifer has been the Chief Financial Officer since April 2019. Prior to joining Alcon, he had served as Executive Vice President and Chief Financial Officer at Hewlett Packard Enterprise from November 2015 through September 2018. Prior to that role, Mr. Stonesifer acted as Senior Vice President and Chief Financial Officer, Enterprise Group at HP Co. since 2014. Before joining HP Co., he served as Chief Financial Officer of General Motors’ International Operations from 2011 to 2014. Previously, he served as Chief Financial Officer of Alegco Scotsman, a storage company, from 2010 to May 2011; Chief Financial Officer of Sabic Innovative Plastics (formerly GE Plastics) from 2007 to 2010; and various other positions at General Electric since joining the company in 1989. Mr. Stonesifer holds a Bachelor of Arts in Economics from the University of Michigan in the United States.
Age: 54 Citizenship: United States

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6.	~~On February 27, 2008, Alcon entered into a letter agreement with Sabri Markabi, M.D.~~
		Laurent Attias, Head Corporate Development, Strategy, Business Development and Licensing (BD&L) and Mergers and Acquisitions (M&A) Laurent Attias is Head of Corporate Development, Strategy, BD&L and M&A where he leads the development of long-term strategic plans for the ~~position~~Surgical and Vision Care franchises of Alcon and is responsible for the Alcon’s BD&L, M&A, partnerships and alliance activities, a role which he has held since 2012. Since 1994 when Mr. Attias joined Alcon, he has had various roles with increasing responsibility beginning with positions in Alcon’s Sales and Marketing functions and then holding the positions of Vice President, Refractive Sales and Marketing from 2002 to 2007; Vice President/General Manager of Alcon Canada from 2007 to 2009; Vice President, Central & Eastern Europe, Italy and Greece from 2009 to 2010; and President, Europe, Middle East and Africa (“EMEA”) from 2010 to 2012. Mr. Attias holds both a Bachelor of Business Administration in Marketing and a Master of Business Administration from Texas Christian University in the United States.
Age: 54 Citizenship: France and United States


			Ian Bell, President, Global Business & Innovation1 Ian Bell has been the President, Global Business & Innovation since September 2021 where he is responsible for driving the innovation pipeline for Alcon. From January 2019 until he was appointed to his current role, he was President-International, overseeing the Europe, Russia, Middle East and Africa, Asia Pacific, Japan and Latin America and Caribbean markets. He joined Alcon in March 2016 as President of EMEA. From 2014 until joining Alcon, Mr. Bell served as Corporate Vice President and President of the EMEA region for Hospira. Mr. Bell was Corporate Vice President and President of Allergan, Inc.’s Asia Pacific region, based in Singapore, from 2008 to 2014. Mr. Bell joined Allergan in 2005 as Vice President and Managing Director of its neurosciences division for the EMEA region. He began his career at GlaxoSmithKline, where he held roles of increasing responsibility and scope in sales, marketing and strategy for more than 10 years. Mr. Bell was awarded the degree of Bachelor of Arts with honors in Economics from the University of York in the United Kingdom.
Age: 52 Citizenship: United Kingdom

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			Leon Sergio Duplan Fraustro, President North America Sergio Duplan has served as President-North America, overseeing the United States and Canada markets since 2015. Mr. Duplan joined Alcon in 2012 and served as Alcon’s President of Latin America and Canada for Alcon for three years. Mr. Duplan began his career with Novartis in 2004, as Vice President of Sales in General Medicines, in Mexico then served as Head of Marketing and Sales for Latin America, General Medicines, Pharma from 2006 to 2008 and then Country Pharma Organization Head and Country President of Novartis Mexico from 2008 to 2012. Prior to joining Novartis, Mr. Duplan held several positions of increasing responsibility in Sales, Finance and Country Management at Procter & Gamble and Eli Lilly & Co. He is also currently a board member of The Alcon Foundation. Mr. Duplan holds a Bachelor degree in Industrial Engineering from Universidad Iberoamericana in Mexico and a Master of Business Administration from The Wharton School at the University of Pennsylvania in the United States.
Age: 54 Citizenship: Mexico and United States


			Rajkumar Narayanan, President, International2 Mr. Narayanan has been the President, International since September 2021 where he oversees the Europe, Russia, Middle East and Africa, Asia Pacific, China, Japan, Latin America and Caribbean markets. From April 2019 until he was appointed to his current role, he was Senior Vice President, Operational Strategy and Chief Transformation Officer and was responsible for leading the development and implementation of Alcon’s transformation program. He joined Alcon in June 2017 as President Asia Pacific Region from Allergan, Inc., where he worked for 22 years in roles of increasing responsibility, including Senior Vice President Asia Pacific Region from 2014 to 2017; Vice President and Managing Director of the Medical Aesthetic Franchise for Europe Africa and Middle East from 2011 to 2014; and Vice-President, Greater China & Japan from 2008 to 2011. Prior to those roles, 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 in finance with Hindustan Unilever India in 1987. Mr. Narayanan holds a Bachelor of Science degree in Accounting and Finance from Mumbai University. He is also a Chartered Accountant and a Cost and Works Accountant in India.
Age: 57 Citizenship: United States

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			Sue-Jean Lin, SVP, Chief Information & Transformation Officer3 Sue-Jean Lin is Senior Vice President, Chief Information and Transformation Officer where she leads the technology initiatives within Alcon and is responsible for leading the development and implementation of Alcon’s transformation program. Ms. Lin joined Alcon in August 2018 as Senior Vice President, Chief Information Officer. Prior to joining Alcon, Ms. Lin was Senior Vice President and Chief Information Officer for Hill-Rom Holdings, Inc., a global medical technology company. Prior to joining Hill-Rom in 2016, she was the Senior Vice President and Chief Information Officer, and before that, the Vice President of Finance & Regional Controller (Europe, Middle East, and Africa and Asia Pacific) for Allergan, Inc. In 2015, she also served as Interim Executive for Presbyterian Healthcare Services in the capacity of Senior Vice President ~~Research~~ and ~~Development. Pursuant to~~Chief Information Officer. Ms. Lin holds both a Bachelor’s degree in Accounting and a Master’s degree in Business Administration from the ~~terms~~University of Nevada, Reno. She also completed the ~~agreement, Alcon will pay Dr. Markabi~~Executive Leadership Program from the University of Southern California, Marshall School of Business, and holds a ~~monthly base salary~~Cybersecurity Oversight certificate from Software Engineering Institute of Carnegie Mellon University.
Age: 63 Citizenship: United Kingdom and he will be eligible for an annual performance bonus based upon the achievement of mutually agreed upon performance objectives. If Alcon, Inc. undergoes a change of control and Dr. Markabi's employment with Alcon or the successor entity is terminated without cause or there is a material reduction in his responsibilities or a change in geographic location for his performance six months preceding or one year following such a change of control, Alcon or the successor entity will pay Dr. Markabi a lump sum payment. The agreement provides that Dr. Markabi is eligible to participate in and receive various benefits under the programs generally available to members of Alcon's senior management.United States

1 Until September 1, 2021, Ian Bell served as President, International and was already a member of the Executive Committee of Alcon. As of this date, he was appointed President, Global Business & Innovation, replacing in this function Michael Onuscheck who simultaneously stepped down from his roles with the Company.

On December 21, 2009, Alcon entered into a letter agreement with Merrick R. McCracken for the position of Senior Vice President, Global Human Resources. Pursuant to the terms of the agreement, Alcon will pay Mr. McCracken an annual base salary and he will be eligible for an annual performance bonus based upon the achievement of mutually agreed upon performance objectives. If Alcon, Inc. undergoes a change of control and Mr. McCracken's employment with Alcon or the successor entity is terminated without cause or there is a material reduction in his responsibilities or a change in geographic location for his performance six months preceding or one year following such a change of control, Alcon or the successor entity will pay Mr. McCracken a lump sum payment. The agreement provides that Mr. McCracken is eligible to participate in and receive various benefits under the programs generally available to members of Alcon's senior management.

2 Rajkumar Narayanan was appointed President, International as of September 1, 2021, replacing in this function Ian Bell. He was previously a member of the Executive Committee of Alcon, serving as Senior Vice President, Operational Strategy and Chief Transformation Officer.

3 Sue-Jean Lin was appointed as a new member of the Executive Committee of Alcon as of September 1, 2021.

On July 6, 2010, Alcon entered into an agreement to acquire privately held LenSx Lasers, Inc., a surgical device company located in Aliso Viejo, CA. LenSx has developed and is nearing commercialization of a femtosecond laser system for use in cataract surgery. Alcon paid LenSx stockholders $367 million in cash at closing and agreed to contingent payments of up to $383 million based on achievement and over-achievement of annual revenue targets over the next 5 years. Following regulatory approval, the transaction closed on August 18, 2010.

Role of the Executive Committee

On July 7, 2010, Alcon, as grantor, entered into the Alcon Litigation Trust Agreement with Thomas G. Plaskett, Joan W. Miller and Lodewijk J.R. De Vink, as trustees. The irrevocable Trust was established under New York law pursuant to a resolution of the Alcon board of directors. The Trust, which was funded with $50 million, is intended to provide the financial means to commence, defend or maintain litigation relating to any transaction between Alcon and a majority shareholder, including the transaction contemplated by the merger proposal announced by Novartis on January 4, 2010. The Trust was dissolved and its property was returned to Alcon in December 2010 in connection with entry into the merger agreement below.

The members of the Executive Committee are appointed by the Board. In accordance with the Articles of Incorporation and the Alcon Board Regulations, the Board delegated the responsibility for the management of the business to the Executive Committee, under the lead of the Chief Executive Officer.

The Executive Committee shall in particular (i) develop strategies and policies and implement those upon approval by the Board, (ii) coordinate and monitor the group’s functions to achieve the business targets, (iii) ensure the efficient operation of the group, (iv) manage the proper provision and use of capacity and financial and other resources within the group and (v) ensure the development and succession of the senior management.

~~10.~~

On December 14, 2010, Novartis and Alcon entered into a merger agreement whereby the parties agree that, subject to certain conditions, Novartis and Alcon shall merge pursuant to Swiss law and in accordance with the merger agreement. Novartis shall be the acquiring company which shall continue to operate, and Alcon shall be the transferring company which shall be dissolved upon completion. By operation of law, Alcon's assets, liabilities and contracts shall be transferred to Novartis in their entirety.

Alcon has not entered into any management agreements with any third parties pursuant to which Alcon would delegate any business management responsibilities to any such third parties.

As of December 31, 2021, none of the members of the Executive Committee held any official functions or political posts.

Limitations of Number of Mandates

D.	~~EXCHANGE CONTROLS~~

No member of the Executive Committee may hold more than six additional mandates in other companies, of which no more than two additional mandates shall be in other listed companies. Each of these mandates shall be subject to approval by the Board. Members of the Executive Committee are not allowed to hold chairs of the board of directors of other listed companies. Further details can be found in Article 34 of the Articles of Incorporation, available under https://investor.alcon.com/governance/governance/default.aspx.

Compensation, Shareholdings and Loans

~~Other~~Please refer to "Item 6.B - Compensation".

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Shareholders’ Participations Rights

Voting-right Restrictions and Representation

Alcon has not imposed any restriction regarding share ownership or voting rights. Nominees shareholdings are not subject to any limitations. The right to vote at Alcon general meetings may only be exercised by a shareholder, usufructuary or nominee who is duly registered in Alcon share register on the record date for the applicable general meeting. Shareholders can be represented at general meetings by the independent proxy or by a third person authorized by written proxy who does not need to be a shareholder. As required by law, shareholders will also be given the opportunity to issue their voting instructions to the independent proxy electronically through an online voting platform.

Each Alcon share has the right to one vote. Shares held by the Company or any of its consolidated subsidiaries are not entitled to vote. Votes are taken either by a show of hands or by electronic voting, unless the General Meeting of Shareholders resolves to have a ballot or where a ballot is ordered by the chairman of the meeting.

Statutory Quorums

Unless otherwise required by law, the General Meeting passes resolutions and elections with the absolute majority of the votes duly represented.

According to Article 704 of the Swiss Code of Obligation, the following shareholders’ resolutions require the approval of at least two thirds of the votes represented at a General Meeting of Shareholders: (1) an alteration of Alcon’s corporate purpose; (2) the creation of shares with increased voting powers; (3) an implementation of restrictions on the transfer of registered shares and the removal of such restrictions; (4) an authorized or conditional increase of the share capital; (5) an increase of the share capital by conversion of equity, by contribution in kind, or for the purpose of an acquisition of property or the grant of special rights; (6) a restriction or an exclusion of shareholders’ pre-emptive rights; (7) a change of Alcon’s registered office; (8) Alcon’s dissolution; or (9) any amendment to the Articles of Incorporation which would create or eliminate a supermajority requirement.

Swiss law further provides for a qualified majority for certain special resolutions, such as in case of merger or demerger.

Convocation of General Meetings

The Annual General Meeting shall be held within six months after the close of the financial year of the Company. Extraordinary General Meetings may be convened upon request of the Alcon Board, the auditors or one or more shareholders representing in aggregate not less than 10% of the Company’s share capital. At least 20 days before the General Meeting, the invitation including the agenda is published in the Swiss Gazette of Commerce and mailed to the registered shareholders.

Agenda

One or more Alcon shareholders whose combined shareholdings represent an aggregate nominal value of at least CHF 1 million may demand that an item be included in the agenda of a General Meeting of Shareholders. Such a demand must be made in writing at the latest 45 days before the meeting and shall specify the items and the proposals of such shareholder.

Registration in the Share Register

The share register of the Company is a non-public register, subject to confidentiality and privacy and data protections imposed on Alcon to protect registered shareholders. Alcon shares can be voted only if their relevant holder is registered in the Alcon share register by the record date determined by the Board. The Articles of Incorporation do not provide for any specific rule regarding the closure of the share register.

Quiet Periods

The Company has strict internal policies regarding insider trading, in line with applicable regulations and international best practice standards.

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Quiet Periods start fourteen days prior to the beginning of the last trading day of each calendar quarter and end following the first full trading day after the date of the release of the quarterly and/or annual results, unless otherwise designated by the Alcon Disclosure Committee. The Company has identified a certain number of Continuing Insiders, i.e. key individuals who may continuously be in possession of material non-public information, that are prohibited from trading in any Alcon securities during Quiet Periods and may trade in any such securities outside of Quiet Periods only with the prior written approval of the Company's corporate legal department.

In addition, Alcon associates may be designated Temporary Insiders in connection with ~~government sanctions~~confidential projects. In this capacity, they are prohibited to trade, during a certain period of time defined as a No Trading Period, in any securities of either Alcon or another company in which any such Alcon associate may have acquired material non-public information.

Changes of Control and Defense Measures

Duty to Make an Offer

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who acquire more than 33.3% of Alcon shares would be under an obligation to make an offer to acquire all remaining Alcon shares. Alcon has neither opted out from the mandatory takeover offer obligation nor opted to increase the threshold for mandatory takeover offers in the Articles of Incorporation.

Clauses on Change of Control

In accordance with the rules of the Ordinance against Excessive Compensation in Listed Companies, Alcon does not provide severance payments upon a change of control or “golden parachute” provisions in its agreements with its Directors, Executive Committee members or other members of senior management. Alcon’s Long Term Incentive Plan and Deferred Bonus Stock Plan, each applicable to all employee participants including Executive Committee members, provide for double trigger accelerated vesting of outstanding stock awards in the event a participant leaves the company for “good reason” or Alcon terminates the employee without “cause,” as such terms are defined in the plans, within two years following a change of control. If such a double trigger event occurs, the participant’s outstanding unvested awards would vest in full. In the case of Performance Share Units, awards less than 50% vested would vest at target and awards more than 50% vested would vest in accordance with Alcon’s actual performance, as determined by the Compensation Committee.

Auditors

Duration of the Mandate and Terms of Office of the Auditors

PricewaterhouseCoopers SA, Switzerland (“PwC Switzerland”), has been the statutory auditor of the Company since 2019 and conducts the audit activities required by Swiss law and the related SIX regulations. It was re-elected on April 28, 2021 for a term of one year until the 2022 Annual General Meeting. Mike Foley has been the auditor in charge of the statutory audit since 2019. Alcon has a policy to rotate the lead audit partner of the statutory auditor at least once every five years.

Separately, on February 16, 2021, the Company appointed PricewaterhouseCoopers LLP, United States (“PwC US”) (PCAOB ID No. 238), for a term of one year, as its independent registered accounting firm to conduct the audit activities required by US law and the related NYSE regulations. PwC US performs the audit from offices located in Fort Worth, Texas. The appointment of PwC US does not require approval of the Company’s shareholders.

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Auditing Fees and Additional Fees

The following table sets forth the amount of audit fees, audit-related fees, tax fees and all other fees billed or expected to be billed in aggregate by PwC Switzerland, PwC US and any other member firm of PricewaterhouseCoopers International Limited that rendered audit and related services to any member of Alcon, for the fiscal years ended December 31, 2021 and December 31, 2020:


($ millions)	2021	2020
Audit fees	9.4	10.3
Audit related fees	0.2	0.2
Tax fees	0.1	0.1

Total	9.7	10.6

Audit fees include fees billed for professional services rendered for audits of our annual consolidated and standalone financial statements, reviews of consolidated quarterly financial information and statutory audits of the Company (including in particular the Compensation Report) and our subsidiaries.

Audit-related fees include fees billed for assurance and related services such as due diligence, accounting consultations and audits in connection with mergers and acquisitions, employee benefit plan audits, internal control reviews and consultations concerning financial accounting and reporting standards.

Tax fees include fees billed for professional services for tax compliance, tax advice and tax planning.

Control Measures over the Activities of the Auditors

The Board has delegated to the Audit and Risk Committee ("ARC") the oversight of the activities of the external auditors. The ARC evaluates on an annual basis the qualifications and performance of our auditors and will determine whether PwC Switzerland should be proposed to the general meeting to stand for re-election. The criteria applicable of the performance assessment of our auditors include professional competence, sufficiency of resources to complete the audit mandate, independence and objectivity, capability to provide effective and pragmatic recommendations and coordination with the ARC and other functions of the Alcon group, including internal audit.

Upon recommendation of the ARC, the Board proposed that the shareholders accept the audited Consolidated Financial Statements of the Alcon group and the financial statements of the Company.

The ARC is further responsible for the compensation of our auditors and pre-approve all auditing services, internal control-related services and non-audit services permitted under applicable statutory law, regulations and listing requirements.

In 2021, our auditors participated in five meetings of the ARC in order to discuss auditing matters and present the 2021 audit strategy and audit results. In addition, our auditors regularly meet in private session with the ARC and individually with the Chair of the ARC. Our auditors provide at least once a year to the ARC a report regarding (i) the external auditor’s internal quality-control procedures, (ii) any material issues raised by quality-control reviews or any inquiry or investigation by governmental or professional authorities, (iii) any step taken to deal with such issues and (iv) all relationships between the external auditor and the Alcon group.

Information Policy

Alcon is committed to pursuing an open and transparent communication with shareholders, suppliers, customers and other stakeholders. It publishes information in a professional manner in accordance with best practices and legal requirements.

Investor Relations

Effective communication with shareholders is an important part of Alcon's governance framework. Therefore, the Company is committed to actively engaging with shareholders and keeping them informed about Alcon's business, governance, strategy and performance, in accordance with applicable laws and regulations. Supported by the Investor Relations team, the Chair leads and supervises the annual shareholders outreach initiative, while the CEO and the CFO are responsible for the management of the day-to-day activities necessary to maintain transparent and open shareholders relationships. The Company believes good engagement and dialogue with the financial community is critical in securing

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support and confidence in management's leadership and Board's governance of Alcon. The Investor Relations team regularly organizes opportunities to learn about the Company through in-person and virtual meetings and product showcases throughout the year, subject to its quiet period policy.

Communications

Financial information is published in the form of annual and quarterly financial results, in accordance with internationally recognized accounting standards. Related material, including annual reports, Form 20-Fs, quarterly results releases, investors presentations and conference call webcasts are available on the Alcon website. From time to time, Alcon issues press releases regarding business developments. Investors may subscribe to receive via email distributions providing news and notification about Alcon. The dissemination of material information about business developments is made in accordance with the rules of the SIX and the NYSE.

Information contained in reports and releases may only be deemed accurate in any material respect at the time of the publication. Past releases are not updated to reflect subsequent events.

Alcon's website provides regular information and updates about the Company at www.alcon.com. Detailed information regarding certain topics may be found as follows:


Topic			Website
Investor relations			https://investor.alcon.com
Media releases			https://investor.alcon.com/news-and-events/press-releases/default.aspx
Leadership			https://investor.alcon.com/governance/leadership-team/default.aspx
Governance			https://investor.alcon.com/governance/governance/default.aspx
Financials			https://investor.alcon.com/financials/quarterly-results/default.aspx

Any information included on our internet websites or the information that might be accessed through such websites is not included in this Annual Report and is not incorporated into this Annual Report by reference.

Corporate Responsibility Report

Alcon publishes an annual Corporate Responsibility Report, which describes Alcon’s corporate responsibility strategy and highlights Alcon's approach to ESG matters, available at https://investor.alcon.com/governance/esg/default.aspx.

Differences in Corporate Governance Standards

According to the NYSE listing standards on corporate governance, listed foreign private issuers are required to disclose any significant ways in which their corporate governance practices differ from those governance practices that must be followed by NYSE-listed US domestic companies. We briefly summarize those differences in the following paragraphs.

Responsibility of the Audit Committee with regard to Independent Auditors

Our Audit and Risk Committee is responsible for the compensation, retention and oversight of our independent statutory auditors. It assesses the performance and qualification of our statutory auditors and submits its proposal for appointment, reappointment or removal of our statutory auditors to the full Board. As required by the Swiss Code of Obligations, our Board then submits its proposal to the shareholders for their vote at the Annual General Meeting (AGM). In contrast, under NYSE listing standards, the audit committee for US domestic companies is responsible for the appointment of the independent auditors.

Supervision of the Internal Audit Function

The CFO and the Audit and Risk Committee share the supervisory responsibility with respect to the internal audit function. In contrast, under NYSE standards, only the audit committee supervises the internal audit function.

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Responsibility of the Compensation Committee for Performance Evaluations of Senior Management

In line with Swiss law, our Compensation Committee, together with the Board, proposes for shareholder approval at the AGM the maximum aggregate amount of compensation for the Board and the maximum aggregate amount of fixed and variable compensation for the Executive Committee of Alcon. Our shareholders elect each of the members of the Compensation Committee at the Annual General Meeting. In contrast, under NYSE standards, it is the responsibility of the compensation committee to evaluate senior management performance and to determine and approve, as a committee or together with the other independent directors, the compensation for senior officers and the board. US domestic companies listed on NYSE are only required to provide shareholders a periodic advisory non-binding vote on a company’s executive compensation practices.

Shareholders’ Votes on Equity Compensation Plans

Swiss law authorizes the Board to approve equity-based compensation plans. Shareholder approval is only mandatory if equity-based compensation plans require an increase in capital. No shareholder approval is required if shares for issuance under such plans are purchased by the issuer in the open market. In contrast, the NYSE standards require shareholder approval for the establishment of and material revisions to all equity compensation plans.

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6.D. EMPLOYEES

The table below sets forth the breakdown of the total year-end number of our full-time equivalent employees by main category of activity for the past three years.


	For the year ended December 31,
	2021	2020	2019
Production & Supply	12,362	12,237	11,026
Marketing & Sales	7,893	7,450	7,301
General & Administration	2,180	2,087	2,120
Research & Development (including support)	1,954	1,881	1,695
Total full-time equivalent employees	24,389	23,655	22,142

Unions or works councils represent a significant number of our associates. We have not experienced any material work stoppages in recent years, and we consider our employee relations to be good.

6.E. SHARE OWNERSHIP

The information set forth under “Item 6.B. Compensation” is incorporated by reference. Also, refer to Note 24 to the Consolidated Financial Statements for a discussion of our equity-based compensation programs.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. MAJOR SHAREHOLDERS

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance” is incorporated by reference.

7.B. RELATED PARTY TRANSACTIONS

None.

7.C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable.

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ITEM 8. FINANCIAL INFORMATION

8.A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Please refer to the financial statements beginning on page F-1 of this Annual Report.

Legal Proceedings

From time to time, we may become involved in litigation or may receive inquiries from regulatory authorities, including antitrust and competition authorities in various jurisdictions relating to matters arising from the ordinary course of business. In addition, we are from time to time and may in the future be subject to audit or investigation by tax authorities in the ordinary course of business in the various jurisdictions in which we operate. Our management believes that, except as described below, there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows.

Contact lenses class actions

Since the first quarter of 2015, more than 50 class action complaints have been filed in several courts across the US naming as defendants contact lens manufacturers, including Alcon, and alleging violations of federal antitrust law, as well as the antitrust, consumer protection and unfair competition laws of various states, in connection with the implementation of unilateral price policies by the defendants in the sale of contact lenses. The cases have been consolidated in the Middle District of Florida by the Judicial Panel on Multidistrict Litigation and the claims are being vigorously contested. Trial is set for March 28, 2022.

JJSVI patent dispute

On June 23, 2020, Johnson & Johnson Surgical Vision, Inc. ("JJSVI"), acting through its subsidiaries, filed a patent infringement action in the US District Court in Delaware alleging that the manufacture, use, sale, offer for sale and/or importation of Alcon’s LenSx Laser System willfully infringes, directly and/or indirectly, one or more claims of 12 US patents. JJSVI subsequently amended its complaint to include copyright infringement claims relating to source code used in the LenSx Laser System as well as additional claims of patent infringement. Also beginning on June 23, 2020, JJSVI filed claims in Mannheim, Germany, alleging that Alcon directly infringes certain European patents through its manufacture and sale of LenSx. In these cases, JJSVI seeks monetary and injunctive relief. Alcon intends to defend all of these cases vigorously and has asserted various patent infringement and invalidity claims against JJSVI in Europe and the United States. The Delaware court has stayed the parties' US patent claims pending final written decisions by the Patent Trial and Appeal Board of the US Patent and Trademark Office in various ongoing inter partes review proceedings pertaining to the patents in the suit. Trial on the copyright claims in the Delaware action is set for February 2023.

Hoya patent dispute

On December 11, 2020, Hoya Corporation and one of its affiliates filed suit against Alcon in the US District Court for the Northern District of Texas alleging that Alcon's UltraSert Pre-Loaded Delivery System infringes six of Hoya's US patents. The court denied in part Alcon's motion to dismiss Hoya's complaint on September 20, 2021. Trial is set for April 2023. Alcon intends to defend the case vigorously.

Dividend Policy

Alcon expects that it will continue to recommend to shareholders the payment of a regular annual cash dividend based on the prior year’s core net income; however, the declaration, timing and amount, including potential increases, of any dividends will be ~~imposed on Belarus,~~subject to the ~~Democratic Republic~~approval of ~~Congo, Guinea,~~our shareholders at a General Meeting. The determination of the ~~Islamic Republic~~Board as to whether to recommend a dividend and the approval of ~~Iran, Republic~~any such proposed dividend by our shareholders will depend upon many factors, including our financial condition, earnings, corporate strategy, capital requirements of ~~Iraq, Ivory Coast, Lebanon, Liberia, Myanmar (Burma),~~our operating subsidiaries, covenants, legal requirements and other factors deemed relevant by the ~~Democratic People's Republic of Korea (North Korea), Sierra Leone, Sudan, Somalia, Zimbabwe, Eritrea, persons~~Board and shareholders. For additional information, see "Item 3. Key Information—3.D. Risk Factors—Risks related to the ~~assassination~~Ownership of ~~Rafik Hariri,~~our Shares—We may not pay or declare dividends".

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For information about deduction of the withholding tax or other duties from dividend payments, see "Item 10. Additional Information—10.E. Taxation—Swiss Taxation—Swiss Residents—Withholding Tax on Dividends" and "Item 10. Additional Information—10.E. Taxation—US Federal Income Taxation—Distributions on the Shares".

Past Dividends

On February 23, 2021, the Alcon Board of Directors proposed a dividend of CHF0.10 per share which was subsequently approved by the shareholders at the Annual General Meeting on April 28, 2021 and paid in May 2021 for an amount of $54 million.

8.B. SIGNIFICANT CHANGES

A discussion of significant changes in our business can be found under "Item 4. Information on the Company —4.A. History and Development of the Company", "Item 4. Information on the Company — 4.B. Business Overview" and "Item 5. Operating and Financial Review and Prospects — 5.A. Operating Results".

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ITEM 9. THE OFFER AND LISTING

9.A. OFFER AND LISTING DETAILS

Alcon Inc. shares are listed on the SIX and the NYSE as global registered shares under the trading ticker “ALC”. As such, they can be traded and transferred across applicable borders, without the need for conversion, with identical shares traded on different stock exchanges in different currencies. During 2021, the average daily trading volume of Alcon Inc. shares was approximately 0.9 million shares on the SIX and approximately 0.8 million shares on the NYSE.

As of the date of this Annual Report, our shares are included in a number of indices, including the “Swiss Market Index”, or SMI, the principal Swiss index published by the SIX. This index contains 20 of the largest and most liquid stocks based on market capitalization and the most active stocks listed on the SIX. The SMI indicates trends in the Swiss stock market as a whole and is one of the most widely followed stock price indices in Switzerland.

9.B. PLAN OF DISTRIBUTION

Not applicable.

9.C. MARKETS

See “Item 9.A. Offer and listing Details.”

9.D. SELLING SHAREHOLDERS

Not applicable.

9.E. DILUTION

Not applicable.

9.F. EXPENSES OF THE ISSUE

Not applicable.

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ITEM 10. ADDITIONAL INFORMATION

10.A. SHARE CAPITAL

Not Applicable.

10.B. MEMORANDUM AND ARTICLES OF ASSOCIATION

We incorporate by reference into this Annual Report the description of our Articles of Incorporation and our Regulations of the Board contained in our Registration Statement on Form 20-F, as amended, initially filed with the SEC on November 13, 2018 (File No. 001-31269).

10.C. MATERIAL CONTRACTS

Bridge Loan, Term Loan and Revolving Credit Facilities

In connection with the Spin‑off, we entered into a $1.5 billion unsecured 364‑day bridge loan facility with two extension options, each for a period of 180 days (the “Bridge Facility”), a $0.5 billion unsecured three‑year term loan facility (“Facility A”), a $0.8 billion unsecured five‑year term loan facility (“Facility B”), a $0.4 billion (or the equivalent in EUR) unsecured five‑year term loan facility (“Facility C”) and a $1.0 billion unsecured five‑year committed multicurrency revolving credit facility (the “Revolving Facility” and, together with the Bridge Facility, Facility A, Facility B and Facility C, the “Facilities” and the related agreement, the “Group Facilities Agreement”). In February 2021, the Revolving Facility term was extended to March 2026.

We and certain ~~persons~~of our subsidiaries are borrowers under the Facilities. We guarantee the borrowings of such subsidiaries under the Facilities. In addition, the Revolving Facility includes a mechanism through which certain of our subsidiaries, as approved by the lenders, can accede as a borrower.

Prior to the Spin‑off, we borrowed an aggregate of approximately $3.2 billion under the Facilities and paid to Novartis approximately $3.0 billion of the net proceeds of the Bridge Facility, Facility A, Facility B and Facility C, including in satisfaction of certain intercompany indebtedness owed by Alcon and its subsidiaries to Novartis and its affiliates. We retained the remaining net proceeds of such Facilities for general corporate and working capital purposes. In September 2019, we used the proceeds of our Initial Notes Offering (as defined below) to pay off in full the Bridge Facility and Facility A. The Bridge Facility and Facility A are no longer available to us for borrowings.

We are permitted to voluntarily prepay loans under the Facilities, in whole or in part, without penalty or premium subject to certain minimum prepayment amounts and the payment of accrued interest on the amount prepaid and customary breakage costs.

The terms of the Facilities include certain events of default and covenants customary for investment grade credit facilities, including restrictive covenants that limit, among other things, the grant or incurrence of security interests over any of our assets, the incurrence of certain indebtedness and entry into certain fundamental change transactions. The Facilities do not contain any financial covenants.

The Facilities originally bore interest at a rate equal to the interest rate benchmark (EURIBOR in the case of loans denominated in EUR, USD LIBOR in the case of loans denominated in USD and CHF LIBOR in the case of loans denominated in CHF), plus an applicable margin. On December 14, 2021, we amended the terms of the Facilities in response to interest rate benchmark reform, which includes the replacement of certain interbank offered rates with alternative benchmark rates. The amended terms incorporate a mechanism to switch from the ~~former Republic~~Facilities’ original interest rates to compounded risk free rates, including any relevant credit adjustment spread.

As of ~~Yugoslavia,~~December 31, 2021, $1.2 billion of borrowings was outstanding under the Facilities. Such indebtedness requires us to dedicate a portion of our future cash flows to payments on our debt, reducing our ability to use our cash flows to pay dividends, fund capital expenditures, BD&L or other strategic transactions, working capital and other general operational requirements.

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2019 Bond Offering

On September 23, 2019, Alcon Finance Corporation (the “Issuer”), an indirect, wholly owned subsidiary of Alcon, completed an offering of $500,000,000 aggregate principal amount of its 2026 Notes, $1,000,000,000 aggregate principal amount of its 2029 Notes and $500,000,000 aggregate principal amount its 2049 Notes (collectively, the "Initial Notes"). The Initial Notes were issued under an Indenture, dated September 23, 2019 (the “Indenture”), by and among the Issuer, Alcon Inc. and Citibank, N.A., as trustee (the “Trustee”). The Initial Notes are senior unsecured obligations of the Issuer and are fully and unconditionally guaranteed on ~~persons or organizations with links~~a senior basis by Alcon.

Interest is payable on the Initial Notes on March 23 and September 23 of each year, beginning on March 23, 2020. The 2026 Notes will mature on September 23, 2026, the 2029 Notes will mature on September 23, 2029 and the 2049 Notes will mature on September 23, 2049.

The Issuer may redeem the 2026 Notes prior to ~~Osama bin Laden,~~July 23, 2026 (the date that is two months prior to their maturity date), the ~~"al-Qaeda" group~~2029 Notes prior to June 23, 2029 (the date that is three months prior to their maturity date) or the ~~Taliban,~~2049 Notes prior to March 23, 2049 (the date that is six months prior to their maturity date) at a redemption price equal to 100% of the principal amount of the applicable series of Initial Notes plus a “make-whole premium” and accrued and unpaid interest, if any, ~~other similar sanctions~~up to, but excluding, the redemption date. The Issuer may also redeem the 2026 Notes on or after the date that is two months prior to their maturity date, the ~~Swiss government~~2029 Notes on or after the date that is three months prior to their maturity date or the 2049 Notes on or after the date that is six months prior to their maturity date at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, the Issuer may ~~impose against various countries, regimes~~redeem any series of the Initial Notes at its option, in whole, but not in part, for cash, at any time prior to their respective maturities at a price equal to 100% of the outstanding principal amount of such Initial Notes, plus accrued and unpaid interest, to, but excluding, the redemption date, if certain tax events occur that would obligate the Issuer to pay additional amounts as described in the Indenture.

Subject to certain limitations, in the event of a change of control triggering event, the Issuer will be required to make an offer to purchase each series of the Initial Notes at a price equal to 101% of the principal amount of the Initial Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indenture also contains certain limitations on the Issuer’s ability to incur liens, as well as customary events of default.

2020 Bond Offering

On May 27, 2020, the Issuer completed an offering of an additional $750,000,000 aggregate principal amount of its 2030 Notes. The 2030 Notes were issued under the same Indenture as the Initial Notes. The 2030 Notes are senior unsecured obligations of the Issuer and are fully and unconditionally guaranteed on a senior basis by Alcon.

Interest is payable on the 2030 Notes on May 27 and November 27 of each year, beginning on November 27, 2020. The 2030 Notes will mature on May 27, 2030.

The Issuer may redeem the 2030 Notes prior to February 27, 2030 (the date that is three months prior to their maturity date) at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a “make-whole premium” and accrued and unpaid interest, if any, up to, but excluding, the redemption date. The Issuer may also redeem the 2030 Notes on or ~~parties, there~~after the date that is three months prior to their maturity date at a redemption price equal to 100% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, the Issuer may redeem the 2030 Notes at its option, in whole, but not in part, for cash, at any time prior to their respective maturities at a price equal to 100% of the outstanding principal amount of such 2030 Notes, plus accrued and unpaid interest, to, but excluding, the redemption date, if certain tax events occur that would obligate the Issuer to pay additional amounts as described in the Indenture.

Subject to certain limitations, in the event of a change of control triggering event, the Issuer will be required to make an offer to purchase the 2030 Notes at a price equal to 101% of the principal amount of the 2030 Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indenture also contains certain limitations on the Issuer’s ability to incur liens, as well as customary events of default.

Acquisition Agreement

On November 5, 2021, Alcon exercised its option to purchase Ivantis, Inc. pursuant to an Option Agreement and Plan of Merger by and among Alcon Research, LLC, Ithaca Merger Sub, Inc., and Ivantis, Inc., dated as of November 9, 2018 (as subsequently amended, the "Merger Agreement"). Pursuant to the Merger Agreement, Alcon agreed to pay total upfront

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consideration of $475 million and potential contingent payments upon the achievement of certain regulatory and commercial milestones. As a result of the merger, which closed on January 7, 2022, Ivantis, Inc. became a wholly-owned subsidiary of Alcon. The transaction expanded Alcon's Surgical portfolio to include the Hydrus microstent, a minimally-invasive glaucoma surgery (MIGS) device for the treatement of mild-to-moderate glaucoma.

10.D. EXCHANGE CONTROLS

There are ~~currently~~ no Swiss governmental laws, decrees or regulations that restrict, in a manner material to Alcon, the export or import of capital, including ~~but not limited to, Swiss~~any foreign exchange controls, onor that generally affect the ~~payment~~remittance of dividends ~~interest~~ or ~~liquidation proceeds, if any,~~other payments to ~~non-resident holders~~non-residents or non-citizens of ~~registered~~Switzerland who hold Alcon shares.

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~~128~~10.E. TAXATION

E.	~~TAXATION~~

The ~~following~~taxation discussion set forth below is intended only as a general summary and does not purport to be a complete analysis or listing of ~~the material Swiss tax and U.S. Federal income~~all potential tax considerations relevant to the ownership ~~acquisition and~~or disposition of our ~~common~~ shares. ~~By its nature, this summary includes only a general discussion~~The statements of ~~such tax consequences~~US and ~~as such is not intended to be relied upon as tax advice.~~ DUE TO THE INHERENTLY INDIVIDUAL AND FACT SPECIFIC NATURE OF TAX CONSEQUENCES, ALL HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF COMMON SHARES, INCLUDING THE EFFECTS OF SWISS FEDERAL, U.S. FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAXES.

~~For purposes of this discussion, a "U.S. Holder" is a holder that is any one of the following:~~

·	~~an individual who is a citizen or resident of the United States;~~

·	~~a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or of any political subdivision of the United States;~~

·	~~an estate the income of which is subject to U.S. Federal income taxation regardless of its source;~~

·	a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust; or

·	~~a person otherwise subject to U.S. Federal income tax on its worldwide income.~~

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

~~For purposes of this discussion, a "Swiss Holder" is any one of the following:~~

·	~~an individual who is a resident of Switzerland;~~

·	~~corporations and other legal entities that are incorporated in Switzerland;~~

·	~~corporations and other legal entities that are effectively managed and controlled in Switzerland;~~

·	~~a person otherwise subject to Swiss tax on its worldwide income; or~~

·	~~corporations or other legal entities that hold our common shares as part of a permanent establishment located in Switzerland.~~

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

~~This summary is not a complete description of all of the tax consequences of the ownership or disposition of common shares. It is~~laws set forth below are based on the laws and regulations in force as of the date of this Annual Report, including the current ~~tax laws of Switzerland and~~Convention Between the United States ~~including~~and the ~~United States~~Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, entered into force on December 19, 1997 (the "Treaty"), and the US Internal Revenue Code of 1986, as amended ~~its legislative history, temporary, existing and proposed~~(the "Code"), Treasury Regulations, ~~U.S. Internal Revenue Service~~ rulings, judicial decisions and ~~judicial opinions,~~administrative pronouncements, all as in effect on the date ~~of this report~~hereof, and all of which are subject to change ~~possibly~~(possibly with retroactive effect) and to differing interpretations.

Swiss Taxation

The following is a general summary of certain tax consequences relating to owning and disposing of Alcon shares based on the Swiss tax laws and regulations and regulatory practices in force on the date of this Annual Report. Tax consequences are subject to changes in applicable law (or subject to changes in interpretation), including changes that could have a retroactive effect. ~~Your individual circumstances may affect~~

This is not a complete summary of the potential Swiss tax effects relevant to the Alcon shares nor does the summary take into account or discuss the tax ~~consequences arising from your ownership and disposal~~laws of ~~common shares, and your particular facts or circumstances are not considered in the discussion below.~~

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

·	~~dealers in securities;~~

·	~~traders in securities who elect to apply a mark-to-market method of tax accounting;~~

·	~~financial institutions;~~

·	~~regulated investment companies;~~

·	~~tax-exempt organizations;~~

·	~~insurance companies;~~

·	~~persons holding common shares as part of a hedging, straddle, conversion or other integrated transaction;~~

·	~~holders who hold their common shares other than as capital assets;~~

·	~~persons whose functional currency is not the U.S. dollar;~~

·	~~certain U.S. expatriates;~~

·	~~Swiss Holders of common shares with a value of at least CHF 1 million;~~

·	~~persons subject to the U.S. alternative minimum tax; and~~

·	~~holders of common shares that will own directly or indirectly, or will be deemed to own, 10% or more of either the total voting power or the total value of our stock.~~

~~Furthermore,~~any jurisdiction other than Switzerland. For example, this summary does not ~~describe~~address estate, gift, inheritance, capital or wealth taxes. It also does not take into account investors' individual circumstances. This summary does not purport to be a legal opinion or to address all ~~the~~ tax ~~considerations~~aspects that may be relevant to ~~persons who acquired common shares pursuant to compensatory arrangements.~~any particular investor.

YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO ACQUIRING, OWNING AND DISPOSING OF ALCON SHARES.

Swiss ~~Tax Considerations~~Residents

~~Swiss~~ Withholding Tax on Dividends

Dividends that we pay and ~~Similar Distributions~~

~~Dividends paid and other~~any similar cash or in-kind distributions ~~that are not~~we may make to a ~~repayment~~holder of our shares (including distributions of liquidation proceeds in excess of the nominal value, stock dividends and, under certain circumstances, proceeds from repurchases of shares by us in excess of the ~~shares or of qualifying additional paid-in capital made by us to a holder of common shares (including dividends on liquidation proceeds and stock dividends)~~nominal value) are generally subject to a Swiss federal withholding tax (the "Withholding Tax") at a current rate of 35%. ~~The withholding tax will be withheld~~Under certain circumstances distributions out of capital contribution reserves made by ~~us on~~shareholders after December 31, 1996 are exempt from the Withholding Tax. We are required to withhold this Withholding Tax from the gross ~~distributions~~distribution and ~~will be paid~~to pay the Withholding Tax to the Swiss Federal Tax Administration.

~~Swiss Holders~~

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

Legal entities incorporated in Switzerland or legal entities holding the common shares in the Company as part of a Swiss business operation or Swiss permanent establishment are generally entitled to a total refund of the withholding tax incurred if they are the beneficial ~~owner~~owners of ~~such~~the taxable distribution at the time ~~the distribution~~it is ~~due~~resolved and duly report the gross distribution received on their personal tax return or in their ~~profit and loss statement.~~

~~U.S. Holders~~

~~A U.S. Holder who is an individual or a legal entity not resident in Switzerland~~financial statements for tax purposes, as the case may ~~be entitled~~be.

The Swiss corporate tax reform, which entered into force on January 1, 2020, requires that Swiss listed companies must make distributions as dividends subject to ~~a partial refund of the withholding tax incurred on a taxable distribution from us if the conditions of the bilateral tax~~

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

~~Other Holders~~

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

~~As of January 1, 2011, Switzerland had entered into bilateral treaties for the avoidance of double taxation with respect to income taxes with the following countries.~~


~~Albania~~	~~France~~	~~Luxembourg~~	~~Serbia~~
~~Algeria~~	~~Germany~~	~~Macedonia~~	~~Singapore~~
~~Argentina~~	~~Ghana~~	~~Malaysia~~	~~Slovak Republic~~
~~Armenia~~	~~Greece~~	~~Mexico~~	~~Slovenia~~
~~Australia~~	~~Hungary~~	~~Moldova~~	~~South Africa~~
~~Austria~~	~~Iceland~~	~~Mongolia~~	~~South Korea~~
~~Azerbaijan~~	~~India~~	~~Montenegro~~	~~Spain~~
~~Bangladesh~~	~~Indonesia~~	~~Morocco~~	~~Sri Lanka~~
~~Belarus~~	~~Iran~~	~~Netherlands~~	~~Sweden~~
~~Belgium~~	~~Israel~~	~~New Zealand~~	~~Thailand~~
~~Bulgaria~~	~~Italy~~	~~Norway~~	~~Trinidad and Tobago~~
~~Canada~~	~~Ivory Coast~~	~~Pakistan~~	~~Tunisia~~
~~Chile~~	~~Jamaica~~	~~People's Republic of China~~	~~Ukraine~~
~~Croatia~~	~~Japan~~	~~Philippines~~	~~United Kingdom~~
~~Czech Republic~~	~~Kazakhstan~~	~~Poland~~	~~United States~~
~~Denmark~~	~~Kuwait~~	~~Portugal~~	~~Uzbekistan~~
~~Ecuador~~	~~Kyrgyzstan~~	~~Qatar~~	~~Venezuela~~
~~Egypt~~	~~Latvia~~	~~Republic of Ireland~~	~~Vietnam~~
~~Estonia~~	~~Liechtenstein~~	~~Romania~~
~~Finland~~	~~Lithuania~~	~~Russia~~

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In addition, new treaties have been signed with Colombia, Georgia, Hong Kong, Malta, Tajikistan, Turkey and Uruguay. These treaties are not yet in force, however. By exchange of notes, extension of the 1954 Treaty with the United Kingdom applies to Antigua and Barbuda, Barbados, Belize, British Virgin Islands, Dominica, Gambia, Grenada, Malawi, Montserrat, St. Kitts and Nevis, Anguilla, St. Lucia, St. Vincent and Zambia. By exchange of notes, the 1973 Treaty with Denmark applies to the Faroe Islands.

~~Income and Profit Tax on Dividends and Similar Distributions~~

~~Swiss Holders~~

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

~~U.S. Holders and Other Holders~~

~~U.S. and other holders of common shares that are not resident in Switzerland for tax purposes and do not hold common shares as part of a Swiss business operation or a Swiss permanent establishment~~described above, are not subject to ~~Swiss income taxes in respect of dividends and similar distributions received from us.~~

~~Capital Gains Realized on Common Shares~~

Withholding Tax.

Swiss ~~Holders~~Issuance Stamp Duty

Switzerland levies a one-time Issuance Stamp Duty (Emissionsabgabe) on the issuance of corporate equity capital by Swiss companies. A 1% Swiss Holder who is an individual resident in Switzerland for tax purposes holding common shares as part of his or her private property generally is exempt from Swiss federal, cantonal and communal taxes with respectIssuance Stamp Duty applies to capital gains realized upon the sale or other disposal of the shares, unless such individual is qualified as a security trading professional for income tax purposes. Gains realized upon a repurchase of the common shares by uscontributions received for the ~~purpose~~issuance of acorporate shares, non-voting shares, participation rights, as well as informal capital ~~reduction are characterized as taxable distributions. The same is true~~contributions in cash or in kind for gains realized upon a repurchase of the common shares if we were not to dispose of the repurchased shares within six years after the repurchase or such shares were repurchased in view of a capital reduction. Taxable income would be the difference between the repurchase price and the nominal value of the common shares and qualifying additional paid-in capital.

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

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

~~U.S. Holders and Other Holders~~

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

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~~Net Worth and Capital Taxes~~

no consideration.

Swiss ~~Holders~~

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

~~U.S. Holders and Other Holders~~

Transfer Stamp ~~Taxes~~Duty upon Transfer of Securities

The ~~transfer~~sale of ~~common~~our shares, whether by ~~any holder~~Swiss residents or Non-resident Holders, may be subject to ~~a Swiss~~federal securities ~~transfer tax~~Transfer Stamp Duty (Umsatzabgabe) of ~~up to~~ 0.15%, calculated on the ~~transaction value~~gross sale proceeds, if itthe sale occurs through or with a Swiss bank or other Swiss securities dealer (Effektenhändler), as defined in the Swiss Federal Stamp ~~Tax~~Duty Act. The ~~stamp duty is~~Transfer Stamp Duty has to be paid by the securities dealer and may be charged to the parties in a taxable transaction who are not securities ~~dealers or exempt entities. Transactions in common~~dealers. In addition to this Transfer Stamp Duty, the sale of shares ~~effected~~ by or through a member of the SIX may be subject to a minor stock exchange levy.

Income Tax on Dividends

A Swiss Holder who holds Alcon shares as private assets ("Swiss Resident Private Shareholder") is required to report the receipt of dividends and similar distributions (including stock dividends and liquidation surplus) in its individual income tax

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returns and is subject to Swiss federal, cantonal and communal income tax on any net taxable income for the relevant tax period.

A Swiss Holder who is Swiss resident for tax purposes, a non-Swiss ~~financial institutions~~individual who is subject to Swiss income tax for reasons other than residency and a legal entity tax resident in Switzerland, in each case that holds Alcon shares as business assets, and a non-Swiss tax resident legal entity that holds Alcon shares as part of a Swiss permanent establishment or fixed place of business (each, a "Swiss Resident Commercial Shareholder") is required to recognize dividends and similar distributions (including stock dividends and liquidation surplus) on Alcon shares in its income statement for the relevant taxation period and is subject to Swiss federal, cantonal and communal individual or corporate income tax, as the case may be, on any net taxable earnings for such taxation period. The same tax treatment also applies to a Swiss Holder who, for income tax purposes, is classified as a "professional securities dealer" for reasons of, inter alia, frequent dealing, or leveraged investments, in shares and other securities. Swiss Resident Commercial Shareholders who are corporate taxpayers may be eligible for a participation deduction (Beteiligungsabzug) in respect of dividends if the Alcon shares held by them as part of a Swiss business have an aggregate market value of at least CHF 1 million.

Taxes upon Disposition of Alcon Shares

Capital gains realized on the sale or other disposal of Alcon shares held by a Swiss Resident Private Shareholder are generally not subject to any federal, cantonal or communal income taxation. However, gain realized upon a repurchase of shares by us may be characterized as taxable dividend income if certain conditions are met. Capital gains realized on shares held by a Swiss Resident Commercial Shareholder are, in general, included in the taxable income of such person.

Residents of Other Countries

Recipients of dividends and similar distributions on our shares who are neither residents of Switzerland for tax purposes nor holding shares as part of a business conducted through a permanent establishment situated in Switzerland ("Non-resident Holders") are not subject to Swiss income taxes in respect of such distributions. Moreover, gain realized by such recipients upon the disposal of our shares is not subject to Swiss income tax.

Non-resident Holders of our shares are, however, subject to the Withholding Tax on dividends and similar distributions mentioned above and under certain circumstances to the Transfer Stamp Duty described above. Such Non-resident Holders may be entitled to a partial refund of the Withholding Tax if the country in which they reside has entered into a bilateral treaty for the avoidance of double taxation with Switzerland. Non-resident Holders should be aware that the procedures for claiming treaty refunds (and the time frame required for obtaining a refund) may differ from country to country. Non-resident Holders should consult their own tax advisors regarding the receipt, ownership, purchase, sale or other dispositions of our shares and the procedures for claiming a refund of the Withholding Tax.

A Non-resident Holder of our shares will not be liable for any Swiss taxes other than the Withholding Tax described above and, if the transfer occurs through or with a Swiss bank or other Swiss securities ~~transfer~~dealer, the Transfer Stamp Duty described above. If, however, the shares of Non-resident Holders can be attributed to a permanent establishment or a fixed place of business maintained by such person within Switzerland during the relevant tax ~~but~~year, the shares may be subject to Swiss income taxes in respect of income and gains realized on the shares and such person may qualify for a full refund of the Withholding Tax based on Swiss tax law.

Residents of the United States

Non-resident Holders who are residents of the United States for purposes of the Treaty are eligible for a reduced rate of tax on dividends equal to 15% of the dividend, provided that such holders qualify for benefits under the Treaty and do not conduct business through a permanent establishment or fixed base in Switzerland to which our shares are attributable. Such holders should consult their own tax advisors regarding their eligibility to claim the reduced rate and the procedures for claiming a refund of the amount of the Withholding Tax in excess of the 15% Treaty rate.

International Automatic Exchange of Information in Tax Matters

On November 19, 2014, Switzerland signed the Multilateral Competent Authority Agreement, which is based on article 6 of the OECD/Council of Europe administrative assistance convention and is intended to ensure the uniform implementation of automatic exchange of information (the "AEOI"). The Federal Act on the International Automatic Exchange of Information in Tax Matters (the "AEOI Act") entered into force on January 1, 2017. The AEOI Act is the legal basis for the implementation of the AEOI standard in Switzerland.

The AEOI is being introduced in Switzerland through bilateral agreements or multilateral agreements. The agreements have been, and will be, concluded on the basis of guaranteed reciprocity, compliance with the principle of specialty (i.e. the

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information exchanged may only be used to assess and levy taxes (and for criminal tax proceedings)) and adequate data protection. The United States is not a treaty state.

Based on such multilateral agreements and bilateral agreements and the implementing laws of Switzerland, Switzerland has begun to collect data in respect of financial assets (including shares) held in, and income derived thereon and credited to, accounts or deposits with a paying agent in Switzerland for the benefit of individuals resident in a EU member state or in a treaty state from, depending on the effective date of the respective agreement, 2017 or 2018, as the case may be, and has begun to exchange such data in 2018 or 2019, as the case may be.

US Federal Income Taxation

The following discussion is a summary of the US federal income tax considerations generally applicable to the ownership and disposition of our shares. This summary is based on the Code, its legislative history, US Treasury Regulations, administrative guidance, published court decisions and the Treaty, all in effect as of the date hereof, and any of which may be repealed, revoked, or modified (possibly with retroactive effect) so as to result in US federal income tax consequences different from those discussed below. This summary is applicable to US Holders (as defined below) who are residents of the United States for purposes of the Treaty and who qualify for the full benefits of the Treaty. It applies only to US Holders that hold our shares as capital assets (generally, property held for investment purposes). This summary should not be construed to constitute legal or tax advice to any particular US Holder.

This summary does not apply to or address US Holders subject to special rules, including, without limitation, brokers, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt entities (including private foundations), insurance companies, banks, thrifts and other ~~local stamp taxes,~~financial institutions, persons liable for alternative minimum tax, persons that hold an interest in an entity that holds our shares, persons that will own, or will have owned, directly, indirectly or constructively 10% or more (by vote or value) of our stock, ~~exchange levies~~persons that hold our shares as part of a straddle, hedge, conversion, constructive sale or other ~~duties.~~integrated transaction for US federal income tax purposes or persons whose functional currency is not the US dollar.

This summary does not purport to be a complete analysis of all of the potential US federal income tax considerations that may be relevant to US Holders in light of their particular circumstances. Further, it does not address any aspect of foreign, state, local or estate or gift taxation or the 3.8% Medicare tax imposed on certain net investment income. Each US Holder is urged to consult its tax advisor regarding the application of US federal taxation to its particular circumstances and the, state, local, non-US and other tax considerations of the ownership and disposition of our shares.

~~U.S. Federal Income Tax Considerations~~General

For purposes of this discussion, a “US Holder” is a beneficial owner of our shares that is, for ~~U.S. Holders~~US federal income tax purposes:

•an individual who is a citizen or resident of the United States;

~~Taxation~~•a corporation (or other entity or arrangement treated as a corporation for US federal income tax purposes) created in or organized under the laws of ~~Dividends~~the United States, any state thereof or the District of Columbia;

•an estate the income of which is includable in gross income for US federal income tax purposes regardless of its source; or

~~The~~•a trust (A) the administration of which is subject to the primary supervision of a US court and which has one or more US persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a US person under the Code.

If a partnership (or other entity or arrangement treated as a partnership for US federal income tax purposes) is a beneficial owner of our shares, the tax treatment of a partner in the partnership that will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our shares and partners in such partnerships are urged to consult their tax advisors as to the particular US federal income tax consequences of an investment in our shares.

Distributions on the Shares

Subject to the passive foreign investment company (“PFIC”) rules discussed below, the gross amount of any distribution received by a ~~distribution made by us, including~~US Holder with respect to our shares (including any amounts ofwithheld to pay Swiss ~~tax withheld,~~withholding taxes) generally will be ~~taxable to a U.S.~~included in the gross income of the US Holder as a dividend ~~income~~ to the extent ~~paid out of our~~attributable to the Company’s current or accumulated earnings and profits, as determined under US federal income tax principles. The Company may not calculate its earnings and profits under US federal income tax rules. Accordingly, US Holders should expect that a

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distribution generally will be treated as a dividend for ~~U.S. Federal~~US federal income tax purposes. ~~The~~Unless the Company is treated as a ~~"qualified~~PFIC for the taxable year in which it pays a distribution or in the preceding taxable year (see “Passive foreign investment company rules” below), the Company believes that it may qualify as a “qualified foreign corporation,"” in which case distributions treated as dividends and ~~thus dividend income~~ received by ~~an individual taxpayer (assuming certain holding period requirements are met)~~non-corporate US Holders may be eligible for a preferential tax rate. Distributions on our shares generally ~~is taxable to such U.S. Holder at the rate imposed on net capital gains, which currently cannot exceed 15%. Dividends received on common shares~~ will not be eligible for the dividends received deduction ~~generally allowed~~available to ~~corporations.~~

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

corporations.

The amount of ~~a distribution~~any dividend paid in Swiss francs (including any amounts withheld to pay Swiss withholding taxes) will be included in the ~~U.S.~~gross income of a US Holder in an amount equal to the US dollar value of the Swiss ~~franc payment, determined at~~francs calculated by reference to the ~~spot Swiss franc/U.S. dollar~~exchange rate in effect on the date the dividend is ~~includible in a U.S. Holder's income,~~actually or constructively received by the US Holder, regardless of whether the ~~payment in fact is~~Swiss francs are converted into ~~U.S. dollars.~~

US dollars on such date. A US Holder will have a tax basis in the Swiss francs equal to their US dollar value on the date of receipt. If the Swiss francs received are converted into US dollars on the date of receipt, the US Holder generally should not be required to recognize foreign currency gain or loss in respect of the distribution. If the Swiss francs received are not converted into US dollars on the date of receipt, a US Holder may recognize foreign currency gain or loss on a subsequent conversion or other disposition of the Swiss francs. Such gain or loss generally will be treated as US source ordinary income or loss.

A ~~U.S.~~US Holder ~~will generally~~may be entitled to ~~claim a foreign tax~~deduct or credit ~~with respect to distributions received from us only for foreign taxes (such as~~ Swiss withholding ~~taxes)~~tax imposed on dividends paid to ~~such U.S.~~a US Holder, ~~and not for taxes imposed on us~~subject to applicable limitations in the Code. The rules governing the foreign tax credit are complex. US Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Sale, Exchange or ~~on any entity in which we have made an investment. Distributions with respect~~Other Taxable Disposition of Our Shares

Subject to the ~~common~~PFIC rules discussed below, a US Holder generally will recognize a capital gain or loss on the sale, exchange or other taxable disposition of our shares ~~that are taxable as dividends~~in an amount equal to the difference between the amount realized for the shares and the US Holder’s adjusted tax basis in the shares. Any capital gain or loss will be long-term capital gain or loss if the ordinary shares have been held for more than one year. Individuals and other non-corporate US Holders who have long-term capital gains will generally be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any capital gain or loss recognized by a US Holder generally will be treated as ~~foreign~~US source ~~passive income (or,~~gain or loss for ~~certain U.S. Holders of "financial services income," as defined in the Code, general category income) for U.S.~~US foreign tax credit purposes. ~~For the purpose~~

Passive Foreign Investment Company Rules

A foreign corporation will be considered a PFIC for any taxable year in which (i) 75% or more of ~~determining the foreign tax credit limitation, the amount of such dividend distributions~~its gross income is ~~reduced under a special rule that generally ensures that the amount~~“passive income” or (ii) 50% or more of the ~~foreign taxes imposed on~~average quarterly value of its assets produce (or are held for the ~~dividend~~production of) “passive income.” For this purpose, “passive income” generally includes interest, dividends, rents, royalties and certain gains. We currently do not believe that ~~can be currently credited against the U.S. Holder's U.S. Federal income tax liability will not exceed the U.S. Federal income tax on the distribution. Alternatively,~~we were a ~~U.S. Holder may generally deduct foreign taxes (such as Swiss withholding taxes) imposed on dividends paid to such U.S. Holder. The decision to claim a credit or take a~~

~~133~~

~~deduction for foreign taxes imposed on a U.S. Holder applies to all such taxes incurred by the U.S. Holder during~~PFIC in the taxable ~~year.~~

~~Tax on Sale or Exchange of Common Shares~~

For U.S. Federal income tax purposes, a U.S. Holder generally will recognize gain or loss on a sale, exchange or other disposition of common shares, unless a specific nonrecognition provision applies. That gain or lossyear ending December 31, 2021, nor do we anticipate that we will be ~~measured by~~a PFIC in subsequent taxable years. However, the ~~difference between~~determination of PFIC status is based on an annual determination that cannot be made until the ~~U.S. dollar value~~close of the ~~amount of cash, and~~taxable year, involves extensive factual investigation, including ascertaining the fair market value of ~~any other property, received~~all of our assets on a quarterly basis and the ~~U.S. Holder's tax basis~~character of each item of income that we earn, and is subject to uncertainty in ~~the common shares. A U.S. Holder's tax basis in the common shares~~several respects. Accordingly, we cannot assure you that we will generally equal the amount paid by the U.S. Holder for the common shares. Gain or loss arising from a sale or exchange of common shares will be capital gain or loss and will be long term if the holding period of the U.S. Holder for the shares exceeds one year. In general, gain from a sale or exchange of shares by a U.S. Holder willnot be treated as ~~United States source income~~a PFIC for ~~U.S. foreign tax credit limitation purposes.~~the taxable year ending December 31, 2021, or any subsequent taxable year, or that the IRS will not take a contrary position.

Required Disclosure with Respect to Foreign Financial Assets

~~Controlled Foreign Corporation~~

~~We do not expect~~Certain US Holders are required to ~~be deemed a "controlled foreign corporation" because we expect more than 50% of the voting power and value of~~report information relating to their holding an interest in our shares, subject to be held by non-U.S. persons. If more than 50% of the voting power or value of our shares were owned (directly or indirectly or by attribution) by U.S. Holders who hold 10% or more of the voting power of our outstanding shares, then we would become a controlled foreign corporation and the U.S. Holders who hold 10% or more of our voting power would be required to include in their taxable income as a constructive dividendcertain exceptions (including an ~~amount equal to their share of certain of our undistributed income.~~

~~Passive Foreign Investment Company~~

We do not expect to be a passive foreign investment company because less than 75% of our gross income will consist of certain "passive" income and less than 50% of the average value of our assets will consist of assets that produce, or are heldexception for the production of, such passive income. For this purpose, "passive" income generally includes dividends from unrelated companies, interest, royalties, rents, annuities and the excess of gains over losses from the disposition of assets that produce passive income. If we were to become a passive foreign investment company, which determination will be made on an annual basis, the passive foreign investment company rules could produce significant adverse consequences for a U.S. Holder (regardless of the ownership percentage of our shares held in accounts maintained by ~~such holder)~~certain financial institutions), ~~including~~by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold an interest in the ~~loss of the preferential~~shares. US Holders are urged to consult their tax ~~rate on dividends.~~

~~Backup Withholding and Information Reporting~~

~~Under certain circumstances, a U.S. Holder who is an individual may be subject to~~advisors regarding information reporting requirements relating to their ownership of our shares.

10.F. DIVIDENDS AND PAYING AGENTS

Not applicable.

10.G. STATEMENTS BY EXPERTS

Not applicable.

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10.H. DOCUMENTS ON DISPLAY

We maintain a website at the following address: www.alcon.com. The information on our website is not incorporated by reference in this Annual Report. We make available on or through our website certain reports and ~~backup withholding, currently~~amendments to those reports that we file with or furnish to the SEC in accordance with the Exchange Act. We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC.

You may read and copy any reports or other information that we file through the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system through the SEC’s website on the Internet at ~~a 28% rate,~~ www.sec.gov.

We also make certain other documents available to the public (such as our Board committee charters, press releases and investor presentations) on ~~dividends received on common shares. This withholding generally applies only if that individual holder:~~

·	fails to furnish his or her taxpayer identification number to the U.S. financial institution that is in charge of the administration of that holder's common shares or any other person responsible for the payment of dividends on the common shares;

·	~~furnishes an incorrect taxpayer identification number;~~

·	is notified by the U.S. Internal Revenue Service that he or she has failed to properly report payments of interest or dividends and the U.S. Internal Revenue Service has notified us that the individual holder is subject to backup withholding; or

·	~~fails, under specified circumstances, to comply with applicable certification requirements.~~

our website (www.alcon.com).

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

~~134~~

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

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

F.	~~DIVIDENDS AND PAYING AGENTS~~

~~Not Applicable.~~

G.	~~STATEMENT OF EXPERTS~~

~~Not Applicable.~~

H.	~~DOCUMENTS ON DISPLAY~~

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

Unless stated otherwise in this Annual Report, none of these documents form part of this Annual Report.

10.I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The major financing risks faced by Alcon are ~~subject~~managed by the Alcon treasury function. For information about the effects of currency and interest rate fluctuations and how we manage currency and interest risk, see "Item 5. Operating and Financial Review and Prospects—5.A. Operating Results" and "—5.B. Liquidity and Capital Resources". Please also see the information set forth under Note 18 to the ~~informational requirements~~Consolidated Financial Statements and related notes included elsewhere in this Annual Report.

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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. DEBT SECURITIES

Not applicable.

12.B. WARRANTS AND RIGHTS

Not applicable.

12.C. OTHER SECURITIES

Not applicable.

12.D. AMERICAN DEPOSITARY SHARES

Not applicable.

147

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

148

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

None.

149

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2021, the end of the ~~Exchange Act~~period covered by this Annual Report, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in accordance therewith will file reports and other information with the SEC. Such reports and other information can be inspected and copied at the public reference facilities maintained by the SEC at its principal offices at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such information may be obtained from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The Commission also maintains a website ~~(http://www.sec.gov)~~ ~~that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.~~

~~As a foreign private issuer, we are not subject to the proxy rules~~Rule 13a-15(e) under ~~Section 14 of~~ the Exchange ~~Act~~Act). Based upon that evaluation, our Chief Executive Officer and ~~our officers, directors and principal shareholders are not subject to the insider short-swing profit disclosure and recovery provisions under Section 16 of the Exchange Act.~~

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

I.	~~SUBSIDIARY INFORMATION~~

~~Not Applicable.~~

~~ITEM 11.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~Interest Rate Risks~~

Because we have previously, and expect to continue, to finance our operations, in part, through loans, we are exposed to interest rate risks that could impact our results of operations and financial position. At December 31, 2010, the majority of our loans were short term, floating rate loans that will become more expensive when interest rates rise and less expensive when they fall. We have partly mitigated this risk by investing our cash, cash

~~135~~

equivalents and short term investments in floating rate investments. We evaluate the use of interest rate swaps and periodically use such agreements to manage interest rate risk on selected debt instruments.

In January 2001, we entered into a 10-year interest rate swap with a notional amount of 5 billion Japanese yen, effectively converting our 5 billion Japanese yen fixed interest rate (1.6%) obligation to a floating rate LIBOR (0.2% at December 31, 2010) instrument. At December 31, 2010, the fair value of the interest rate swap was less than $1 million, based on market data, including the relevant interest rate. The equivalent notional principal amount at December 31, 2010 was $61 million.

~~At December 31, 2010, our interest rate sensitivity was largely dependent on the following balance sheet components:~~

Interest Rate Sensitivity

Annual Pretax Earnings Effect
Fair Value/ 100 Basis 100 Basis
Notional Amount Points Decrease Points Increase
Segment in Rates in Rates
Variable Rate Instruments (in millions)
Assets:
Cash and Cash Equivalents - Variable Rate $ 2,525 $ (25 ) $ 25

Liabilities:
Short Term Debt - Variable Rate 337 3 (3 )
Interest Rate Swaps – Variable Rate 61 1 (1 )

Net
$ (21 ) $ 21

Additionally, the Company holds fixed income portfolios with various strategies, all of which are actively managed within specific risk parameters. The market value of the Company's fixed income portfolios classified as available-for-sale investments was approximately $1,281 million at December 31, 2010, of which $560 million were U.S. government and agency securities, $9 million were mortgage-backed securities, $690 million were corporate debt securities, and $22 million were certain other investments.

~~Credit Risks~~

In the normal course of our business, we incur credit risk because we extend trade credit to our customers. We believe that these credit risks are well diversified, and our internal staff actively manages these risks. Our principal concentrations of trade credit are generally with large and financially sound corporations, such as large retailers and grocery chains, drug wholesalers and governmental agencies. It is not unusual for our five largest customers in the United States to represent in the aggregate approximately 16% of the outstanding balance of gross accounts receivable; however, no single customer accounted for more than 10% of the Company's consolidated sales in the year ended December 31, 2010.

In connection with our sales of surgical equipment, we frequently finance the purchase of our equipment and enter into leases and other financial transactions with our customers. In general, these loans and other transactions range in duration from one to five years and in principal amount range from $15,000 to $500,000. We conduct credit analyses of the customers to whom we extend credit and secure the loans and leases with the purchased surgical equipment. Over the last 24 years, we have offered financing programs for surgical equipment and losses have not been material to our operations. In countries that may be subject to high inflation, the credit risks to which we are exposed can be larger and less predictable.

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

~~136~~

In certain countries in the European Union, many of our government customers have significantly delayed payment of amounts owed to us for their purchase of our products. This has increased our exposure to credit risk in these countries. We regularly review these risks and take appropriate actions related to them.

~~Currency Risk~~

Because a significant portion of our revenues and earnings are denominated in foreign currencies, we are exposed to market risk from changes in currency exchange rates that could impact our results of operations and financial position. We manage our exposure to these currency risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments.

We use foreign currency forward contracts and options to manage the volatility of non-functional currency monetary assets and liabilities resulting from changes in exchange rates. Foreign currency forward contracts are used primarily to hedge intercompany receivables and payables. The use of these derivative financial instruments allows us to reduce our overall exposure to exchange rate fluctuations, since the gains and losses on the derivative contracts substantially offset losses and gains on the underlying assets and liabilities being hedged.

The fair value of foreign currency forward contracts is subject to changes in currency exchange rates. Because we target hedging less than 100% of currency risk, we believe that any gains or losses to foreign currency forward contracts resulting from exchange rate fluctuations primarily would offset gains or losses on the underlying foreign currency assets or liabilities. Regarding foreign currency forward contracts, an instantaneous 10% appreciation in the value of foreign currencies against the U.S. dollar at December 31, 2010 would have decreased our earnings before income taxes by approximately $68 million. We believe that such losses would be offset primarily by gains on the underlying foreign currency assets or liabilities.

At December 31, 2010, our financial instruments included $680 million equivalent notional amount of foreign currency forward contracts intended to offset potential earnings effects from intercompany receivables and loans (denominated in various currencies) held by a Swiss subsidiary.

~~Other Market Risk~~

Management reevaluated the Company's overall investment portfolio strategy and mix of investments in light of market conditions late in 2008. In December 2008, the board of directors authorized the Company to liquidate holdings in hedge funds and real estate investment trusts in an effort to reduce investment portfolio volatility. In January 2009, the Company sold its investment in real estate investment trusts. The Company filed redemption requests with the managers of the hedge funds and received the majority of the proceeds of these redemptions during 2009. Proceeds from these liquidations in 2009 were reinvested primarily in cash, cash equivalents and investment-grade fixed income investments. The Company expects to receive additional proceeds from the remaining hedge funds redemptions during 2011.

The Company's hedge fund investments are professionally managed by firms with long term performance records. Asset allocation and manager performance are monitored regularly. At December 31, 2010, the fair value of the Company's hedge funds was $6 million. The hedge funds were classified as trading securities.

The values of these investments are subject to market price volatility. The potential impact to the fair value of this portion of the investment portfolio assuming a hypothetical change in value of each security of a decline and an increase of 10% would be a reduction of $1 million or an increase of $1 million, respectively. While actual market prices for individual securities of this type can be volatile, this sensitivity assumes that all securities in the portfolio exhibit the same volatility concurrently. Security market prices change in a more complex fashion than presented.

~~ITEM 12.~~

~~DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES~~

~~Not Applicable.~~

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~~PART II~~

~~ITEM 13.~~

~~DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES~~

~~None.~~

~~ITEM 14.~~

~~MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS~~

~~Not Applicable.~~

~~ITEM 15.~~

~~CONTROLS AND PROCEDURES~~

~~(a)~~

~~Disclosure Controls and Procedures~~. As of the end of the period covered by this annual report (the "Evaluation Date"), the Company conducted an evaluation (under the supervision and with the participation of the Company's management, including its chief executive officer and its chief financial officer) pursuant to Rule 13a-15 of the Exchange Act of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)).

~~Based on this evaluation, the Company's chief executive officer and its chief financial officer~~Chief Financial Officer concluded that as of December 31, 2021, the ~~Evaluation Date,~~end of the ~~Company's~~period covered by this Annual Report, we maintained effective disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Basedprocedures.

Management’s Annual Report on this evaluation, the Company's chief executive officer and its chief financial officer concluded that as of the Evaluation Date, the Company's disclosure controls and procedures also were effective to provide reasonable assurance that material information required to be disclosed by the Company in reports it files or submits under the Exchange Act were accumulated and communicated to the Company's chief executive officer and its chief financial officer, as appropriate to allow timely decisions regarding required disclosure.Internal Control Over Financial Reporting

~~(b)~~

~~Management's Report on Internal Control over Financial Reporting. Management's Report on Internal Control over Financial Reporting is included under Item 18 on page F-2.~~

~~(c)~~

~~Attestation Report of the Registered Public Accounting Firm. The report of KPMG LLP, an independent registered public accounting firm, is included under Item 18 on page F-4.~~

~~(d)~~

~~Changes in Internal Control over Financial Reporting~~. There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation performed above that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

~~ITEM 16.~~

~~[RESERVED]~~

~~ITEM 16A.~~

~~AUDIT COMMITTEE FINANCIAL EXPERT~~

Alcon's board of directors has determined that Thomas G. Plaskett is an "audit committee financial expert" as defined in the instructions for Item 16A of Form 20-F. Mr. Plaskett is "independent," as determined in accordance with the rules of the NYSE.

~~ITEM 16B.~~

~~CODE OF ETHICS~~

Alcon has adopted a Code of Business Conduct and Ethics that applies to all employees, including its Chief Executive Officer, Chief Financial Officer and its principal accounting officer. The Company has posted this Code of Ethics to its website, ~~www.alcon.com~~, where it is publicly available. In addition, Alcon will provide a printed copy of its Code of Business Conduct and Ethics to its shareholders without charge upon request. All such requests should

~~138~~

~~be sent in writing to Global Compliance, Alcon Laboratories, Inc., 6201 South Freeway, TA2-2, Fort Worth, Texas 76134.~~

~~ITEM 16C.~~

~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~

~~The aggregate worldwide fees billed by KPMG LLP and its affiliates for professional services to the Company were $7.8 million in 2010 and $6.1 million in 2009, as noted below.~~

2010 2009
(in thousands)

Audit fees (1)                                    ��                                                $ 7,306 $ 5,790
Audit-related fees (2)                                                                                     57 57
Tax fees (3)                                                                                     353 240
All other fees (4)                                                                                     78 47
Total fees                                                                                $ 7,794 $ 6,134

~~(1)~~

Audit fees represent fees for professional services provided for the integrated audit of the Company's annual financial statements, review of the Company's quarterly financial statements, and statutory audits for the Company's worldwide subsidiaries/affiliates. In 2010, audit fees include additional fees related to the change of majority ownership and reporting to Novartis, for which the Company expects reimbursement from Novartis.

~~(2)~~

~~Audit-related fees consisted principally of fees for international audit coordination and audits of financial statements of certain employee benefit plans.~~

~~(3)~~

~~Tax fees represent fees for professional services related to tax compliance and tax planning/advisory consultation.~~

~~(4)~~

~~All other fees represent professional services provided for services not directly supporting financial statement audits.~~

The above professional services are covered within the scope of audit and permitted non-audit services as defined by SEC regulations. All fees disclosed for the fiscal years ended December 31, 2010 and 2009 have been approved by the Audit Committee, subject to the policy and procedures described below.

~~Audit Committee Pre-Approval Policy and Procedures~~

~~Policy~~

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

~~(1)~~

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

~~(2)~~

~~All non-audit services, including tax services.~~

~~Procedures~~

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

2.	Specifically related to permitted tax services, the Audit Committee annually pre-approves such particular services for all Company subsidiaries rendered by the external auditors. All other tax services to be performed

~~139~~

~~by the external auditors as needed or incremental to the annual pre-approved services list will be approved by the Audit Committee prior to engagement of the service.~~

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

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

~~ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES~~

~~None.~~

~~ITEM 6E.~~

~~PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS~~

The following table provides information with respect to purchases made during the year ended December 31, 2010 by or on behalf of Alcon or any "affiliated purchaser," of its common shares that are registered pursuant to Section 12 of the Exchange Act.

~~ISSUER PURCHASES OF EQUITY SECURITIES~~

Total Number of
Shares Purchased Maximum Number of
Total Number of Average Price as Part of Publicly Shares That May Yet
Shares Purchased Paid Announced Plans or Be Purchased under the
Period (a)(b)(c) per Share Programs (a)(b)(c) Plans or Programs (d)(e)

January 1 to 31, 2010 4,369 155.67 4,369 1,759,660
February 1 to 28, 2010 41,175 157.58 41,175 1,718,485
March 1 to 31, 2010 10,204 162.33 10,204 1,708,281
April 1 to 30, 2010 19,028 152.88 19,028 1,689,253
May 1 to 31, 2010 1,174 151.76 1,174 1,688,079
June 1 to 30, 2010 820 148.21 820 1,687,259
July 1 to 31, 2010 1,560 152.89 1,560 1,685,699
August 1 to 31, 2010 74,600 160.28 74,600 1,611,099
September 1 to 30, 2010 28,456 165.21 28,456 1,582,643
October 1 to 31, 2010 9,679 167.21 9,679 1,572,964
November 1 to 30, 2010 6,531 167.12 6,531 1,566,433
December 1 to 31, 2010 9,493 161.28 9,493 1,556,940
Total 207,089 160.18 207,089 N/A

~~(a)~~

~~Based on settlements occurring within the month.~~

~~(b)~~

~~Shares purchased include shares withheld to cover employee taxes under provisions of employee share-based compensation plans.~~

~~(c)~~

In addition to the purchases disclosed in this table, during 2010 the Company also acquired 239 treasury shares from forfeitures of restricted shares by employees who terminated employment with the Company before vesting in such shares.

~~(d)~~

On September 7, 2007, Alcon's board of directors authorized the purchase in the market of up to 2,000,000 Alcon common shares. The Company plans to use the acquired shares to cover the expected future exercises of employee share-based awards. From time to time, the Company may purchase shares in the open market.

~~140~~

~~(e)~~

In 2008, as a result of the agreement between Nestlé and Novartis discussed in note 16 to the consolidated financial statements, the Company halted the purchase of Alcon common shares in the open market under all share repurchase programs. However, the Company has continued to acquire shares withheld from employees' exercises of share-based awards to cover their taxes.

~~ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT~~

~~None.~~

~~ITEM 16G. CORPORATE GOVERNANCE~~

~~Compliance with NYSE Listing Standards on Corporate Governance~~

On November 4, 2003, the SEC approved rules proposed by the NYSE intended to strengthen corporate governance standards for listed companies. These corporate governance listing standards supplement the corporate governance reforms already adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002.

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

These rules did not change the NYSE's traditional approach of permitting listed companies that are foreign private issuers, such as Alcon, to follow their home jurisdiction governance practices where such practices differ from the NYSE requirements. However, listed companies that are foreign private issuers must disclose any significant ways in which their corporate governance practices differ from those followed by U.S. companies under NYSE listing standards. These are identified in the first table below.

In addition, certain of the NYSE's corporate governance standards allow for an exemption for "controlled companies," as defined under the NYSE listing standards. The NYSE listing standards require a controlled company that chooses to take advantage of any or all of these exemptions must disclose that choice, that it is a controlled company and the basis for the determination. Alcon has determined that it is a controlled company for purposes of the NYSE listing standards, as approximately 77% of the outstanding common shares of Alcon are owned by Novartis AG, and Novartis has the right to appoint six of the eleven members of our board of directors. The second table below identifies the NYSE listing standards from which Alcon has elected to use the controlled company exemption.

~~141~~

~~NYSE rules applicable to~~ ~~U.S. listed companies~~	~~Alcon's practice~~
A U.S. listed company's compensation committee must have a written charter providing the committee with responsibility for approving corporate goals and objectives relevant to Chief Executive Officer ("CEO") compensation.	Alcon's compensation committee charter gives it the responsibility for reviewing and assessing the corporate goals and objectives relevant to CEO compensation, but in accordance with Swiss law the board of directors is responsible for actually approving those goals and objectives.
~~A U.S. listed company must assign the responsibility to determine and approve the CEO's compensation level to the compensation committee.~~	Pursuant to Swiss law, the determination of CEO compensation is the responsibility of the board of directors. Alcon's compensation committee evaluates CEO compensation and makes a recommendation to the board of directors.
~~All listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.~~	Rule 10A-3 of the Exchange Act requires the audit committee of a U.S. company to be directly responsible for the appointment of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit review or attest services. There is an exception for foreign private issuers that are required under home country law to have statutory auditors selected pursuant to home country requirements. Swiss law requires that Alcon's statutory auditors be appointed by the shareholders at the annual general meeting of the shareholders and that the board of directors recommends to the shareholders whether to approve the statutory auditors. Alcon's audit committee is responsible for evaluating the statutory auditors and advising the board of directors of its recommendation regarding their appointment.
A U.S. listed company must obtain shareholder approval of amendments to employee plans involving the stock of the company that are deemed material pursuant to NYSE Listed Company Manual Section 303A.08.	The Amended 2002 Alcon Incentive Plan was amended by action of the board of directors without necessity of obtaining shareholder approval. Pursuant to Swiss law, shareholder approval is not required to make material amendments to employee equity incentive plans. Rather, the authority to do so lies with the board of directors. However, shareholder approval is required to increase conditional capital if the number of shares required to satisfy the Amended 2002 Alcon Incentive Plan exceeds the existing conditional capital and the treasury shares available.
~~NYSE rules under which Alcon claims exemption as a controlled company~~	~~Alcon's practice~~
~~A majority of the directors of a U.S. listed company's board must be independent.~~	~~Alcon's board consists of (i) three independent directors, (ii) six directors that were designated by Novartis, (iii) the vice chairman and (iv) the CEO of Alcon Laboratories, Inc.~~
~~A U.S. listed company's nominating/corporate governance committee must be composed entirely of independent directors.~~	Alcon's nominating/corporate governance committee is composed of at least two independent directors and at least one director designated by Novartis as long as Novartis remains as Alcon, Inc.'s majority shareholder.
~~A U.S. listed company's compensation committee must be composed entirely of independent directors.~~	~~Alcon's compensation committee is composed of at least two independent directors and at least one director designated by Novartis as long as Novartis remains as Alcon, Inc.'s majority shareholder.~~

~~142~~

~~PART III~~

~~ITEM 17.~~

~~FINANCIAL STATEMENTS~~

~~Not Applicable.~~

~~ITEM 18.~~

~~FINANCIAL STATEMENTS~~

~~INDEX TO FINANCIAL STATEMENTS~~

	~~Page~~ ~~Reference~~
~~ALCON, INC. AND SUBSIDIARIES:~~
~~Management's Report on Internal Control over Financial Reporting~~	~~F-2~~
~~Reports of Independent Registered Public Accounting Firm~~	~~F-3~~
~~Consolidated Balance Sheets - December 31, 2010 and 2009~~	~~F-5~~
~~Consolidated Statements of Earnings - Years ended~~
~~December 31, 2010, 2009 and 2008~~	~~F-6~~
~~Consolidated Statements of Shareholders' Equity and~~
~~Comprehensive Income - Years ended December 31,~~
~~2010, 2009 and 2008~~	~~F-7~~
~~Consolidated Statements of Cash Flows - Years ended~~
~~December 31, 2010, 2009 and 2008~~	~~F-8~~
~~Notes to Consolidated Financial Statements~~	~~F-9~~

~~143~~

~~ITEM 19. EXHIBITS~~

~~EXHIBIT INDEX~~

~~Exhibit~~
~~No.~~	~~Description~~
~~1.1~~	~~Registrant's Articles of Association, as of January 20, 2011~~
	~~(Incorporated by reference to Exhibit 99.1 of Registrant's Report on~~
	~~Form 6-K filed on February 10, 2011)~~
~~1.2~~	~~Registrant's Organizational Regulations, as of February 2, 2011~~
~~2.1~~	~~The Registrant agrees to furnish copies of any instruments defining the~~
	~~rights of holders of long term debt of the Registrant and its~~
	~~consolidated subsidiaries to the Commission upon request.~~
~~4.1~~	~~Amended 2002 Alcon Incentive Plan effective January 1, 2010~~
	~~(Incorporated by reference to Exhibit 99.1 to the Registrant's Registration~~
	~~Statement on Form S-8 filed on October 29, 2009, File No. 333-162738)~~
~~4.2~~	~~Alcon Executive Deferred Compensation Plan~~
	~~(Incorporated by reference to Exhibit 99.1~~
	~~of Registrant's Report on Form 6-K filed on March 5, 2009)~~
~~4.3~~	~~Alcon 401(k) Retirement Plan and Trust~~
	~~(Incorporated by reference to Exhibit 99.1 to the Registrant's Registration~~
	~~Statement on Form S-8 filed on October 29, 2009, File No. 333-162736)~~
~~4.4~~	~~Alcon Excess 401(k) Plan~~
	~~(Incorporated by reference to Exhibit 99.5~~
	~~of Registrant's Report on Form 6-K filed on March 5, 2009)~~
~~4.5~~	~~Alcon Supplemental Executive Retirement Plan for Alcon Holdings, Inc.~~
	~~and Affiliated Entities~~
	~~(Incorporated by reference to Exhibit 99.2 of Registrant's Report~~
	~~on Form 6-K filed on March 5, 2009)~~
~~4.6~~	~~Alcon Supplemental Executive Retirement Plan for Alcon, Inc. as~~
	~~Successor to Alcon Holdings, Inc. and Affiliated Entities~~
	~~(Incorporated by reference to Exhibit 99.3 of Registrant's Report~~
	~~on Form 6-K filed on March 5, 2009)~~
~~4.7~~	~~Alcon Supplemental Executive Retirement Plan II for Alcon, Inc. as~~
	~~Successor to Alcon Holdings, Inc. and Affiliated Entities~~
	~~(Incorporated by reference to Exhibit 99.4 of Registrant's Report~~
	~~on Form 6-K filed on March 5, 2009)~~
~~4.8~~	~~Amended and Restated Registration Rights Agreement dated as of~~
	~~December 10, 2009 between Alcon, Inc. and Nestlé S.A.~~
	~~(Incorporated by reference to Exhibit 99.2 of Registrant's Report~~
	~~on Form 6-K filed on March 11, 2010)~~
~~4.9~~	~~Registration Rights Agreement dated as of December 10, 2009 between~~
	~~Alcon, Inc. and Novartis AG~~
	~~(Incorporated by reference to Exhibit 99.3 of Registrant's Report~~
	~~on Form 6-K filed on March 11, 2010)~~
~~4.10~~	~~Shareholder Coordination Letter Agreement dated December 10, 2009~~
	~~between Alcon, Inc., Nestlé S.A. and Novartis AG~~
	~~(Incorporated by reference to Exhibit 99.1 of Registrant's Report~~
	~~on Form 6-K filed on March 11, 2010)~~
~~4.11~~	~~Stock Purchase Agreement between Alcon Holdings Inc. and LenSx Lasers~~
	~~Inc. and the Shareholders Listed Herein and William Link and James~~
	~~Garvey as the Sellers' Representatives dated July 6, 2010~~
	~~(Incorporated by reference to Exhibit 99.1 to the Registrant's Report on~~
	~~Form 6-K filed on July 9, 2010)~~
~~4.12~~	~~Alcon Litigation Trust Agreement dated July 7, 2010, between Alcon, as~~
	~~grantor, and Thomas G. Plaskett, Joan W. Miller and Lodewijk J.R. de~~
	~~Vink, as trustees.~~

~~144~~

~~EXHIBIT INDEX (continued)~~

~~Exhibit~~
~~No.~~	~~Description~~
~~4.13~~	~~Merger Agreement dated December 14, 2010 between Novartis AG and~~
	~~Alcon, Inc.~~
	~~(Incorporated by reference to Exhibit 99.1 to the Registrant's~~
	~~Report on Form 6-K filed on December 16, 2010)~~
~~8.1~~	~~Significant Subsidiaries of the Registrant~~
	~~(Incorporated by reference to Exhibit 8.1 to the Registrant's Annual Report~~
	~~on Form 20-F filed on March 17, 2009)~~
~~12.1~~	~~Certification of Chief Executive Officer Required by~~
	~~Rule 13a-14(a) (17 CFR240.13a-14(a)) or Rule 15d-14(a)~~
	~~(17 CFR240.15d-14(a))~~
~~12.2~~	~~Certification of Chief Financial Officer Required by~~
	~~Rule 13a-14(a) (17 CFR240.13a-14(a)) or Rule 15d-14(a)~~
	~~(17 CFR240.15d-14(a))~~
~~13.1~~	~~Certification Furnished Pursuant to 18 U.S.C. Section 1350 as~~
	~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~
~~15.1~~	~~Consent of Independent Registered Public Accounting Firm~~
~~101.INS~~	~~XBRL Instance Document~~
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
~~101.DEF~~	~~XBRL Taxonomy Definition Linkbase Document~~

~~145~~

~~SIGNATURES~~

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

		~~Alcon, Inc.~~
		~~(Registrant)~~


		~~/s/ Robert Karsunky~~
		~~Robert Karsunky, Senior Vice President, Finance,~~
		~~Chief Financial Officer and Corporate Strategy Officer~~

~~Date:~~
~~March 18, 2011~~

~~146~~

~~INDEX TO FINANCIAL STATEMENTS~~

	~~Page~~
	~~Reference~~
~~ALCON, INC. AND SUBSIDIARIES:~~
~~Management's Report on Internal Control over Financial Reporting~~	~~F-2~~
~~Reports of Independent Registered Public Accounting Firm~~	~~F-3~~
~~Consolidated Balance Sheets - December 31, 2010 and 2009~~	~~F-5~~
~~Consolidated Statements of Earnings - Years ended~~
~~December 31, 2010, 2009 and 2008~~	~~F-6~~
~~Consolidated Statements of Shareholders' Equity and~~
~~Comprehensive Income - Years ended December 31,~~
~~2010, 2009 and 2008~~	~~F-7~~
~~Consolidated Statements of Cash Flows - Years ended~~
~~December 31, 2010, 2009 and 2008~~	~~F-8~~
~~Notes to Consolidated Financial Statements~~	~~F-9~~

~~F-1~~

~~MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING~~

~~Alcon, Inc.'s~~Our management is responsible for establishing and maintaining adequate internal control over financial ~~reporting. Alcon, Inc.'s~~reporting (as defined in Rule 13a-15(f) under the Exchange Act). Because of its inherent limitations, internal control ~~system was designed to provide reasonable assurance to the Company's management regarding the reliability of~~over financial reporting ~~and the preparation and fair presentation of its published consolidated financial statements.~~

~~All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective~~ may not prevent or detect ~~misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation.~~misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

~~Alcon, Inc.'s~~Our management, ~~assessed~~including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting using the ~~Company's~~criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the results of this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Our independent registered public accounting firm, PricewaterhouseCoopers LLP, audited the effectiveness of our internal control over financial reporting. PricewaterhouseCoopers LLP's attestation report on our internal control over financial reporting as of December 31, ~~2010.~~2021 is included in Item 18 of this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fiscal year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

150

ITEM 16A. AUDIT COMMITTEE AND FINANCIAL EXPERT

Our Board has determined that Lynn D. Bleil, Scott Maw, Karen May and Dieter Spälti, each of whom serves on our Audit and Risk Committee ("ARC"), are independent for purposes of serving on the audit committee under Rule 10A-3 and the listing standards promulgated by the New York Stock Exchange and are audit committee financial experts.

ITEM 16B. CODE OF ETHICS

Our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer are bound to adhere to our Code of Business Conduct, which applies to all of our associates and members of our Board. Our Code of Business Conduct is available on our website at www.alcon.com/about-us/responsible-business-practice.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance—Auditors—Auditing Fees and Additional Fees" is incorporated by reference.

Policy on Audit and Risk Committee Pre-Approval of Services of Principal Accountant

The Audit and Risk Committee has established a written policy to pre-approve, on an annual basis, all anticipated audit and non-audit services provided by our independent auditors (“Pre-Approval Policy”). These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to 12 months from the date of pre-approval, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget.

The Pre-Approval Policy provides that the independent auditors may not perform any services for Alcon unless the independent auditors are engaged pursuant to the Pre-Approval Policy. In addition, the Pre-Approval Policy prohibits the Audit and Risk Committee from pre-approving certain non-audit services that are prohibited from being performed by the independent auditors by applicable securities laws. Management is required to periodically report to the Audit and Risk Committee regarding the extent of services provided by the independent auditors. In 2021, approximately 97% of audit-related, tax and other services provided by PwC were pre-approved.

In connection with its review and evaluation of non-audit services, the Audit and Risk Committee is required to and does consider and conclude that the provision of the non-audit services is compatible with maintaining the independence of the independent auditor.

151

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Neither we nor any of our affiliated purchasers purchased any of our Ordinary Shares for the fiscal year ended December 31, 2021.

152

ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

The information set forth under “Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Corporate Governance—Differences from Corporate Governance Standards Relevant to US-listed Companies" is incorporated by reference.

153

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

154

PART III

ITEM 17. FINANCIAL STATEMENTS

See response to "Item 18. Financial Statements."

ITEM 18. FINANCIAL STATEMENTS

Please refer to the financial statements beginning on page F-1 of this Annual Report.

155

ITEM 19. EXHIBITS


Exhibit Number						Description
1.1						Articles of Incorporation of Alcon Inc., as amended December 1, 2020 (English Translation) - incorporated by reference to Exhibit 1.1 to the Annual Report on Form 20-F (File No. 001-31269 ) filed with the Securities and Exchange Commission on February 23, 2 0 21
1.2						Regulations of the Board of Directors of Alcon Inc., as amended May 6, 2020 (English Translation)- incorporated by reference to Exhibit 1.2 to the Annual Report on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on February 23, 2021
2.1						Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934
2.2						The total amount of long-term debt securities authorized under any instrument does not exceed 10% of the total assets of Alcon and its subsidiaries on a consolidated basis. We hereby agree to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of long-term debt of Alcon or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.11						Facilities Agreement by and among Alcon Inc., as borrower, Bank of America Merrill Lynch International Designated Activity Company, BNP Paribas Fortis SA/NV, Citigroup Global Markets Limited, Morgan Stanley Bank International Limited and UBS AG, London Branch, as joint lead arrangers and joint bookrunners, and Citibank Europe PLC, UK Branch, as agent, dated as of March 6, 2019 - incorporated by reference to Exhibit 4.11 to the Registration Statement on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on March 13, 2019
4.12						Alcon Inc. Long Term Incentive Plan, as amended - incorporated by reference to Exhibit 4.12 to the Annual Report on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on February 25, 2020
4.13						Alcon Inc. Deferred Bonus Stock Plan, as amended - incorporated by reference to Exhibit 4.13 to the Annual Report on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on February 25, 2020
4.14						Alcon Swiss Employee Share Ownership Plan - incorporated by reference to Exhibit 99.3 to the Registration Statement on Form S-8 (File No. 333-230794) filed with the Securities and Exchange Commission on April 10, 2019
4.15						Alcon Laboratories Ireland Share Participation Scheme - incorporated by reference to Exhibit 99.4 to the Registration Statement on Form S-8 (File No. 333-230794) filed with the Securities and Exchange Commission on April 10, 2019
4.16						Alcon Inc. UK Share Incentive Plan, as amended - incorporated by reference to Exhibit 4.16 to the Annual Report on Form 20-F (File No. 001-31269) filed with the Securities and Exchange Commission on February 23, 2021
4.17*						Option Agreement and Plan of Merger by and among Alcon Research, Ltd., Ithaca Merger Sub, Inc., and Ivantis, Inc., dated as of November 9, 2018
4.18*						Amendment No. 1 to Option Agreement and Plan of Merger by and among Alcon Research, LLC, Ithaca Merger Sub, Inc., and Ivantis, Inc., dated as of December 16, 2019
8.1						For a list of all principal subsidiaries of Alcon Inc., see "Item 18. Financial Statements-Note 28. Alcon subsidiaries".
12.1						Certification of David J. Endicott, Chief Executive Officer of Alcon Inc., Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
12.2						Certification of Timothy C. Stonesifer, Chief Financial Officer of Alcon Inc., Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
13.1						Certification of David J. Endicott, Chief Executive Officer of Alcon Inc., Pursuant to 18 U.S.C Section 1350
13.2						Certification of Timothy C. Stonesifer, Chief Financial Officer of Alcon Inc., Pursuant to 18 U.S.C Section 1350
15.1						Consent of PricewaterhouseCoopers LLP
101.SCH						Inline XBRL Taxonomy Extension Schema

156


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)
*Certain portions of this exhibit have been redacted pursuant to Instruction 4(a) as to Exhibits of Form 20-F. The Company agrees to furnish supplementally an unredacted copy of the exhibit to the SEC or its Staff upon request.

157

Signatures

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


Alcon Inc.
By:	/s/ David J. Endicott
	Name:	David J. Endicott
	Title:	Authorized Representative

By:	/s/ Timothy C. Stonesifer
	Name:	Timothy C. Stonesifer
	Title:	Authorized Representative

Date: February 15, 2022

158

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.


Audited Consolidated Financial Statements
Consolidated Income Statement			F-2
Consolidated Statement of Comprehensive Income/(Loss)			F-3
Consolidated Balance Sheet			F-4
Consolidated Statement of Changes in Equity			F-5
Consolidated Statement of Cash Flows			F-6
Notes to Consolidated Financial Statements			F-7
Report of Independent Registered Public Accounting Firm			F-65

F-1

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.

Consolidated Income Statement

(For the years ended December 31, 2021, 2020 and 2019)


($ millions except earnings/(loss) per share)	Note	2021	2020	2019
Net sales to third parties	5	8,222	6,763	7,362
Other revenues	5	69	70	146
Net sales and other revenues		8,291	6,833	7,508
Cost of net sales		(3,577)	(3,830)	(3,719)
Cost of other revenues		(62)	(63)	(127)
Gross profit		4,652	2,940	3,662
Selling, general & administration		(3,076)	(2,694)	(2,847)
Research & development		(842)	(673)	(656)
Other income		43	235	55
Other expense		(197)	(290)	(401)
Operating income/(loss)		580	(482)	(187)
Interest expense	6	(120)	(124)	(113)
Other financial income & expense	6	(42)	(29)	(32)
Income/(loss) before taxes		418	(635)	(332)
Taxes	7	(42)	104	(324)
Net income/(loss)		376	(531)	(656)

Earnings/(loss) per share ($)
Basic	8	0.77	(1.09)	(1.34)
Diluted	8	0.76	(1.09)	(1.34)

Weighted average number of shares outstanding (millions)
Basic	8	490.0	489.0	488.2
Diluted	8	493.4	489.0	488.2

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-2

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Consolidated Statement of Comprehensive Income/(Loss)

(For the years ended December 31, 2021, 2020 and 2019)


($ millions)	2021	2020	2019
Net income/(loss)	376	(531)	(656)
Other comprehensive income to be eventually recycled into the Consolidated Income Statement:
Currency translation effects, net of taxes(1)	(58)	19	(4)
Total of items to eventually recycle	(58)	19	(4)
Other comprehensive income never to be recycled into the Consolidated Income Statement:
Actuarial gains/(losses) from defined benefit plans, net of taxes(2)	26	(14)	(55)
Fair value adjustments on equity securities, net of taxes(3)	—	(7)	(2)
Total of items never to be recycled	26	(21)	(57)
Total comprehensive income/(loss)	344	(533)	(717)

(1)Amount is net of tax benefit of $6 million in 2021.

(2)Amounts are net of tax expense of $11 million in 2021, and net of tax benefits of $13 million and $11 million in 2020 and 2019, respectively.

(3)Amounts are net of tax benefits of $3 million and $5 million in 2020 and 2019, respectively.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-3

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Consolidated Balance Sheet

(At December 31, 2021 and 2020)


($ millions)	Note	2021	2020
Assets
Non-current assets
Property, plant & equipment	9	3,711	3,425
Right-of-use assets	16	372	358
Goodwill	10	8,905	8,905
Intangible assets other than goodwill	10	8,765	9,097
Deferred tax assets	11	409	399
Financial assets	12	217	218
Other non-current assets	12	234	211
Total non-current assets		22,613	22,613
Current assets
Inventories	13	1,899	1,644
Trade receivables	14	1,496	1,361
Income tax receivables		9	21
Cash and cash equivalents	18	1,575	1,557
Other current assets	15	407	404
Total current assets		5,386	4,987
Total assets		27,999	27,600

Equity and liabilities
Equity

Share capital	8.1	20	20
Reserves		19,236	18,802
Total equity		19,256	18,822
Liabilities
Non-current liabilities
Financial debts	17	3,966	3,949
Lease liabilities	16	339	315
Deferred tax liabilities	11	1,026	1,196
Provisions & other non-current liabilities	19	940	1,060
Total non-current liabilities		6,271	6,520
Current liabilities
Trade payables		903	876
Financial debts	17	114	169
Lease liabilities	16	67	70
Current income tax liabilities		187	149
Provisions & other current liabilities	20	1,201	994
Total current liabilities		2,472	2,258
Total liabilities		8,743	8,778
Total equity and liabilities		27,999	27,600

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-4

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Consolidated Statement of Changes in Equity

(For the years ended December 31, 2021, 2020 and 2019)


($ millions)	Share capital	Other reserves	Former parent net investment	Fair value adjustments on equity securities	Actuarial gains/(losses) from defined benefit plans	Cumulative currency translation effects	Total value adjustments(1)	Equity
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(2)		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
Net (loss)		(531)	—				—	(531)
Other comprehensive income/(loss)				(7)	(14)	19	(2)	(2)
Total comprehensive (loss)	—	(531)	—	(7)	(14)	19	(2)	(533)
Equity-based compensation		70	—				—	70
Other movements(2)		5	—		(23)		(23)	(18)
Total other movements	—	75	—	—	(23)	—	(23)	52
Balance as of December 31, 2020	20	18,899	—	(32)	(109)	44	(97)	18,822
Net income		376	—				—	376
Other comprehensive income/(loss)				—	26	(58)	(32)	(32)
Total comprehensive income	—	376	—	—	26	(58)	(32)	344
Dividends		(53)	—				—	(53)
Equity-based compensation		124	—				—	124
Other movements(2)		10	—		9		9	19
Total other movements	—	81	—	—	9	—	9	90
Balance as of December 31, 2021	20	19,356	—	(32)	(74)	(14)	(120)	19,256

(1) "Total value adjustments" are presented net of the corresponding tax effects.

(2) Activity includes hyperinflationary accounting (see Note 3 to the Consolidated Financial Statements). The current year primarily includes an adjustment to actuarial gains to recognize plan assets related to the separation of a pension plan in the Spin-off from Novartis but which were not previously recorded. The year ended December 31, 2020 includes an adjustment to actuarial (losses) for other post-employment benefit obligation assumption changes directly related to the Spin-off on April 9, 2019 but which was not recorded at that time.

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-5

CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Consolidated Statement of Cash Flows

(For the years ended December 31, 2021, 2020 and 2019)


($ millions)	Note	2021	2020	2019
Net income/(loss)		376	(531)	(656)
Adjustments to reconcile net income/(loss) to net cash flows from operating activities
Depreciation, amortization, impairments and fair value adjustments	21.1	1,220	1,626	1,456
Equity-based compensation expense		138	105	83
Non-cash change in current and non-current provisions and other non-current liabilities		57	(106)	(4)
Losses on disposal and other adjustments on property, plant & equipment and other non-current assets, net		13	42	5
Interest expense		120	124	113
Other financial income & expense		42	29	32
Taxes		42	(104)	324
Interest received		3	5	7
Interest paid		(108)	(105)	(67)
Other financial payments		(7)	(5)	(18)
Taxes paid		(175)	(97)	(224)
Net cash flows before working capital changes and net payments out of provisions and other non-current liabilities		1,721	983	1,051
Net payments out of provisions and other cash movements in non-current liabilities		(62)	(115)	(83)
Change in net current assets and other operating cash flow items	21.2	(314)	(45)	(48)
Net cash flows from operating activities		1,345	823	920
Purchase of property, plant & equipment		(700)	(479)	(553)
Proceeds from sale of property, plant & equipment		—	6	—
Purchase of intangible assets		(480)	(88)	(123)
Purchase of financial assets		(19)	(11)	(59)
Proceeds from financial assets		1	—	8
Purchase of other non-current assets		—	—	(1)
Acquisition of business, net	21.3	—	—	(283)
Net cash flows used in investing activities		(1,198)	(572)	(1,011)
Dividends paid to shareholders of Alcon Inc.	8.2	(54)	—	—
Movements of financing provided to former parent, net		—	—	(2,658)
Proceeds from non-current financial debts, net of issuance costs	21.4	52	744	3,724
Proceeds from Bridge Facility, net of issuance costs		—	—	1,495
Repayment of non-current financial debts		—	—	(509)
Repayment of Bridge Facility		—	—	(1,500)
Change in current financial debts	21.4	(43)	(139)	202
Lease payments	21.4	(72)	(69)	(52)
Change in other financial receivables from former parent		—	—	39
Change in other financial liabilities to former parent		—	—	(67)
Other financing cash flows		(6)	(70)	(15)
Net cash flows (used in)/from financing activities		(123)	466	659
Effect of exchange rate changes on cash and cash equivalents		(6)	18	27
Net change in cash and cash equivalents		18	735	595
Cash and cash equivalents at January 1		1,557	822	227
Cash and cash equivalents at December 31		1,575	1,557	822

The accompanying Notes form an integral part of the Consolidated Financial Statements.

F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC.

1. Description of business

Alcon Inc. (the "Company") and the subsidiaries it controls (collectively "Alcon") is a leading eye care company. Alcon is a multinational company specializing in the research, development, manufacturing and marketing of a broad range of eye care products within 2 businesses: Surgical and Vision Care. Alcon is a stock corporation organized under the laws of Switzerland, domiciled in Fribourg, Switzerland, with global headquarters located in Geneva, Switzerland.

On February 28, 2019, Novartis AG (“Novartis” or “Former Parent”) shareholders at their Annual General Meeting approved the proposed 100% spin-off of Alcon through the distribution of a dividend in kind of new Alcon shares to Novartis shareholders and Novartis American Depository Receipt ("ADR") holders (the “Spin-off”), subject to completion of certain conditions precedent to the distribution. Amendment No. 6 to the Company's Registration Statement on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 22, 2019, ("2018 Form 20-F"), was declared effective by the SEC on that same day. On April 9, 2019, Novartis completed the Spin-off, which resulted in the Company becoming an independent, publicly-traded company. Each Novartis shareholder of record as of April 8, 2019 and each holder of Novartis’ ADR of record as of April 1, 2019 received one share of Alcon common stock for every five shares of Novartis common stock or Novartis ADR held. The shares of the Company are listed on the SIX Swiss Stock Exchange ("SIX") and on the New York Stock Exchange ("NYSE") under the symbol “ALC”.

The Consolidated Financial Statements of Alcon are comprised of the Consolidated Balance Sheet as of December 31, 2021 and 2020 and the Consolidated Income Statement, Consolidated Statement of Comprehensive Income/(Loss), Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows for each of the years ended December 31, 2021, 2020 and 2019.

The country of operation and percentage ownership of the legal entities with "Total assets" or "Net sales to third parties" in excess of $5 million included in the Consolidated Financial Statements are disclosed in Note 28.

2. Basis of preparation

The accompanying Consolidated Financial Statements present our historical financial position, results of operations, comprehensive income/(loss), and cash flows in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), including the basis of preparation as described in this Note and with the selected accounting policies as described in Note 3 to these Consolidated Financial Statements.

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

Relationship with Former Parent and affiliates prior to Spin-off

For the period in 2019 prior to the Spin-off, the financial statements were prepared on a combined basis for carve-out financial statements and were derived from Novartis’ Consolidated Financial Statements and accounting records, which were prepared in accordance with IFRS. Through the date of the Spin-off, all revenues and expenses as well as assets and liabilities directly associated with Alcon have been included in the financial statements. For the period in 2019 prior to the Spin-off, the financial statements also included allocations of certain expenses for services provided by Novartis to Alcon and allocations of related assets, liabilities, and the Former Parent’s invested capital, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had Alcon been an entity that operated independently of Novartis during the applicable periods. Refer to Note 25 to these Consolidated Financial Statements for additional disclosures.

The financial statements for the period in 2019 prior to the Spin-off include all Alcon subsidiaries and all Alcon business operated within Novartis Group subsidiaries over which Alcon has control, by applying the principles of IFRS 10, Consolidated Financial Statements. Alcon controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Both before and after the Spin-off, Alcon's associates participated in defined benefit pension and other postretirement plans sponsored by Novartis; in some countries these were single employer plans dedicated to the Alcon business associates and in other countries these were plans where associates of Alcon and associates of the Novartis Group are

F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

participants. As of December 31, 2021, all defined benefit pension and other postretirement plans have been separated from Novartis. Refer to Note 23 to these Consolidated Financial Statements for additional disclosure on post-employment benefits for associates.

Income taxes attributable to the Alcon business in the financial statements were determined using the separate return approach, under which current and deferred income taxes are calculated as if a separate tax return had been prepared in each tax jurisdiction. In various tax jurisdictions, Alcon and Novartis businesses operated within the same legal entity and certain Alcon subsidiaries were part of a Novartis tax group. This required an assumption that the subsidiaries and operations of Alcon in those tax jurisdictions operated on a standalone basis and constitute separate taxable entities. Actual outcomes and results could differ from these separate tax return estimates, including those estimates and assumptions related to realization of tax benefits within these Novartis tax groups. Refer to Note 7 to these Consolidated Financial Statements for additional disclosures on income taxes.

Alcon's Equity in the financial statements for the periods prior to Spin-off represents the excess of total assets over total liabilities and was impacted by the following:

•Currency translation adjustments of the Novartis Group multi-divisional subsidiaries were allocated between Alcon and the Novartis retained businesses by applying allocation keys based on net assets of each respective business.

•Other transactions with Novartis Group as shown on the Consolidated Statement of Changes in Equity represent the movements in Equity 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 Statement of Changes in Equity and on the Consolidated Statement of Cash Flows primarily represent the net contributions from Alcon to Novartis Group.

Following the Spin-off, the Consolidated Financial Statements include the accounts of Alcon and no longer include any allocations from Novartis.

3. Selected accounting policies

Principles of consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. In the event that the Company has an interest in another entity that is not wholly owned, the assets, liabilities, results of operations and cash flows of such entity are included in the Company's Consolidated Financial Statements, if the Company is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Consolidated Financial Statements of the Company are prepared in accordance with IFRS as issued by the IASB. They are prepared in accordance with the historical cost convention except for items that are required to be accounted for at fair value. All intercompany transactions and accounts within Alcon were eliminated.

The Company's financial year-end is December 31, which is also the annual closing date of the individual entities' financial statements incorporated into the Consolidated Financial Statements.

Impact of the COVID-19 pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. The pandemic triggered widespread shelter-in-place orders, business shutdowns and the deferral of non-urgent surgical procedures. Outbreaks of COVID-19 cases continued to occur in 2021 and localized responses remain unpredictable. The COVID-19 pandemic continued to have an impact on our financial results and operations in 2021, and it may continue to have an adverse effect on our net sales, operating results and cash flow. The extent to which the COVID-19 pandemic and the related economic impact may continue to affect our financial condition or results of operations is uncertain.

We have analyzed the impact of the COVID-19 pandemic on our financial statements for the twelve months ended December 31, 2021 and 2020, respectively. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in the context of the unknown future impacts of COVID-19 using information reasonably available to us at this time. The accounting estimates and other matters assessed included, but were not limited to, provisions for expected credit losses, goodwill and other intangible assets, financial instruments, inventory provisions, associate benefits, income taxes and revenue recognition. Based on our assessment performed, the resulting provisions recorded were not material to our Consolidated Financial Statements for the twelve months ended December 31, 2021 or 2020, respectively. However, the inherent uncertainties of COVID-19 including the

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

duration, scope, and severity of the pandemic may result in actual outcomes that differ materially from our current assumptions and estimates.

Foreign currencies

The Consolidated Financial Statements are presented in US dollars ("USD"). The functional currency of individual entities incorporated into the Consolidated Financial Statements is generally the local currency of the respective entity. The functional currency used for the reporting of certain Swiss entities is USD instead of their respective local currencies. This reflects the fact that the cash flows and transactions of these entities are primarily denominated in these currencies.

For entities not operating in hyperinflationary economies, the entities results, financial position and cash flows that do not have USD as their functional currency are translated into USD using the following exchange rates:

•Income, expense and cash flows using for each month the average exchange rate with the USD values for each month being aggregated during the year.

•Balance sheet using year-end exchange rates.

•Resulting exchange rate differences are recognized in other comprehensive income/(loss).

The hyperinflationary economies in which Alcon operates are Argentina and Venezuela, both of which were hyperinflationary for all years presented.

The impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period an economy becomes hyperinflationary is recorded in "Other reserves" in equity. The subsequent gains or losses resulting from the restatement of non-monetary assets and liabilities are recorded in "Other financial income & expense" in the Consolidated Income Statement.

Acquisition of assets

Assets separately acquired are initially recognized on the balance sheet at cost if they meet the criteria for capitalization. The capitalized cost of the asset includes the purchase price and any directly attributable costs for bringing the asset into the condition to operate as intended. Expected costs for obligations to dismantle and remove property, plant and equipment when it is no longer used are included in their cost.

Property, plant and equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Freehold land is not depreciated. The related depreciation expense is included in the costs of the functions using the asset or "Cost of net sales" in the Consolidated Income Statement.

Property, plant and equipment are assessed for impairment at the cash generating unit ("CGU") level whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

The following table shows the respective useful lives for property, plant and equipment:


			Useful life
Buildings and improvements			10 to 40 years
Machinery and other equipment
Machinery and equipment			5 to 20 years
Furniture and vehicles			5 to 10 years
Computer hardware			3 to 7 years

Business combinations

Effective January 1, 2020, Alcon adopted Amendments to IFRS 3, Business Combinations. The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary may include:

•Fair values of the assets transferred;

•Liabilities incurred to the former owners of the acquired business;

•Equity interests issued by the Company;

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

•Fair value of an asset or liability resulting from a contingent consideration arrangement; and

•Fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred over the fair value of the net identifiable assets acquired is recorded as goodwill, or directly in the income statement if it is a bargain purchase. Alcon primarily uses net present value techniques, utilizing post-tax cash flows and discount rates in calculating the fair value of identifiable assets acquired when allocating the purchase consideration paid for the acquisition. The estimates used in calculating fair values involve significant judgment by management and include assumptions with measurement uncertainty such as, the amount and timing of projected cash flows, long-term sales forecasts, the timing and probability of regulatory and commercial success, and the discount rate.

Acquisition related costs are expensed as incurred.

Alcon may elect on a transaction-by-transaction basis to apply the optional concentration test to assess whether a transaction qualifies as a business. Under the test, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, Alcon will account for the transaction as an asset purchase and not a business combination.

Goodwill and intangible assets

The annual impairment testing date is Alcon's financial year-end, December 31.

Goodwill

Goodwill arises in a business combination and is the excess of the consideration transferred to acquire a business over the underlying fair value of the net identified assets acquired. It is allocated to groups of CGUs which are usually represented by the reportable segments, which are the same as Alcon's operating segments. Goodwill is tested for impairment annually at the level of these groups of CGUs, and any impairment charges are recorded under "Other expense" in the Consolidated Income Statement.

Intangible assets available for use

Alcon has the following classes of available-for-use intangible assets: Currently marketed products, Marketing know-how, Technologies, Other intangible assets (including computer software) and the Alcon brand name.

Currently marketed products represent the composite value of acquired intellectual property, patents, and distribution rights and product trade names.

Marketing know-how represents the value attributable to the expertise acquired for marketing and distributing Alcon surgical products.

Technologies represent identified and separable acquired know-how used in the research, development and production processes.

Significant investments in internally developed and acquired software are capitalized and included in the "Other" category and amortized once available for use.

The Alcon brand name is shown separately as it is the only Alcon intangible asset that is available for use with an indefinite useful life. Alcon considers it appropriate that the brand name has an indefinite life since the branded products have a history of strong revenue and cash flow performance, and Alcon has the intent and ability to support the brand with spending to maintain its value for the foreseeable future.

Except for the Alcon brand name, intangible assets available for use are amortized over their estimated useful lives on a straight-line basis and evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. The Alcon brand name is not amortized, but evaluated for potential impairment annually.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table shows the respective useful lives for available-for-use intangible assets and the location in the Consolidated Income Statement in which the respective amortization and any potential impairment charge is recognized:


	Useful life	Income statement location for amortization and impairment charges
Currently marketed products	5 to 20 years	"Cost of net sales"
Marketing know-how	25 years	"Cost of net sales"
Technologies	10 to 20 years	"Cost of net sales" or "Research and Development"
Other (including software)	3 to 10 years	In the respective functional expense
Alcon brand name	Not amortized, indefinite useful life	"Other expense"

Acquired In-Process Research & Development ("IPR&D")

Acquired research and development intangible assets, which are still under development and have accordingly not yet obtained marketing approval, are recognized as IPR&D.

IPR&D is not amortized, but evaluated for potential impairment on an annual basis or when facts and circumstances warrant. IPR&D is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal ("FVLCOD") and its value in use ("VIU"). Usually, Alcon applies the FVLCOD method for its impairment assessments. Under this approach when evaluating IPR&D for potential impairment, FVLCOD is estimated using net present value techniques utilizing post-tax cash flows and discount rates as there are no direct or indirect observable prices in active markets for identical or similar assets. The estimates used in calculating the net present values involve significant judgment by management and include assumptions with measurement uncertainty such as, the amount and timing of projected cash flows, long-term sales forecasts, discount rate, and the timing and probability of regulatory and commercial success. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

Any impairment charge is recorded in the Consolidated Income Statement under "Research & development".

Once a project included in IPR&D has been successfully developed it is transferred to the "Currently marketed products" category.

Impairment of goodwill, Alcon brand name and definite lived intangible assets

A CGU to which goodwill has been allocated (reportable segments) is considered impaired when its carrying amount, including the goodwill, exceeds its recoverable amount, which is defined as the higher of its FVLCOD and its VIU. If the recoverable amount of the reportable segment is less than its carrying amount, an impairment loss shall be recognized. The impairment loss shall be allocated to reduce the carrying amount of any goodwill allocated to the reportable segment first, with any remaining impairment loss allocated to other assets of the reportable segment on a pro-rata basis of their carrying amount.

An intangible asset other than goodwill is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its FVLCOD and its VIU. If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. Usually, Alcon applies the FVLCOD method for its impairment assessment. In most cases, no direct or indirect observable market prices for identical or similar assets are available to measure the FVLCOD. Therefore, an estimate of FVLCOD is based on net present value techniques utilizing post-tax cash flows and discount rates. In the limited cases where the VIU method would be applied, net present value techniques would be applied using pre-tax cash flows and discount rates.

FVLCOD reflects estimates of assumptions that market participants would be expected to use when pricing the asset or CGUs, and for this purpose management considers the range of economic conditions that are expected to exist over the remaining useful life of the asset.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The estimates used in calculating the net present values involve significant judgment by management and include assumptions with measurement uncertainty, such as the following:

•Amount and timing of projected cash flows;

•Long-term sales forecasts for periods of up to 25 years including sales growth rates;

•Royalty rate for the Alcon brand name;

•Terminal growth rate; and

•Discount rate.

Other assumptions used in the net present values calculation include:

•Future tax rate;

•Actions of competitors (launch of competing products, marketing initiatives, etc.); and

•Outcome of R&D activities and forecast of related costs (future product developments).

Generally, for intangible assets with a definite useful life Alcon uses cash flow projections for the whole useful life of these assets. For goodwill and the Alcon brand name, Alcon generally utilizes cash flow projections for a five-year period based on management forecasts, with a terminal value based on cash flow projections considering the long-term expected growth rates and impact of demographic trends of the population to which Alcon products are prescribed, for later periods. Probability-weighted scenarios are typically used.

Discount rates used consider Alcon estimated weighted average cost of capital adjusted for specific country and currency risks associated with cash flow projections to approximate the weighted average cost of capital of a comparable market participant. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using net present value techniques.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, and other short-term and highly liquid investments with original or weighted-average maturities of three months or less which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are usually presented within current financial debts on the Consolidated Balance Sheet except in cases where a right of offset has been agreed with a bank which then allows for presentation on a net basis.

Financial assets

Non-current financial assets such as loans and long-term receivables from customers, primarily related to surgical equipment sales arrangements, advances and other deposits, are carried at amortized cost, which reflects the time value of money, less any allowances for uncollectable amounts.

Alcon assesses on a forward-looking basis the expected credit losses associated with its non-current financial assets valued at amortized cost.

For loans, advances and other deposits valued at amortized cost, impairments, which are based on their expected credit losses, and exchange rate losses are included in "Other expense" in the Consolidated Income Statement and exchange rate gains and interest income, using the effective interest rate method, are included in "Other income" in the Consolidated Income Statement.

For long-term receivables from customers, provisions for uncollectable amounts, which are based on their expected credit losses, are recorded as marketing and selling costs recognized in the Consolidated Income Statement within "Selling, general & administration" expenses.

Fund investments are valued at fair value through profit and loss ("FVPL"). Unrealized gains and losses, including exchange gains and losses, are recognized in the Consolidated Income Statement in "Other income" for gains and "Other expense" for losses.

Equity securities and convertible notes receivable held as strategic investments are generally designated at the date of acquisition as financial assets valued at fair value through other comprehensive income ("FVOCI") with no subsequent recycling through profit and loss. Unrealized gains and losses, including exchange gains and losses, are recorded as a fair value adjustment in the Consolidated Statement of Comprehensive Income/(Loss). They are reclassified to "Other reserves" when the equity security is sold. If these equity securities and convertible notes receivable are not designated at the date of acquisition as financial assets valued at FVOCI, they are valued at FVPL, as described above for fund

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

investments. Changes in fair value of options to acquire development stage companies are charged to research and development expense.

Derivative financial instruments are initially recognized in the Consolidated Balance Sheet at fair value and are remeasured to their current fair value at the end of each subsequent reporting period. The valuation of forward exchange rate contracts and foreign exchange swaps are based on the discounted cash flow model, using interest curves and spot rates at the reporting date as observable inputs. Unsettled forward contracts and swaps are measured at fair value at quarter-end with changes in fair value recorded to the Consolidated Income Statement as unrealized gains or losses in "Other financial income & expense". Settled forward contracts and swaps are measured at maturity date at fair value with corresponding realized gains or losses recognized in the Consolidated Income Statement in "Other financial income & expense". No hedge accounting is applied for these arrangements.

Inventories

Trade receivables

Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for estimated revenue deductions such as chargebacks and cash discounts.

Provisions for expected credit losses are established using an expected credit loss model ("ECL"). The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivable. These provisions represent the difference between the trade receivable's carrying amount and the estimated net collectible amount. Charges for doubtful trade receivables are recorded as marketing and selling costs recognized in the Consolidated Income Statement within "Selling, general & administration" expenses.

Leases

Effective January 1, 2019, Alcon adopted IFRS 16, Leases. As lessee, Alcon assesses whether a contract contains a lease at inception of a contract based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Alcon recognizes a right-of-use asset and a corresponding lease liability for all arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases for which Alcon has elected the recognition exemptions allowed under IFRS 16.

Right-of-use assets

Right-of-use assets are initially recognized at cost, which is comprised of the amount of the initial measurement of the corresponding lease liabilities, adjusted for any lease payments made at or prior to the commencement date of the lease, lease incentives received and initial direct costs incurred, as well as any expected costs for obligations to dismantle and remove right-of-use assets when they are no longer used.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the useful life of the right-of-use asset or the end of the lease term.

Right-of-use assets are assessed for impairment whenever there is an indication that the balance sheet carrying amount may not be recoverable using cash flow projections for the useful life.

Lease liabilities

Lease liabilities are accounted for at amortized cost and are initially measured at the present value of future lease payments and are classified as current or non-current based on the due dates of the underlying principal payments. In determining the lease term, Alcon evaluates the renewal options and termination options reasonably certain to be exercised. Lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, the incremental borrowing rate Alcon would be expected to pay within the respective markets, on a borrowing with a similar term and security. Interest in the period is recorded within "Interest expense" in the Consolidated Income Statement.

Lease liabilities are remeasured for changes in estimated lease term, future lease payments arising from a change in an index or rate, amounts expected to be payable under a residual value guarantee, or in assessment of whether Alcon will exercise a purchase, extension or termination option. Changes to initial lease contract terms are assessed to determine their impact on the scope of lease, and any modifications increasing the scope of the lease are treated as new contracts

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

under the initial measurement principles, while modifications that do not increase or that decrease the scope of the lease result in an adjustment to the right-of-use asset which is remeasured as of the date of the modification.

Principal payments made on lease liabilities and any initial direct costs paid are classified as financing cash outflows, while interest payments are classified as operating cash outflows.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the Consolidated Income Statement and are classified as cash flows from operating activities.

Legal liabilities

Alcon is subject to contingencies arising in the ordinary course of business such as patent litigation and other product-related litigation, commercial litigation, and governmental investigations and proceedings. Provisions are recorded where a reliable estimate can be made of the probable outcome of legal or other disputes.

Contingent consideration

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

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

The effect of unwinding the discount over time is recognized in "Interest expense" in the Consolidated Income Statement.

Defined benefit pension plans and other post-employment benefits

The liability or asset recognized in the balance sheet in respect of defined benefit pension plans and other post-employment benefits is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating the terms of the related obligation. In countries where there is no sufficient market for such bonds, the market rates on government bonds are used.

The current service cost for such post-employment benefit plans is included in the personnel expenses of the various functions where the associates are employed. The net interest on the net defined benefit liability is recognized as "Other expense" or "Other income". The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. Past service cost is recognized as "Other expense" or "Other income" in the Consolidated Income Statement for the change in the present value of a defined benefit obligation for employee service in prior periods resulting from a plan amendment or a curtailment.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income/(loss).

Defined contribution plans

For defined contribution plans, Alcon contributes to publicly or privately administered plans. Alcon has no further payment obligations once the contributions have been paid. The contributions are included in the personnel expenses of the various functions where the associates are employed.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Financial debts

Financial debts are initially recognized at fair value, net of transaction costs incurred. Financial debts are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs and discounts) and the redemption amount is recognized in the Consolidated Income Statement over the period of the financial debts using the effective interest method. Fees paid on the establishment of credit facilities are recognized as transaction costs of the financial debt to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates, and is recognized in "Other financial income & expense" in the Consolidated Income Statement.

Financial debts are derecognized from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial debt that has been extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in "Other financial income & expense" in the Consolidated Income Statement.

Interest paid on financial debts is classified as operating activities in the Consolidated Statement of Cash Flows. Financial debts are classified as current liabilities unless Alcon has an unconditional right and intent to defer the settlement of the liability for at least twelve months after the reporting period.

Revenue

Net sales to third parties

Revenue on the sale of Alcon products and services, which is recorded as "Net sales to third parties" in the Consolidated Income Statement, is recognized when a contractual promise to a customer (i.e., a performance obligation) has been fulfilled by transferring control over the promised goods and services to the customer, substantially all of which is at the point in time of shipment to or receipt of the products by the customer or when the services are performed. If contracts contain customer acceptance provisions, revenue would be recognized upon the satisfaction of acceptance criteria. The amount of revenue to be recognized is based on the consideration Alcon expects to receive in exchange for its goods and services. If a contract contains more than one performance obligation, the consideration is allocated based on the relative standalone selling price of each performance obligation.

Surgical equipment may be sold together with other products and services under a single contract and may be structured as an outright cash sale, an installment sale, or lease. Surgical equipment installment sales and leases have a fixed payment amount which the customer may pay either in fixed intervals or as the customer purchases consumables and/or implantables. Revenues are recognized upon satisfaction of each of the performance obligations in the contract and the consideration is allocated based on the relative standalone selling price of each performance obligation.

•Surgical equipment revenue from outright cash sales and installment sales arrangements is recognized at the point in time when control is transferred to the customer. The current portion of long-term receivables from customers and long-term receivables from customers for installment sales arrangements are recorded in "Other current assets" (see "Current portion of long-term receivables from customers" in Note 15 of these Consolidated Financial Statements) and "Financial assets" (see "Long-term receivables from customers" in Note 12 of these Consolidated Financial Statements), respectively. Financing income for installment sales arrangements longer than twelve months is recognized over the term of the arrangement in "Other income". Alcon applies the practical expedient under IFRS 15 to installment sales arrangements that are twelve months or less in duration.

•In addition to cash and installment sales, revenue is recognized under finance and operating lease arrangements. Leases in which Alcon transfers substantially all the risks and rewards incidental to ownership to the customer are treated as finance lease arrangements. Revenue from finance lease arrangements is recognized at amounts equal to the fair value of the equipment, which approximates the present value of the minimum lease payments under the arrangements. As interest rates embedded in lease arrangements are approximately market rates, revenue under finance lease arrangements is comparable to revenue for outright sales. Finance income for arrangements longer than twelve months is deferred and subsequently recognized based on a pattern that approximates the use of the effective interest method and recorded in "Other income". Operating lease revenue for equipment rentals is recognized on a straight-line basis over the lease term in "Net sales to third parties".

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The consideration Alcon receives in exchange for its goods or services may be fixed or variable. Variable consideration is only recognized when it is highly probable that a significant reversal of cumulative sales will not occur. The most common elements of variable consideration are listed below:

•Rebates and discounts granted to government agencies, wholesalers, retail pharmacies, managed health-care organizations and other customers, as well as chargebacks 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, regulations, the specific terms in the individual agreements, product pricing, channels and payors.

•Cash discounts are offered to customers to encourage prompt payment and are provisioned and recorded as revenue deductions at the time the related sales are recorded.

•Sales returns provisions are recognized and recorded as revenue deductions when there is historical experience of Alcon agreeing to customer returns and Alcon can reasonably estimate expected future returns. In doing so, the estimated rate of return is applied, determined based on historical experience of customer returns and considering any other relevant factors. This is applied to the amounts invoiced, also considering the amount of returned products to be destroyed versus products that can be placed back in inventory for resale. Where shipments are made on a re-sale or return basis, without sufficient historical experience for estimating sales returns, revenue is only recorded when there is evidence of consumption or when the right of return has expired.

Provisions for revenue deductions are adjusted to actual amounts as rebates, discounts, chargebacks and returns are processed. The provision represents estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions.

Other revenues

"Other revenues" include revenue from contract manufacturing services provided to the Former Parent which are recognized over time as the service obligations are completed and third party royalty income. Associated costs for contract manufacturing services are recognized in "Cost of other revenues".

Research & development

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

Payments made to third parties to in-license or acquire intellectual property rights and products, including initial upfront and subsequent milestone payments, are capitalized as intangible assets. If additional payments are made to the originator company to continue to perform R&D activities, an evaluation is made as to the nature of the payments. Such additional payments will be expensed if they are deemed to be compensation for subcontracted R&D services not resulting in an additional transfer of intellectual property rights to Alcon. Such additional payments will be capitalized if they are deemed to be compensation for the transfer to Alcon of additional intellectual property developed at the risk of the originator company. Subsequent internal R&D costs in relation to IPR&D and other assets are expensed until such time that technical feasibility can be proven, as demonstrated by the receipt of marketing approval for the related product from a regulatory authority in a major market.

Equity-based compensation

Each of the periods presented include expense related to incentive compensation provided to eligible Alcon associates in the form of equity-settled or equity-based awards including restricted stock units ("RSUs") and performance stock units ("PSUs").

Alcon expenses the fair values of RSUs and PSUs granted to associates as compensation over the related vesting periods within the various functions where the associates are employed. The fair values of the awards are determined on their grant dates and are adjusted to account for the specific provisions of each of the corresponding grant agreements.

Alcon RSUs do not entitle the recipients to dividends. As such, the fair value upon grant is based on the Alcon share price at the grant date adjusted for potential future dividends to be paid within the holding period. The fair value of these grants, after making adjustments for assumptions related to their forfeiture during the vesting period, is expensed on a straight-line basis over the respective vesting period.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

PSUs are subject to certain performance criteria being achieved during the vesting period and require plan participants to provide services during the vesting period. PSUs granted under Alcon's plans are subject to performance criteria based on internal performance metrics. The expense is determined taking into account assumptions concerning performance during the period relative to targets and expected forfeitures due to plan participants not meeting their service conditions. These assumptions are periodically adjusted. Any change in estimates for past services is recorded immediately as an expense or income in the Consolidated Income Statement and amounts for future periods are expensed over the remaining vesting period. As a result, at the end of the vesting period, the total charge during the whole vesting period represents the amount that will finally vest. The number of equity instruments that finally vest is determined at the vesting date.

If a plan participant leaves Alcon for reasons other than retirement, disability or death, then unvested restricted shares, RSUs and PSUs are forfeited, unless determined otherwise by the provision of the plan rules or by the Compensation Committee of the Alcon Board of Directors, for example, in connection with a reorganization.

Restructuring charges

Restructuring provisions are recognized for the direct expenditures arising from the restructuring, where the plans are sufficiently detailed and where appropriate communication to those affected has been made.

Charges to increase restructuring provisions are included in "Other expense" in the Consolidated Income Statement. Corresponding releases are recorded in "Other income" in the Consolidated Income Statement.

Taxes

Taxes on income are expensed in the same periods as the revenues and expenses to which they relate and include any interest and penalties incurred during the period. Deferred taxes are determined using the comprehensive liability method and are calculated on the temporary differences that arise between the tax basis of an asset or liability and its carrying value in the balance sheet prepared for purposes of these Consolidated Financial Statements, except for those temporary differences related to investments in subsidiaries where the timing of their reversal can be controlled and it is probable that the difference will not reverse in the foreseeable future. Since the retained earnings are reinvested, withholding or other taxes on eventual distribution of a subsidiary's retained earnings are only taken into account when a dividend has been planned.

Earnings/(loss) per share

Basic earnings/(loss) per share is based on the weighted average number of common shares outstanding. Diluted earnings/(loss) per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding.

New standards and interpretations not yet adopted

There are no IFRS standards, interpretations or amendments not yet effective that would be expected to have a material impact on Alcon.

4. Significant transactions

Significant transactions in 2021

Acquisition of Simbrinza US commercialization rights

On April 28, 2021, Alcon executed an Asset Purchase Agreement (“Agreement”) to acquire exclusive US commercialization rights to a pharmaceutical ophthalmic eye drop, Simbrinza (brinzolamide/brimonidine tartrate ophthalmic suspension) 1%/0.2% from Novartis. Under the terms of the Agreement, Alcon paid $355 million at closing on June 8, 2021 and recognized the intangible asset acquisition as currently marketed products within the Vision Care reportable segment. After closing, Alcon and Novartis immediately began a transition period during which Novartis sold Simbrinza on Alcon's

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

behalf. The transition period concluded during the third quarter of 2021 and Alcon has started to fully commercialize Simbrinza for the US market. Novartis retains all rights to Simbrinza® outside of the US.

Significant transactions in 2020

Series 2030 notes issuance

On May 27, 2020, Alcon, through its wholly owned subsidiary Alcon Finance Corporation (“AFC”), completed an offering of $750 million of non-current financial debt consisting of 2.600% senior notes due 2030. The senior notes are described in Note 17 of these Consolidated Financial Statements.

Significant transactions in 2019

Refinancing of Bridge Facility and Facility A financial debts

On September 23, 2019, Alcon, through its wholly owned subsidiary AFC, refinanced $2 billion of the bridge and term loans, which had been issued in April 2019, with $500 million of 2.750% senior notes due 2026, $1 billion of 3.000% senior notes due 2029, and $500 million of 3.800% senior notes due 2049. The bridge and term loans, notes, and refinancing are described in Note 17 of these Consolidated Financial Statements.

Completion of Spin-off from Novartis through a dividend in kind distribution to Novartis shareholders

The Spin-off was executed on April 9, 2019 as described in Note1 of these Consolidated Financial Statements. The below transactions occurred in April 2019, immediately preceding the Spin-off.

On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans which were executed on March 6, 2019 and are described in Note 17 of these Consolidated Financial Statements. These borrowings increased Alcon's third party financial debts to $3.5 billion at the date of Spin-off. Through a series of intercompany transactions, Alcon then paid approximately $3.1 billion in cash to Novartis and its affiliates prior to the Spin-off, decreasing Alcon's net assets to approximately $20.0 billion at the date of Spin-off.

Surgical - Acquisition of PowerVision, Inc.

On March 13, 2019, Alcon acquired 100% of the outstanding shares and equity of PowerVision, Inc. ("PowerVision"), a privately-held, US-based company focused on developing accommodative, implantable intraocular lenses. This technology allows the intraocular lens to respond to natural muscular movements in the eye to alter shape and focus. The PowerVision acquisition was executed as part of Alcon's commitment to innovation in advanced technology intraocular lenses ("AT-IOLs").

The fair value of the total purchase consideration was $424 million. This amount consisted of an initial cash payment of $289 million and the fair value of the probability weighted contingent consideration of $135 million due to PowerVision shareholders, which they are eligible to receive upon the achievement of specified regulatory and commercialization milestones. The purchase price allocation resulted in net identifiable assets of $418 million, which consisted of in-process research & development intangible assets of $505 million, a net deferred tax liability of $93 million, and other net assets of $6 million. Goodwill of $6 million was also recognized which is attributable to the assembled workforce. Cash paid for the acquisition, net of cash acquired, was $283 million. The 2019 results of operations following the date of acquisition and transaction costs for the acquisition were not material.

5. Segment information

The segment information disclosed in these Consolidated Financial Statements reflects historical results consistent with the identifiable reportable segments of Alcon and financial information that the Chief Operating Decision Maker ("CODM") reviews to evaluate segmental performance and allocate resources among the segments. The CODM is the Executive Committee of Alcon.

The businesses of Alcon are divided operationally on a worldwide basis into 2 identified reportable segments, Surgical and Vision Care. Alcon's reportable segments are the same as its operating segments as Alcon does not aggregate any operating segments in arriving at its reportable segments. As indicated below, certain income and expenses are not allocated to segments.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Reportable segments are presented in a manner consistent with the internal reporting to the CODM. The reportable segments are managed separately due to their distinct needs and activities for research, development, manufacturing, distribution, and commercial execution.

The Executive Committee of Alcon is responsible for allocating resources and assessing the performance of the reportable segments.

In Surgical, Alcon researches, develops, manufactures, distributes and sells ophthalmic products for cataract surgery, vitreoretinal surgery, refractive laser surgery and glaucoma surgery. The surgical portfolio also includes implantables, consumables and surgical equipment required for these procedures and supports the end-to-end procedure needs of the ophthalmic surgeon.

In Vision Care, Alcon researches, develops, manufactures, distributes and sells daily disposable, reusable, and color-enhancing contact lenses and a comprehensive portfolio of ocular health products, including products for dry eye, glaucoma, contact lens care and ocular allergies, as well as ocular vitamins and redness relievers.

Alcon also provides services, training, education and technical support for both the Surgical and Vision Care businesses.

The basis of preparation described in Note 2, and the selected accounting policies mentioned in Note 3 of these Consolidated Financial Statements, are used in the reporting of segment results.

The Executive Committee of Alcon evaluates segmental performance and allocates resources among the segments primarily based on net sales and segment contribution.

Net identifiable assets are not assigned to the segments in the internal reporting to the CODM, and are not considered in evaluating the performance of the business segments by the Executive Committee of Alcon.

Segment contribution excludes amortization and impairment charges for acquired product rights or other intangibles, general and administrative expenses for corporate activities, spin readiness and separation costs, transformation costs, fair value adjustments of contingent consideration liabilities, past service costs primarily for post-employment benefit plan amendments, and certain other income and expense items.

General & administration (corporate) includes the costs of the Alcon corporate headquarters, including all related corporate function costs. For a portion of the historical comparative periods only, the related corporate function costs were allocated to Alcon from its Former Parent.

Other income and expense items excluded from segment contribution include fair value adjustments of financial assets in the form of options to acquire a company carried at FVPL, net gains and losses on fund investments and equity securities valued at FVPL, restructuring costs, legal provisions and settlements, integration related expenses and other income and expense items not attributed to a specific segment.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Net sales and other revenues by segment


($ millions)	2021	2020	2019
Surgical
Implantables	1,522	1,126	1,210
Consumables	2,388	1,952	2,304
Equipment/other	793	632	660
Total Surgical net sales to third parties	4,703	3,710	4,174
Vision Care
Contact lenses	2,139	1,838	1,969
Ocular health	1,380	1,215	1,219
Total Vision Care net sales to third parties	3,519	3,053	3,188
Total net sales to third parties	8,222	6,763	7,362
Vision Care other revenues	69	70	146
Total net sales and other revenues	8,291	6,833	7,508

Segment contribution and reconciliation to income/(loss) before taxes


($ millions)	2021	2020	2019
Segment contribution:
Surgical	1,184	672	957
Vision Care	604	419	580
Total segment contribution	1,788	1,091	1,537
Not allocated to segments:
Amortization of intangible assets	(590)	(1,078)	(1,084)
Impairment charges on intangible assets	(225)	(167)	—
General & administration (corporate)	(251)	(232)	(216)
Separation costs	(36)	(217)	(237)
Spin readiness costs	—	—	(72)
Transformation costs	(68)	(49)	(52)
Fair value adjustments of contingent consideration liabilities	42	63	75
Past service costs for post-employment benefit plan amendments	18	154	(2)
Other	(98)	(47)	(136)
Operating income/(loss)	580	(482)	(187)
Interest expense	(120)	(124)	(113)
Other financial income & expense	(42)	(29)	(32)
Income/(loss) before taxes	418	(635)	(332)

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Included in segment contribution are:


($ millions)	2021	2020	2019
Depreciation of property, plant & equipment:
Surgical	(129)	(122)	(112)
Vision Care	(194)	(171)	(155)
Total depreciation of property, plant & equipment	(323)	(293)	(267)

Depreciation of right-of-use assets:
Surgical	(50)	(47)	(42)
Vision Care	(31)	(32)	(24)
Total depreciation of right-of-use assets	(81)	(79)	(66)

Impairment charges on property, plant & equipment, net:
Surgical	—	(6)	(3)
Vision Care	—	—	(5)
Total impairment charges on property, plant & equipment, net	—	(6)	(8)

Equity-based compensation:
Surgical	(74)	(55)	(55)
Vision Care	(60)	(45)	(44)
Not allocated to segments	(17)	(13)	(15)
Total equity-based compensation	(151)	(113)	(114)

Geographical information

The following table shows the United States, International and countries that accounted for more than 5% of at least one of the respective Alcon totals, for net sales for the years ended December 31, 2021, 2020 and 2019, and for selected non-current assets at December 31, 2021 and 2020:


	Net sales(2)									Total of selected non-current assets(3)
($ millions unless indicated otherwise)(1)	2021			2020			2019			2021			2020

Country
United States	3,651	44	%	2,975	44	%	3,055	41	%	10,200	47	%	10,309	47	%
International	4,571	56	%	3,788	56	%	4,307	59	%	11,553	53	%	11,476	53	%
thereof:
Switzerland (country of domicile)	60	1	%	55	1	%	56	1	%	9,762	45	%	9,737	45	%
Japan	621	8	%	650	10	%	656	9	%	46	—	%	63	—	%
China	486	6	%	383	6	%	377	5	%	16	—	%	16	—	%
Other	3,404	41	%	2,700	40	%	3,218	44	%	1,729	8	%	1,660	8	%
Company total	8,222	100	%	6,763	100	%	7,362	100	%	21,753	100	%	21,785	100	%

(1)International percentages may not sum due to rounding.

(2)Net sales from operations by location of third-party customer.

(3)Includes property, plant & equipment, right-of-use assets, goodwill and other intangible assets.

No customer accounted for 10% or more of Alcon's net sales.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

6. Interest expense and other financial income & expense

Interest expense


($ millions)	2021	2020	2019
Interest expense on financial debts	(95)	(94)	(81)
Interest expense from discounting long-term liabilities	(12)	(17)	(21)
Interest expense on lease liabilities	(13)	(13)	(11)
Total interest expense	(120)	(124)	(113)

Other financial income & expense


($ millions)	2021	2020	2019
Interest income	3	6	8
Loss on extinguishment of financial debt	—	—	(4)
Other financial expense	(10)	(9)	(18)
Monetary loss from hyperinflation accounting	(6)	(4)	(2)
Currency result, net	(29)	(22)	(16)
Total other financial income & expense	(42)	(29)	(32)

7. Taxes

Income/(loss) before taxes


($ millions)	2021	2020	2019
Switzerland	680	(585)	(274)
Foreign	(262)	(50)	(58)
Total income/(loss) before taxes	418	(635)	(332)

Current and deferred income tax (expense)/income


($ millions)	2021	2020	2019
Switzerland	(118)	(14)	(34)
Foreign	(116)	(105)	(168)
Current income tax expense	(234)	(119)	(202)
Switzerland	45	96	(246)
Foreign	147	127	124
Deferred tax income/(expense)	192	223	(122)
Total income tax (expense)/income	(42)	104	(324)

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Analysis of tax rate

Alcon's overall applicable tax rate can change each year since it is calculated as the weighted average tax rate based on pre-tax income/(loss) of each subsidiary. The main elements contributing to the difference between Alcon's overall applicable tax rate and the effective tax rate are summarized in the below table.


	2021			2020			2019
($ millions unless indicated otherwise)		%			%			%
Applicable tax rate	(39)	9.3	%	98	15.4	%	39	11.7	%
Effect of disallowed expenditures	(10)	2.4	%	(20)	(3.1)	%	(23)	(6.9)	%
Effect of equity-based compensation	(7)	1.7	%	(5)	(0.8)	%	(1)	(0.3)	%
Effect of income taxed at reduced rates	1	(0.2)	%	4	0.6	%	2	0.6	%
Effect of tax credits and allowances	9	(2.2)	%	9	1.4	%	7	2.1	%
Effect of deductibility of a statutory expense in Switzerland(1)	38	(9.1)	%	—	—	%	—	—	%
Effect of adjustments to contingent consideration and other liabilities	7	(1.7)	%	17	2.7	%	11	3.3	%
Effect of option payments	(2)	0.5	%	(6)	(0.9)	%	(12)	(3.6)	%
Effect of tax rate changes(2)	(3)	0.7	%	10	1.6	%	(342)	(103.0)	%
Effect of changes in uncertain tax positions(3)	(39)	9.3	%	(8)	(1.3)	%	10	3.0	%
Effect of other items	(3)	0.7	%	(10)	(1.6)	%	(2)	(0.6)	%
Effect of prior year items	6	(1.4)	%	15	2.4	%	(13)	(3.9)	%
Effective tax rate	(42)	10.0	%	104	16.4	%	(324)	(97.6)	%

(1)Effect of deductibility of a statutory expense in Switzerland relates to an agreement for fiscal year 2021. It is uncertain whether Alcon will obtain a similar benefit in future years.

(2)Effect of tax rate changes in 2019 relates primarily to the adoption of the Swiss Tax Reform which resulted in a non-cash tax increase in tax expense of $304 million for the re-measurement of the Swiss deferred tax balances anda $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)Effect of changes in uncertain tax positions in 2021 primarily relate to international transfer pricing and a partial reserve for the deductibility of a statutory expense in Switzerland.

Alcon has a substantial business presence in many countries and is therefore subject to different income and expense items that are non-taxable (permanent differences) or are taxed at different rates in those tax jurisdictions. This results in a difference between Alcon's applicable tax rate and effective tax rate as shown in the table above.

The applicable tax rate in 2021, 2020 and 2019 was impacted by pre-tax losses in certain tax jurisdictions. The fluctuation in taxes and effective tax rates, excluding Swiss tax reform, is primarily due to the geographical pre-tax income and loss mix across certain tax jurisdictions relative to Alcon's consolidated income/(loss) before taxes, changes in uncertain tax positions and certain non-recurring items.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

8. Share capital, dividend and earnings/(loss) per share

8.1 Share capital

The share capital of the Company as of December 31, 2021 is CHF 20 million, which is comprised of 499.7 million registered shares, nominal value of CHF 0.04 per share.

The following table shows the movement in the shares:


(shares in millions)	Common stock shares outstanding	Treasury stock shares	Total shares
January 1, 2019	—	—	—
Distribution by former parent of share capital at Spin-off	488.2	0.5	488.7
Issuance of additional registered shares	—	3.0	3.0
Settlement of equity-based awards	0.1	(0.1)	—
December 31, 2019	488.3	3.4	491.7
Issuance of additional registered shares	—	8.0	8.0
Settlement of equity-based awards	0.9	(0.9)	—
December 31, 2020	489.2	10.5	499.7
Settlement of equity-based awards	0.9	(0.9)	—
December 31, 2021	490.1	9.6	499.7

On November 10, 2020 and November 19, 2019, the Company's Board of Directors approved increases of CHF 320,000 and CHF 120,000, respectively, out of the Company’s authorized share capital through the issuance of 8.0 million and 3.0 million additional registered shares, respectively, nominal value CHF 0.04 per share, to fulfill the future vesting of existing and future equity-based awards. These additional shares were issued as treasury shares as part of the Company's authorized share capital according to the authority granted by the shareholders at the Company’s Annual General Meeting held on January 29, 2019 and reflected in the Company’s Articles of Incorporation as amended. While the transactions increased the number of shares available for issuance under the Company’s equity-based compensation plans, there was no immediate impact on the number of shares outstanding or earnings per share calculations at the time of the transactions. The number of shares outstanding and earnings per share calculations will be impacted as shares are delivered to plan participants over the course of the next several years. All of the Company's 9.6 million shares held in treasury may only be used to fulfill the future vesting of existing and future equity-based awards. The authority to issue additional registered shares under the authorized share capital expired on January 29, 2021.

8.2 Dividend

8.3 Earnings/(loss) per share

Basic earnings/(loss) per share is computed by dividing net income/(loss) for the period by the weighted average number of common shares outstanding during the period. For the years ended December 31, 2021, 2020, and 2019 the weighted average number of shares outstanding was 490.0 million, 489.0 million and 488.2 million shares, respectively.

The only potentially dilutive securities are the outstanding unvested equity-based awards under the Company's equity-based incentive plans, as described in Note 24 to these Consolidated Financial Statements. Except when the effect would be anti-dilutive, the calculation of diluted earnings per common share includes the weighted average net impact of unvested equity-based awards. For the year ended December 31, 2021, the weighted average diluted number of shares outstanding was 493.4 million, which includes the potential conversion of 3.4 million unvested equity-based awards. For the years ended December 31, 2020 and 2019, 2.8 million and 1.9 million unvested equity-based awards, respectively, have been excluded from the calculation of diluted loss per share as their effect would be anti-dilutive.

The average market value of the Company's shares for the purposes of calculating the potentially dilutive effects of unvested equity-based awards was based on quoted market prices for the period that the unvested awards were outstanding.

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

9. Property, plant & equipment

The following table summarizes the movements of property, plant & equipment in 2021:


($ millions)	Land	Buildings & improvements	Construction in progress	Machinery & other equipment	Total

Cost
January 1, 2021	35	1,884	573	3,425	5,917
Additions(1)	2	8	654	57	721
Disposals and derecognitions(2)	—	(7)	(8)	(93)	(108)
Reclassifications for assets placed in service	—	146	(410)	264	—

Currency translation effects	(1)	(44)	(19)	(106)	(170)
December 31, 2021	36	1,987	790	3,547	6,360

Accumulated depreciation
January 1, 2021	—	(716)	(8)	(1,768)	(2,492)
Depreciation charge	—	(107)	—	(216)	(323)
Disposals and derecognitions(2)	—	5	7	83	95

Currency translation effects	—	16	—	55	71
December 31, 2021	—	(802)	(1)	(1,846)	(2,649)
Net book value at December 31, 2021	36	1,185	789	1,701	3,711

(1)Includes $52 million in non-cash additions.

(2)Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2021, commitments for purchases of property, plant & equipment were $186 million.

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes the movements of property, plant & equipment in 2020:


($ millions)	Land	Buildings & improvements	Construction in progress	Machinery & other equipment	Total

Cost
January 1, 2020	33	1,628	755	2,906	5,322
Additions(1)	2	7	479	74	562
Disposals and derecognitions(2)	—	(7)	(10)	(105)	(122)
Reclassifications for assets placed in service	—	215	(705)	490	—
Other reclassifications	—	11	—	(11)	—
Currency translation effects	—	30	54	71	155
December 31, 2020	35	1,884	573	3,425	5,917

Accumulated depreciation
January 1, 2020	—	(618)	(8)	(1,583)	(2,209)
Depreciation charge	—	(80)	—	(213)	(293)
Impairment charge	—	—	—	(6)	(6)
Disposals and derecognitions(2)	—	4	—	70	74
Other reclassifications	—	(7)	—	7	—
Currency translation effects	—	(15)	—	(43)	(58)
December 31, 2020	—	(716)	(8)	(1,768)	(2,492)
Net book value at December 31, 2020	35	1,168	565	1,657	3,425

(1)Includes $83 million in non-cash additions.

(2)Derecognition of assets that are no longer used and are not considered to have a significant disposal value or other alternative use.

As of December 31, 2020, commitments for purchases of property, plant & equipment were $136 million.

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

10. Goodwill and other intangible assets

The following table summarizes the movements of goodwill and other intangible assets in 2021:


		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, 2021	8,905	2,980	727	5,369	4,440	5,960	556	20,032
Additions	—	—	20	—	359	—	104	483
Reclassifications	—	—	(10)	—	10	—	—	—
Disposals and derecognitions(1)	—	—	—	—	(6)	—	(2)	(8)
December 31, 2021	8,905	2,980	737	5,369	4,803	5,960	658	20,507

Accumulated amortization
January 1, 2021	—	—	—	(5,199)	(3,197)	(2,384)	(155)	(10,935)
Amortization charge	—	—	—	(39)	(235)	(238)	(78)	(590)
Disposals and derecognitions(1)	—	—	—	—	6	—	2	8
Impairment charges	—	—	(180)	—	(45)	—	—	(225)
December 31, 2021	—	—	(180)	(5,238)	(3,471)	(2,622)	(231)	(11,742)
Net book value at December 31, 2021	8,905	2,980	557	131	1,332	3,338	427	8,765

(1) Derecognitions of assets that are no longer used or being developed and are not considered to have a significant disposal value or other alternative use.

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reportable segment at December 31, 2021:


		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	—	555	131	229	3,338	251	4,504
Vision Care	4,361	—	2	—	1,103	—	176	1,281
Not allocated to segments	—	2,980	—	—	—	—	—	2,980
Net book value at December 31, 2021	8,905	2,980	557	131	1,332	3,338	427	8,765

The Surgical and Vision Care reportable segments' CGUs, to which goodwill is allocated are comprised of a group of smaller CGUs. The valuation method of the recoverable amount of the CGUs, to which goodwill is allocated, is based on the FVLCOD.

The Alcon brand name is an intangible asset with an indefinite life. The intangible asset is not allocated to the reportable segments as it is used to market the Alcon-branded products of both the Surgical and Vision Care businesses. Net sales of these products together are the grouping of CGUs, which is used to determine the recoverable amount. The valuation method is based on the FVLCOD.

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following assumptions were used in the calculations for the recoverable amounts of goodwill and the Alcon brand name at December 31, 2021 and 2020:


	2021		2020
(As a percentage)	Surgical	Vision Care	Surgical	Vision Care
Terminal growth rate	3.0	3.0	3.0	3.0
Discount rate (post-tax)	7.0	6.5	7.5	7.0

The Surgical and Vision Care reportable segments' terminal growth rate assumption of 3.0% takes into consideration how the industry is expected to grow, analysis of industry expert reports, and expected relevant changes in demographics for various markets. The discount rates for both Surgical and Vision Care reportable segments consider Alcon's weighted average cost of capital, adjusted to approximate the weighted average cost of capital of comparable market participants. Both the terminal growth rates and the discount rates are consistent with external sources of information.

The FVLCOD, for all groupings of CGUs containing goodwill or indefinite life intangible assets, is reviewed for the impact of reasonably possible changes in key assumptions. In particular Alcon considered an increase in the discount rate, a decrease in the terminal growth rate and certain negative impacts on the forecasted cash flows. These reasonably possible changes in key assumptions did not indicate an impairment.

Refer to "Impairment of goodwill, Alcon brand name and definite lived intangible assets" and "Acquired In-Process Research & Development ("IPR&D")" in Note 3 in these Consolidated Financial Statements for additional disclosures on how Alcon performs goodwill and intangible asset impairment testing.

The following table summarizes the movements of goodwill and other intangible assets in 2020:


		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, 2020	8,905	2,980	728	5,369	4,440	5,960	611	20,088

Additions	—	—	2	—	—	—	118	120

Disposals and derecognitions(1)	—	—	(3)	—	—	—	(173)	(176)
December 31, 2020	8,905	2,980	727	5,369	4,440	5,960	556	20,032

Accumulated amortization
January 1, 2020	—	—	(3)	(4,692)	(2,842)	(2,146)	(174)	(9,857)
Amortization charge	—	—	—	(507)	(249)	(238)	(84)	(1,078)
Disposals and derecognitions (1)	—	—	3	—	—	—	164	167
Impairment charges	—	—	—	—	(106)	—	(61)	(167)
December 31, 2020	—	—	—	(5,199)	(3,197)	(2,384)	(155)	(10,935)
Net book value at December 31, 2020	8,905	2,980	727	170	1,243	3,576	401	9,097

(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.

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes the allocation of the net book values of goodwill and other intangible assets by reportable segment at December 31, 2020:


		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	—	723	170	247	3,576	237	4,953
Vision Care	4,361	—	4	—	996	—	164	1,164
Not allocated to segments	—	2,980	—	—	—	—	—	2,980
Net book value at December 31, 2020	8,905	2,980	727	170	1,243	3,576	401	9,097

Intangible asset impairment charges

The following table shows the intangible asset impairment charges in 2021, 2020 and 2019:


($ millions)	2021	2020	2019
Surgical	(178)	(66)	—
Vision Care	(47)	(101)	—
Total	(225)	(167)	—

For the year ended December 31, 2021, impairment charges recognized in the Consolidated Income Statement amounted to $225 million. Impairments of $180 million were recognized in Research & development in 2021. Of that amount, an impairment charge of $178 million was recognized in the third quarter of 2021 in Research & development to fully impair a CGU in the Surgical reportable segment upon a decision to suspend research and development efforts and commercialization of the product as Alcon prioritizes other products in the portfolio. An additional impairment charge of $2 million was recognized in the fourth quarter of 2021 in Research & development to fully impair a licensed technology in the Vision Care reportable segment, which will no longer be used in any future research and development activities. The remaining amount of $45 million relates to an impairment charge recognized in the first quarter of 2021 in Cost of net salesfor a currently marketed product CGU in the Vision Carereportable segment due to lower expected sales. The CGU was reduced to its recoverable amount of $48 million at the time of impairment.

For the year ended December 31, 2020, impairments amounted to $167 million. An impairment of $61 million was recognized in the third quarter of 2020, primarily to fully impair a CGU within the Vision Care reportable segment upon termination of the associated licensing agreement. The impairment was recognized in Research & development in the Consolidated Income Statement. The remaining amount relates to additional impairments of $106 million, which were recognized in Cost of net sales in the Consolidated Income Statement in 2020. Of that amount, an impairment of $41 million was recorded for a currently marketed product CGU within the Vision Care reportable segment due to lower expected sales. The CGU was reduced to its recoverable amount of $88 million at the time of impairment in the second quarter of 2020. An additional $65 million relates to impairments of a currently marketed product CGU in the Surgical reportable segment recognized in the first and fourth quarters of 2020 due to lower expected sales. This CGU was also reduced to its recoverable amount of $65 million at the time of impairment at December 31, 2020.

The recoverable amount of each CGU was determined based on the FVLCOD method. FVLCOD was estimated using net present value techniques utilizing post-tax cash flows and discount rates as there are no direct or indirect observable prices in active markets for identical or similar assets. The estimates used in calculating the net present value involve significant judgment by management and include assumptions with measurement uncertainty. The estimates used are considered to be consistent with market participant assumptions and include cash flow projections for a five-year period based on management forecasts, sales forecasts beyond the five-year period extrapolated using long-term expected growth rates, discount rates, and future tax rates. Since the cash flow projections are a significant unobservable input, the fair value of the CGUs were classified as Level 3 in the fair value hierarchy. Actual cash flows and values could vary significantly from forecasted future cash flows and related values derived using net present value techniques.

There were no intangible asset impairment charges during the year ended December 31, 2019.

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

11. Deferred tax assets and liabilities


($ millions)	Property, plant & equipment	Intangible assets	Pensions and other benefit obligations of associates	Inventories	Tax loss carry-forwards	Other assets, provisions and accruals	Total
Gross deferred tax assets at December 31, 2020	24	5	128	381	174	314	1,026
Gross deferred tax liabilities at December 31, 2020	(215)	(1,519)	—	(23)	—	(66)	(1,823)
Net deferred tax balance at December 31, 2020	(191)	(1,514)	128	358	174	248	(797)

At December 31, 2020	(191)	(1,514)	128	358	174	248	(797)
(Charged)/credited to income	(27)	137	1	(9)	4	86	192
(Charged)/credited to equity	—	—	(2)	—	7	3	8
(Charged)/credited to other comprehensive income	—	—	(11)	—	3	(12)	(20)
Net deferred tax balance at December 31, 2021	(218)	(1,377)	116	349	188	325	(617)

Gross deferred tax assets at December 31, 2021	28	5	116	372	188	452	1,161
Gross deferred tax liabilities at December 31, 2021	(246)	(1,382)	—	(23)	—	(127)	(1,778)
Net deferred tax balance at December 31, 2021	(218)	(1,377)	116	349	188	325	(617)

The below table presents the Net deferred tax balance as of December 31, 2021 after offsetting $752 millionof deferred tax assets and liabilities within the same tax jurisdiction.


($ millions)			At December 31, 2021
Deferred tax assets			409
Deferred tax liabilities			(1,026)
Net deferred tax liabilities			(617)

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


($ millions)	Property, plant & equipment	Intangible assets	Pensions and other benefit obligations of associates	Inventories	Tax loss carry-forwards	Other assets, provisions and accruals	Total
Gross deferred tax assets at 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)

At December 31, 2019	(159)	(1,707)	141	348	110	235	(1,032)
(Charged)/credited to income	(32)	193	(33)	10	59	26	223
Credited/(charged) to equity	—	—	7	—	5	(16)	(4)
Credited to other comprehensive income	—	—	13	—	—	3	16


Net deferred tax balance at December 31, 2020	(191)	(1,514)	128	358	174	248	(797)

Gross deferred tax assets at December 31, 2020	24	5	128	381	174	314	1,026
Gross deferred tax liabilities at December 31, 2020	(215)	(1,519)	—	(23)	—	(66)	(1,823)
Net deferred tax balance at December 31, 2020	(191)	(1,514)	128	358	174	248	(797)

The below table presents the Net deferred tax balance as of December 31, 2020 after offsetting $627 million of deferred tax assets and liabilities within the same tax jurisdiction.


($ millions)			At December 31, 2020
Deferred tax assets			399
Deferred tax liabilities			(1,196)
Net deferred tax liabilities			(797)

The below table presents deferred tax assets and deferred tax liabilities expected to have an impact on current taxes payable after more than twelve months.


($ billions)	At December 31, 2021	At December 31, 2020
Deferred tax assets	0.8	0.6
Deferred tax liabilities	1.7	1.8

For foreign unremitted earnings retained by consolidated entities for reinvestment, which amounted to $9 billion as of December 31, 2021, no provision is made for income taxes that would be payable upon the distribution of these earnings. If these earnings were remitted, an income tax charge could result based on the tax statutes currently in effect.

IFRS exceptions to recognizing taxable temporary differences include an exception to recognizing a deferred tax liability arising on the initial recognition of goodwill from acquisitions. As such, we have not provided a deferred tax for goodwill from acquisitions which amounted to $9 billion as of December 31, 2021 and 2020.

The gross value of capital loss carryforwards for which no deferred tax assets were recognized amounted to $103 million at December 31, 2021 and will expire in five years. There were no capital loss carryforwards at December 31, 2020.

The gross value of tax loss carryforwards capitalized as deferred tax assets amounted to $1,047 million at December 31, 2021 ($921 million at December 31, 2020), of which $2 million will expire in five years. Of the remaining $1,045 million, approximately $677 million have an indefinite carryforward period, and approximately $368 million have a carryforward period that ranges from six to twenty years. All tax loss carryforwards have been capitalized as deferred tax assets in 2021 as it is probable that sufficient taxable income will be available for the foreseeable future.

No tax losses carried forward have expired in 2021, 2020 or 2019.

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Swiss tax reform

On June 30, 2019, Swiss voters approved the Swiss Tax Reform and Old Age Insurance financing bill ("Swiss tax reform"). As a result, the corporate income tax rate applicable to Alcon’s Swiss profits as of January 1, 2020 increased from approximately 9.4% in 2019 to approximately 14.2% beginning in 2020. This change resulted in a non-cash increase in tax expense of $304 million related to the re-measurement of Swiss deferred tax assets and liabilities in 2019.

12. Financial and other non-current assets

The below tables provide details related to Financial assets and Other non-current assets as of December 31, 2021 and 2020.

Financial assets


($ millions)	2021	2020
Long-term financial investments measured at FVOCI	46	28
Long-term financial investments measured at FVPL	6	12
Long-term receivables from customers	110	117
Non-current minimum lease payments from finance lease agreements	35	39
Long-term loans, advances and security deposits	20	22
Total financial assets	217	218

Minimum lease payments from finance lease agreements

The following table shows the receivables of the gross investments in finance leases and the net present value of the minimum lease payments, as well as unearned finance income, related to surgical equipment lease arrangements. The finance income is recorded in "Other income".


	2021					2020
($ 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)	32	(2)	30	(2)	28	33	(3)	30	(1)	29
Between one and five years	47	(2)	45	(12)	33	55	(3)	52	(18)	34
Later than five years	2	—	2	—	2	32	—	32	(27)	5
Total	81	(4)	77	(14)	63	120	(6)	114	(46)	68

(1) The current portion of the minimum lease payments is recorded in trade receivables or other current assets (to the extent not yet invoiced).

Other non-current assets


($ millions)	2021	2020
Deferred compensation plans	155	137
Prepaid post-employment benefit plans	25	24
Other non-current assets	54	50
Total other non-current assets	234	211

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

13. Inventories

The amount of inventory recognized as an expense in "Cost of net sales" in the Consolidated Income Statement during 2021 amounted to $2.5 billion (2020: $2.1 billion, 2019: $2.2 billion). The amount of inventory recognized as an expense in "Cost of other revenues" in the Consolidated Income Statement during 2021 amounted to $62 million (2020: $63 million, 2019: $127 million).


($ millions)	2021	2020
Raw material, consumables	336	278
Work in progress	169	136
Finished products	1,394	1,230
Total inventories	1,899	1,644

Alcon recognized inventory provisions and write-downs amounting to $220 million in 2021 (2020: $304 million, 2019: $181 million) and reversed inventory provisions amounting to $83 million in 2021 (2020: $91 million, 2019: $65 million). Inventory provisions mainly relate to the adjustment of inventory balances to their net realizable value based on the forecasted sales. Reversals are made when the products become salable.

14. Trade receivables

Trade receivable balances include sales to wholesalers, retailers, doctor groups, private health systems, government agencies, pharmacy benefit managers, managed health-care organizations and government-supported healthcare systems. The following tables provide details related to Trade receivables as of December 31, 2021 and 2020, including trade receivables that are not overdue as specified in the payment terms and conditions established with Alcon's customers, as well as an analysis of overdue amounts, expected credit loss rates and related provisions for doubtful trade receivables:


	2021
($ millions)	Gross trade receivables	Provision	Trade receivables, net	Expected credit loss rates
Not overdue	1,273	(2)	1,271	0.2	%
Past due for not more than one month	96	(1)	95	1.0	%
Past due for more than one month but less than three months	74	(1)	73	1.4	%
Past due for more than three months but less than six months	43	(2)	41	4.7	%
Past due for more than six months but less than one year	23	(13)	10	56.5	%
Past due for more than one year	42	(36)	6	85.7	%
Total	1,551	(55)	1,496


	2020
($ millions)	Gross trade receivables	Provision	Trade receivables, net	Expected credit loss rates
Not overdue	1,137	(2)	1,135	0.2	%
Past due for not more than one month	109	(1)	108	0.9	%
Past due for more than one month but less than three months	67	(2)	65	3.0	%
Past due for more than three months but less than six months	36	(2)	34	5.6	%
Past due for more than six months but less than one year	31	(18)	13	58.1	%
Past due for more than one year	49	(43)	6	87.8	%
Total	1,429	(68)	1,361

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table summarizes the movement in the provision for doubtful trade receivables:


($ millions)	2021	2020	2019
January 1	(68)	(48)	(54)
Provisions for doubtful trade receivables charged to the Consolidated Income Statement	(20)	(48)	(17)
Utilization of provisions for doubtful trade receivables	8	15	7
Reversal of provisions for doubtful trade receivables	23	14	15
Currency translation effects	2	(1)	1
December 31	(55)	(68)	(48)

The following table shows the gross trade receivables balance from these closely monitored countries as of December 31, 2021 and 2020, the amounts that are past due for more than one year and the related amount of the provisions for doubtful trade receivables that have been recorded:


($ millions)	2021	2020
Total balance of gross trade receivables from closely monitored countries	252	211
Past due for more than one year	10	14
Provisions for doubtful trade receivables	(11)	(15)

Trade receivables include amounts denominated in the following major currencies:


($ millions)	2021	2020
US dollar (USD)	526	477��
Euro (EUR)	243	214
Japanese yen (JPY)	160	168
Chinese yuan (CNY)	122	121
Indian rupee (INR)	36	30
Canadian dollar (CAD)	39	32
Australian dollar (AUD)	24	29
British pound (GBP)	29	21
Russian ruble (RUB)	35	28
South Korean won (KRW)	38	31
Other currencies	244	210
Total trade receivables, net	1,496	1,361

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

15. Other current assets

The following table provides details related to Other current assets as of December 31, 2021 and 2020:


($ millions)	2021	2020
Current portion of long-term financial investments measured at FVPL	—	12
Current portion of long-term receivables from customers	97	107
Current portion of minimum lease payments from finance lease agreements	28	29
Prepaid expenses	92	93
Other receivables, security deposits and current assets	79	88
Derivative financial instruments	3	3
VAT receivables	105	72
Equity securities in public companies	3	—
Total other current assets	407	404

16. Right-of-use assets and Lease liabilities

Right-of-use assets

Right-of-use assets as of December 31, 2021 and 2020 were comprised of the following:


($ millions)	2021	2020
Land	17	20
Buildings	326	310
Machinery & equipment and other assets	29	28
Total right-of-use assets	372	358

Depreciation charges of $81 million and $79 million for the years ended December 31, 2021 and 2020, respectively, are shown in the table below by underlying class of asset:


($ millions)	2021	2020
Land	1	1
Buildings	60	59
Machinery & equipment and other assets	20	19
Total depreciation of right-of-use assets	81	79

Additions to right-of-use assets amounted to $115 million and $107 million for the years ended December 31, 2021 and 2020, respectively.

Lease liabilities

Lease liabilities totaled $406 million as of December 31, 2021, including $67 million in current lease liabilities and $339 million in non-current lease liabilities. The contractual maturities of the undiscounted lease liabilities as of December 31, 2021 and 2020, are as follows:


	Lease liabilities undiscounted
($ millions)	2021	2020
Not later than one year	80	82
Between one and five years	197	203
Later than five years	237	203
Total lease liabilities undiscounted	514	488

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


	Lease liabilities
($ millions)	2021	2020
Not later than one year	67	70
Between one and five years	157	168
Later than five years	182	147
Total lease liabilities	406	385

Additional disclosures

The following table provides additional disclosures related to right-of-use assets and lease liabilities:


($ millions)	2021	2020
Interest expense on lease liabilities	13	13
Expense on short-term, low value and variable leases	7	4
Total cash outflows for leases	92	85
Thereof:
Lease liability payments(1)	72	69
Interest payments(2)	13	12
Short-term, low value and variable lease payments(2)	7	4

(1) Reported as cash outflows from financing activities net of lease incentives received

(2) Included within total net cash flows from operating activities

17. Non-current and current financial debts

The below table summarizes non-current and current Financial debts outstanding as of December 31, 2021 and 2020.


($ millions)	2021	2020
Non-current financial debts
Facility B	796	794
Facility C	395	429
Local facilities (Japan)	47	—
Series 2026 notes	496	496
Series 2029 notes	993	992
Series 2030 notes	745	744
Series 2049 notes	494	494
Revolving facility	—	—
Total non-current financial debts	3,966	3,949

Current financial debts
Local facilities:
Japan	84	101
All others	17	49
Other short-term financial debts	6	12
Derivatives	7	7
Total current financial debts	114	169
Total financial debts	4,080	4,118

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Interest expense recognized for Financial debts, excluding lease liabilities, was $95 million, $94 million and $81 million for the years ended December 31, 2021, 2020 and 2019, respectively. The weighted average interest rate on Financial debts was 2.3%in 2021 and 2020.

Bridge Loan, Term Loan and Revolving Credit Facilities

On March 6, 2019, Alcon entered into a $1.5 billion unsecured 364-day bridge loan facility with 2 extension options, each for a period of 180 days (the "Bridge Facility"), a $0.5 billion unsecured three-year term loan facility ("Facility A"), a $0.8 billion unsecured five-year term loan facility ("Facility B"), a $0.4 billion (or the equivalent in EUR) unsecured five-year term loan facility ("Facility C") and a $1.0 billion unsecured five-year committed multicurrency revolving credit facility (the "Revolving Facility" and, together with the Bridge Facility, Facility A, Facility B and Facility C, the "Facilities"). On April 2, 2019, Alcon borrowed $3.2 billion against the bridge and other term loans. In February 2021, the $1.0 billion Revolving Facility was extended to March 2026. The Revolving Facility remained undrawn as of December 31, 2021.

Alcon and certain of its subsidiaries are the borrowers under the Facilities and Alcon guarantees the borrowings of such subsidiaries under the Facilities. In addition, the Revolving Facility includes a mechanism through which certain subsidiaries, as approved by the lenders, can accede as a borrower.

Alcon is permitted to voluntarily prepay loans under the Facilities, in whole or in part, without penalty or premium subject to certain minimum prepayment amounts and the payment of accrued interest on the amount prepaid and customary breakage costs. The Bridge Facility had a mandatory prepayment provision, pursuant to which Alcon would have to apply proceeds from relevant debt capital markets transactions in prepayment under the Bridge Facility.

The terms of the Facilities include certain events of default and covenants customary for investment grade credit facilities, including restrictive covenants that will limit, among other things, the grant or incurrence of security interests over any of Alcon's assets, the incurrence of certain indebtedness and entry into certain fundamental change transactions. The Facilities do not contain any financial covenants.

Refinancing of Bridge Facility and Facility A

On September 23, 2019, AFC issued Senior Notes ("Notes") with maturity dates in 2026, 2029, and 2049, which are guaranteed by the Company. The Notes are unsecured senior obligations of AFC issued in a private placement. The total principal amount of the Notes is $2.0 billion. The Notes were issued at a discount totaling $7 million, which was recorded as a reduction to the carrying value of the Notes and will be amortized to Interest expense over the term of the Notes. AFC incurred $15 million of debt issuance costs, which were recorded as a reduction to the carrying value of the Notes and will be amortized to Other financial income & expense over the term of the Notes.

The Notes consist of the following:

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

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

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

The funds borrowed through the issuance of the Notes were used to repay the $1.5 billion Bridge Facility and $0.5 billion Facility A. The transaction was accounted for as an extinguishment of a liability. Alcon recognized a loss of $4 million associated with the write-off of unamortized deferred financing costs due to extinguishment of the original financing. This loss on extinguishment was recognized in Other financial income & expense.

Interest rate benchmark reform

Facility B and Facility C ("Term Loan Facilities") and the Revolving Facility (collectively, the "Remaining Facilities") originally bore interest rates equal to the interest rate benchmark (prevailing Euro Interbank Offered Rate (“EURIBOR”) in the case of loans denominated in EUR, USD prevailing London Interbank Offered Rate (“LIBOR”) in the case of loans denominated in USD and CHF LIBOR in the case of loans denominated in CHF), plus an applicable margin. On December 14, 2021, Alcon amended the terms of the Remaining Facilities in response to interest rate benchmark reform which includes the replacement of certain interbank offered rates (“IBOR”) with alternative benchmark rates. The amended terms incorporate a mechanism to switch from the Remaining Facilities' original interest rates to compounded risk-free rates ("RFR"), including any relevant credit adjustment spread. The practical expedient in Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 4 and IFRS 16 will be applied which allows the effective interest rate to be updated to

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

reflect the change in interest rate benchmark from IBOR to RFR without adjusting the carrying amount. Consequently, there was no change in the carrying value of the Remaining Facilities as a result of the amendment.

Series 2030 notes issuance

On May 27, 2020, AFC issued senior notes due in 2030 (“Series 2030 Notes”), which are guaranteed by the Company. The Series 2030 Notes are unsecured senior obligations of AFC issued in a private placement and rank equally in right of payment with the Series 2026, Series 2029, and Series 2049 notes. The total principal amount of the Senior 2030 Notes is $750 million. The Senior 2030 Notes were issued at 99.843% with 2.600% interest payable twice per year in May and November, beginning in November 2020. The Series 2030 Notes were issued at a discount totaling $1 million, which was recorded as a reduction to the carrying value of the Series 2030 notes and will be amortized to Interest expense over the term of the Series 2030 Notes. AFC incurred $5 million of debt issuance costs, which were recorded as a reduction to the carrying value of the Series 2030 Notes and will be amortized to Other financial income & expense over the term of the Series 2030 Notes.

Local bilateral facilities

In February 2019, Alcon entered into a number of local bilateral facilities in different countries, with the largest share of borrowings in Japan. Two local bilateral facilities in Japan matured in February 2021 and were refinanced by three facilities with one and two year maturities. As of December 31, 2021, a total of $131 million was drawn in Japan, including $84 million classified as current and $47 million classified as non-current. There was $90 million undrawn on the facilities in Japan as of December 31, 2021.

Maturity of contractual undiscounted cash flows and interest payment commitments

The following table provides details on the maturity of the contractual undiscounted cash flows for Alcon's borrowings as of December 31, 2021 and 2020:


	2021			2020
($ millions)	Nominal amount - Current and non-current financial debt	Derivatives	Total	Nominal amount - Current and non-current financial debt	Derivatives	Total
Not later than one year	107	7	114	162	7	169
Between one and five years	1,743	—	1,743	1,231	—	1,231
Later than five years	2,250	—	2,250	2,750	—	2,750
Total contractual undiscounted cash flows	4,100	7	4,107	4,143	7	4,150
Unamortized debt discount and issuance costs	(27)	—	(27)	(32)	—	(32)
Total carrying value	4,073	7	4,080	4,111	7	4,118

The following table provides details on the maturity of the future contractual interest payments commitments as of December 31, 2021 and 2020:


($ millions)	2021	2020
Not later than one year	94	96
Between one and five years	340	357
Later than five years	583	687
Total cash flows	1,017	1,140

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

18. Financial instruments - additional disclosures

The below table provides detail related to financial instruments as of December 31, 2021 and December 31, 2020.


($ millions)	Note	2021	2020
Cash and cash equivalents
Cash in current accounts		246	262
Cash held in time deposits and money market funds		1,329	1,295
Total cash and cash equivalents		1,575	1,557
Financial assets - measured at fair value through other comprehensive income ("FVOCI")
Long-term financial investments	12	46	28
Total financial assets - measured at FVOCI		46	28
Financial assets - measured at amortized costs(1)
Trade receivables	14	1,496	1,361
Income tax receivables		9	21
Other current assets (excluding prepaid expenses and other current assets measured at FVPL)	15	309	296
Long-term receivables from customers	12	110	117
Non-current minimum lease payments from finance lease agreements	12	35	39
Long-term loans, advances and security deposits	12	20	22
Total financial assets - measured at amortized costs		1,979	1,856
Financial assets - measured at fair value through profit and loss ("FVPL")
Equity securities of public companies	15	3	—
Deferred compensation assets	12	155	137
Current portion of long-term financial investments	15	—	12
Derivative financial instruments	15	3	3
Long-term financial investments	12	6	12
Total financial assets - measured at FVPL		167	164
Total financial assets		3,767	3,605
Financial liabilities - measured at amortized cost or cost(1)
Current financial liabilities
Financial debts	17	107	162
Lease liabilities	16	67	70
Trade payables		903	876
Total current financial liabilities - measured at amortized cost or cost		1,077	1,108
Non-current financial liabilities
Financial debts	17	3,966	3,949
Lease liabilities	16	339	315
Total non-current financial liabilities - measured at amortized cost or cost		4,305	4,264
Total financial liabilities - measured at amortized cost or cost		5,382	5,372
Financial liabilities - measured at FVPL
Contingent consideration liabilities	19/20	112	157
Derivative financial instruments	17	7	7
Total financial liabilities - measured at FVPL		119	164
Total financial liabilities		5,501	5,536
Net financial assets and financial liabilities		(1,734)	(1,931)

(1)The carrying amount is a reasonable approximation of fair value, with the exception of the Series 2026, 2029, 2030 and 2049 notes recorded in Non-current financial debts with a fair value of $2,891 million and carrying value of $2,728 million as of December 31, 2021 and a fair value of $3,036 million and carrying value of $2,726 million as of December 31, 2020. The fair value of notes was determined using Level 2 inputs. The notes were valued using a quoted market price for such notes, which have low trading volumes.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Fair value by hierarchy

As required by IFRS, financial assets and liabilities recorded at fair value in the Consolidated Financial Statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. There are three hierarchical levels, based on an increasing amount of judgment associated with the inputs to derive fair value for these financial assets and liabilities, which are as follows:

Financial assets and liabilities carried at Level 1 fair value hierarchy are listed in active markets.

Financial assets and liabilities carried at Level 2 fair value hierarchy are valued using corroborated market data.

Level 1 financial assets include money market funds, equity securities of public companies and deferred compensation assets. There were no financial liabilities carried at Level 1 fair value, and Level 2 financial assets and liabilities include derivative financial instruments.

Investments in money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The investments are classified as Cash & cash equivalents within the Consolidated Balance Sheet.

Investments in equity securities of public companies are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

Deferred compensation investments for certain employee benefit plans are held in a rabbi trust and dedicated to pay the benefits under the associated plans but are not considered plan assets as the assets remain available to creditors of Alcon in certain events, including bankruptcy. Rabbi trust assets primarily consist of investments in mutual funds. These assets are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices.

Level 3 inputs are unobservable for the financial asset or liability. The financial assets and liabilities generally included in the Level 3 fair value hierarchy are equity securities and convertible notes receivable of private companies measured at FVOCI, fund investments, options to acquire private companies, and contingent consideration liabilities measured at FVPL.

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following tables summarize financial assets and liabilities measured at fair value on a recurring basis or at amortized cost or cost as of December 31, 2021 and December 31, 2020.


	December 31, 2021
($ 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	—	—	46	—	46
Long-term financial investments measured at FVPL	—	—	6	—	6
Long-term receivables from customers	—	—	—	110	110
Deferred compensation assets(1)	155	—	—	—	155
Non-current minimum lease payments from finance lease agreements	—	—	—	35	35
Long-term loans, advances and security deposits	—	—	—	20	20
Non-current financial assets	155	—	52	165	372
Current financial assets
Money market funds	624	—	—	—	624
Equity securities of public companies(2)	3	—	—	—	3

Current portion of long-term receivables from customers(2)	—	—	—	97	97
Current portion of minimum lease payments from finance lease agreements(2)	—	—	—	28	28
Other receivables, security deposits and current assets(2)	—	—	—	79	79
VAT receivables(2)	—	—	—	105	105
Derivative financial instruments(2)	—	3	—	—	3
Current financial assets	627	3	—	309	939
Financial assets at fair value and amortized cost or cost	782	3	52	474	1,311
Financial liabilities
Contingent consideration liabilities	—	—	(112)	—	(112)
Non-current financial debt	—	—	—	(3,966)	(3,966)
Current financial debt	—	—	—	(107)	(107)
Derivative financial instruments	—	(7)	—	—	(7)
Financial liabilities at fair value and amortized cost	—	(7)	(112)	(4,073)	(4,192)

(1)Recorded in Other non-current assets.

(2)Recorded in Other current assets.

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


	December 31, 2020
($ 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	—	—	28	—	28
Long-term financial investments measured at FVPL	—	—	12	—	12
Long-term receivables from customers	—	—	—	117	117
Deferred compensation assets(1)	137	—	—	—	137
Non-current minimum lease payments from finance lease agreements	—	—	—	39	39
Long-term loans, advances and security deposits	—	—	—	22	22
Non-current financial assets	137	—	40	178	355
Current financial assets
Money market funds	625	—	—	—	625
Current portion of long-term financial investments measured at FVPL(2)	—	—	12	—	12
Current portion of long-term receivables from customers(2)	—	—	—	107	107
Current portion of minimum lease payments from finance lease agreements(2)	—	—	—	29	29
Other receivables, security deposits and current assets(2)	—	—	—	88	88
VAT receivables(2)	—	—	—	72	72
Derivative financial instruments(2)	—	3	—	—	3
Current financial assets	625	3	12	296	936
Financial assets at fair value and amortized cost or cost	762	3	52	474	1,291
Financial liabilities
Contingent consideration liabilities	—	—	(157)	—	(157)
Non-current financial debt	—	—	—	(3,949)	(3,949)
Current financial debt	—	—	—	(162)	(162)
Derivative financial instruments	—	(7)	—	—	(7)
Financial liabilities at fair value and amortized cost	—	(7)	(157)	(4,111)	(4,275)

(1)Recorded in Other non-current assets.

(2)Recorded in Other current assets

There were notransfers of financial instruments between levels in the fair value hierarchy during the years ended December 31, 2021 and December 31, 2020.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Level 3 financial instruments measured at fair value on a recurring basis

Financial assets


	Long-term financial investments measured at FVOCI		Financial investments measured at FVPL
($ millions)	2021	2020	2021	2020
Balance as of January 1	28	31	24	61
Additions	18	7	—	2

(Losses) recognized in Consolidated Statement of Comprehensive Income/(Loss)	—	(10)	—	—
Unrealized (losses) in Consolidated Income Statement	—	—	(3)	(5)
Amortization	—	—	(12)	(34)
Settlement	—	—	(3)	—
Balance as of December 31	46	28	6	24

If the pricing parameters for the Level 3 inputs were to change for Long-term financial investments measured at FVOCI by 10% positively or negatively, this would change the amount recorded in the 2021 Consolidated Statement of Comprehensive Income/(Loss) by $5 million.

Financial liabilities


	Contingent consideration liabilities
($ millions)	2021	2020
Balance as of January 1	(157)	(243)

Accretion for passage of time	(12)	(17)
Adjustments for changes in assumptions	42	63
Payments	15	40
Balance as of December 31	(112)	(157)

Changes in contingent consideration liabilities in the current year include adjustments for changes in assumptions of $42 million, primarily due to revised expectations for achievement of commercial milestones related to the impaired CGU in the Surgical reportable segment discussed in Note 10 and timing of settlement for development and commercial milestones. The current year also included a payment of $15 million related to achievement of a development milestone. As of December 31, 2021, the probability of success for various development and commercial milestones ranges from 55% to 80% and the maximum remaining potential payments related to contingent consideration from business combinations is $395 million, plus other amounts calculated as a percentage of commercial sales in cases where there is not a specified maximum contractual payment amount. The estimation of probability typically depends on factors such as technical milestones or market performance and is adjusted for the probability of payment. If material, probable payments are appropriately discounted to reflect the impact of time.

Changes in contingent consideration liabilities in the prior year included adjustments for changes in assumptions of $63 million primarily related to revised expectations for achievement of development and commercial milestones and timing of settlement for milestones, and payments of $40 million related to achievement of development milestones. As of December 31, 2020, the probability of success for various development and commercial milestones ranged from 55% to 100% and the maximum remaining potential payments related to contingent consideration from business combinations was $470 million, plus other amounts calculated as a percentage of commercial sales in cases where there is not a specified maximum contractual payment amount.

Contingent consideration liabilities are reported in “Provisions & other non-current liabilities" based on the projected timing of settlement which is estimated to range from 2025 through 2033 for contingent consideration obligations as of December 31, 2021.

For the determination of the fair value of a contingent consideration various unobservable inputs are used. A change in these inputs might result in a significantly higher or lower fair value measurement. The inputs used are, among others, the probability of success, sales forecast and assumptions regarding the discount rate, timing and different scenarios of

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

triggering events. The significance and usage of these inputs to each contingent consideration may vary due to differences in the timing and triggering events for payments or in the nature of the asset related to the contingent consideration.

As the most significant Level 3 input, if the probability of success were to change by 10% positively or negatively, this would change the amount recorded for contingent consideration payables in the 2021 Consolidated Income Statement by $19 million.

Derivatives

As of December 31, 2021 and December 31, 2020, the net value of unsettled positions for derivative forward contracts and swaps was $4 million, including $3 million of unrealized gains in Other current assets and $7 million of unrealized losses in Current financial debts. There are master agreements with several banking counterparties for derivatives financial instruments, however, there were no derivative financial instruments meeting the offsetting criteria under IFRS as of December 31, 2021 or December 31, 2020.

Nature and extent of risks arising from financial instruments

Market risk

Alcon is exposed to market risk, primarily related to foreign currency exchange rates, interest rates and the market value of investments of liquid funds. Alcon actively monitors and seeks to reduce, where it deems it appropriate to do so, fluctuations in these exposures. It is Alcon policy and practice to enter into a variety of derivative financial instruments to manage the volatility of these exposures and to enhance the yield on the investment of liquid funds. Alcon does not enter into any financial transactions containing a risk that cannot be quantified at the time the transaction is concluded. In addition, Alcon does not sell short assets it does not have, or does not know it will have, in the future. Alcon only sells existing assets or enters into transactions and future transactions (in the case of anticipatory hedges) that it confidently expects it will have in the future, based on past experience. In the case of liquid funds, Alcon writes call options on assets it has, or writes put options on positions it wants to acquire and has the liquidity to acquire. Alcon expects that any loss in value for these instruments generally would be offset by increases in the value of the underlying transactions.

Foreign currency exchange rate risk

Alcon uses the US Dollar as its reporting currency and is therefore exposed to foreign currency exchange movements, primarily in Euros, Japanese Yen, Chinese Renminbi, Swiss Francs, and emerging market currencies. Fluctuations in the exchange rate between the US Dollar and other currencies can have a significant effect on both Alcon’s results of operations, including reported sales and earnings, as well as on the reported value of Alcon's assets, liabilities and cash flows. This, in turn, may significantly affect the comparability of period-to-period results of operations.

Interest rate risk

Alcon's exposure to cash flow interest rate risks arises mainly from non-current financial debts at variable rates. Alcon may enter into interest rate swap agreements, in which it exchanges periodic payments based on a notional amount and agreed-upon fixed and variable rate interests. If the interest rates had been higher / lower by 1%, the income before taxes would have been lower / higher by $14 million from the impacts of interest expense based on the change in the interest rate.

Commodity price risk

Alcon is currently experiencing inflation and supply chain challenges due to COVID-19 in certain components and has exposure to price risk related to anticipated purchases of certain commodities used as raw materials by Alcon's businesses. A change in those prices may alter the gross margin of a specific business, but generally by not more than 10% of the margin and thus below Alcon's risk management tolerance levels. Accordingly, Alcon does not enter into significant forward and option contracts to manage fluctuations in prices of anticipated purchases.

Credit risk

Credit risks arise from the possibility that customers may not be able to settle their obligations as agreed. To manage this risk, Alcon periodically assesses credit risk, assigns individual credit limits, and takes actions to mitigate credit risk where appropriate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

With the continued adverse economic conditions in relation to the COVID-19 pandemic which vary by region, there is an ongoing credit risk due to expected credit losses. Provisions for expected credit losses have been reflected in the Consolidated Financial Statements as of December 31, 2021. Alcon will continue to assess forward-looking estimates of potential increased default rates and potential increase in lifetime expected credit losses. For further information, refer to Note 14 of these Consolidated Financial Statements.

No customer accounted for 10% or more of Alcon's net sales in 2021, 2020 or 2019.

Liquidity risk

Liquidity risk is defined as the risk that Alcon may not be able to settle or meet its obligations on time or at a reasonable price. Alcon Treasury is responsible for liquidity, funding and settlement management. In addition, liquidity and funding risks, and related processes and policies, are overseen by management. Alcon manages its liquidity risk on a consolidated basis according to business needs, tax, capital or regulatory considerations, if applicable, through numerous sources of financing in order to maintain flexibility. Management monitors Alcon's net debt or liquidity position through rolling forecasts on the basis of expected cash flows.

While collections stabilized in 2021, with the continued adverse economic conditions in relation to the COVID-19 pandemic which vary by region, there is an ongoing liquidity risk due to potential delays or reductions in collections from our customers or increased difficulties in accessing the capital or debt markets. In response to the increased liquidity risk, on May 27, 2020, AFC completed an offering of $750 million of 2.600% senior notes due in 2030, increasing Alcon's overall liquidity. In addition, Alcon’s revolving credit facility with total availability of $1 billion remained undrawn as of December 31, 2021 with no current limitations on borrowing, and management has not identified any changes in Alcon's ability to access the capital or debt markets.

For further information on maturity of the contractual undiscounted cash flows for Alcon's borrowings and interest on borrowings, refer to Note 17 of these Consolidated Financial Statements.

19. Provisions and other non-current liabilities

The below table provides details related to Provisions and other non-current liabilities as of December 31, 2021 and 2020.


($ millions)	Note	2021	2020
Accrued liability for employee benefits:
Defined benefit pension plans	23	295	339
Other long-term employee benefits and deferred compensation		177	152
Other post-employment benefits	23	300	332
Provisions for litigation and other legal matters		—	—
Contingent consideration	18	112	142
Other non-current liabilities		56	95
Total provisions and other non-current liabilities		940	1,060

Alcon believes that its total provisions are adequate based upon currently available information; however, given the inherent difficulties in estimating liabilities in this area, Alcon may incur additional costs beyond the amounts provided. Management believes that such additional amounts, if any, would not be material to Alcon's financial condition but could be material to the results of operations or cash flows in a given period.

Provisions for litigation and other legal matters

Alcon has established provisions for certain litigation and other legal matters, where a potential cash outflow is probable and a reliable estimate can be made of the amount of the outflow. These provisions represent the current best estimate of the total financial effect for these matters. Potential cash outflows reflected in a provision may be fully or partially off-set by insurance in certain circumstances.

Alcon has not established provisions for potential damage awards for certain additional legal claims if Alcon currently believes that a payment is either not probable or cannot be reliably estimated. A number of other legal matters are in such early stages or the issues presented are such that Alcon has not made any provisions since it cannot currently estimate either a potential outcome or the amount of any potential losses. For these reasons, among others, Alcon generally is

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

unable to make a reliable estimate of possible loss with respect to such cases. It is therefore not practicable to provide information about the potential financial impact of those cases.

There might also be cases for which Alcon was able to make a reliable estimate of the possible loss or the range of possible loss, but Alcon believes that publication of such information on a case-by-case basis would prejudice Alcon's position in ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, information would be disclosed with respect to the nature of the contingency, but no disclosure is provided as to an estimate of the possible loss or range of possible loss.

Note 26 contains additional information on contingencies.

Summary of significant legal proceedings

A number of Alcon companies are, and will likely continue to be, subject to various legal proceedings and investigations that arise from time to time, including proceedings regarding product liability, sales and marketing practices, commercial disputes, employment, and wrongful discharge, antitrust, securities, health and safety, environmental, tax, international trade, privacy, and intellectual property matters. As a result, Alcon may become subject to substantial liabilities that may not be covered by insurance and could affect Alcon's business, financial position and reputation. While Alcon does not believe that any of these legal proceedings will have a material adverse effect on its financial position, litigation is inherently unpredictable and large judgments sometimes occur. As a consequence, Alcon may in the future incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations or cash flow. The following is a summary as of February 15, 2022 of significant legal proceedings of the Alcon business to which Alcon or any of its subsidiaries are a party.

Contact lenses class actions

JJSVI patent dispute

On June 23, 2020, Johnson & Johnson Surgical Vision, Inc. ("JJSVI"), acting through its subsidiaries, filed a patent infringement action in the US District Court in Delaware alleging that the manufacture, use, sale, offer for sale, and/or importation of Alcon’s LenSx Laser System willfully infringes, directly and/or indirectly, one or more claims of 12 US patents. JJSVI subsequently amended its complaint to include copyright infringement claims relating to source code used in the LenSx Laser System as well as additional claims of patent infringement. Also beginning on June 23, 2020, JJSVI filed claims in Mannheim, Germany, alleging that Alcon directly infringes certain European patents through its manufacture and sale of LenSx. In these cases, JJSVI seeks monetary and injunctive relief.Alcon intends to defend all of these cases vigorously and has asserted various patent infringement and invalidity claims against JJSVI in Europe and the United States. The Delaware court has stayed the parties' US patent claims pending final written decisions by the Patent Trial and Appeal Board of the US Patent and Trademark Office in various ongoing inter partes review proceedings pertaining to the patents in the suit. Trial on the copyright claims in the Delaware action is set for February 2023.

Hoya patent dispute

On December 11, 2020, Hoya Corporation and one of its affiliates filed suit against Alcon in the US District Court for the Northern District of Texas alleging that Alcon's UltraSert Pre-Loaded Delivery System infringes six of Hoya's US patents. The court denied in part Alcon’s motion to dismiss Hoya’s complaint on September 20, 2021. Trial is set for April 2023. Alcon intends to defend the case vigorously.

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Asia / Russia investigation

In 2017 and 2018, Alcon and Novartis Group companies, as well as certain present and former executives and associates of Alcon and Novartis, received document requests and subpoenas from the US Department of Justice (“DoJ”) and the SEC requesting information concerning Alcon accounting, internal controls and business practices in Asia and Russia, including revenue recognition for surgical equipment and related products and services and relationships with third party distributors, both before and after Alcon became part of the Novartis Group. The Investigations by the DoJ and the SEC have concluded. On June 25, 2020, Alcon entered into a three-year Deferred Prosecution Agreement with the DoJ regarding a charge that Alcon Pte Ltd. conspired to falsify financial books and records in violation of the US Foreign Corrupt Practices Act. The charge relates to payments made by a former distributor to health care providers in Vietnam between 2007 and 2014. Alcon agreed to pay the DoJ a penalty of $8.925 million, for which Novartis has indemnified Alcon.

Litigation and other legal matters provision movements


($ millions)	2021	2020	2019
January 1	—	—	42
Additions to provisions	54	9	—
Cash payments	(1)	(9)	(40)
Releases of provisions	—	—	(2)
December 31	53	—	—
Less current portion	(53)	—	—
Non-current provisions for litigation and other legal matters at December 31	—	—	—

Alcon believes that its total provisions for litigation and other legal matters are adequate based upon currently available information. However, given the inherent difficulties in estimating liabilities, additional liabilities and costs may be incurred beyond the amounts provided.

20. Provisions and other current liabilities

The following table provides details related to Provisions and other current liabilities as of December 31, 2021 and 2020:


($ millions)	Note	2021	2020
Taxes other than income taxes		93	110
Restructuring provisions		17	10
Accrued expenses for goods and services received but not invoiced		76	61
Accruals for royalties		10	11
Accruals for deductions from revenue		264	217
Accruals for compensation and benefits including social security		489	352
Deferred income		108	110
Provisions for litigation and other legal matters	19	53	—
Accrued equity-based payments		14	9
Accrued interest on financial debts		19	19
Contingent consideration	18	—	15
Other payables		58	80
Total provisions and other current liabilities		1,201	994

Provisions and accruals are based upon management's best estimate and adjusted for actual experience. Such adjustments to the historical estimates have not been material.

F-47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

Accruals for deductions from revenue

The following table shows the movement of accruals for deductions from revenue:


($ millions)	2021	2020	2019
January 1	217	212	194
Additions	677	540	662
Payments/utilizations	(619)	(537)	(646)
Changes in offset against gross trade receivables	(5)	(2)	1
Currency translation effects	(6)	4	1
December 31	264	217	212

Restructuring provisions

The following table shows the movement of restructuring provisions:


($ millions)	2021	2020	2019
January 1	10	28	8
Additions	21	22	32
Cash payments	(14)	(40)	(10)
Releases	—	—	(2)

December 31	17	10	28

In 2021, 2020 and 2019, additions to restructuring provisions of $21 million, $22 million and $32 million, respectively, were primarily related to the multi-year transformation program announced by Alcon on November 19, 2019 andwere mainly related to accrued severance for the associates whose positions will be eliminated.

21. Consolidated Statement of Cash Flows - additional details

The Consolidated Statement of Cash Flows was prepared in accordance with IAS 7, Statement of Cash Flows. The below tables provide additional detail supporting select line items in the Consolidated Statement of Cash Flows.

21.1 Depreciation, amortization, impairments and fair value adjustments


($ millions)	2021	2020	2019
Property, plant & equipment	323	299	275
Right-of-use assets	81	79	66
Intangible assets	815	1,245	1,084
Financial assets	3	5	31
Other non-current assets	(2)	(2)	—
Total	1,220	1,626	1,456

21.2 Change in net current assets and other operating cash flow items


($ millions)	2021	2020	2019
(Increase) in inventories	(326)	(159)	(108)
(Increase)/decrease in trade receivables	(198)	43	(115)
Increase/(decrease) in trade payables	60	(21)	84
Net change in other operating assets	(24)	127	(26)
Net change in other operating liabilities	174	(35)	117
Total	(314)	(45)	(48)

F-48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

21.3 Acquisitions of businesses, net


($ millions)	2021	2020	2019
Net assets recognized as a result of business combinations	—	—	(418)
Payables contingent consideration	—	—	135

Cash flows	—	—	(283)

Notes 4 and 22 to these Consolidated Financial Statements provide further information regarding an acquisition of a business in 2019 for cash.

21.4 Reconciliation of assets and liabilities arising from financing activities


	Financial Liabilities
($ millions)	Non-current financial debts	Current financial debts	Non-current lease liabilities	Current lease liabilities
January 1, 2021	3,949	169	315	70
Proceeds from non-current financial debts, net of issuance costs	52	—

Additions to leases			106	9
Change in current financial debts	—	(43)
Amortization of discounts on financial debts	1	—
Payments of lease liabilities, net			—	(72)
Interest payments for amounts included in lease liabilities classified as cash flows from operating activities			—	(13)
Changes in fair values and other non-cash changes, net	4	—	(2)	8
Currency translation effects	(40)	(12)	(10)	(5)
Reclassification from non-current to current	—	—	(70)	70
December 31, 2021	3,966	114	339	67


	Financial Liabilities
($ millions)	Non-current financial debts	Current financial debts	Non-current lease liabilities	Current lease liabilities
January 1, 2020	3,218	261	280	61
Proceeds from non-current financial debts, net of issuance costs	744	—

Additions to leases			96	11
Change in current financial debts	—	(139)
Amortization of discounts on financial debts	1	—
Payments of lease liabilities, net			—	(69)
Interest payments for amounts included in lease liabilities classified as cash flows from operating activities			—	(12)
Changes in fair values and other non-cash changes, net	4	(9)	(2)	8
Currency translation effects	37	1	10	2
Reclassification from non-current to current	(55)	55	(69)	69
December 31, 2020	3,949	169	315	70

F-49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

22. Acquisitions of businesses

Fair value of assets and liabilities arising from acquisitions


($ millions)	2021	2020	2019
Property, plant and equipment	—	—	1

Acquired research and development	—	—	505
Deferred tax assets	—	—	28


Cash and cash equivalents	—	—	6
Deferred tax liabilities	—	—	(121)
Trade payables and other liabilities	—	—	(1)
Net identifiable assets acquired	—	—	418
Acquired liquidity	—	—	(6)
Goodwill	—	—	6
Net assets recognized as a result of business combinations	—	—	418

Note 4 of these Consolidated Financial Statements details a significant acquisition of a business, PowerVision, in 2019. No goodwill from the 2019 acquisition is tax-deductible.

23. Post-employment benefits for associates

Defined benefit plans

In addition to the legally required social security schemes, Alcon has sponsored numerous independent pension and other post-employment benefit plans. In most cases, these plans are externally funded in entities that are legally separate from Alcon. For certain subsidiaries, however, no independent plan assets exist for the pension and other post-employment benefit obligations of associates. In these cases the related unfunded liability is included in the Consolidated Balance Sheet. The value of the post-employment benefits promised under the pension and other post-employment benefit plans is represented by the defined benefit obligation ("DBO"), which is measured based on the projected unit credit method ("PUC"). Independent actuaries reappraise the DBOs of all major pension and other post-employment benefit plans annually. Plan assets are recognized at fair value.

The major pension and other post-employment benefit plans are based in Switzerland, the United States, Germany, and the United Kingdom. As of December 31, 2021, these plans represent 88% of Alcon's total DBO and are independently sponsored by Alcon. Details of the plans in those significant countries are provided below.

The pension plans in Switzerland represent the most significant portion of Alcon's total pension DBO and the largest component of Alcon's total plan assets. The principal plan in Switzerland is funded and open for new joiners. For the Swiss pension plan, active insured members' benefits are partially linked to the contributions paid into the plan. Certain features of the Swiss pension plan required by law preclude the plan from being categorized as a defined contribution plan. These factors include a minimum interest guarantee on retirement savings accounts, a pre-determined factor for converting the accumulated savings account balance into a pension and embedded death and disability benefits. All benefits granted under a Swiss-based principal pension plan are vested, and Swiss legislation prescribes that the employer has to contribute a fixed percentage of an associate's pay to an external pension foundation. Additional employer contributions may be required whenever the foundation's statutory funding ratio falls below a certain level. The associate also contributes to the plan.

As of December 31, 2021, following the transfer out of the Novartis pension fund effective February 1, 2021, Alcon's Swiss pension obligation is set-up under an Alcon-sponsored arrangement affiliated with Copré La Collective de Prévoyance ("Copré") – a Swiss collective foundation. As a collective foundation, Copré is governed by its own board of trustees which is responsible for the foundation regulations and asset investment strategy for multiple entities participating in the collective foundation. Also effective February 1, 2021, Alcon established its own pension committee, consisting of representatives nominated by Alcon and the active insured associates. During the fourth quarter of 2021, Copré announced the rates to be used to convert participant balances to pension annuities for 2024 to 2026. This announcement resulted in a plan amendment with a benefit of $15 million recognized in Other income and a corresponding decrease in the DBO. During the third quarter of 2020, the selection of Copré resulted in a plan amendment with past service costs of $12 million recognized in Other expense and a corresponding increase in the DBO.

F-50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The United States pension plans represent the second largest component of Alcon's total pension DBO and the third largest component of Alcon's total plan assets. The principal plan (Qualified Plan) is funded, whereas the plans providing additional benefits for executives (Defined Benefit Restoration Plan and Grandfathered Supplemental Executive Plan) are unfunded. Benefits in the Qualified Plan and Restoration Plan are frozen for all participants. Employer contributions are required for the Qualified Plan whenever the statutory funding ratio falls below a certain level. Furthermore, most associates in the United States are covered under other post-employment benefit plans (US OPEB plans) which represent 99% of the total DBO for other post-employment benefit plans. These benefits in the US primarily consist of post-employment healthcare which has been closed to new members since 2015. Effective January 1, 2021, the Alcon sponsored group health plan for current and future eligible retired participants age 65 and over was changed to a private Medicare marketplace while providing an annual notional contribution to a Health Reimbursement Account for each covered member and spouse. The impact of the plan amendment in the fourth quarter of 2020 was a benefit of $164 million recognized in Other income and a corresponding decrease in the DBO in Provisions and other non-current liabilities. There is no statutory funding requirement for the US OPEB plans.

The major pension arrangements in Germany are governed by the Occupational Pensions Act ("BetrAVG") and represent the third largest component of Alcon's total pension DBO and the fifth largest component of Alcon's total plan assets. The plans are partly funded by a Contractual Trust arrangement or direct insurances. The employer is responsible for contributing the premiums to the insurances and paying certain benefits when they fall due. All plans are closed for new entrants and the benefits are fully vested for all participants. For some participants the benefits are based on final salary and length of employment, and for others the benefit is earned each year based on the current salary in the year of service. Associates do not contribute towards the cost of the benefits.

The pension plans in the United Kingdom represent the fourth largest component of Alcon's total pension DBO and the second largest component of Alcon's total plan assets. The plan is closed with only former Alcon associates entitled to current or future benefits. The Alcon United Kingdom Pension Scheme is governed and administered by a board of trustees in accordance with its Trust Deed. United Kingdom legislation requires that pension schemes are funded prudently (i.e., to a level in excess of the "best estimate" expected cost of providing benefits). Funding is assessed on a triennial basis using (prudent) assumptions agreed by the board of trustees and Alcon. The board of trustees is responsible for jointly agreeing with Alcon the level of contributions needed to eliminate any shortfall over a reasonable period of time, typically not exceeding 10 years. Under the governing documentation, if a surplus remains once liabilities have been settled it would be refunded to Alcon.

One of Alcon's pension plans has a surplus that is not recognized on the basis that future economic benefits are not available to the entity in the form of a reduction in future contributions or a cash refund.

F-51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following tables summarize the funded and unfunded DBO for pension and other post-employment benefit plans of Alcon associates at December 31, 2021 and 2020:


	Pension plans		Other post-employment benefit plans
($ millions)	2021	2020	2021	2020
Benefit obligation at January 1	817	723	332	423
Current service cost	24	31	10	14
Interest cost	9	12	7	15
Past service costs and settlements	(38)	9	—	(165)
Administrative expenses	1	1	—	—
Remeasurement (gains)/losses arising from changes in financial assumptions	(22)	38	(12)	92
Remeasurement losses/(gains) arising from changes in demographic assumptions	—	2	1	(4)
Remeasurement losses/(gains) arising from experience-related changes	67	(13)	(25)	(27)
Currency translation effects	(35)	44	—	—
Benefit payments	(37)	(36)	(17)	(25)
Contributions of associates	5	6	4	9

Benefit obligation at December 31	791	817	300	332
Fair value of plan assets at January 1	519	451	—	—
Interest income	6	7	—	—
Return on plan assets excluding interest income	49	32	—	—
Currency translation effects	(18)	24	—	—
Employer contributions	23	25	13	16
Contributions of associates	5	6	4	9
Settlements	(20)	(2)	—	—
Benefit payments	(37)	(36)	(17)	(25)
Effect of acquisitions, divestments or transfers	14	12	—	—
Fair value of plan assets at December 31	541	519	—	—
Funded status	(250)	(298)	(300)	(332)
Limitation on recognition of fund surplus at January 1	(17)	(6)
Change in limitation on recognition of fund surplus (including exchange rate differences)	(3)	(11)
Limitation on recognition of fund surplus at December 31	(20)	(17)
Net liability in the balance sheet at December 31	(270)	(315)	(300)	(332)

F-52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The reconciliation of the net liability from January 1 to December 31 is as follows:


	Pension plans		Other post-employment benefit plans
($ millions)	2021	2020	2021	2020
Net liability at January 1	(315)	(278)	(332)	(423)
Current service cost	(24)	(31)	(10)	(14)
Net interest expense	(3)	(5)	(7)	(15)
Administrative expenses	(1)	(1)	—	—
Past service costs and settlements	18	(11)	—	165
Remeasurements	4	5	36	(61)
Currency translation effects	17	(20)	—	—
Employer contributions	23	25	13	16
Effect of acquisitions, divestments or transfers	14	12	—	—
Change in limitation on recognition of fund surplus	(3)	(11)	—	—
Net liability at December 31	(270)	(315)	(300)	(332)

Amounts recognized in the balance sheet
Prepaid benefit cost	25	24	—	—
Accrued benefit liability	(295)	(339)	(300)	(332)

The following tables provide detail of the DBO for pension plans by geography and type of member and of plan assets based on the geographical locations in which they are held:


	2021
($ millions)	Switzerland	United States	Germany	United Kingdom	Rest of the world	Total
By type of member
Active	(295)	(43)	(64)	—	(99)	(501)
Deferred pensioners	(11)	(41)	(28)	(57)	(14)	(151)
Pensioners	(23)	(42)	(23)	(40)	(11)	(139)
Benefit obligation at December 31	(329)	(126)	(115)	(97)	(124)	(791)
Thereof: unfunded plans	47	29	—	—	23	99
Thereof: unfunded portion of funded plans	87	6	94	—	9	196
Prepaid benefit costs and assets subject to limitation on recognition of fund surplus	—	—	—	(24)	(21)	(45)
Fair value of plan assets at December 31	195	91	21	121	113	541
Funded status	(134)	(35)	(94)	24	(11)	(250)

F-53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


	2020
($ millions)	Switzerland	United States	Germany	United Kingdom	Rest of the world	Total
By type of member
Active	(251)	(53)	(76)	—	(125)	(505)
Deferred pensioners	(12)	(50)	(32)	(62)	(17)	(173)
Pensioners	(26)	(35)	(26)	(42)	(10)	(139)
Benefit obligation at December 31	(289)	(138)	(134)	(104)	(152)	(817)
Thereof: unfunded plans	51	30	—	—	31	112
Thereof: unfunded portion of funded plans	84	14	115	—	14	227
Prepaid benefit costs and assets subject to limitation on recognition of fund surplus	—	—	—	(23)	(18)	(41)
Fair value of plan assets at December 31	154	94	19	127	125	519
Funded status	(135)	(44)	(115)	23	(27)	(298)

The following table shows the principal weighted average actuarial assumptions used for calculating defined benefit plans and other post-employment benefits of Alcon associates:


	Pension plans				Other post-employment benefit plans
	2021		2020		2021		2020
Discount rate	1.4	%	1.2	%	2.7	%	2.3	%
Expected rate of pension increase	1.1	%	1.1	%	0		0
Expected rate of salary increase	2.2	%	2.4	%	0		0
Interest on savings account	1.3	%	1.0	%	0		0
Current average life expectancy for a 65-year-old male (in years)	20		20		21		20
Current average life expectancy for a 65-year-old female (in years)	22		23		23		22

The following table shows additional details related to the weighted average discount rates for the principal plan for each significant country:


	Pension plans				Other post-employment benefit plans
	2021		2020		2021		2020
Switzerland	0.2	%	0.1	%
United States	2.8	%	2.4	%	2.7	%	2.3	%
Germany	1.2	%	0.8	%
United Kingdom	1.9	%	1.3	%

Changes in the aforementioned actuarial assumptions can result in significant volatility in the accounting for pension plans and other post-employment benefit plans in the Consolidated Financial Statements. This can result in substantial changes in Alcon's other comprehensive income, non-current liabilities and prepaid pension assets.

The DBO is significantly impacted by assumptions related to the rate used to discount the actuarially determined post-employment benefit liability. This rate is based on yields of high-quality corporate bonds in the country of the plan. Increasing corporate bond yields increase the discount rate. An increase in the discount rate results in a decrease in the DBO and an increase in the funded status.

The impact of increasing interest rates on a plan's assets is more difficult to predict. A significant part of plan assets is invested in bonds. Bond values typically are inversely correlated to interest rates. Bond values usually decrease when interest rates rise and may therefore partially offset the increase in the funded status. Furthermore, pension assets also

F-54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

include significant holdings of equity instruments. Share prices tend to fall when interest rates increase and therefore often offset the positive impact of the decreasing DBO on the funded status (although the correlation of interest rates with returns on equities is not as strong as with bonds, especially in the short term).

The assumption for the expected rate for pension increases significantly affects the DBO of most plans in Switzerland, Germany and the United Kingdom. Such pension increases also decrease the funded status, although there is no strong correlation between the value of the plan assets and pension/inflation increases.

Assumptions regarding life expectancy significantly impact the DBO. An increase in longevity increases the DBO. There is no offsetting impact from the plan assets, as no longevity bonds or swaps are held by the pension funds. Generational mortality tables are used where this data is available.

The following table shows the sensitivity of the defined benefit pension and other post-employment benefit obligations to the principal actuarial assumptions as of December 31, 2021:


($ millions)			Change in 2021 year-end
25 basis point increase in discount rate			(45)
25 basis point decrease in discount rate			38
1 year increase in life expectancy			23
25 basis point increase in rate of pension increase			9
25 basis point decrease in rate of pension increase (1)			(11)
25 basis point increase of interest on savings account			5
25 basis point decrease of interest on savings account			(5)
25 basis point increase in rate of salary increase			5
25 basis point decrease in rate of salary increase			(5)

(1)Decrease in rate of pension increase is limited to zero.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes of the assumptions may be correlated. When calculating the sensitivity of the DBO to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the PUC method at the end of the reporting period) has been applied as when calculating the net liability recognized in the Consolidated Balance Sheet.

The healthcare cost trend rate assumptions used for other post-employment benefits are as follows:


	2021		2020		2019
Healthcare cost trend rate assumed for next year	6.2	%	6.2	%	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	2029		2028		2028

F-55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The following table shows the weighted average plan asset allocation of funded defined benefit pension plans at December 31, 2021, and 2020:


	Pension plans
(as a percentage)	Long-term target minimum	Long-term target maximum	2021	2020
Equity securities	15	40	35	31
Debt securities	20	60	40	46
Real estate	5	20	11	7
Alternative investments	0	20	11	10
Cash and other investments	0	15	3	6
Total			100	100

Cash and most of the equity and debt securities have a quoted market price in an active market. Real estate and alternative investments, which include hedge fund and private equity investments, usually do not have a quoted market price.

The strategic allocation of assets of the different pension plans is determined with the objective of achieving an investment return that, together with employer contributions and contributions of associates (where applicable), is sufficient to manage the various funding risks of the plans. Based upon the market and economic environments, actual asset allocations may temporarily be permitted to deviate from policy targets.

The weighted average duration of the DBO is 15.5 years as of December 31, 2021 and December 31, 2020.

Alcon's ordinary contribution to the various pension plans is based on the rules of each plan and its respective country. Additional contributions are made whenever required by local statute or law (i.e., usually when statutory funding levels fall below predetermined thresholds).

The following table summarizes expected future cash flows for pension and other post-employment benefit plans as of December 31, 2021:


($ millions)	Pension plans	Other post-employment benefit plans
Employer contributions
2022 (estimated)	12	—
Expected future benefit payments
2022	31	18
2023	29	19
2024	31	21
2025	32	21
2026	33	21
2027-2031	196	103

Defined contribution plans

In many subsidiaries, associates are covered by defined contribution plans. Contributions charged to the 2021 Consolidated Income Statement for the defined contribution plans were $133 million (2020: $136 million; 2019: $128 million).

F-56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

24. Equity-based compensation

For the year ended December 31, 2021, Alcon recorded equity-based compensation expense of $151 million (2020: $113 million, 2019: $114 million).

Liabilities from cash-settled equity-based compensation plans were$14 million as of December 31, 2021 ($9 million as of December 31, 2020).

On April 9, 2019, Alcon adopted various equity-based incentive plans, under which Alcon may grant awards in the form of restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs"), restricted stock awards ("RSAs"), or any other form of award at the discretion of the Board. Certain associates in select countries may also participate in share ownership savings plans.

Prior to the Spin-off, Alcon associates participated in Novartis equity-based participation plans, which included stock options, RSUs, PSUs, RSAs and certain share ownership savings plans. Such awards were settled in shares or options of the Former Parent. Prior to the Spin-off, the Consolidated Income Statement reflects the compensation expense for Novartis’ equity-based incentive plans in which Alcon associates participated.

Replacement awards

Concurrent with the Spin-off, certain outstanding Novartis awards granted to Alcon associates under Novartis’ equity-based incentive plans vested in Novartis equity on a pro rata basis, in proportion to the amount of the vesting period completed. The remaining unvested Novartis awards were replaced and restored with Alcon awards as governed by the Alcon equity restoration plan with terms and vesting schedules substantially similar to the replaced Novartis awards.

The pro rata vesting of Novartis awards and replacement of unvested Novartis awards with Alcon awards represents a modification under IFRS 2, Share-based Payment. Alcon measured the fair value of the awards immediately prior to and subsequent to the modification and concluded that no incremental fair value was provided to associates. Accordingly, Alcon continues to recognize as an expense the amount of unrecognized compensation cost of the original awards over the remaining vesting periods. Alcon issued 4.2 million unvested equity-based awards in connection with the modification at the time of the Spin-off.

The replacement awards consist primarily of RSUs and PSUs, and vest over a period consistent with the original vesting schedule of the awards which they replaced. In addition to the replacement awards, Alcon has granted additional equity-based awards under the newly-established Alcon incentive plans which were also granted in the form of RSUs and PSUs that will settle in Alcon Inc. shares upon vesting.

Summary of unvested share movements

The below table summarizes unvested share movements for all Alcon equity-based incentive plans through December 31, 2021 and 2020:


	2021			2020
	Number of shares in thousands	Weighted average fair value at grant date in $	Fair value at grant date in $ millions	Number of shares in thousands	Weighted average fair value at grant date in $	Fair value at grant date in $ millions
Unvested shares at January 1	5,417	54.90	297	4,742	51.20	243
Granted
Restricted awards	1,456	72.05	105	1,668	60.19	100
Performance awards	429	72.71	31	457	62.03	28
Vested	(1,258)	50.94	(64)	(1,149)	50.55	(58)
Forfeited	(417)	62.50	(26)	(301)	54.14	(16)
Unvested shares at December 31	5,627	60.96	343	5,417	54.90	297

F-57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

The remaining weighted-average vesting period of unvested equity-based awards as of December 31, 2021 was 1.1 years.

Alcon equity-based incentive plans

The below table summarizes the number of shares authorized under the plans as of December 31, 2021:


(thousands)			Authorized shares
Long-term Incentive Plan			20,000
Deferred Bonus Stock Plan(1)			1,500
Swiss Employee Share Ownership Plan			475
Other share savings plans			275
Total			22,250

(1) Beginning in 2020, the annual incentives for the Alcon CEO and ATLs no longer include deferrals of compensation in the form of equity-based awards subject to the provisions of this plan. No grants were issued under this plan in 2021 and 2020.

Long-Term Incentive Plan ("LTIP") - Restricted Stock Units and Restricted Stock Awards

Under Alcon's LTIP, certain associates may receive grants of RSUs and RSAs (together "Restricted awards"). The awards generally vest on the third anniversary of the award and are generally forfeited if the employment relationship with Alcon terminates prior to vesting. Recipients of RSU awards do not have any shareholder rights, such as voting or dividend rights, until the shares are delivered. Alcon associates receiving grants of RSAs are entitled to the dividends that may be declared and paid over the vesting period only if the associates vest in such award.

Prior to the Spin-off, Alcon associates participated in the Former Parent's "Select" plan. The Company's LTIP plan is substantially similar to and replaced the Former Parent plan.

LTIP - Performance Stock Units

The Alcon CEO and Alcon Top Leaders ("ATLs") participate in Alcon's long-term performance program. PSUs granted under the LTIP each convert to one unrestricted Alcon Inc. share at vesting, subject to the achievement of performance measures.

PSUs awarded to plan participants are granted at target incentive ranges from 35% to 430% of base compensation and vest over a three-year period. The payout between 0% and 200% of target is dependent upon 4equally weighted performance metrics which are determined at the onset of the performance period by the Alcon Inc. Board of Directors. The metrics include compound annual growth rate of Net sales, compound annual growth rate of core EPS, market share of peers, and innovation. The Alcon Inc. Board of Directors and the Compensation Committee assess the performance against the defined measures, including input from the Innovation Committee for the innovation metric, and approve the final payout. PSUs granted under the performance plan do not carry voting rights, but do carry dividend equivalents that are paid in cash or Alcon Inc. shares at vesting, provided participants remain associates of Alcon.

Prior to the Spin-off, Alcon associates participated in the Former Parent's Long-Term Performance Plan ("LTPP") and Long-Term Relative Performance Plan ("LTRPP"), which were substantially similar to Alcon's LTIP performance program.

Swiss Employee Share Ownership Plan and other share savings plans

Alcon associates in certain countries are encouraged to invest in share savings plans. Under the share savings plans, participants may elect to receive some of their wages or annual incentives in Alcon Inc. shares in lieu of cash. Subject to plan rules and limitations, as a reward for their participation in the share savings plans, at no additional cost to the participant, Alcon may partially match their investments in shares after a holding period of 3 years.

Prior to the Spin-off, Alcon associates participated in the Former Parent's share savings plans, which were substantially similar to and replaced by Alcon's share savings plans.

F-58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

25. Related parties transactions

Executive officers

The following table summarizes compensation information for key management personnel:


($ millions)	2021	2020	2019
Cash and other compensation	19.3	12.8	12.5
Post-employment benefits	0.9	1.1	0.9
Equity-based compensation	20.9	9.2	10.7
Total	41.1	23.1	24.1

Transactions with Novartis (up to April 9, 2019)

Prior to the Spin-off, the Alcon business was a segment of Novartis such that transactions with Novartis were considered related party transactions. In connection with the Spin-off, Alcon entered into a separation and distribution agreement as well as various other agreements governing relationships with Novartis going forward, including manufacturing and supply, transitional services, tax matters, employee matters, and patent and know-how license and brand license agreements. Information included in this Note with respect to Novartis is strictly limited to related party transactions with Novartis prior to the Spin-off on April 9, 2019.

Transactions from trading activities related to products and services invoiced between other Novartis Group companies and Alcon's business, have been retained in the historical Consolidated Financial Statements. The ultimate controlling parent of both, the other Novartis Group companies and Alcon's business, was Novartis AG until the Spin-off.

The following table summarizes amounts for the year ended December 31, 2019:


($ millions)			2019 (1)
Contract manufacturing revenues from former parent			47
Purchases from former parent			19

(1) Activity presented strictly relates to the period during which Novartis was a related party (up to April 9, 2019).

Sales to and purchases from Former Parent

Beginning in 2019, product sales to Novartis are recorded in Other revenues in line with Alcon's contract manufacturing arrangement executed with Novartis. Other revenues in 2019 prior to the Spin-off were $47 million. Purchases of products from Novartis under the contract manufacturing arrangement totaled $19 million in 2019 prior to the Spin-off.

Services provided by Former Parent

Services provided by Novartis Group to Alcon in 2019 prior to the Spin-off totaled $40 million and primarily related to human resources operations, real estate and facility services, and information technology.

Management believes that the net charges and methods used for allocations to Alcon were performed on a reasonable basis and reflect the services received by Alcon and the cost incurred on behalf of Alcon. Although the Consolidated Financial Statements reflect management's best estimate of all historical costs related to Alcon, this may however not necessarily reflect what the results of operations, financial position, or cash flows would have been had Alcon been a separate entity, nor the future results of Alcon as it exists following completion of the separation on April 9, 2019.

F-59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

26. Commitments and contingencies

Commitments

Research & development

Alcon has entered into long-term research agreements with various institutions which provide for potential milestone payments and other payments by Alcon that may be capitalized. As of December 31, 2021, the commitments to make payments under those agreements, and their estimated timing, were as follows:


($ millions)			2021
2022			4
2023			4
2024			—
2025			3
2026			—
Thereafter			44
Total			55

Other

Alcon entered into various purchase commitments for services and materials as well as for equipment in the ordinary course of business. These commitments are generally entered into at current market prices and reflect normal business operations. For disclosure of Property, plant and equipment purchase commitments, see Note 9.

Contingencies

The Alcon companies have to observe the laws, government orders and regulations of the country in which they operate.

Governments and regulatory authorities around the world have been stepping up their compliance and law enforcement activities in recent years in key areas, including marketing practices, pricing, corruption, trade restrictions, embargo legislation, insider trading, antitrust, cyber security and data privacy. Further, when one government or regulatory authority undertakes an investigation, it is not uncommon for other governments or regulators to undertake investigations regarding the same or similar matters. Responding to such investigations is costly and requires an increasing amount of management's time and attention. In addition, such investigations may affect Alcon's reputation, create a risk of potential exclusion from government reimbursement programs in the United States and other countries, and may lead to (or arise from) litigation. These factors have contributed to decisions by Alcon and other companies in the healthcare industry, when deemed in their interest, to enter into settlement agreements with governmental authorities around the world prior to any formal decision by the authorities or a court. Those government settlements have involved and may continue to involve, in current government investigations and proceedings, large cash payments, sometimes in the hundreds of millions of dollars or more, including the potential repayment of amounts allegedly obtained improperly and other penalties, including treble damages. In addition, settlements of government healthcare fraud cases often require companies to enter into corporate integrity agreements, which are intended to regulate company behavior for a period of years. Also, matters underlying governmental investigations and settlements may be the subject of separate private litigation.

While provisions have been made for probable losses, which management deems to be reasonable or appropriate, there are uncertainties connected with these estimates. Note 19 contains additional information on these matters.

Alcon is involved in legal proceedings concerning intellectual property rights. The inherent unpredictability of such proceedings means that there can be no assurances as to their ultimate outcome. A negative result in any such

F-60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

proceeding could potentially adversely affect the ability of certain Alcon companies to sell their products, or require the payment of substantial damages or royalties.

Alcon's potential for environmental remediation liability is assessed based on a risk assessment ~~it used~~and investigation of the various sites identified by Alcon as at risk for environmental remediation exposure. Alcon's future remediation expenses are affected by a number of uncertainties. These uncertainties include, but are not limited to, the method and extent of remediation, the percentage of material attributable to Alcon at the remediation sites relative to that attributable to other parties, and the financial capabilities of the other potentially responsible parties.

Alcon has no significant environmental liabilities as at December 31, 2021 and 2020 and has incurred no significant remediation costs for the years ended December 31, 2021, 2020 and 2019.

27. Subsequent events

Surgical - Acquisition of Ivantis, Inc.

On January 7, 2022, Alcon acquired 100% of the outstanding shares and equity of Ivantis, Inc., a privately-held, US-based company and manufacturer of the Hydrus Microstent, a minimally-invasive glaucoma surgery (“MIGS”) device designed to lower intraocular pressure for open-angle glaucoma patients. The acquisition expands Alcon’s surgical portfolio and is expected to help provide a platform for more growth in the glaucoma space. Pursuant to the terms and subject to the conditions of the Option Agreement and Plan of Merger, as amended, Alcon agreed to pay total upfront consideration of $478 million and additional amounts to be potentially paid upon achievement of a development milestone and commercial milestones calculated as a percentage of sales in excess of defined targets that expire in calendar year 2024. The acquisition will be accounted for as an asset acquisition rather than a business combination as substantially all of the fair value of the gross assets acquired on the closing of the acquisition is concentrated in the value of Hydrus Microstent commercially marketed product intangible assets, being a group of identifiable assets. Consequently, a relative fair value approach was taken for allocating the consideration to the acquired assets and liabilities with no goodwill recognized. The preliminary purchase price allocation includes approximately $449 million of intangible assets, primarily related to currently marketed products, $39 million of tangible assets and approximately $10 million of assumed liabilities. Cash paid for the acquisition, net of cash acquired, was $475 million.

Board of Directors approval of AGM agenda

OnFebruary 15, 2022, the Alcon Board of Directors approved the proposal to submit the 2021 financial statements of Alcon Inc. and these Consolidated Financial Statements for approval at the Annual General Meeting on April 27, 2022.Additionally on February 15, 2022, the Board proposed a dividend of CHF 0.20 per share to be approved at the same Annual General Meeting. If approved by the shareholders, the total dividend payments would amount to a maximum of approximately $108 million using the CHF/USD exchange rate as of February 10, 2022.

The Board of Directors has evaluated subsequent events as they relate to Alcon for potential recognition or disclosures from January 1, 2022 to the date of the approval of these Consolidated Financial Statements and has determined there are no additional subsequent events to be reported in these Consolidated Financial Statements.

F-61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)

28. Alcon subsidiaries

The following table lists the subsidiaries of Alcon Inc. with Total assets or Net sales to third parties in excess of $5 million included in the Consolidated Financial Statements at and for the year ended December 31, 2021, respectively. The equity interest percentage shown in the table represents Alcon's share in voting rights in those entities. Unless otherwise stated, each entity has share capital consisting of equity held directly by the Company or another of its consolidated subsidiaries.


Country of organization/Entity name	Place of business	Equity interest
Argentina
Alcon Laboratorios Argentina S.A.	Buenos Aires	100	%
Australia
Alcon Laboratories (Australia) Pty Ltd	Macquarie Park	100	%
Austria
Alcon Ophthalmika GmbH	Wein	100	%
Belgium
Alcon Laboratories Belgium BVBA	Puurs	100	%
Alcon N.V.	Vilvoorde	100	%
Brazil
Alcon Brasil Cuidados com a Saúde Ltda.	São Paulo	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	%


Ecuador
AlconLab Ecuador S.A.	Quito	100	%
France
Laboratoires Alcon S.A.S.	Rueil-Malmaison	100	%
Germany
Alcon Deutschland 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	%
Italy
Alcon Italia S.p.A.	Milano	100	%
Japan
Alcon Japan Ltd.	Tokyo	100	%
Malaysia
Alcon Laboratories (Malaysia) Sdn. Bhd.	Petaling Jaya	100	%

F-62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


Country of organization/Entity name	Place of business	Equity interest
CIBA Vision Johor Sdn. Bhd.	Johor	100	%
Mexico
Alcon Laboratorios, S.A. de C.V.	Ciudad de Mexico	100	%


Netherlands
Alcon Nederland B.V.	Gorinchem	100	%
New Zealand
Alcon Laboratories (New Zealand) Ltd.	Remuera	100	%
Panama
Alcon Centroamerica S.A.	Panama City	100	%
Peru
Alcon Pharmaceutical del Peru S.A.	Lima	100	%
Philippines
Alcon Laboratories (Philippines), Inc.	Pasig City	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 Grieshaber AG	Schaffhausen	100	%
Alcon Management SA	Vernier	100	%
Alcon Pharmaceuticals Ltd.	Fribourg	100	%
Alcon Services AG	Fribourg	100	%
Alcon Switzerland SA	Zug	100	%
Thailand
Alcon Laboratories (Thailand) Limited	Bangkok	100	%
Turkey
Alcon Laboratuvarlari Ticaret A.S.	Istanbul	100	%
Ukraine
Alcon Ukraine LLC	Kiev	100	%
United Kingdom
Alcon Eye Care UK Limited	Frimley/Camberley	100	%

F-63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF ALCON INC. (Continued)


Country of organization/Entity name	Place of business	Equity interest
United States of America
Alcon Finance Corporation	Fort Worth, TX	100	%
Alcon Laboratories, Inc.	Fort Worth, TX	100	%
Alcon LenSx, Inc.	Fort Worth, TX	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	Fort Worth, TX	100	%
WaveLight, Inc.	Fort Worth, TX	100	%

PowerVision, Inc.	Fort Worth, TX	100	%
Tear Film Innovations, Inc.	Fort Worth, TX	100	%
TrueVision Systems, Inc.	Fort Worth, TX	100	%
Uruguay
Alcon Laboratorios Uruguay S.A.	Montevideo	100	%

F-64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Alcon Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Alcon Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, comprehensive income/(loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal ~~Control--Integrated~~Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ~~Based on this assessment, management has concluded that, as of December 31, 2010, Alcon, Inc.'s internal control over financial reporting is effective based on those criteria.~~

~~/s/ Kevin J. Buehler~~		~~/s/ Robert Karsunky~~
~~Kevin J. Buehler~~		~~Robert Karsunky~~
~~President and~~		~~Senior Vice President, Finance,~~
~~Chief Executive Officer~~		~~Chief Financial Officer and Corporate Strategy Officer~~



~~February 1, 2011~~

~~F-2~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and Shareholders of~~

~~Alcon, Inc.:~~

We have audited the accompanying consolidated balance sheets of Alcon, Inc. and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of earnings, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ~~Alcon, Inc. and subsidiaries~~the Company as of December 31, ~~2010~~2021 and ~~2009,~~2020, and the results of ~~their~~its operations and ~~their~~its cash flows for each of the three years in the ~~three-year~~ period ended December 31, ~~2010,~~2021 in conformity with ~~U.S. generally accepted accounting principles.~~

~~We also have audited,~~International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in ~~accordance with~~our opinion, the ~~standards of the Public~~ Company ~~Accounting Oversight Board (United States), Alcon, Inc.'s~~maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2010~~2021, based on criteria established in Internal ~~Control--Integrated~~Control - Integrated Framework (2013) issued by the ~~Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 1, 2011 expressed an unqualified opinion on the effectiveness of the Company~~'~~s internal control over financial reporting.~~COSO.

Basis for Opinions

~~/s/ KPMG LLP~~

~~KPMG LLP~~

~~Fort Worth, Texas~~

~~February 1, 2011~~

~~F-3~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and Shareholders of~~

~~Alcon, Inc.:~~

~~We have audited Alcon, Inc~~.'~~s internal control over financial reporting as of December 31, 2010, based on criteria established in~~ ~~Internal Control--Integrated Framework~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Alcon, Inc.'s~~The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in ~~the accompanying~~ Management's Annual Report on Internal Control ~~over~~Over Financial Reporting. appearing under Item 15. Our responsibility is to express ~~an opinion~~opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our ~~audit.~~

audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the ~~audit~~audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our ~~audit~~audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our ~~audit provides~~audits provide a reasonable basis for our ~~opinion.~~opinions.

Definition and Limitations of Internal Control over Financial Reporting

A ~~company's~~company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A ~~company's~~company’s internal control over financial reporting includes those policies and procedures that ~~(1)~~(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; ~~(2)~~(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and ~~(3)~~(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company's~~company’s assets that could have a material effect on the financial statements.

F-65

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

InThe critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill and Alcon ~~Inc. maintained,~~Brand Name Impairment Assessments

As described in ~~all material respects, effective internal control over~~Notes 3 and 10 to the consolidated financial ~~reporting~~statements, as of December 31, ~~2010,~~2021 the Company had $8.9 billion of goodwill, as well as a $3.0 billion indefinite life intangible asset related to the Alcon brand name. An impairment assessment on goodwill and indefinite life intangible assets, which is performed over the groupings of cash generating units containing goodwill or the Alcon brand name, is performed at least annually. A cash generating unit to which goodwill has been allocated is considered impaired when its carrying amount, including the goodwill, exceeds its recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. An intangible asset other than goodwill is considered impaired when its balance sheet carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. Usually, management applies the fair value less costs of disposal method for its impairment assessment. In most cases, no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of fair value less costs of disposal is based on ~~criteria established~~net present value techniques utilizing post-tax cash flows and discount rates. The estimates used by management in ~~Internal Control--Integrated Framework~~ ~~issued~~calculating the net present values involve significant judgment by ~~COSO.~~management and include assumptions with measurement uncertainty, such as the amount and timing of projected cash flows, long-term sales forecasts, terminal growth rate, discount rate, and additionally for the Alcon brand name, royalty rate.

The principal considerations for our determination that performing procedures relating to the goodwill and Alcon brand name impairment assessments is a critical audit matter are the significant judgment by management when determining the fair value less costs of disposal, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating, for (i) goodwill, management’s significant assumptions related to long-term sales forecasts and discount rate, and (ii) the Alcon brand name, management’s significant assumptions related to long-term sales forecasts, discount rate and royalty rate. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

~~We also have audited,~~Addressing the matter involved performing procedures and evaluating audit evidence in ~~accordance~~connection with forming our overall opinion on the ~~standards~~consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and the Alcon brand name impairment assessments, including controls over the determination of the ~~Public Company Accounting Oversight Board (United States),~~fair value less costs of disposal. These procedures also included, among others, testing management’s process for developing the fair value less costs of disposal estimates; evaluating the appropriateness of the estimates; testing the completeness, accuracy, and relevance of underlying data used; and evaluating the significant assumptions used by management related to long-term sales forecasts, discount rates and royalty rate. Evaluating management’s assumptions related to long-term sales forecasts involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the business, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of management's estimation method of fair value less costs of disposal and the discount rate and royalty rate significant assumptions.

In-Process Research and Development and Definite Lived Intangible Asset Impairment Assessments

As described in Notes 3 and 10 to the consolidated ~~balance sheets of Alcon, Inc. and subsidiaries~~financial statements, as of December 31, ~~2010~~2021 the Company had $557 million of in-process research and ~~2009,~~development (IPR&D) intangible assets and $5,228 million of definite lived intangible assets. IPR&D is evaluated for potential impairment on an annual basis or when facts and circumstances warrant. Individual definite lived intangible assets are evaluated for potential impairment whenever facts and circumstances indicate that their carrying value may not be recoverable. An intangible asset is considered impaired when its carrying amount exceeds its estimated recoverable amount, which is defined as the higher of its fair value less costs of disposal and its value in use. Usually, management applies the fair value less costs of disposal method for its impairment

F-66

assessment. In most cases, no direct or indirect observable market prices for identical or similar assets are available to measure the fair value less costs of disposal. Therefore, an estimate of fair value less costs of disposal is based on net present value techniques utilizing post-tax cash flows and discount rates. The estimates used by management in calculating the net present values involve significant judgment by management and include assumptions with measurement uncertainty, such as the amount and timing of projected cash flows, long-term sales forecasts, and discount rates, and additionally for IPR&D intangible assets, the timing and probability of success.

The principal considerations for our determination that performing procedures relating to the IPR&D and definite lived intangible asset impairment assessments is a critical audit matter are the significant judgment by management when determining the fair value less costs of disposal, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating for (i) IPR&D intangible assets, management’s significant assumptions related to long-term sales forecasts, discount rate, and probability of success, and (ii) definite lived intangible assets, management’s significant assumptions related to long-term sales forecasts and discount rate. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s IPR&D and definite lived intangible asset impairment assessments, including controls over the determination of the fair value less costs of disposal. These procedures also included, among others, testing management’s process for developing the fair value less costs of disposal estimates; evaluating the appropriateness of the estimates; testing the completeness, accuracy, and relevance of underlying data used; and evaluating the significant assumptions used by management related to long-term sales forecasts, discount rates and probability of success. Evaluating management’s assumptions related to long-term sales forecasts and probability of success involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the business, and (ii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Evaluating management’s assumption related to long-term sales forecasts also involved considering consistency with external market and industry data. Professionals with specialized skill and knowledge were used to assist in the evaluation of management's estimation method of fair value less costs of disposal and the related consolidated statements of earnings, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2010, and our report dated February 1, 2011 expressed an unqualified opinion on those consolidated financial statements.discount rate significant assumptions.

/s/ ~~KPMG~~PricewaterhouseCoopers LLP

~~KPMG LLP~~

Fort Worth, Texas

February ~~1, 2011~~15, 2022

We have served as the Company’s auditor since 2019.

~~F-4~~

F-67

~~ALCON, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
2010 2009
(in millions, except share data)
Assets
Current assets:
Cash and cash equivalents                                                                                 $ 2,525 $ 3,007
Short term investments                                                                                 889 479
Trade receivables, net                                                                                 1,483 1,346
Inventories                                                                                 693 626
Deferred income tax assets                                                                                 172 162
Other current assets                                                                                 307 213

Total current assets                                                                            6,069 5,833
Long term investments                                                                                    398 73
Property, plant and equipment, net                                                                                    1,388 1,304
Intangible assets, net                                                                                    953 255
Goodwill                                                                                    833 688
Long term deferred income tax assets                                                                                    261 391
Other assets                                                                                    171 142

Total assets                                                                            $ 10,073 $ 8,686

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable                                                                                 $ 370 $ 321
Short term borrowings                                                                                 337 607
Current maturities of long term debt                                                                                 62 --
Other current liabilities                                                                                 1,022 1,047

Total current liabilities                                                                            1,791 1,975

Long term debt, net of current maturities                                                                                    -- 56
Long term deferred income tax liabilities                                                                                    65 59
Other long term liabilities                                                                                    965 691
Contingencies (note 17)
Shareholders' equity:
Common shares, par value CHF 0.20 per share, 320,254,200
shares authorized; 305,044,983 shares issued and 302,390,266
shares outstanding at December 31, 2010;
304,016,290 shares issued and 299,550,733 shares
outstanding at December 31, 2009                                                                              42 42
Additional paid-in capital                                                                                 1,669 1,535
Accumulated other comprehensive income                                                                                 98 203
Retained earnings                                                                                 5,706 4,533
Treasury shares, at cost; 2,654,717 shares at December 31, 2010;
and 4,465,557 shares at December 31, 2009                                                                              (263 ) (408 )

Total shareholders' equity                                                                            7,252 5,905

Total liabilities and shareholders' equity                                                                            $ 10,073 $ 8,686

See accompanying notes to consolidated financial statements.

~~F-5~~

~~ALCON, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF EARNINGS~~

Years ended December 31,
2010 2009 2008
(in millions, except share data)

Sales                                                                 $ 7,179 $ 6,499 $ 6,294
Cost of goods sold                                                                 1,675 1,614 1,472

Gross profit                                                         5,504 4,885 4,822
Selling, general and administrative                                                                 2,070 1,935 1,961
Research and development                                                                 747 665 619
Amortization of intangibles                                                                 60 24 29
Other operating expenses                                                                 152 -- --

Operating income                                                         2,475 2,261 2,213
Other income (expense):
Gain (loss) from foreign currency, net
(3 ) (3 ) (21 )
Interest income                                                            29 46 76
Interest expense                                                            (9 ) (16 ) (51 )
Other, net                                                            35 25 (134 )

Earnings before income taxes                                                         2,527 2,313 2,083
Income taxes                                                                 317 306 36

Net earnings                                                         $ 2,210 $ 2,007 $ 2,047

Basic earnings per common share                                                                 $ 7.34 $ 6.72 $ 6.86

Diluted earnings per common share                                                                 $ 7.27 $ 6.66 $ 6.79

Basic weighted average common shares                                                                 300,932,749 298,847,072 298,504,732
Diluted weighted average common shares
304,104,272 301,348,181 301,582,676

See accompanying notes to consolidated financial statements.

~~F-6~~

~~ALCON, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME~~

~~Years Ended December 31, 2010, 2009 and 2008~~

Common Shares Accumulated
Number Additional Other
of Shares Paid-in Comprehensive Retained Treasury
Outstanding Amount Capital Income Earnings Shares Total
(in millions, except share data)

Balance, December 31, 2007 297,662,706 $ 43 $ 1,300 $ 203 $ 3,392 $ (1,563 ) $ 3,375

Comprehensive income:
Net earnings -- -- -- -- 2,047 -- 2,047
Change in net unrealized gains
(losses) on investments -- -- -- (7 ) -- -- (7 )
    Foreign currency translation
adjustments -- -- -- (89 ) -- -- (89 )
   Unrecognized postretirement
benefits losses and prior
service costs, net of taxes -- -- -- (27 ) -- -- (27 )
Total comprehensive income 1,924

Adjustment for new pension plan
measurement date, net of taxes -- -- -- -- (1 ) -- (1 )
Share-based payments -- -- 83 -- -- -- 83
Share award transactions 2,031,562 -- 25 -- (8 ) 108 125
Tax benefits on share award
     transactions -- -- 61 -- -- -- 61
Treasury shares acquired (1,045,915 ) -- -- -- -- (127 ) (127 )
Share cancellation -- (1 ) (21 ) -- (981 ) 1,003 --
Dividends on common shares -- -- 1 -- (750 ) -- (749 )
Balance, December 31, 2008 298,648,353 42 1,449 80 3,699 (579 ) 4,691

Comprehensive income:
Net earnings -- -- -- -- 2,007 -- 2,007
Change in net unrealized gains
(losses) on investments -- -- -- 40 -- -- 40
Foreign currency translation
adjustments -- -- -- 71 -- -- 71
    Unrecognized postretirement
benefits losses and prior
service costs, net of taxes -- -- -- 12 -- -- 12
Total comprehensive income 2,130

Adjustment for acquisition of
noncontrolling interest -- -- (12 ) -- -- -- (12 )
Share-based payments -- -- 74 -- -- -- 74
Share award transactions 977,202 -- 5 -- (2 ) 52 55
Tax benefits on share award
   transactions -- -- 22 -- -- -- 22
Treasury shares acquired (74,822 ) -- -- -- -- (7 ) (7 )
Share cancellation -- -- (3 ) -- (123 ) 126 --
Dividends on common shares -- -- -- -- (1,048 ) -- (1,048 )
Balance, December 31, 2009 299,550,733 42 1,535 203 4,533 (408 ) 5,905

Comprehensive income:
Net earnings -- -- -- -- 2,210 -- 2,210
Change in net unrealized gains
(losses) on investments -- -- -- (30 ) -- -- (30 )
Foreign currency translation
adjustments -- -- -- (43 ) -- -- (43 )
Unrecognized postretirement
     benefits losses and prior
service costs, net of taxes -- -- -- (32 ) -- -- (32 )
Total comprehensive income 2,105

Share-based payments -- -- 78 -- -- -- 78
Share award transactions 3,046,622 -- (9 ) -- -- 178 169
Tax benefits on share award
     transactions -- -- 65 -- -- -- 65
Treasury shares acquired (207,089 ) -- -- -- -- (33 ) (33 )
Dividends on common shares -- -- -- -- (1,037 ) -- (1,037 )
Balance, December 31, 2010 302,390,266 $ 42 $ 1,669 $ 98 $ 5,706 $ (263 ) $ 7,252

See accompanying notes to consolidated financial statements.

~~F-7~~

~~ALCON, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years ended December 31,
2010 2009 2008
(in millions)
Cash provided by (used in) operating activities:
Net earnings                                                                    $ 2,210 $ 2,007 $ 2,047
Adjustments to reconcile net earnings to cash provided
from operating activities:
Depreciation                                                                 212 194 167
Amortization of intangibles                                                                 60 24 29
Share-based payments                                                                 78 74 83
Tax benefits from share-based compensation 8 5 8
Deferred income taxes                                                                 4 51 (146 )
Loss (gain) on sale of assets                                                                 (29 ) 49 12
Loss on impairment of available-for-sale securities -- -- 37
Unrealized depreciation (appreciation) on trading
securities                                                               (6 ) (76 ) 85
Other, net                                                                 4 1 7
Changes in operating assets and liabilities, net of
effects from business acquisitions:
Trade receivables                                                               (129 ) (144 ) (121 )
Inventories                                                               (54 ) (6 ) (79 )
Other assets                                                               (116 ) (13 ) 25
           Accounts payable                                                                       49 118 (8 )
           Other current liabilities                                                                       (27 ) 100 62
           Other long term liabilities                                                                       111 32 (176 )

Net cash from operating activities                                                            2,375 2,416 2,032
Cash provided by (used in) investing activities:
    Purchases of property, plant and equipment (309 ) (342 ) (302 )
Acquisitions of businesses, net of cash acquired (529 ) (149 ) (23 )
Purchases of intangible assets                                                                    (137 ) (8 ) (26 )
Purchases of investments                                                                    (2,881 ) (1,261 ) (1,099 )
Proceeds from sales and maturities of investments 2,149 1,362 1,081
Other, net                                                                    2 8 4

              Net cash from investing activities
(1,705 ) (390 ) (365 )
Cash provided by (used in) financing activities:
    Net proceeds from (repayment of) short term debt (306 ) (492 ) (633 )
Repayment of long term debt                                                                    -- (6 ) (2 )
Dividends on common shares                                                                    (1,037 ) (1,048 ) (749 )
Acquisition of treasury shares                                                                    (33 ) (7 ) (127 )
Proceeds from exercise of stock options                                                                    169 55 125
Tax benefits from share-based payment
  arrangements                                                                    57 17 53

Net cash from financing activities                                                            (1,150 ) (1,481 ) (1,333 )

Effect of exchange rates on cash and cash equivalents (2 ) 13 (19 )

Net increase (decrease) in cash and cash equivalents (482 ) 558 315
Cash and cash equivalents, beginning of year 3,007 2,449 2,134

Cash and cash equivalents, end of year                                                                       $ 2,525 $ 3,007 $ 2,449
See accompanying notes to consolidated financial statements.

~~F-8~~

~~ALCON, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(in millions, except share data)~~

~~(1)~~

~~Summary of Significant Accounting Policies and Practices~~

~~(a)~~

~~Description of Business~~

Alcon, Inc. ("Alcon"), a Swiss corporation, is a majority owned subsidiary of Novartis AG. During July 2008, Nestlé S.A. sold approximately 74 million of its Alcon common shares to Novartis. At December 31, 2009, Nestlé owned 156,076,263 common shares of Alcon. In January 2010, Novartis exercised its call option for Nestlé's remaining Alcon common shares and proposed a merger of Alcon with and into Novartis, as discussed in note 16. In August 2010, Novartis acquired Nestlé's remaining Alcon shares. As of December 31, 2010, Novartis had purchased 231,352,279 Alcon common shares.

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

~~(b)~~

~~Principles of Consolidation~~

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

~~(c)~~

~~Management Estimates~~

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Actual results could differ from those estimates.

~~(d)~~

~~Foreign Currency~~

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

~~(e)~~

~~Cash and Cash Equivalents~~

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

~~(f)~~

~~Inventories~~

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

~~F-9~~

~~(g)~~

~~Investments~~

~~The Company holds investments of various types, maturities and classifications.~~

~~Trading Securities~~. Trading securities are stated at fair value, with gains or losses resulting from changes in fair value recognized currently in earnings. Gains or losses from changes in fair value of these securities are included in the consolidated statements of earnings in other, net.

~~Available-for-Sale Investments~~. Investments designated as available-for-sale include marketable debt and equity securities. Investments designated as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax, recorded in shareholders' equity. The cost of securities sold is based on the specific identification method. Realized gains and losses on the sale of these securities are recorded in the consolidated statements of earnings in other, net. Should the decline in value of any investment be deemed to be other-than-temporary, the investment basis is written down to fair value and the write-down is recorded to earnings as a loss in other, net.

~~Held-to-Maturity Investments. The Company holds no investments classified as held-to-maturity.~~

~~Short Term/Long Term Classification~~. The Company considers all liquid interest-earning investments with original maturities of three months or less to be cash equivalents. Debt securities with maturities greater than three months and less than one year are classified as short term investments. Generally, debt securities with remaining maturities greater than one year are classified as long term investments. However, investments with maturities greater than one year may be classified as short term based on their highly liquid nature and because they represent the investment of cash that is available for current operations.

~~(h)~~

~~Financial Instruments~~

The Company uses various derivative financial instruments on a limited basis as part of a strategy to manage the Company's exposure to certain market risks associated with interest rate and foreign currency exchange rate fluctuations expected to occur within the next twelve months. The Company evaluates the use of interest rate swaps and periodically uses such arrangements to manage its interest risk on selected debt instruments.

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

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

~~(i)~~

~~Property, Plant and Equipment~~

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

~~F-10~~

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

~~Land improvements~~	~~25 years~~
~~Buildings and improvements~~	~~5-50 years~~
~~Machinery, other equipment and software~~	~~3-12 years~~

~~(j)~~

~~Goodwill and Intangible Assets, Net~~

Goodwill is not amortized, but instead is tested for impairment at least annually. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their residual values and reviewed for recoverability upon the occurrence of an event that might indicate conditions for impairment could exist.

Intangible assets, net, include acquired customer base, trademarks, patents and licensed technology. The cost of these intangible assets is amortized on a straight-line basis over the estimated useful lives of the respective assets, which are 3 to 20 years.

Intangible assets, net, also include the costs of purchased in process research and development projects. The costs of these projects are not amortized but are tested for impairment at least annually and the projects are monitored to determine if commercialization has been achieved. If these projects reach commercialization, the related costs will be amortized over the useful lives of the respective assets.

~~(k)~~

~~Impairment~~

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

~~(l)~~

~~Pension and Other Postretirement Plans~~

~~The Company sponsors several defined contribution plans, defined benefit retirement plans and a postretirement healthcare plan.~~

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

The overfunded or underfunded status of defined benefit postretirement plans (other than multiemployer plans) is shown as an asset or liability in the balance sheet and changes in the funded status are recognized in the year in which the changes occur through other comprehensive income. Effective January 1, 2008, the Company adopted a provision to measure the funded status of a plan as of the date of its year-end balance sheet. The Company utilized the alternate transition method to transition the measurement date for its defined pension benefit plan in Japan from September 30 to December 31. Under this transition method, the Company charged 3/15ths of the estimated pension cost from October 1, 2007 to December 31, 2008 (or $1, net of taxes) to retained earnings as of January 1, 2008. Retrospective application was not permitted.

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

~~F-11~~

~~(m)~~

~~Revenue Recognition~~

~~The Company recognizes revenue in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 104.~~

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

The Company recognizes revenue on surgical equipment sales when the customer takes title and assumes risk of loss and when installation and any required training have been completed. Per procedure technology fees associated with treatment cards related to refractive products manufactured by WaveLight AG are recognized when the treatment cards are delivered and title and risks of ownership are transferred.

When the Company recognizes revenue from the sale of products, certain items, such as cash discounts, allowances and rebates, which are known and estimable at the time of sale, are recorded as a reduction of sales. To the extent the customer will, or is expected to, reduce its payment on the related invoice amounts, these items are reflected as a reduction of accounts receivable and sales.

In accordance with certain government rebate requirements (such as those under U.S. Medicaid and Medicare) and with certain contractual agreements, the Company is required to pay rebates to customers, their customers or government agencies under provisions that limit the amounts that may be paid for pharmaceuticals and surgical devices. The amount of accrued product rebates is included in other current liabilities.

The Company records a reduction of sales for estimated discounts, allowances and rebates in the period in which the related sales occur, based upon historical experience of amounts paid and amounts as a percentage of sales. The Company also considers the effects of changes in product pricing, in sales trends, in contract terms and in laws and regulations.

~~Value added taxes and other sales taxes are excluded from sales.~~

~~(n)~~

~~Research and Development~~

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

~~(o)~~

~~Selling, General and Administrative~~

~~Advertising costs are expensed as incurred. Advertising costs amounted to $128, $129 and $144 in 2010, 2009 and 2008, respectively.~~

~~Shipping and handling costs amounted to $76, $70 and $76 in 2010, 2009 and 2008, respectively.~~

~~Legal costs are expensed during the period incurred.~~

~~(p)~~

~~Income Taxes~~

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

~~F-12~~

~~investments in certain subsidiaries that would be taxable in the event of liquidation. Dividends paid by subsidiaries to Alcon, Inc. do not result in Swiss income taxes.~~

~~(q)~~

~~Basic and Diluted Earnings Per Common Share~~

Basic earnings per common share were computed by dividing net earnings by the weighted average number of common shares outstanding for the relevant period. The unvested portion of restricted common shares was excluded in the calculation of basic weighted average common shares outstanding. Diluted weighted average common shares reflect the potential dilution, using the treasury stock method, that could occur if employee stock options for the purchase of common shares and share-settled stock appreciation rights were exercised and if share-settled restricted share units and performance share units and contingent restricted common shares granted to employees were vested.

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

2010 2009 2008

Basic weighted average common shares outstanding 300,932,749 298,847,072 298,504,732
Effect of dilutive securities:
Employee stock options
1,736,233 1,807,211 2,585,873
Share-settled stock appreciation rights
1,050,684 414,799 300,834
Share-settled restricted share units and
performance share units
374,191 187,543 49,786
Contingent restricted common shares
10,415 91,556 141,451

Diluted weighted average common shares outstanding 304,104,272 301,348,181 301,582,676

Certain executives of the Company had deferred the receipt of 70,675 and 118,180 Alcon common shares at December 31, 2010 and 2009, respectively, into the Alcon Executive Deferred Compensation Plan discussed in note 13. Alcon common shares held in the plan were reflected as outstanding in the consolidated balance sheets and were included in the applicable basic and diluted earnings per share calculations.

The computations of diluted weighted average common shares outstanding for the years ended December 31, 2010, 2009 and 2008 did not include the following instruments, as their exercise prices and unrecognized costs were greater than the average market price of the common shares:

2010 2009 2008

Stock options
-- 125 497,805
Share-settled stock appreciation rights
1,350 5,850 3,628,998

~~The effect of their inclusion would have been anti-dilutive.~~

~~(r)~~

~~Comprehensive Income~~

Comprehensive income consists of net earnings, foreign currency translation adjustments, unrealized gains (losses) on investments and the changes in the funded status of defined benefit postretirement plans and is presented in the consolidated statements of shareholders' equity and comprehensive income.

~~F-13~~

~~(s)~~

~~Share-Based Compensation~~

~~U.S. GAAP requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, based on estimated "fair values."~~

The Company estimates the "fair value" of share-based payment awards as of the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period. Share-based compensation expenses recognized in net earnings were based on awards ultimately expected to vest, and therefore the amounts were reduced for estimated forfeitures. The Company estimates forfeitures at the time of grant and revises, if necessary, in subsequent periods if actual forfeitures differ materially from those estimates. Excess tax benefits related to share-based compensation are reflected as financing cash flows rather than operating cash flows.

The Company records deferred tax assets for share-based awards that result in deductions on the Company's income tax returns, based on the amount of compensation cost recognized and the Company's statutory tax rate in the jurisdiction in which it expects to receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company's income tax return are recorded in additional paid-in capital (if the tax deduction exceeds the deferred tax asset) or in the consolidated statement of earnings (if the deferred tax asset exceeds the tax deduction and no additional paid-in capital exists from previous awards).

~~(t)~~

~~Treasury Shares~~

~~Treasury shares are accounted for by the cost method. The board of directors has approved the purchase of Alcon common shares for various purposes as described in notes 12 and 6.~~

~~(u)~~

~~Warranty Reserves~~

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

~~(2)~~

~~Cash Flows-Supplemental Disclosures~~

2010 2009 2008

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for the following:

Interest expense, net of amount capitalized $ 9 $ 14 $ 53

Income taxes $ 284 $ 262 $ 232

~~Supplemental Disclosure of Noncash Financing Activities:~~

During the years ended December 31, 2010, 2009 and 2008, certain individuals terminated employment prior to the vesting of their restricted Alcon common shares and forfeited 239 shares, 5,420 shares and 17,622 shares, respectively. (See note 12 for discussion of restricted common shares.) The forfeited shares were recorded as treasury shares during the respective periods.

~~F-14~~

~~(3)~~

~~Supplemental Balance Sheet Information~~

December 31,
2010 2009
Cash and Cash Equivalents
Cash                                                                                                $ 479 $ 195
Cash equivalents on deposit with Nestlé                                                                                                -- 10
Cash equivalents -- other                                           ��                                                    2,046 2,802

Total                                                                                           $ 2,525 $ 3,007

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

December 31,
2010 2009
Trade Receivables, Net
Trade receivables                                                                                                $ 1,540 $ 1,389
Allowance for doubtful accounts                                                                                                (57 ) (43 )

Net                                                                                           $ 1,483 $ 1,346

2010 2009 2008
Allowance for Doubtful Accounts
Balance at beginning of year                                                                           $ 43 $ 45 $ 34
Bad debt expense                                                                           19 6 13
Charge-offs, net of recoveries                                                                           (5 ) (8 ) (2 )

Balance at end of year                                                                           $ 57 $ 43 $ 45

December 31,
2010 2009
Inventories
Finished products                                                                                                 $ 434 $ 375
Work in process                                                                                                 48 50
Raw materials                                                                                                 211 201

Total                                                                                            $ 693 $ 626

December 31,
2010 2009
Other Current Assets
Prepaid expenses                                                                                                 $ 74 $ 57
Prepaid income taxes                                                                                                 139 58
Receivables from affiliates                                                                                                 3 --
Other                                                                                                 91 98

Total                                                                                            $ 307 $ 213

~~F-15~~

December 31,
2010 2009

Property, Plant and Equipment, Net
Land and improvements                                                                                                 $ 28 $ 29
Buildings and improvements                                                                                                 879 828
Machinery, other equipment and software                                                                                                 1,685 1,566
Construction in progress                                                                                                 278 227

Total                                                                                            2,870 2,650

Accumulated depreciation                                                                                                 (1,482 ) (1,346 )

Net                                                                                            $ 1,388 $ 1,304

Construction in progress at December 31, 2010 consisted primarily of initial construction of a new manufacturing facility in Singapore and various plant expansion and upgrade projects. Commitments related to these projects at December 31, 2010 totaled $53.

December 31,
2010 2009

Other Current Liabilities
Deferred income tax liabilities                                                                                                 $ 9 $ 9
Payables to affiliates                                                                                                 -- 2
Accrued warranties                                                                                                 12 9
Accrued compensation                                                                                                 339 333
Accrued taxes                                                                                                 217 201
Accrued product rebates                                                                                                 236 221
Other                                                                                                 209 272

Total                                                                                            $ 1,022 $ 1,047

2010 2009 2008

Warranty Reserve
Balance at beginning of year                                                                       $ 9 $ 7 $ 7
Warranty expense                                                                       16 12 12
Warranty payments, net                                                                       (13 ) (10 ) (12 )

Balance at end of year                                                                       $ 12 $ 9 $ 7

December 31,
2010 2009
Other Long Term Liabilities
Pension plans                                                                                              $ 543 $ 423
Postretirement healthcare plan                                                                                              123 99
Deferred compensation                                                                                              29 29
Long term income tax liabilities (note 9)                                                                                              76 57
Liability for acquisition-related contingent payments                                                                                              160 71
Other                                                                                              34 12

Total                                                                                         $ 965 $ 691

~~F-16~~

December 31,
2010 2009

Accumulated Other Comprehensive Income (Loss)
Foreign currency translation adjustment                                                                                              $ 222 $ 265
Unrealized gains (losses) on investments, net of income taxes -- 30
Unrecognized postretirement benefits losses and prior service costs, net of tax
benefits                                                                                            (124 ) (92 )

Total                                                                                         $ 98 $ 203

~~At December 31, 2010, the portion of retained earnings that was available under Swiss law for the payment of dividends was $3,496.~~

~~For the years ended December 31, 2010, 2009 and 2008, the Company declared and paid dividends on common shares in Swiss francs ("CHF") as follows:~~

2010 2009 2008

Dividends per common share in Swiss francs CHF 3.95 CHF 3.95 CHF 2.63

Dividends per common share measured in U.S. dollars $ 3.44 $ 3.50 $ 2.50

Total dividends on common shares measured in U.S. dollars $ 1,037 $ 1,048 $ 750

~~(4)~~

~~Investments~~

~~At December 31, 2010 and 2009, investments were as follows:~~

2010 2009

Short term investments:
Trading securities                                                                                     $ 6 $ 22
Available-for-sale investments                                                                                     883 457

Total short term investments                                                                                  $ 889 $ 479

Long term investments—available-for-sale investments                                                                                          $ 398 $ 73

~~At December 31, 2010 and 2009, trading securities were as follows:~~

2010 2009
Net Estimated Net Estimated
Unrealized Fair Unrealized Fair
Gains (Losses) Value Gains (Losses) Value

Total trading securities $ (3 ) $ 6 $ (9 ) $ 22

~~F-17~~

~~At December 31, 2010, available-for-sale investments were as follows:~~

Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Short term investments:

U.S. government and agency securities $ 279 $ 1 $ -- $ 280
Mortgage-backed securities 5 -- -- 5
Corporate debt securities                                                               579 1 (2 ) 578
Foreign government bonds                                                               17 -- -- 17
Other investments                                                               3 -- -- 3

Total short term investments                                                            883 2 (2 ) 883

Long term investments:
U.S. government and agency securities 280 1 (1 ) 280
Mortgage-backed securities                                                               4 -- -- 4
Corporate debt securities                                                               112 -- -- 112
Other investments                                                               2 -- -- 2

Total long term investments                                                            398 1 (1 ) 398

Total available-for-sale investments                                                            $ 1,281 $ 3 $ (3 ) $ 1,281

~~At December 31, 2009, available-for-sale investments were as follows:~~

Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Short term investments:

U.S. government and agency securities $ 129 $ -- $ (1 ) $ 128
Mortgage-backed securities fund                                                             75 7 -- 82
Mortgage-backed securities 6 -- -- 6
Senior secured bank loans fund 131 23 -- 154
Corporate debt securities                                                             43 -- -- 43
Equity securities                                                             29 -- -- 29
Other investments                                                             15 -- -- 15

Total short term investments                                                        428 30 (1 ) 457

Long term investments:
U.S. government and agency securities 52 -- (1 ) 51
Mortgage-backed securities                                                             10 -- -- 10
Equity securities                                                             2 -- -- 2
Other investments                                                             8 2 -- 10

Total long term investments                                                        72 2 (1 ) 73

Total available-for-sale investments $ 500 $ 32 $ (2 ) $ 530

~~The senior secured bank loans fund is a professionally managed fund investing in loans made by banks to large corporate borrowers whose assets are pledged as collateral.~~

~~F-18~~

~~The contractual maturities of available-for-sale investments at December 31, 2010 were as follows:~~

Estimated
Amortized Fair
Cost Value

Securities not due at a single maturity date*                                                                                             $ 1 $ 1
Other debt securities, maturing:
Within one year                                                                                        563 563
After 1 year through 10 years                                                                                        710 710
After 10 years through 15 years                                                                                        -- --
Beyond 15 years                                                                                        7 7

Total debt securities recorded at market                                                                                     1,281 1,281

Equity and other investments                                                                                             -- --

Total available-for-sale investments                                                                                     $ 1,281 $ 1,281

*Mortgage-backed securities and certain other investments.

~~Activities related to available-for-sale investments were as shown below. The cost of securities was based on the specific identification method.~~

Years ended December 31,
2010 2009 2008

Proceeds from sales and principal repayments $ 2,132 $ 1,068 $ 10

Gross realized gains on sales 39 22 1

Gross realized losses on sales (4 ) (4 ) (2 )

The net unrealized holding gains (losses) for available-for-sale investments included in accumulated other comprehensive income (loss) in shareholders' equity at December 31, 2010, 2009 and 2008 were less than $1, $30 and $(10), respectively. Net unrealized holding gains (losses) on trading securities included in earnings for the years ended December 31, 2010, 2009 and 2008 were $6, $76 and $(85), respectively.

~~The changes in net unrealized gains (losses) on investments, net of taxes, included in accumulated other comprehensive income (loss) were:~~

2010 2009 2008

Changes in unrealized holding gains (losses) arising
during the period $ 5 $ 58 $ (45 )
Reclassification adjustment for losses (gains) included
in net income (35 ) (18 ) 38

Changes in net unrealized gains (losses) on investments,
net of taxes $ (30 ) $ 40 $ (7 )

~~F-19~~

~~As of December 31, 2010 and 2009, there were no gross unrealized losses on individual available-for-sale investments greater than $1.~~

~~The Company recognized $37 in losses for other-than-temporary impairment in the year ended December 31, 2008, as discussed in note 5.~~

~~Investment Income~~

~~Other, net, included gains (losses) on investments as follows:~~

2010 2009 2008

Realized gains (losses) on sale of investments                                                                            $ 30 $ (49 ) $ (12 )
Unrealized gains (losses) on investments
classified as trading securities                                                                      6 76 (85 )
Other-than-temporary impairment                                                                            -- -- (37 )

Total gains (losses) on investments                                                                            $ 36 $ 27 $ (134 )

~~(5)~~

~~Financial Instruments~~

~~Foreign Currency Risk Management~~

A significant portion of the Company's cash flows is denominated in foreign currencies. Alcon relies on ongoing cash flows generated from foreign sources to support its long term commitments to U.S. dollar-based research and development. To the extent the dollar value of cash flows is diminished as a result of weakening local currencies relative to the dollar, the Company's ability to fund research and other dollar-based strategic initiatives at a consistent level may be impaired. The Company has established a foreign currency risk management program to protect against volatility of non-functional currency monetary assets and liabilities and changes in fair value caused by fluctuations in foreign exchange rates.

The Company primarily utilizes forward exchange contracts in countries where they are available and economically beneficial to offset the impact of fluctuations in foreign exchange rates on monetary assets and their related cash flows. All outstanding foreign exchange forward contracts are entered into to protect the value of assets or liabilities denominated in currencies other than the entity's functional currency. To the extent hedged, the changes in fair value of the forward contracts offset the changes in the value of the assets or liabilities. The changes in value of the foreign exchange forward contracts and the assets/liabilities that are being protected are recorded in foreign exchange gains and losses within other income (expense).

The fair values of forward exchange and option contracts are reported in other current assets and other current liabilities. At December 31, 2010, the fair value hedge derivative instruments have settlement dates in the first half of 2011 and cover a gross notional amount of $680.

The Company believes that, at the balance sheet date, counterparty credit risk was not significant due to the credit quality of the counterparties to the derivatives, which were all large financial institutions in Europe, and the short-term maturities of most derivatives. The credit exposure related to these financial instruments was represented by the fair value of contracts with a positive fair value at the reporting date.

~~F-20~~

~~For the years ended December 31, 2010 and 2009, the effects of foreign exchange derivative instruments were:~~

2010 2009
Derivatives in Fair Value Hedging Relationships Location of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) on the Hedged Items Amount of Gain (Loss) Recognized in Earnings on Derivatives Amount of Gain (Loss) on the Hedged Items

Foreign exchange forward contracts Gain (loss) from foreign currency, net $ (28 ) $ 16 $ 3 $ (8 )

~~Interest Rate Risk Management~~

The Company may use interest rate swaps on certain investing and borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. The Company does not use leveraged swaps and does not leverage any of its investment activities that would put capital at risk.

At December 31, 2010 and 2009, in connection with a long term bank loan, the Company had an interest rate swap fair value hedge outstanding in the notional principal amount of $61 and $54 at the respective year-end exchange rates. The fair values of interest rate swap agreements are reported in other current assets and other current liabilities. This interest rate swap did not have a significant effect on results of operations in 2010 and 2009.

~~Fair Value of Financial Instruments~~

At December 31, 2010 and 2009, the Company's financial instruments included cash and cash equivalents, investments, trade receivables, accounts payable, short term borrowings, long term debt and the estimated fair value of certain contingent payments. The estimated fair values of all of these financial instruments were as noted below. Due to the short term maturities of cash and cash equivalents, trade receivables, accounts payable and short term borrowings, the carrying amounts approximate fair values at the respective balance sheet dates.

At December 31, 2010 and 2009, the Company's cash equivalents included $218 and $30, respectively, of instruments that were tri-party fully collateralized reverse repurchase agreements. They were transacted on December 31, 2010 and 2009 and matured "overnight" on the first business day in January 2011 and 2010. The Company utilized this type of transaction to enhance yields on available cash balances, while maintaining liquidity. These securities were recorded at cost, which approximated fair value.

The Company received debt and equity securities as collateral for its advances under the reverse repurchase agreements. A financial institution other than the seller held the collateral for the Company's benefit. The value and the liquidity of the underlying collateral were required to be between 102% and 110%, depending upon the credit of collateral, of the advanced amount and were evaluated by an independent third-party custodian. The Company recorded only its advances under the agreements as cash equivalents at the time of entering the transactions and recognized the interest income upon settlement. The collateral value or changes in collateral value were not recorded or recognized.

The fair values of long term debt were based on interest rates then currently available to the Company for issuance of debt with similar terms and remaining maturities. The fair values of investments and acquisition-related contingent payments were determined as discussed below.

~~F-21~~

December 31,
2010 2009
Carrying Fair Carrying Fair
Amounts Value Amounts Value

Assets:
Short term trading and available-for-sale investments $ 889 $ 889 $ 479 $ 479
Long term available-for-sale investments                                                                  398 398 73 73
Forward exchange contracts                                                                  -- -- 6 6
Interest rate swaps                                                                  -- -- 1 1

Liabilities:
Long term debt                                                                  62 62 56 56
Liability for acquisition-related contingent payments 160 160 71 71
Forward exchange and option contracts                                                                  12 12 2 2

Financial instruments, such as equity or fixed income securities, other investments, financial liabilities and derivatives, are presented at fair value. Fair value is defined as the price at which an asset could be exchanged or a liability could be transferred in an orderly transaction between knowledgeable and willing market participants within the principal or most advantageous market at the measurement date. Where available, fair value is based on or derived from observable market prices or parameters. Where observable prices or inputs are not available, pricing for similar financial assets or liabilities, dealer quotes or valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments' complexity.

Financial assets and liabilities recorded at fair value in the consolidated balance sheets were categorized based upon the level of judgment associated with the inputs used to measure their fair value. These categories, from lowest to highest based on the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

~~Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.~~

~~The types of Company assets carried at Level 1 fair value are equities listed in active markets.~~

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liabilities through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

The Company's assets generally included in this fair value category are various government agency securities, certain investment funds, mortgage backed securities, collateralized mortgage obligations, foreign exchange derivatives and certain interest rate derivatives. Foreign exchange derivatives and interest rate derivatives are valued using corroborated, observable market data. The Company's liabilities generally included in this fair value category consist of certain foreign exchange derivatives.

Level 3 – Inputs are unobservable inputs for the asset or liability. These inputs reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

~~Generally, the Company's assets carried at fair value included in this category are various investment funds.~~

~~The Company's liabilities carried at fair value in this category are acquisition-related contingent payments.~~

~~F-22~~

The Company's Level 3 financial investments are held in funds professionally managed by investment managers. The net asset values are furnished in statements received from fund custodians whose statements reflect valuations conducted according to their respective fund pricing policies and asset types. The complete details of the fund holdings of several of the Company's professionally managed funds may be unavailable at times, limiting the Company's ability to look through to the underlying assets at the date the financial statements are prepared. Because of these constraints, the Company classifies these fund investments as Level 3.

As of December 31, 2010, the Company estimated $160 as the fair value of its obligations to make contingent payments related to acquisitions. The fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement.

In connection with an acquisition in 2009, the Company is obligated to make acquisition-related contingent payments of up to $439 based upon the achievement of future research and development milestones that would be expected to create value for Alcon. At December 31, 2010, the fair value of these payments was estimated to be $71. Each milestone was assigned a probability based on its current status. The resultant probability-weighted cash flows were then discounted using a discount rate of 5.3%, which the Company believed was appropriate and representative of a market participant assumption. The probabilities assigned to payment streams ranged from 5% to 39%. An increase or decrease of 10 percentage points in the probability assumptions would result in an adjustment to the estimated value of approximately $30.

In connection with acquisitions in 2010, the Company is obligated to make acquisition-related contingent payments of up to $528 upon achieving certain sales objectives through 2015. The fair values of these payments at December 31, 2010 were estimated to total $89. The fair values were based on the Company's estimates of the probability and timing of related sales projection streams. Each revenue projection assumption was assigned a probability and the resultant probability-weighted cash flows were then discounted using discount rates between 4.5% and 6%, which the Company believed was appropriate and representative of market participant assumptions. Achieving the Company's most optimistic sales assumptions would not increase the estimated total fair value more than $10.

The fair values of these contingent payments are reviewed each reporting period. Any changes in the estimated value not associated with the original purchase price valuation are recorded in the Company's results of operations. No such changes were recognized in the current period.

~~Fair Value by Category~~

Financial assets and financial liabilities measured at fair value on a recurring basis were categorized in the tables below based upon the lowest hierarchical level of input that is significant to the fair value measurement.

~~F-23~~

Fair Value as of December 31, 2010
Level 1 Level 2 Level 3 Total

Financial Assets
Trading securities - Hedge funds $ -- $ -- $ 6 $ 6
Available-for-sale securities:
U.S. government and agency

securities
-- 560 -- 560
Mortgage-backed securities
-- 9 -- 9
Corporate debt securities
-- 690 -- 690
Foreign government bonds
-- 17 -- 17
Other investments
-- 5 -- 5

Total
$ -- $ 1,281 $ 6 $ 1,287

Financial Liabilities
Liability for acquisition-related contingent payments $
payments
$ -- $ -- $ 160 $ 160
Foreign exchange and option contracts -- 12 -- 12

Total $ -- $ 12 $ 160 $ 172

Fair Value as of December 31, 2009
Level 1 Level 2 Level 3 Total

Financial Assets
Trading securities - Hedge funds $ -- $ -- $ 22 $ 22
Available-for-sale securities:
U.S. government and agency securities
-- 179 -- 179
Mortgage-backed securities fund
-- 82 -- 82
Mortgage-backed securities
-- 16 -- 16
Senior secured bank loans fund
-- 154 -- 154
Corporate debt securities
-- 43 -- 43
Equity securities
31 -- -- 31
Other investments
-- 25 -- 25
Forward exchange contracts -- 6 -- 6
Interest rate swaps -- 1 -- 1

Total $ 31 $ 506 $ 22 $ 559

Financial Liabilities
Liability for acquisition-related contingent payments
payments
$ -- $ -- $ 71 $ 71
Foreign exchange and option contracts -- 2 -- 2

Total $ -- $ 2 $ 71 $ 73

~~Level 3 Gains and Losses~~

At December 31, 2010, trading securities were the only type of financial assets included in Level 3. The trading securities were professionally managed investment funds, which included hedge funds of $6. The fair value of the investment funds classified as Level 3 could not be determined by independent market observation or through the use of other observable valuation techniques. The valuation was based on net asset values as furnished by the funds'

~~F-24~~

custodian. If more than an insignificant proportion of a particular fund's assets were Level 3, the entire fund was classified as Level 3, although many of the fund's individual holdings may meet the definition of Level 1 or Level 2. The only liabilities included in Level 3 were the acquisition-related contingency payments, as discussed earlier in this note.

Total gains or losses (realized and unrealized) for financial assets and liabilities classified as Level 3 that were included in earnings before income taxes were a component of other, net, in the consolidated statements of earnings. For the year ended December 31, 2010, there were net gains (realized and unrealized) of $1 from trading securities, and the Company received proceeds from sales of Level 3 trading securities of $17. Realized and unrealized net gains during the period were approximately 5% of the beginning balance for Level 3 trading securities and did not negatively affect or materially impact operations, liquidity or capital resources.

~~The table presented below summarizes the change in carrying values associated with Level 3 financial instruments during the year ended December 31, 2010.~~

Assets Liabilities
Acquisition-Related

Trading
Securities
Contingent Payments

Beginning balance $ 22 $ 71
Total net gains or losses (realized/unrealized)
Included in earnings before income taxes
1 --

Purchases of investments -- --
Acquisition-related activities -- 89
Proceeds on sales and maturities (17 ) --
Transfers in and/or out of Level 3 -- --

Ending balance $ 6 $ 160

~~Gains and losses (realized and unrealized) on Level 3 financial instruments included in earnings were reported in other, net, as follows:~~

2010

Net gains (losses) included in earnings for the period $ 1

Change in unrealized net gains (losses) related to assets still held at reporting date $ 1

At December 31, 2009, trading securities were the only type of financial assets included in Level 3. The trading securities were professionally managed investment funds, which included fixed income funds of $22. The fair value of the investment funds classified as Level 3 could not be determined by independent market observation or through the use of other observable valuation techniques. The valuation was based on net asset values as furnished by the funds' custodian. If more than an insignificant proportion of a particular fund's assets were Level 3, the entire fund was classified as Level 3, although many of the fund's individual holdings may meet the definition of Level 1 or Level 2. The only liabilities included in Level 3 were the acquisition-related contingency payments, as discussed earlier in this note.

Total gains and losses (realized and unrealized) included in earnings before income taxes for financial assets and liabilities classified as Level 3 were a component of other, net, in the consolidated statements of earnings. For the

~~F-25~~

year ended December 31, 2009, there were net gains (realized and unrealized) of $7 from trading securities, and the Company received proceeds from sales of Level 3 trading securities of $246. Realized and unrealized net gains during the period were approximately 3% of the beginning balance for Level 3 trading securities and did not negatively affect or materially impact operations, liquidity or capital resources.

~~The table presented below summarizes the change in carrying values associated with Level 3 financial instruments during the year ended December 31, 2009.~~

Assets Liabilities
Acquisition-Related

Trading
Securities
Contingent Payments

Beginning balance $ 261 $ --
Total net gains or losses (realized/unrealized)
Included in earnings before income taxes
7 --

Acquisition-related activities -- 71
Proceeds on sales and maturities (246 ) --
Transfers in and/or out of Level 3 -- --

Ending balance $ 22 $ 71

~~Gains and losses (realized and unrealized) on Level 3 financial instruments included in earnings were reported in other, net, as follows:~~

2009

Net gains (losses) included in earnings for the period $ 7

Change in unrealized net gains (losses) related to assets still held at reporting date $ 2

~~Valuation Techniques~~

Valuation techniques used for financial assets and liabilities accounted for at fair value are generally categorized into three types: market approach, income approach and cost approach. The Company valued its Level 3 financial assets and liabilities at December 31, 2010 and 2009 primarily using the market approach and, to a lesser extent, the income approach.

~~Market Approach~~. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Valuation techniques consistent with the market approach include comparables. A majority of the Company's balances measured at fair value on a recurring basis were valued using the market approach. Most measurements were market quotes or obtained from other reliable market sources. The Company did not use market indices for valuing material balances measured at fair value.

~~Income Approach~~. Income approach valuation techniques convert future amounts, such as cash flows or earnings, to a single present or discounted amount. The measurement is based on the value indicated by current market expectations about those future amounts. Examples of income approach valuation techniques include present value techniques, option-pricing models, binomial or lattice models that incorporate present value techniques and option-pricing models. The Company valued certain derivatives, in part or whole, and acquisition-related contingent payments using the income approach.

~~F-26~~

~~Cost Approach~~. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. The Company did not employ the cost approach for determining fair value of financial assets and liabilities.

The valuation approaches are consistent with generally accepted valuation methodologies. While all three approaches are not applicable to all assets or liabilities accounted for at fair value, where appropriate and possible, one or more valuation techniques may be used. Professionally managed investment funds may use a combination of market, income and cost approaches. The process of selecting which valuation method(s) to apply considers the definition of an exit price and the nature of the asset or liability being valued and significant expertise and judgment is required.

~~Other-Than-Temporary Impairment of Available-for-Sale Investments~~

The Company reviews quarterly its available-for-sale investments to identify impaired equity and debt securities. An individual security is impaired if the fair value of the investment is less than its amortized cost basis. Impairment may be either temporary or other-than-temporary.

The Company normally reviews securities held in its portfolio that have been in a continuous loss position for twelve months or longer and securities whose fair value is significantly lower than its amortized cost basis. Impairment is evaluated using a combination of quantitative and qualitative factors such as considering the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer, as well as the Company's ability and intent to hold the investments for an adequate period of time until an anticipated market price recovery or maturity. In its impairment analysis of debt securities, management assesses whether it does not have the intent to sell the security before maturity and it is more likely than not that it will not have to sell the security before recovery of its cost basis. If an impairment is determined to be other-than-temporary, the investment is written down to fair value, and a loss is recognized immediately through earnings.

In addition, the Company assesses whether there are probable credit losses associated with impaired available-for-sale debt securities. The portion of an other-than-temporary impairment of an available-for-sale debt security that is related to credit loss is recognized in earnings and the remainder of the difference between the cost basis of the debt security and its fair value is recorded in other comprehensive income.

The Company determined that, at December 31, 2010 and 2009, there were no unrealized losses on available-for-sale investments that were other-than-temporarily impaired and there were no credit losses on any investments.

The Company determined that, at December 31, 2008, unrealized losses on certain available-for-sale equity securities and a senior secured bank loans fund were other-than-temporarily impaired due to deteriorating general market conditions, particularly during the fourth quarter of 2008, coupled with the unlikely near term prospects for achieving a sustainable recovery, uncertainty about future market conditions, and declines in certain quantitative or qualitative factors. The other-than-temporary impairment recognized for the senior secured bank loans fund also was deemed appropriate to bring a significant portion of the unrealized losses in line with current market conditions for credit default rates and loss recovery rates. The Company recognized losses for other-than-temporary impairment during the year ended December 31, 2008 of $37.

~~F-27~~

~~Concentrations of Credit Risk~~

As part of its ongoing control procedures, the Company monitors concentrations of credit risk associated with corporate issuers of securities and financial institutions with which it conducts business. Credit risk is minimal as credit exposure limits are established to avoid a concentration with any single issuer or institution. The Company also monitors the creditworthiness of its customers to which it grants credit terms in the normal course of business. Concentrations of credit risk associated with these trade receivables are considered minimal due to the Company's diverse customer base. Bad debts have been minimal. The Company does not normally require collateral or other security to support credit sales.

~~(6)~~

~~Intangible Assets and Goodwill~~

December 31, 2010 December 31, 2009
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization

Intangible Assets
Subject to amortization:
Licensed technology $ 467 $ (315 ) $ 332 $ (296 )
Patents 290 (40 ) 111 (24 )
Other 562 (115 ) 121 (93 )

Total subject to amortization 1,319 (470 ) 564 (413 )

Not subject to amortization:
Purchased in process research and
development assets
104 -- 104 --

Total intangible assets $ 1,423 $ (470 ) $ 668 $ (413 )

During the years ended December 31, 2010 and 2009, the Company added licensed technology, patents and other intangible assets through business acquisitions and asset purchases. Note 18 provides additional information on changes to intangible assets from significant business acquisitions in 2010 and 2009.

Years ended December 31,
2010 2009 2008

Aggregate amortization expense related to intangible assets $ 60 $ 24 $ 29

Estimated Amortization Expense:

For year ended December 31, 2011                                                                                               $ 78
For year ended December 31, 2012                                                                                               $ 73
For year ended December 31, 2013                                                                                               $ 67
For year ended December 31, 2014                                                                                               $ 67
For year ended December 31, 2015                                                                                               $ 65

~~F-28~~

~~The changes in the carrying amounts of goodwill for the years ended December 31, 2010 and 2009 were as follows:~~

United States International
Segment Segment Total

Goodwill
Balance,  December 31, 2008                                                                    $ 403 $ 242 $ 645
Acquisition of business                                                                    18 22 40
Impact of changes in foreign exchange rates 2 1 3

Balance,  December 31, 2009                                                                    423 265 688

Acquisitions of businesses                                                                    90 64 154
Impact of changes in foreign exchange rates (5 ) (4 ) (9 )

Balance,  December 31, 2010                                                                    $ 508 $ 325 $ 833

~~(7)~~

~~Short Term Borrowings~~

December 31,
2010 2009

Lines of credit
$ 307 $ 273
Commercial paper
-- 286
From affiliates
4 7
Bank overdrafts
26 41

Total short term borrowings
$ 337 $ 607

At December 31, 2010, the Company had several unsecured line of credit agreements with third parties totaling $597 that were denominated in various currencies. The commitment fees related to unused borrowings under these facilities were less than $1 during 2010, 2009 and 2008. The weighted average interest rates at December 31, 2010 and 2009 were 2.2% and 2.2%, respectively. The amounts outstanding under these agreements at December 31, 2010 were due at various dates during 2011.

During the first half of 2010 and all of 2009, the Company had a $2,000 commercial paper facility. Nestlé guaranteed the commercial paper facility and assisted in its management, for which the Company paid Nestlé an annual fee based on the average outstanding commercial paper balances. The Company's management believes that any fees paid by the Company to Nestlé for their guarantee of any indebtedness or for the management of the commercial paper program were comparable to the fees that would be paid in an arm's length transaction. Total fees paid to Nestlé in connection with this facility for the years ended December 31, 2010, 2009 and 2008 were less than $1 per year.

During 2010, the Company entered into an unsecured line of credit agreement denominated in Venezuelan bolivars with a subsidiary of Novartis. These short term borrowings at December 31, 2010 were due October 15, 2011. The weighted average interest rate at December 31, 2010 was 10.0%. The unused portion under the line of credit agreements was $8 at December 31, 2010.

The Company had several unsecured bank overdraft lines of credit denominated in various currencies totaling $248 at December 31, 2010. The weighted average interest rates on bank overdrafts at December 31, 2010 and 2009 were 4.5% and 4.5%, respectively.

~~F-29~~

~~(8)~~

~~Long Term Debt~~

December 31,
2010 2009

Bank loan                                                                                          $ 62 $ 56

Less current maturities of long term debt                                                                                          62 --

Long term debt, net of current maturities                                                                                     $ -- $ 56

The Company's Japanese subsidiary has an outstanding bank loan with a fixed interest rate of 1.6%, due in January 2011. This fixed rate of 1.6% was swapped for floating rate yen LIBOR, which was 0.2% at December 31, 2010. The bank loan was guaranteed by Nestlé for a fee of less than $1 annually in 2010, 2009 and 2008. The bank loan contains provisions that may accelerate the obligation in the event that Nestlé's ownership of Alcon falls below 51%. Although Nestlé's ownership fell below this threshold, the lenders have opted not to call the loan before its maturity date. The balance of the loan was paid in January 2011.

~~Interest costs of $1, $1 and $2 in 2010, 2009 and 2008, respectively, were capitalized as part of property, plant and equipment.~~

~~(9)~~

~~Income Taxes~~

~~The components of earnings before income taxes were:~~

2010 2009 2008

Switzerland $ 1,822 $ 1,339 $ 1,446
Outside Switzerland 705 974 637

Earnings before income taxes $ 2,527 $ 2,313 $ 2,083

~~Income tax expense (benefit) consisted of the following:~~

2010 2009 2008
Current:
Switzerland $ 5 $ 29 $ 6
Outside Switzerland 308 226 176

Total current 313 255 182

Deferred:
Switzerland -- (1 ) (6 )
Outside Switzerland 4 52 (140 )

Total deferred 4 51 (146 )

Total $ 317 $ 306 $ 36

During the year ended December 31, 2010, the Company recognized a $25 tax charge for the write-off of deferred tax assets as a result of provisions of U.S. healthcare reform laws enacted during the period.

Income tax expense for the year ended December 31, 2008 reflected a net reduction of $271 for period items, including a reduction of $236 related to losses associated with the Company's investment in and advances to its

~~F-30~~

former subsidiary, Summit Autonomous, Inc., as well as reductions related to progress in audit settlements, advance pricing agreement negotiations, the lapse of statutes of limitation and other minor items.

Current tax expense does not reflect benefits of $65, $22 and $61 for the years ended December 31, 2010, 2009 and 2008, respectively, related to restricted shares and the exercise of employee stock options, recorded directly to additional paid-in capital.

In 2010, 2009 and 2008, the Company realized certain Swiss tax benefits totaling approximately $194, $145 and $130, respectively, for its commitment to relocate and significantly expand its global administration operations in Switzerland. The initial term of these benefits is expected to continue from 2008 for a period of five years. These benefits would be extended for an additional five years if the Company fulfills certain employment commitments and maintains these commitments through 2022.

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

2010 2009 2008

Statutory income tax rate 7.8 % 7.8 % 7.8 %
Effect of different tax rates in various jurisdictions 4.8 4.8 8.2
Current year research and experimentation credits (0.6 ) (0.9 ) (1.1 )
Other current year taxes 0.3 0.4 0.2
Current year nondeductible and excludable items (0.4 ) 0.1 (0.4 )
Effect of losses on investment in Summit
Autonomous, Inc -- -- (11.3 )
Effect of provisions of U.S. healthcare reform ��
legislation 1.0 -- --
Effect of change of majority ownership (0.3 ) -- --
Tax impact of prior year audit settlements, amended
returns and adjustments to estimates -- 1.1 (1.7 )
Other (0.1 ) (0.1 ) --

Effective tax rate 12.5 % 13.2 % 1.7 %

~~At December 31, 2010, Alcon's subsidiaries had loss carryforwards that expire as follows:~~

2011
$ --
2012
--
2013
--
2014
2
2015
--
2016-2030
91
Indefinite
--

Total loss carryforwards
$ 93

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

~~Temporary differences and carryforwards at December 31, 2010 and 2009 were as follows:~~

~~F-31~~

December 31,
2010 2009

Deferred income tax assets:
Trade receivables                                                                              $ 53 $ 41
Inventories                                                                              9 12
Intangible assets                                                                              50 25
Accounts payable and other current liabilities                                                                              113 113
Other liabilities                                                                              232 237
Share-based payments                                                                              60 81
Loss carryforwards                                                                              31 3

Gross deferred income tax assets                                                                            548 512
Unused tax credits                                                                              18 19
Valuation allowance                                                                              (5 ) (6 )

Total deferred income tax assets                                                                            561 525

Deferred income tax liabilities:
Property, plant and equipment                                                                              35 34
Intangible assets 157 --
Other                                                                              10 6

Total deferred income tax liabilities                                                                            202 40

Net deferred income tax assets                                                                            $ 359 $ 485

The valuation allowances for deferred tax assets as of January 1, 2010 and 2009 were $(6) and $(5), respectively. The net changes in the total valuation allowance for each of the years ended December 31, 2010 and 2009 were a decrease of $1 and an increase of $1, respectively. The valuation allowances at December 31, 2010 and 2009 were primarily related to costs for which deductions did not appear to be more likely than not to be realized. Based on the Company's historical pretax earnings, management believes it is more likely than not that the Company will realize the benefit of the existing net deferred income tax assets at December 31, 2010. Management believes the existing net deductible temporary differences will reverse during periods in which the Company generates net taxable earnings; however, there can be no assurance that the Company will generate any earnings or any specific level of continuing earnings in future years. Certain tax planning or other strategies could be implemented, if necessary, to supplement earnings from operations to fully realize tax benefits.

Withholding taxes of approximately $107 have not been provided on approximately $2,133 of unremitted earnings of certain subsidiaries since such earnings are, or will be, reinvested in operations indefinitely. Taxes of approximately $17 have not been provided on temporary differences of approximately $212 for permanent investments in certain subsidiaries that will be taxable upon liquidation.

The Company or one of its subsidiaries files income tax returns in Switzerland, the U.S. federal jurisdiction, and various state and other foreign jurisdictions. With few exceptions, the Company is no longer subject to Swiss, U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004.

In June 2009, the Internal Revenue Service ("IRS") commenced an examination of the Company's U.S. income tax returns for 2006 and 2007 that was completed substantially in January 2011. In May 2009, the IRS and the Company entered the Compliance Assurance Process ("CAP") program for 2009. In January 2010, the IRS and the Company extended the CAP program to 2010. The Company also currently is subject to income tax examinations by various state, local and foreign tax authorities. In addition, in June 2009, the Company and the IRS signed an

~~F-32~~

advance pricing agreement ("APA") contract memorializing the mutual agreement letter between Switzerland and the United States for years through 2014 that covers all material intercompany transactions involving the Company and its subsidiaries in these two jurisdictions. Finally, during the fourth quarter of 2007, the Company submitted a similar request for a bilateral APA between Japanese and Swiss tax authorities that would cover the tax years 2008 through 2012. The Company received the duly signed Japanese-Swiss APA in the third quarter of 2010.

The Company believes that it takes reasonable positions on its tax returns filed throughout the world; however, tax laws are complex and susceptible to differing interpretations. Tax authorities throughout the world, from time to time, routinely challenge positions taken by the Company, particularly in the case of transfer pricing issues. The Company has identified its uncertain tax positions and prepared its reserve for contingent tax liabilities to reflect the associated unrecognized tax benefits (the "Tax Reserves") in accordance with Financial Accounting Standards Board ("FASB") guidance which, among other things, requires that the Company assume that it will be subject to examination in every jurisdiction in which it is subject to tax. Management believes that the Tax Reserves are fairly stated but believes it is reasonably possible that the total amount of unrecognized tax benefits related to transfer pricing, currency translations and other tax positions reflected in the Tax Reserves will significantly increase or decrease within 12 months of the reporting of this financial statement as the result of, among other things, (i) developments with respect to currently active audits and/or (ii) the further development of tax laws through judicial or administrative actions and/or the actual payment of Tax Reserves. Although tax laws are complex and significant uncertainty exists with respect to the actual date that any of the currently active audits could reach final resolution or a new audit could commence, management believes it is reasonably possible that unrecognized tax benefits could increase in the next 12 months by at least 10% or decrease by up to 70%.

~~A reconciliation of the beginning and ending amounts of unrecognized tax benefits, exclusive of interest and penalties, related to uncertain tax positions is as follows:~~

2010 2009

Balance at January 1                                                                                         $ 74 $ 130
Additions for tax positions related to prior years                                                                                         19 40
Reductions for tax positions related to prior years                                                                                         (13 ) (16 )
Additions for tax positions related to the current year                                                                                         4 10
Settlements                                                                                         (12 ) (90 )
Lapse of statutes of limitation                                                                                         (1 ) --

Balance at December 31                                                                                         $ 71 $ 74

During the years ended December 31, 2010 and 2009, the total amount of unrecognized tax benefits excluding interest and penalties, included in the Tax Reserves decreased by $3 to $71 and decreased by $56 to $74, respectively. The net decrease in unrecognized tax benefits in 2010 reflected progress on audit settlements, APA negotiations, the lapse of statutes of limitation and other minor items. The net decrease in unrecognized tax benefits in 2009 reflected the resolution of various audits, progress on ongoing audits, APA negotiations, the development of case law, the lapse of statutes of limitations and other minor items. The amounts of unrecognized tax benefits that would impact the effective tax rate if recognized at December 31, 2010 and 2009 were $64 and $69, respectively.

The Company's policy is to classify interest and penalties in income tax expense. The gross amount of interest and penalties accrued as part of the Tax Reserves at December 31, 2010 and 2009 were $14 and $9, respectively. At December 31, 2010, the consolidated balance sheet included $1 in other current liabilities and $76 in other long term liabilities for the Tax Reserves, net of deposits with statutory authorities. At December 31, 2009, the consolidated balance sheet included $19 in other current liabilities and $57 in other long term liabilities for the Tax Reserves, net of deposits with statutory authorities. The gross amounts of interest and penalties included in the consolidated statements of earnings for 2010 and 2009 were not significant.

~~F-33~~

~~(10)~~

~~Business Segments~~

The Company conducts its global business through two business segments: Alcon United States and Alcon International. Alcon United States includes sales to unaffiliated customers located in the United States of America, excluding Puerto Rico. Alcon United States operating income is derived from operating profits within the United States. Alcon International includes sales to all other unaffiliated customers.

Each business segment markets and sells products principally in three product categories of the ophthalmic market: (1) pharmaceutical (prescription drugs), (2) surgical equipment and devices (cataract, vitreoretinal and refractive), and (3) consumer eye care (contact lens disinfectants and cleaning solutions, artificial tears and ocular vitamins). Business segment operations generally do not include research and development, certain manufacturing and other corporate functions.

~~Segment performance is measured based on sales and operating income reported in accordance with U.S. GAAP.~~

Certain manufacturing costs and manufacturing variances are not assigned to business segments because most manufacturing operations produce products for more than one business segment. Research and development costs, excluding regulatory costs which are included in the business segments, are treated as general corporate costs and are not assigned to business segments.

~~Identifiable assets are not assigned by business segment and are not considered in evaluating the performance of the business segments.~~

Sales Operating Income Depreciation and Amortization
2010 2009 2008 2010 2009 2008 2010 2009 2008

  United States
$ 3,177 $ 2,914 $ 2,807 $ 1,896 $ 1,664 $ 1,554 $ 64 $ 47 $ 46
  International
4,002 3,585 3,487 1,728 1,507 1,472 107 90 78

    Segments total
7,179 6,499 6,294 3,624 3,171 3,026 171 137 124
  Manufacturing operations -- -- -- (64 ) (64 ) (61 ) 58 51 46
  Research and development -- -- -- (687 ) (579 ) (527 ) 24 18 16
  General corporate -- -- -- (332 ) (190 ) (144 ) 19 12 10
  Share-based compensation -- -- -- (66 ) (77 ) (81 ) -- -- --

Total
$ 7,179 $ 6,499 $ 6,294 $ 2,475 $ 2,261 $ 2,213 $ 272 $ 218 $ 196

During the year ended December 31, 2010, advancements in its sales reporting system permitted the Company to better estimate allowable deductions from sales in the calculation of accrued royalties. This change in estimate resulted in a $24 addition to U.S. operating income during the period.

In the year ended December 31, 2010, the Company incurred pretax expenses totaling $152 for costs (including $12 in share-based compensation costs) related to the change of majority ownership discussed in note 16 and other costs to support Alcon’s board of directors in its evaluation of Novartis's merger proposal. In the tables above, these expenses were included with general corporate expenses.

On February 11, 2009, the Company announced that it initiated programs to align its operations with the evolving economic conditions and market environment. These programs included a staffing reduction of approximately 260 employee positions that resulted in a pre-tax charge of $19 for the year ended December 31, 2009, which was included in general corporate expenses.

~~F-34~~

~~(11)~~

~~Geographic, Customer and Product Information~~

Sales for the Company's country of domicile and all individual countries accounting for more than 10% of total sales are presented below along with long lived assets in those countries. Sales by ophthalmic market segment are also included. Sales below are based on the location of the customer. Sales to one customer of the United States business segment represented $661 of the Company's consolidated sales in 2008. No single customer accounted for more than 10% of total sales in 2010 and 2009.

Property, Plant and
Sales Equipment
For the Years ended December 31, At December 31,
2010 2009 2008 2010 2009

United States                                               $ 3,177 $ 2,914 $ 2,807 $ 739 $ 720
Switzerland                                               50 46 44 20 19
Rest of world                                               3,952 3,539 3,443 629 565

Total                                         $ 7,179 $ 6,499 $ 6,294 $ 1,388 $ 1,304

Pharmaceutical                                               $ 3,066 $ 2,677 $ 2,561
Surgical                                               3,220 2,997 2,881
Consumer eye care                                               893 825 852

Total                                         $ 7,179 $ 6,499 $ 6,294

~~(12)~~

~~Share-Based Compensation Plans~~

Under the Amended 2002 Alcon Incentive Plan, the Company's board of directors may award to officers, directors and key employees share-based compensation, including stock options, share-settled stock appreciation rights ("SSARs"), restricted shares, share-settled restricted share units ("RSUs"), performance share units and certain cash-settled liability awards. The total number of shares from conditional capital and treasury shares that may be issued under the plan with respect to such awards cumulatively shall not exceed 40 million Alcon common shares. The number of shares that may be delivered pursuant to an exercise or after a lapse of a restriction period may not exceed 10% of the total number of shares issued and outstanding at that time. The grant prices for stock options or stock appreciation rights shall not be lower than the prevailing stock exchange price upon the grant of the award, unless specifically approved by the board.

Individual grants become exercisable generally on or after the third anniversary of the grant and lapse on the tenth anniversary of the grant. Grants prior to February 2006 also become exercisable upon early retirement at or after age 55. If there is a change in control (as defined by the plan), the exercise or vesting of the awards accelerates.

Beginning in February 2006, consistent with earlier grants, participants may vest in the stock option and SSAR grants upon early retirement at or after age 55; however, under grants subsequent to January 2006, participants may exercise these instruments only on or after the third anniversary of the grant. Restricted share and restricted share unit awards are subject to a three-year cliff vesting; furthermore, participants retiring before reaching age 60 for awards granted subsequent to January 2006 through December 2008, or age 62 for awards granted subsequent to January 2009, will forfeit some or all of such awards if the three-year service period has not expired.

The Company intends to satisfy all equity awards granted prior to December 31, 2003 and after December 31, 2007 with the issuance of new shares from conditional capital authorized for the Amended 2002 Alcon Incentive Plan. At December 31, 2010, the Company had reserved approximately 19.6 million Alcon common shares for issuance pursuant to the Amended 2002 Alcon Incentive Plan.

~~F-35~~

The Company's board of directors has authorized the acquisition on the open market of Alcon common shares to, among other things, satisfy the share-based awards requirements granted under the Amended 2002 Alcon Incentive Plan. At December 31, 2010, outstanding authorizations by the Company's board of directors would have permitted the purchase of approximately 1.6 million Alcon common shares. The Company has purchased treasury shares on the open market to satisfy the majority of the outstanding equity awards granted subsequent to December 31, 2003 and prior to January 1, 2008. Additional treasury shares were purchased during 2008 in anticipation of presenting the shares to the shareholders for approval of cancellation (note 16).

~~Change of Control Provisions~~

Upon the change of control in the ownership of Alcon to Novartis from Nestlé discussed in note 16, the Company's share-based compensation awards granted to employees prior to January 1, 2009 vested immediately. However, the vesting of similar awards granted after January 1, 2009 will accelerate only if the respective participant's employment with the Company or its successor is terminated without cause, or by the participant under certain circumstances, within six months preceding or during the two years following a change of control. The acceleration of vesting increased the cost of share-based payments $8, which was included in other operating expenses in 2010. If the change of control had not occurred, $6 of that cost would have been recognized in normal attribution during the remainder of 2010.

Upon the completion of the merger discussed in note 16, management expects that Novartis common shares would be substituted for Alcon common shares under the outstanding share-based awards at the merger date. The substitution ratio would be based on the price of a Novartis share in the merger relative to $168 for an Alcon share, but no cash would be paid.

~~Equity Awards~~

~~Net earnings for the years ended December 31, 2010, 2009 and 2008 reflected the impact of compensation cost for all share-based payments based on the estimated grant-date "fair value."~~

~~The effects of share-based equity awards on operating income and net earnings for the years ended December 31, 2010, 2009 and 2008 were as follows:~~

2010 2009 2008

Total share-based equity award costs applicable for period $ 78 $ 74 $ 83
Costs relieved from (capitalized in) inventory                                                                                      -- -- --

Costs recognized in operating income                                                                                 78 74 83
Tax benefit recognized in net earnings                                                                                      23 23 27

Reduction to net earnings                                                                                 $ 55 $ 51 $ 56

Compensation expense for equity awards was calculated on a straight-line basis over the three-year vesting period of the applicable share-based awards, with acceleration of the expense for individuals meeting the requirements for retirement and under the change of control provisions, as described above.

As of December 31, 2010, total unrecognized compensation cost related to nonvested share-based equity compensation arrangements (including share options, SSARs and nonvested share and share unit awards) granted under the plan was $112. That cost is expected to be recognized over a weighted average period of 1.6 years.

~~F-36~~

~~Options and SSARs~~

No options or SSARs were granted in 2010. The "fair values" of each stock option and SSAR granted in 2009 and 2008 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

2009 2008

Expected volatility
31.5 % 29.5 %
Risk-free interest rate
1.66 % 2.67 %
Expected dividend yield
3.0 % 1.5 %
Expected term
5 years 5 years

The Company based its estimates of expected volatility on daily historical trading data of its common shares from March 2002 through the grant dates and, due to its short history as a public company when compared to length of the term of the instruments, other factors, such as the volatility of the common share prices of other pharmaceutical and surgical companies.

The risk-free interest rate assumptions were based on implied yields, at the grant dates, of U.S. Treasury zero-coupon bonds having a remaining term equal to the expected term of the employee share awards.

~~The expected dividend yield was estimated generally based upon the Company's historic dividend yield since 2003, projected dividend increases and other relevant information.~~

The Company estimated the expected term consistent with historical exercise and cancellation activity of its previous share-based grants with a ten-year contractual term, as well as that of other pharmaceutical and surgical companies.

~~Forfeitures of stock options and SSARs were estimated to be 4.0% in 2010 (6.3% in 2009 and 7.3% in 2008) of the number granted, based on historical experience.~~

If factors change and the Company employs different assumptions to account for share-based payments in future periods, the compensation expense that the Company records may differ significantly from what the Company has recorded in the current period.

~~The status of the stock options and SSARs as of December 31, 2010 and the changes during the year then ended are presented below:~~

~~F-37~~

Stock Options SSARs
Weighted Weighted Weighted Weighted
Average Average Average Average
Exercise Remaining Exercise Remaining
Price Contractual Aggregate Price Contractual Aggregate
per Term Intrinsic per Term Intrinsic
Number Share (Years) Value Number Share (Years) Value

Outstanding at
    beginning of period 5,633,142 $ 68 5,345,020 $ 117
Granted -- -- -- --
Forfeited (26,936 ) 97 (42,442 ) 104
Exercised (2,448,823 ) 69 (1,501,331 ) 130
Expired                           (617 ) 133 (1,863 ) 129
Outstanding at end
    of period 3,156,766 68 3.6 $ 302 3,799,384 112 7.1 $ 197
Exercisable at end
    of period 2,965,322 66 3.3 $ 288 1,991,643 134 6.1 $ 59

The weighted average grant-date "fair values" of stock options granted during the years ended December 31, 2009 and 2008 were $19 and $39 per option, respectively. The total intrinsic values of the stock options exercised during the years ended December 31, 2010, 2009 and 2008 were $227, $69, and $191, respectively.

The weighted average grant-date "fair values" of SSARs granted during the years ended December 31, 2009 and 2008 were $19 and $38 per SSAR. The total intrinsic value of SSARs exercised during the years ended December 31, 2010 and 2009 were $244 and $4. No SSARs were exercised during the year ended December 31, 2008.

~~The following tables summarize information about stock options and SSARs as of December 31, 2010:~~

Options Outstanding Options Exercisable
Weighted Weighted Weighted
Average Average Average
Range of Remaining Exercise Scheduled Exercise
Exercise Number Contractual Price per Exercisable Number Price per
Prices Outstanding Term (Years) Share Date Exercisable Share

$ 33 204,431 1.2 $   33 March 21, 2005 204,431 $ 33
36 597,888 2.1   36 February 18, 2006 597,888 36
42-50 12,100 2.5   47 Various dates in 2006 12,100 47
63 916,083 3.1   63 February 11, 2007 916,083 63
67-80 58,000 3.7   77 Various dates in 2007 58,000 77
80 5,500 4.0   80 January 18, 2008 5,500 80
79 939,838 4.1   79 February 9, 2008 939,838 79
98-105 11,000 4.4 101 Various dates in 2008 11,000 101
123 61,106 5.1 123 February 8, 2009 61,106 123
131 85,510 6.1 131 February 12, 2010 85,510 131
148 72,409 7.1 148 February 11, 2011 72,409 148
145 125 7.3 145 April 3, 2011 125 145
87 192,070 8.1 87 February 17, 2012 1,332 87
90 706 8.3 90 April 3, 2012 --

Total 3,156,766 2,965,322

~~F-38~~

SSARs Outstanding SSARs Exercisable
Weighted Weighted Weighted
Average Average Average
Range of Remaining Exercise Scheduled Exercise
Exercise Number Contractual Price per Exercisable Number Price per
Prices Outstanding Term (Years) Share Date Exercisable Share

$ 123 599,512 5.1 $ 123 February 8, 2009 599,512 $ 123
100 6,600 5.3 100 May 2, 2009 6,600 100
131 724,509 6.1 131 February 12, 2010 724,509 131
133 6,000 6.4 133 May 14, 2010 6,000 133
148 627,864 7.1 148 February 11, 2011 627,864 148
145-168 21,266 7.3 148 Various dates in 2011 21,266 148
87 1,781,786 8.1 87 February 17, 2012 5,892 87
90-116 31,847 8.3 97 Various dates in 2012 --

Total 3,799,384 1,991,643

~~Restricted Shares and RSUs~~

Restricted shares and RSUs are recognized over the required service period at the closing market price for Alcon common shares on the date of grant. Forfeitures of restricted shares and RSUs in 2010, 2009 and 2008 were estimated to be 6.0%, 8.3% and 9.8%, respectively, of the number granted, based on historical experience. The status of the nonvested restricted shares and RSUs as of December 31, 2010 and the changes during the year then ended are presented below:

Restricted Shares RSUs
Weighted Weighted Weighted Weighted
Average Average Average Average
Grant-Date Remaining Grant-Date Remaining
Price Contractual Aggregate Price Contractual Aggregate
per Term Market per Term Market
Number Share (Years) Value Number Share (Years) Value

Nonvested at beginning
    of period                            125,058 $ 131 693,782 $ 110
Granted                            -- -- 790,636 159
Vested                            (124,819 ) 131 (288,922 ) 144
Forfeited                            (239 ) 131 (38,353 ) 127

Nonvested at end
    of period -- -- -- $           -- 1,157,143 134 1.53 $                  189

No restricted shares were granted during 2010, 2009 and 2008. The total market values of restricted shares that vested during the years ended December 31, 2010, 2009 and 2008 were $20, $14 and $4, respectively.

The weighted average grant-date market values of RSUs granted during the years ended December 31, 2010, 2009 and 2008 were $159, $89, and $147 per share, respectively. The total market values of RSUs that vested during the years ended December 31, 2010, 2009 and 2008 were $50, $6 and less than $1, respectively.

~~Performance Share Units~~

In February 2009 and 2008, pursuant to the Amended 2002 Alcon Incentive Plan, the Company's board of directors approved the grants of approximately 47,000 and 37,000 performance share units, respectively, to the senior executive officers and other selected executives. The performance share units are designed to award

~~F-39~~

additional compensation in the form of Alcon shares if certain earnings per share targets are met. The final awards may be adjusted by a total shareholder return multiplier. If minimum earnings per share targets are not met, no Alcon shares are delivered under the awards. These awards do not pay dividend equivalents during the performance period. The 2009 and 2008 performance share units vest at the end of a three-year service period, with forfeitures if the recipient is not fully vested before age 62 or 60, respectively.

The "fair value" of each performance share unit was estimated at the grant date assuming that the target performance goal will be achieved and using a Monte Carlo simulation approach to model adjustments for total shareholder return modifier provisions. The following weighted average assumptions were incorporated into the valuation model:

2009 2008

Expected volatility
31.5 % 29.5 %
Risk-free interest rate
1.22 % 2.10 %
Expected dividend yield
3.0 % 1.5 %
Expected term
3 years 3 years

In the event that the minimum performance goals are not met, previously recognized compensation cost will be reversed. The Company recognizes the "fair values" of performance share units over the required service period.

Forfeitures of performance share units were estimated to be 0.8% in 2010 (1.5% in 2009 and 2.3% in 2008) of the number granted, based on historical experience of other types of awards and the limited number of executives receiving them. The status of the performance share unit awards as of December 31, 2010 and the changes during the year then ended are presented below:

Performance Share Units
Weighted Weighted
Average Average
Grant-Date Remaining Aggregate
"Fair Value" Contractual Market
Number per Unit Term (Years) Value

Nonvested at beginning of period 81,155 $ 114
Granted                                             -- --
Vested                                             (8,003 ) 107
Forfeited                                             (683 ) 86

Nonvested at end of period                                             72,469 114 0.7 $                                                 12

The weighted average grant-date "fair values" of performance share units granted during the years ended December 31, 2009 and 2008 were $86 and $152 per instrument, respectively. The total market value of performance share units that vested during the year ended December 31, 2010 was $1. No performance share units vested during the years ended December 31, 2009 and 2008. No such instruments were granted in 2010 and prior to 2008.

~~Liability Awards~~

The Amended 2002 Alcon Incentive Plan also provides that the board may grant cash-settled stock appreciation rights ("CSARs") whereby the grantee may receive the appreciation in share value over the grant price. Individual grants become exercisable generally on or after the third anniversary of the grant and lapse on the tenth anniversary of the grant. In addition to scheduled vesting, shares are fully vested upon meeting the requirements for retirement.

~~F-40~~

The Company accounts for CSARs as share-based liability awards that are remeasured each reporting period through the awards' settlement dates using the Black-Scholes option-pricing model and similar assumptions to those used for measuring equity grants. No CSARs were granted in 2010, 2009 and 2008. At December 31, 2010 and 2009, all CSARs were fully vested and were measured at their intrinsic value. The market price for Alcon common shares was $163 per share at December 31, 2010. At December 31, 2010 and 2009, the Company's liability for CSARs totaled $2 and $3, respectively. The related activity in 2010, 2009 and 2008 was not significant.

~~The Company expects to use liability awards minimally in the future. As of December 31, 2010, there was no unrecognized compensation cost related to CSARs granted under the plan.~~

~~(13)~~

~~Deferred Compensation~~

The Alcon Executive Deferred Compensation Plan permits certain executives of the Company to defer receipt of compensation and certain stock gains otherwise payable currently and to accumulate earnings thereon on a tax-deferred basis. The plan is designed to permit executives' deferral elections to be held and owned by the Company in a Rabbi trust. During the years ended December 31, 2010, 2009 and 2008, certain executives elected to defer compensation totaling $2, $1, and $1 respectively. At December 31, 2010 and 2009, other long term liabilities in the accompanying consolidated balance sheets included liabilities under the plan of $12 and $13, respectively.

In 2004, the Company established the Alcon Excess 401(k) Plan, allowing deferral of excess employer contributions that cannot be made to the Alcon 401(k) Retirement Plan because of limitations under the U.S. Internal Revenue Code of 1986. During the years ended December 31, 2010, 2009 and 2008, deferrals under the plan were $5, $3 and $3 respectively. At December 31, 2010 and 2009, liabilities under the plan, included in other long term liabilities in the accompanying consolidated balance sheets, were $17 and $13, respectively.

~~(14)~~

~~Related Party Transactions~~

~~As of December 31, 2010, Novartis had purchased 231,352,279 common shares of Alcon, and Nestlé no longer owned any common shares of Alcon.~~

~~On January 9, 2009, the Company entered into an agreement with Novartis Pharma AG (an affiliate of Novartis) providing for the co-promotion under their license of the Lucentis~~® product in Japan. This agreement has a three-year term ending on December 31, 2011. During the years ended December 31, 2010 and 2009, the Company recognized approximately $10 and $3 in co-promotion fees from this agreement, which fees were more than sufficient to recover the Company's costs under the agreement.

~~During the year ended December 31, 2010, the Company reimbursed Novartis for certain operating expenses totaling $2 incurred on the Company's behalf.~~

The Company's other material transactions with related parties during 2010, 2009 and 2008 were with Nestlé and its subsidiaries. All material related party transactions that are not disclosed elsewhere in these notes are included below.

~~During 2010, 2009 and 2008, the Company had investments and borrowings with Nestlé and its subsidiaries which resulted in the following impact to earnings before income taxes:~~

2010 2009 2008

Interest expense $ 1 $ 3 $ 5
Interest income $ -- Less than $1 Less than $1

The Company continues to lease certain facilities from Nestlé subsidiaries which resulted in rent expense of $3, $3, and $2 in 2010, 2009 and 2008, respectively. Nestlé provided the Company with certain services, including a portion of the Company's information technology licenses, corporate legal services, certain treasury and cash

~~F-41~~

management activities and certain internal audit activities. Nestlé charged the Company for its portion of the costs of these services based on arm's length prices. Such charges were less than $3 in each of the three years ended December 31, 2010, 2009 and 2008.

During 2008, Lehman Brothers International (Europe) London filed for administration in England. At that time the Company's cash and cash equivalents included $707 of short term securities held in a segregated custodial account of Lehman Brothers International (Europe) London pursuant to a Custody Agreement. Nestlé invoiced the Company in December 2008, and in 2009 the Company reimbursed Nestlé, for a total of $5 in fees paid by Nestlé to the Joint Administrators of Lehman Brothers International (Europe) (in administration) related to the release of the short-term securities held in the custodial account. This amount of fees is subject to adjustment depending on the final costs incurred to settle the administration of Lehman Brothers International (Europe).

The Company executed certain foreign exchange contracts through Nestlé Finance SA, Cham to benefit from Nestlé's foreign exchange transaction volumes and expertise. At December 31, 2010 and 2009, the Company had no notional amounts outstanding with Nestlé.

The Company participated with certain Nestlé affiliates in specific cash pooling accounts under which overdraft lines of credit were available and were jointly and severally guaranteed by all participants, including the Company. At December 31, 2010, these lines of credit were longer available.

The Company was part of the Nestlé Swiss Value-Added Tax Group until October 2010, when a new Swiss Alcon Value-Added Tax Group was formed. Alcon is jointly and severally liable for any value-added tax liabilities of all other Swiss Alcon Group participants effective October 2010.

~~(15)~~

~~Pension and Postretirement Benefits~~

The Company's pension and postretirement benefit plans, which in aggregate cover substantially all employees in the United States and employees in certain other countries, consist of defined benefit pension plans, defined contribution plans and a postretirement healthcare plan. The Company's cost of defined contribution plans was $94, $86 and $78 in 2010, 2009 and 2008, respectively.

The information provided below pertains to the Company's defined benefit pension plans and postretirement healthcare plan. The measurement date used to determine pension and postretirement benefit measurements for all of the benefit plans in 2010, 2009 and 2008 was December 31 of the respective year.

~~The changes in benefit obligations, fair values of plan assets and funded status for the years ended December 31, 2010 and 2009 were:~~

~~F-42~~

Postretirement
Pension Benefits Benefits
2010 2009 2010 2009
Change in Benefit Obligation
Benefit obligation at beginning of year
$ 557 $ 458 $ 276 $ 269
Service cost
28 23 14 13
Interest cost
30 29 16 16
Benefits paid by trust
(5 ) (7 ) (11 ) (10 )
Benefits paid by Company
(21 ) (19 ) -- --
Employee contributions
1 1 -- --
Foreign currency translation
7 3 -- --
Medicare subsidy
-- -- 1 1
Conversion of multi-employer plan/acquisition
-- 35 -- --
Special termination benefits
101 -- -- --
Curtailment
(44 ) -- -- --
Actuarial (gain)/loss
58 34 45 (13 )

Benefit obligation at end of year
712 557 341 276

Change in Plan Assets
Fair value of plan assets at beginning of year
119 68 177 123
Actual return on plan assets
7 10 18 32
Employer contribution
12 17 34 32
Employee contributions
1 1 -- --
Conversion of multi-employer plan/acquisition
-- 29 -- --
Foreign currency translation
4 1 -- --
Benefits paid
(5 ) (7 ) (11 ) (10 )

Fair value of plan assets at end of year
138 119 218 177

Funded Status at End of Year
$ (574 ) $ (438 ) $ (123 ) $ (99 )
��
Amounts Recognized in the Consolidated Balance Sheets
Accrued benefit costs in other current liabilities
$ (31 ) $ (15 ) $ -- $ --
Pension and postretirement obligation in other long term liabilities (543 ) (423 ) (123 ) (99 )

Net amount recognized in the consolidated balance sheet $ (574 ) $ (438 ) $ (123 ) $ (99 )

~~Amounts recognized in accumulated other comprehensive income, net of taxes, at December 31, 2010 consisted of:~~

Pension Benefits Postretirement Benefits

Prior service cost $ -- $ --
Net losses (gains) 82 42

Total $ 82 $ 42

~~The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost in the year ended December 31, 2011 were estimated to be:~~

~~F-43~~

Pension Postretirement
Benefits Benefits

Prior service cost $ -- $ --
Net losses (gains 4 4

Total $ 4 $ 4

~~The accumulated benefit obligation for all defined benefit pension plans was $605 and $439 at December 31, 2010 and 2009, respectively.~~

~~The following table provides information for pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2010 and 2009:~~

Pension Benefits
2010 2009

Projected benefit obligation $ 571 $ 438
Accumulated benefit obligation 511 359
Fair value of plan assets 13 10

Postretirement
Pension Benefits Benefits
Weighted Average Assumptions to Calculate Benefit 2010 2009 2010 2009
Obligations as of December 31

Discount rate                                                                     4.8 % 5.4 % 5.5 % 6.0 %
Expected return on plan assets                                                                     4.0 4.2 6.6 7.5
Rate of compensation increase                                                                     4.9 4.9 N/A N/A

Postretirement
Pension Benefits Benefits
Weighted Average Assumptions to Calculate Net 2010 2009 2010 2009
Benefit Costs for

Discount rate                                                                     5.4 % 5.7 % 6.0 % 6.0 %
Expected return on plan assets                                                                     4.2 3.3 7.5 7.5
Rate of compensation increase                                                                     4.9 5.1 N/A N/A

The discount rates for the defined benefit pension plans were determined by matching, as of the respective measurement dates, the expected future cash flows with high-quality fixed-income securities of the same duration. This resulted in weighted average discount rates for appropriate equivalent annualized rates.

The discount rates for the postretirement benefit plan were determined by matching the expected future cash flows with high quality fixed-income securities of the same duration as of the respective measurement dates.

The expected long term rates of return on plan assets were based on historical market index returns for the applicable asset classes weighted in proportion to the target allocation of the plan. The return assumption for the

~~F-44~~

~~postretirement benefits plan also took into account the estimated cost of life insurance coverage and insurer profit due to the use of the trust-owned life insurance investment vehicle.~~

At December 31, 2009, the Company adopted the provisions of the Compensation-Defined Benefits-Disclosure Topic of the ASC, as adopted by the FASB, which enhances disclosure requirements for fair value measurements. The required hierarchical levels were discussed in note 5.

~~Pension Plan Assets~~

The Company's overall investment strategy is to achieve a mix of investments for long-term growth and investments for near-term benefit payments, with a wide diversification of asset types, fund strategies, and fund managers. The strategies use a variety of asset classes to provide return opportunities that are consistent with the

~~Company's acceptable risk tolerance. The majority of the Company's plans are unfunded, with the major funded plans designated for employees in Japan, Belgium and Spain.~~

The target allocations for plan assets at December 31, 2010 (on a weighted-average basis) were 12% equity securities, 14% debt securities, 41% guaranteed investment contracts and 33% other investments. Equity securities primarily included investment in large capitalization companies and index funds located in the United States and Japan. Debt securities were primarily government bonds in Japan. The guaranteed investment contract was with an insurance company located in Japan used to fund benefits for employees in Japan. Other investments consisted of investment funds mainly invested in a mix of debt and equity securities for employees in Belgium, the Netherlands and Norway. Assets previously invested with a Nestlé plan for employees in Spain had been liquidated and the proceeds were in cash and cash equivalents at December 31, 2010.

Expected long-term rates-of-return on assets were based primarily on historical returns and asset-liability modeling studies and considered expected real returns, inflation fluctuations and volatility of each asset category.

~~At December 31, 2010 and 2009, the Company's asset allocations by asset category were as follows:~~

2010 2009

Cash and cash equivalents $ 31 $ 8
Equity securities 5 12
Debt securities 7 20
Guaranteed investment contracts 51 40
Other investments:
Investment funds
39 35
Other
5 4

Total
$ 138 $ 119

At December 31, 2010, financial assets for pension benefits measured at fair value on a recurring basis were categorized in the table below based upon the lowest level of input that is significant to the fair value measurement as follows:

~~F-45~~

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 31 $ -- $ -- $ 31
Equity securities (a) -- 5 -- 5
Debt securities (b) -- 7 -- 7
Guaranteed investment contracts (c) -- 51 -- 51
Other investments (d):
Investment funds
-- 39 -- 39
Other
-- 5 -- 5

Total
$ 31 $ 107 $ -- $ 138

~~(a)~~

~~This category consists mainly of large capitalization companies and index funds in the United States and Japan.~~

~~(b)~~

~~This category consists mainly of government debt securities primarily in Japan.~~

~~(c)~~

This category is primarily guaranteed investment contracts in Japan administered through insurance companies with guaranteed returns of 0.75%. The life insurance companies pool pension plan assets together from all the participating companies and generally invest in a relatively conservative asset mix of corporate and government bonds, mostly Japanese, with a minor portion in both domestic and foreign equity, loans and other investments.

~~(d)~~

This category includes assets held in a variety of funds primarily managed by Nestlé Capital Management (a Nestlé affiliate) and State Street Global Advisors for the benefit of employees in Belgium and the Netherlands. Equity funds consist of Robusta European, Common Contractual and Emerging Market funds (operated by Nestlé's investment management company) and State Street Global Advisors Asia Pacific and World Index funds. Fixed income funds consist of Euro government bonds, Robusta Inflation Linked and Global Credit Bonds (operated by Nestlé's investment management company). A minor portion of the funds are invested in real estate, commodities and absolute return hedge funds.

The Company maintains an irrevocable Rabbi trust to be held and invested in an unfunded arrangement for the payment of benefits to participants under certain defined benefit pension plans of the Company. The assets of the trust are restricted to the payment of pension benefits except under certain conditions, such as the Company's insolvency or termination of the trust. The Alcon Executive Retirement Plans Grantor Trust Agreement provides for the Company to fund the current actuarially determined present value of the aggregate accrued pension benefits of all participants upon the change of control (discussed in note 16). Based on actuarially determined pension benefit projections and market conditions, the Company contributed $152 during 2010 to satisfy this requirement. The assets of the trust were primarily the cash surrender value ($279 as of December 31, 2010) of company owned life insurance policies purchased from a related captive insurance company subsidiary and cash equivalents ($152 as of December 31, 2010).

~~The Company does not anticipate that any assets from defined benefit plans would be returned to the Company during the year ending December 31, 2011.~~

At December 31, 2009, financial assets for pension benefits measured at fair value on a recurring basis were categorized in the table below based upon the lowest level of input that is significant to the fair value measurement as follows:

~~F-46~~

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 8 $ -- $ -- $ 8
Equity securities (a) -- 12 -- 12
Debt securities (b) -- 20 -- 20
Guaranteed investment contracts (c) -- 40 -- 40
Other investments (d):
Investment funds -- 35 -- 35
Other -- 4 -- 4

Total $ 8 $ 111 $ -- $ 119

~~(a)~~

~~This category consists mainly of large capitalization companies and index funds in the United States and Europe.~~

~~(b)~~

~~This category consists mainly of government debt securities in Europe, the United States and Japan.~~

~~(c)~~

~~(d)~~

~~Postretirement Benefits Assets~~

The Company's overall investment strategy for these fund assets is to invest in long-term growth assets (excluding necessary cash for near-term benefit payments) with a wide diversification of asset types, fund strategies, and fund managers. The strategies use a variety of asset classes to provide return opportunities that are consistent with the Company's acceptable risk tolerances. The post retirement plan is a U.S. plan having assets funded to a Voluntary Employee Benefit Association ("VEBA") trust and to a 401(h) account under the Alcon Retirement Plan. The blended target allocations for plan assets at December 31, 2010 were 6% cash and cash equivalents, 63% global equity securities, 27% corporate bonds, and 4% other investments. Equity securities primarily included investment in large cap companies located around the world. Corporate bonds were primarily investment-grade bonds of companies in diversified industries primarily located in the United States. Other investments consisted primarily of convertible bonds and real assets, including real estate investments and commodities. Expected long-term rates-of-return on assets were primarily based on historical returns.

~~At December 31, 2010 and 2009, the Company's asset allocations by asset category were as follows:~~

~~F-47~~

2010 2009

Cash and cash equivalents $ 37 $ 27
Equity securities (funds and direct holdings):
Equity securities - U.S. large cap
32 28
Equity securities - large cap located outside United States (a)
28 26
Debt securities:
Debt securities – U.S. Treasuries, Agencies & investment grade corporate (b)
31 29
Other investments:
Alcon Active Balanced Fund (c)
90 67

Total
$ 218 $ 177

~~(a)~~

~~International holdings were largely located in developed countries within Europe, the Far East and Australia.~~

~~(b)~~

~~Debt securities were largely located in the United States, benchmarked to the Barclay's Aggregate Index.~~

~~(c)~~

~~The 401(h) account is invested in a balanced fund offered within the Master Trust for the Defined Contribution Plans for Alcon Laboratories, Inc. and Alcon (Puerto Rico), Inc.~~

At December 31, 2010, financial assets measured at fair value on a recurring basis were categorized in the table below for postretirement benefits based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 37 $ -- $ -- $ 37
Equity securities:
Equity securities – U.S. large cap (a)
-- 32 -- 32
Equity securities – large cap located outside United States (b)
-- 28 -- 28
Debt securities:
Debt securities – U.S. Treasuries, Agencies & investment

grade corporate (c)
-- 31 -- 31
Other investments:
Alcon Active Balanced Fund (d)
-- 90 -- 90

Total
$ 37 $ 181 $ -- $ 218

~~(a)~~

~~This category consists of assets in a U.S. equity index fund through trust-owned life insurance.~~

~~(b)~~

~~This category consists of assets in an international equity index fund through trust-owned life insurance.~~

~~(c)~~

~~This category consists of assets in a U.S. Aggregate Board bond market index fund through trust-owned life insurance.~~

~~(d)~~

This category consists of one investment in the Alcon Active Balanced fund. This fund has a globally balanced mandate to include global equities (primarily developed countries), investment grade U.S. corporate and agency debt, real assets and convertibles. The fund is highly liquid with the vast majority of assets classified as either Level 1 or Level 2 within the FASB fair value hierarchy.

~~The Company does not anticipate that any assets from the postretirement benefits plan would be returned to the Company during the year ending December 31, 2011.~~

At December 31, 2009, financial assets measured at fair value on a recurring basis were categorized in the table below for postretirement benefits based upon the lowest level of input that is significant to the fair value measurement as follows:

~~F-48~~

Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 27 $ -- $ -- $ 27
Equity securities:
Equity securities – U.S. large cap (a)
-- 28 -- 28
Equity securities – large cap located outside United States (b)
-- 26 -- 26
Debt securities:
Debt securities – U.S. Treasuries, Agencies & investment grade corporate (c)
-- 29 -- 29
Other investments:
Alcon Active Balanced Fund (d)
-- 67 -- 67

Total
$ 27 $ 150 $ -- $ 177

~~(a)~~

~~This category consists of assets in a U.S. equity index fund through trust-owned life insurance.~~

~~(b)~~

~~This category consists of assets in an international equity index fund through trust-owned life insurance.~~

~~(c)~~

~~This category consists of assets in a U.S. Aggregate Board bond market index fund through trust-owned life insurance.~~

~~(d)~~

This category consists of one investment in the Alcon Active Balanced fund. This fund has a globally balanced mandate to include global equities (primarily developed countries), investment grade U.S. corporate and agency debt, real assets, convertibles and absolute return funds. The fund is highly liquid with the vast majority of assets classified as either Level 1 or Level 2 within the FASB fair value hierarchy.

~~Contributions~~

~~The Company expects to contribute in 2011 approximately $41 to its pension plans and approximately $27 to its postretirement benefit plan.~~

~~Estimated Future Benefit Payments~~

~~The following table provides the benefit payments expected to be paid and the anticipated subsidy receipts:~~

Pension Benefits Postretirement Benefits
Gross Payments Subsidy Receipts

2011 $ 32 $ 12 $ (1 )
2012 32 13 (1 )
2013 32 15 (1 )
2014 33 16 (2 )
2015 36 18 (2 )
2016 - 2020 204 123 (14 )

~~F-49~~

Pension Benefits Postretirement Benefits
2010 2009 2008 2010 2009 2008
Components of Net Periodic Benefit Cost

Service cost                                                       $ 28 $ 23 $ 24 $ 14 $ 13 $ 13
Interest cost                                                       30 29 24 16 16 15
Expected return on assets                                                       (5 ) (4 ) (2 ) (14 ) (10 ) (11 )
Prior service cost                                                       (5 ) (1 ) (1 ) -- 1 1
Special termination benefits                                                       101 -- -- -- -- --
Net losses                                                       6 7 7 2 4 1

Net periodic benefit cost                                                    155 54 52 18 24 19

Other Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income

Current year net loss (gain)                                                       56 33 16 40 (35 ) 47
Amortization of net (gain)                                                       (6 ) (7 ) (6 ) (2 ) (4 ) (1 )
Amortization of prior service cost 5 1 1 -- (1 ) (1 )
Curtailment                                                       (44 ) -- -- -- -- --
Foreign currency translation                                                       2 2 (2
)
-- -- --
Net charge to other comprehensive
       income 13 29 9 38 (40
)
45

      Total recognized in net periodic pension
    cost and other comprehensive income $ 168 $ 83 $ 61 $ 56 $ (16
)
$ 64

Effective January 1, 2008, the Company adopted a provision to measure the funded status of a plan as of the date of its year-end balance sheet. The Company utilized the alternate transition method to transition the measurement date for its defined pension benefit plan in Japan from September 30 to December 31. Under this transition method, the Company charged 3/15ths of the estimated pension cost from October 1, 2007 to December 31, 2008 (or $1, net of taxes) to retained earnings as of January 1, 2008.

Certain U.S. defined benefit plans contain change of control provisions that, among other items, provide for accelerated vesting of benefits. The Company recognized charges of $97 in special termination benefits and amortization of prior service cost upon the change of control in the ownership of Alcon by Novartis's purchase of Nestlé's common shares of Alcon (discussed note 16). A curtailment gain of $44 was offset against prior unrecognized losses and no gain was recognized in earnings. Except for certain key employees, payments of these accelerated benefits began during the fourth quarter of 2010 as provided by the plans.

The healthcare cost trend rate used to measure the expected cost of benefits covered by the postretirement plan is 7.6% at December 31, 2010, declining to 5% in 2017 and after. The effect of a one percentage point change in assumed medical cost trend rates is as follows:

~~F-50~~

1% Increase 1% Decrease

Effect on total of service and interest cost components $ 6 $ (5 )

Effect on the postretirement benefit obligation 60 (47 )

In certain countries, the Company's employees participate in defined benefit plans of Nestlé. No separate valuation for the Company's employees has historically been prepared for the plans, as they are not individually material to the Company or to Nestlé. Accordingly, these plans are treated as multi-employer plans. Annual contributions to these plans are determined by Nestlé and charged to the Company. Company contributions to these plans during 2010, 2009 and 2008 were $10, $9, and $10, respectively. Future contributions may not reflect past trends. During 2009, the Company obtained a separate valuation for its Belgium and Netherlands subsidiaries' defined benefit pension plans and converted from multi-employer plans to single-employer plans. Prior to the change of ownership by Novartis, the Company and Nestlé entered into an agreement outlining the terms to segregate Alcon employees from Nestlé pension plans. The agreement provides that, except for certain circumstances, all current Alcon pension participants will be migrated from Nestlé pension plans to other, not yet determined Alcon pension plans by January 1, 2011.

~~(16)~~

~~Shareholders' Equity~~

~~Share Cancellation~~

On May 5, 2009, Alcon's shareholders approved the cancellation of 1,043,400 Alcon common shares, which the Company purchased during 2008. After the fulfillment of certain formal Swiss law requirements, the cancellation became effective in August 2009.

On May 6, 2008, the Company's shareholders approved the cancellation of 7,657,400 Alcon common shares, which the Company purchased during 2007. After the fulfillment of certain formal Swiss law requirements, the cancellation became effective in August 2008.

~~Change of Control and Proposed Merger~~

On April 6, 2008, Nestlé and Novartis executed the Purchase and Option Agreement pursuant to which Nestlé agreed to sell approximately 74 million of its shares of Alcon common stock to Novartis in a cash transaction at a price of $143.18 per share. That sale was consummated on July 7, 2008, and Novartis acquired a minority stake in Alcon of slightly less than 25% of Alcon's outstanding shares, while Nestlé remained Alcon's majority shareholder with approximately 156 million Alcon shares comprising approximately 52% of the Company's outstanding shares.

The Purchase and Option Agreement between Nestlé and Novartis also contained put and call option rights on the balance of approximately 156 million Alcon shares owned by Nestlé. The option rights commenced on January 1, 2010. As outlined by the two parties, these rights granted (i) Novartis a call option to buy all but 4.1 million (or 2.5%) of Nestlé's remaining Alcon shares at a fixed price of $181 per share and the 4.1 million shares at the first stage price of $143.18 per share, and (ii) Nestlé a put option to sell to Novartis all but 4.1 million of its remaining Alcon shares to Novartis at the lower of Novartis's call price of $181 per share or a premium of approximately 20.5% above the then-market price of Alcon shares, calculated as the average market price of Alcon shares during the five trading days immediately preceding the exercise date of the put option, with the 4.1 million share balance to be sold at the first stage closing price of $143.18 per share.

On January 4, 2010, Novartis announced that it had exercised its option to purchase the remaining approximately 156 million Alcon shares owned by Nestlé at a weighted average price of $180 per share in cash, pursuant to the Purchase and Option Agreement. After consummation of the purchase on August 25, 2010, Novartis owned an approximate 77% interest in Alcon with the 23% balance being the publicly traded shares.

~~F-51~~

The consummation triggered certain change of control provisions in certain retirement plans for Company employees, the Company's share-based awards plan (including the vesting of certain outstanding share-based awards) and other agreements.

On January 4, 2010, Novartis also announced that it submitted to the Alcon board of directors a proposal for a merger of Alcon with and into Novartis to be effected under Swiss merger law. Under the terms of the merger proposal, holders of the Alcon shares that are publicly traded would receive 2.8 Novartis shares for each Alcon share. The proposed merger would be contingent upon, among other things, approval by the Alcon board of directors. The Company believes that Alcon's Organizational Regulations provide that the Alcon board of directors may only approve the proposed merger if a majority of the Independent Director Committee so recommends; however, management cannot predict the outcome of any proceeding that might be initiated to interpret or challenge this position.

The Independent Director Committee was formed in 2008 in connection with Novartis's initial purchase of slightly less than 25% of the Alcon shares from Nestlé to evaluate transactions such as the merger proposed by Novartis. The Independent Director Committee engaged independent financial and legal advisors in connection with its evaluation of the proposed merger. On January 20, 2010, the Independent Director Committee issued its formal response rejecting the Novartis merger proposal. The committee rejected the merger proposal based on its assessment that the price offered and other terms were not acceptable and that Novartis's merger proposal was not in the best interests of Alcon and its minority shareholders.

~~Merger Agreement of December 14, 2010~~

On December 15, 2010, Alcon announced that its board of directors approved a merger agreement with Novartis, whereby Novartis will pay a total merger consideration valued at $168 per share for the Alcon shares it does not currently own. Under the terms of the deal, the merger consideration will be comprised of a combination of Novartis shares and, if necessary, a cash contingent value amount to result in a total value of $168 per share. The exact exchange ratio and cash contingent value amount will be calculated based upon formulas set forth in the merger agreement.

In accordance with Alcon's Organizational Regulations and after receiving a fairness opinion from its independent financial adviser, Greenhill & Co., the Independent Director Committee recommended approval of the merger agreement to the Alcon board. The board also received a separate fairness opinion rendered by Lazard Frères & Co. LLC in connection with the transaction. After considering these items and other appropriate information and factors, the Alcon board approved the merger proposal.

The merger will be effected under Swiss merger law. Completion is conditional, among other things, on two-thirds approval by the shareholders of both Novartis and Alcon voting at their respective meetings, and the registration and listing of Novartis shares on the SIX Swiss Exchange and American Depository Shares on the New York Stock Exchange to be issued as merger consideration. At December 31, 2010, Novartis owned more than the required two-thirds of the outstanding common shares of Alcon and has agreed, subject to certain conditions, to vote all of its Alcon shares to approve the merger. The merger is expected to be completed during the first half of 2011.

Upon completion of the merger, Alcon will become the second largest division within Novartis. Novartis has proposed that its CIBA VISION operations and select Novartis ophthalmic medicines will be integrated into Alcon.

~~Independent Director Committee Trust~~

On July 8, 2010, the Independent Director Committee announced the creation and funding of the Alcon Litigation Trust, an irrevocable trust established under New York law pursuant to a resolution of the Alcon board of directors. The members of the Independent Director Committee were the trustees of the trust. The trust was created and funded on July 7, 2010 with $50. The trust was created to provide the financial means to commence, defend or maintain litigation relating to any transaction between Alcon and a majority shareholder, including the transaction contemplated by the merger proposal announced by Novartis on January 4, 2010, and ensure the protection of the interests of Alcon and its minority shareholders in connection with any such transaction.

~~F-52~~

~~In connection with the merger agreement of December 14, 2010, the trust was terminated and the trust property was returned to Alcon in December 2010.~~

~~Share Repurchase Agreement Terminated~~

In March 2008, as a result of the then-pending agreement between Nestlé and Novartis discussed above, the Company halted the purchase of Alcon common shares in the open market under all share repurchase programs, and terminated the pro rata share repurchase agreement with Nestlé that it had entered into following the December 2007 authorization by the board of directors of the share repurchase program that provided for the purchase of up to $1,100 of Alcon common shares. Prior to its termination, the Company had purchased a total of 150,000 shares under the agreement, comprised of 112,500 shares from the Company's majority shareholder, Nestlé, and 37,500 shares from the market, for a total of $20. The price for the shares purchased from Nestlé under the agreement was equal to the volume-weighted average price for such shares determined in accordance with Rule 10b-18 of the U.S. Securities Exchange Act of 1934.

The program authorized in December 2007 was in addition to the Company's pre-existing share repurchase program, under which, as of December 31, 2008, the Company had remaining authorization to purchase up to 1.8 million shares. In September 2008, the Company resumed purchasing from the public under the pre-existing program up to 1 million Alcon common shares to be presented to the shareholders for retirement. Neither Nestlé nor Novartis participated in this program and their ownership interests did not change materially as a result of these share repurchases.

~~(17)~~

~~Commitments and Contingencies~~

~~Minority Shareholder Class Action Lawsuits~~

~~On January 4, 2010, Novartis announced that it submitted to the Alcon board of directors a proposal for a merger of Alcon with and into Novartis to be effected under Swiss merger law (note 16).~~

Certain Alcon minority shareholders filed several class action lawsuits related to Novartis's January 2010 merger proposal concerning the acquisition of the remaining publicly held minority interest. The claims varied among the cases, but include allegations of: (i) breach of contract against Alcon; (ii) tortious interference with contract against Novartis and Nestlé; (iii) breach of fiduciary duties against the Alcon board of directors, Nestlé and Novartis; (iv) aiding and abetting breaches of fiduciary duties against the Alcon board of directors, Nestlé and Novartis; (v) breach of Section 13(d) of the Exchange Act against Novartis and Nestlé for an alleged failure to disclose that they were acting as a "group;" and (vi) breach of Section 14(d) of the Exchange Act against Novartis and Nestlé for an alleged failure to file with the U.S. Securities and Exchange Commission the materials required in connection with a "tender offer."

Eight cases filed in the U.S. District Courts for the Southern District of New York and the Northern District of Texas were consolidated into one class action case in the Southern District of New York. A ninth case, which did not name Alcon, Inc. and its board of directors as parties, was filed in the Eastern District of New York but was voluntarily dismissed by the plaintiffs on March 18, 2010.

On April 14, 2010, plaintiffs in the consolidated action dismissed their claims against Nestlé and the five Alcon directors designated by Nestlé. On May 24, 2010, the court granted a motion by Novartis and dismissed the action in its entirety on the ground that Switzerland was a more convenient forum for the dispute. On July 14, 2010, the plaintiffs appealed the district court's dismissal to the U.S. Court of Appeals for the Second Circuit. Plaintiffs moved to dismiss the appeal on January 5, 2011, and the Second Circuit granted their motion the next day.

Two cases filed in District Court, Tarrant County, Texas and two cases filed in the County Court at Law, Dallas County, Texas were consolidated for pre-trial purposes by the Texas Multidistrict Litigation Panel in the Texas District Court, Dallas County. In November 2010, the court granted Novartis's motion seeking dismissal of these

~~F-53~~

~~actions on the ground that Switzerland is a more convenient forum. The plaintiffs appealed the court's dismissal, and the appeal is pending.~~

~~Other Contingencies~~

The Company, either alone or jointly with its commercial partners, has filed fourteen North American patent infringement actions against six different generic drug companies. With the exception of international generic challenges, all of these generic drug companies are seeking U.S. Food and Drug Administration ("FDA") approval to market generic versions of the Company's products, under what are known as Abbreviated New Drug Applications ("ANDAs").

Each infringement action was filed after the Company received notice that one or more of the generic drug companies had filed an ANDA seeking approval to sell a generic version of the Company's product. As part of its ANDA, each generic drug company challenged one or more patents covering the Company's product. In the United States, as a result of filing the lawsuits, the FDA must delay approval of the related ANDAs for 30 months unless the litigation is earlier resolved or the court modifies the 30-month stay on FDA approval. In Canada, filing of the lawsuit secured a 24-month delay in approval from the Minister of Health, which can be shortened if the litigation is earlier resolved or the court modifies the 24-month stay on such approval. Should any generic drug company succeed in overcoming the Company's patents and secure regulatory approval, it would be entitled to sell a generic product that would compete with the Company's product in the United States or Canada. Such competition would be expected to impact significantly the Company's sales and profits.

~~The following table provides a summary of these lawsuits:~~

~~F-54~~

~~Parties seeking approval~~	~~Alcon product(s)~~	~~No. of patents challenged~~	~~Longest patent expiration date~~	~~Patents owned by~~	~~Jurisdiction/Regulatory Body~~	~~Date first suit filed~~	~~Status~~	~~If generic challenger is successful, earliest date that a generic may begin selling~~

~~Teva Pharmaceuticals USA, Inc.~~	~~Vigamox~~® ~~antibiotic ophthalmic solution (Moxifloxacin, the primary ingredient in~~ ~~Vigamox~~®~~, is licensed to Alcon by Bayer Schering Pharma AG).~~	3~~(1)~~	~~2020~~	~~Bayer Schering Pharma AG/the Company~~	~~FDA, U.S. District Court of Delaware~~	~~April 5, 2006~~	~~Trial relative to the Company's patent concluded on March 6, 2008. On October 19, 2009, the court ruled in the Company's favor. Teva has appealed.~~		~~September 4, 2014~~
~~Apotex Inc., Apotex Corp., Barr Laboratories, Inc., Wockhardt Limited, Sandoz Inc. and Sandoz Canada Inc. (the last two parties are affiliates of Novartis)~~	~~Patanol~~® ~~and~~ ~~Pataday~~™ ~~anti-allergy ophthalmic solutions~~	~~Up to 5~~ ~~(2), (3), (4),(5), (6), (7)~~	~~2015 (Patanol~~®~~) and 2023 (Pataday~~™)	~~Kyowa Hakko Kirin Co., Ltd./the Company~~	~~FDA, U.S. District Court in Indianapolis and Canadian Minister of Health, Federal Court in Toronto~~	~~November 15, 2006~~	~~One non-jury trial concluded on May 7, 2010. Closing arguments, however, were held August 3, 2010. A ruling has not yet been issued.~~		~~June 18, 2011~~ ~~(2), (3), (4), (5), (8), (9)~~
~~Barr Laboratories, Inc., Par Pharmaceutical, Inc., Apotex Corp. and Apotex Inc.~~	~~TRAVATAN~~® ~~and~~ ~~TRAVATAN Z~~® ~~ophthalmic solutions~~	~~Up to 7~~	~~2014(8)~~	~~The Company~~	~~FDA, U.S. District Court of Delaware~~	~~April 30, 2009~~	~~Trial postponed until May 2, 2011. The parties have requested a further postponement.~~		~~December 2011(8)~~

(1) Two of the patents are owned by the Company's licensor, Bayer Schering Pharma AG, and the third, which expires in 2020 (including a six-month pediatric extension), is owned by the Company. The two Bayer Schering Pharma AG patents were also the subject of another Teva ANDA seeking approval to sell a generic version of Bayer Schering Pharma AG's systemic moxifloxacin product, Avelox®~~. Suit was filed by the Company and Bayer Schering Pharma AG as co-plaintiffs against Teva relative to the~~ ~~Vigamox~~® ~~ANDA on April 5, 2006 in the U.S. District Court in Delaware. Bayer Schering Pharma AG subsequently filed suit in the same court relative to the Avelox~~® ANDA, and the two suits were merged. Trial was scheduled to begin February 26, 2008, but the dispute between Bayer Schering Pharma AG and Teva relative to the two Bayer Schering Pharma AG patents was resolved by settlement on the eve of trial. Under the terms of the settlement, Teva acknowledged the validity and enforceability of both Bayer Schering Pharma AG patents, and further acknowledged that its proposed generic ophthalmic product would infringe both patents. Teva has therefore relinquished any claim that it is entitled to market the generic ophthalmic product prior to September 4, 2014. The Company remains the exclusive ophthalmic licensee under the Bayer Schering Pharma AG patents.

The trial relative to the Company's patent concluded on March 6, 2008. On October 19, 2009, the court ruled in the Company's favor on all counts, finding the Company's patent to be valid and infringed by the proposed generic product. Since then, the Company received issuance of a related patent with claims that cover the ~~Vigamox~~® ~~product and Teva's proposed generic product. U.S. Patent No. 7,761,010 was issued on March 2, 2010 and has been added to the FDA Orange Book relative to the Company's~~ ~~Vigamox~~® ~~product. Teva has appealed the trial court ruling.~~

~~F-55~~

However, even if Teva were to succeed in having the district court decision reversed on appeal, it would still have to address the Company's recently issued second patent before competing with the Company's ~~Vigamox~~® product in September 2014 when the underlying Bayer patent expires. If Teva were to win on appeal and overcome the Company's second patent, the resulting generic competition would be expected to impact significantly the Company's sales and profits. On a related note, the Company's European counterpart patent to the patent-in-suit was determined to be invalid in a European Patent Office Opposition Proceeding. That invalidity decision was upheld by an Enlarged Board of Appeal on October 22, 2009. Divisional patent applications on the Company's ~~Vigamox~~® ~~product remain pending in the European Patent Office.~~

~~(2) The Company's raw material supplier, Kyowa Hakko Kirin Co., Ltd., holds another U.S. patent that has not been challenged in the Apotex ANDA on~~ ~~Patanol~~® ~~and expires on December 18, 2010. In addition, the Company has secured a six-month pediatric extension to the patent coverage, which means this generic challenge poses no threat to the~~ ~~Patanol~~® ~~product market prior to June 18, 2011.~~

~~(3) Unlike the Apotex ANDA on~~ ~~Patanol~~®~~, which is challenging only the patent jointly owned by Kyowa and the Company, the Barr ANDA on~~ ~~Patanol~~® ~~also challenged Kyowa's composition patent on olopatadine, the active agent in~~ ~~Patanol~~®. The 30-month period after which the FDA could have approved Barr's generic product would have expired at the end of March 2010. Trial was scheduled for late April 2010. However, in September 2009, Barr withdrew its ANDA and subsequently was dismissed from the suit.

~~(4) The Barr ANDA on~~ ~~Pataday~~™ ~~is challenging the patent jointly owned by Kyowa and the Company, as well as two later issued patents owned by the Company that cover the~~ ~~Pataday~~™ formulation. In this ANDA, Barr is not challenging the Kyowa patent on olopatadine that expires in December 2010 (effectively extended until June 18, 2011 by a pediatric extension). Of the two patents owned solely by the Company, the latest expiry date is November 2023. The 30-month period after which the FDA could approve Barr's generic product should expire in May 2011 but is of no practical effect in view of the unchallenged Kyowa patent, the term of which extends until June 2011.

~~(5) Like Barr's ANDA on~~ ~~Pataday~~™~~, the Apotex ANDA on~~ ~~Pataday~~™ ~~is challenging the patent jointly owned by Kyowa and the Company, as well as two later issued patents owned by the Company that cover the~~ ~~Pataday~~™ formulation. Apotex is not challenging the Kyowa patent on olopatadine that expires in December 2010 (June 2011 with the pediatric extension). If Apotex succeeds in overcoming both of the challenged patents and secures FDA approval, then after the expiration of Barr's potential 180-day "first filer" exclusivity period, it would be entitled to begin selling a generic olopatadine product that would compete with the Company's ~~Pataday~~™ ~~product in the United States.~~

~~(6) Similar to the Apotex ANDA on~~ ~~Patanol~~®~~, the Sandoz Inc. (an affiliate of Novartis) ANDA on~~ ~~Patanol~~® is challenging only the patent jointly owned by Kyowa and the Company, but not the Kyowa-owned patent on olopatadine, which expires December 2010 (June 2011 with pediatric extension). Trial was scheduled for April 26, 2010, and consolidation with the above-described Apotex suit (~~Patanol~~®) was ordered by the court. Apotex advised the court of public statements of intent by Novartis to acquire all outstanding shares of Alcon stock, and filed a motion to sever Sandoz from the trial. On February 22, 2010, the court granted the motion, ordering the suit against Sandoz to proceed separately and confirming the April 26, 2010 trial date with Apotex. A new trial date for the Sandoz case has not yet been set. At the request of Sandoz, the court has stayed the litigation against Sandoz until November 2010, and Sandoz has requested a six-month extension of that stay.

~~The Sandoz Inc. ANDA on~~ ~~Pataday~~™ ~~is challenging the patent jointly owned by Kyowa and the Company (described above), as well as two later issued patents owned by the Company that cover the~~ ~~Pataday~~™ formulation. Of the Company's two patents, the latest expiry date is November 2023. Sandoz is not challenging the Kyowa patent on olopatadine that expires in December 2010 (effectively extended until June 2011 by a pediatric extension). On January 27, 2010, Alcon and Kyowa filed suit in the Federal District Court in Indianapolis. This case was consolidated with the other ~~Pataday~~™ suits (Barr and Apotex, described above), but at the request of Sandoz, the court has stayed the litigation against Sandoz until November 2010. Sandoz has requested a six-month extension of that stay.

~~F-56~~

~~(7) The Sandoz Canada Inc. Abbreviated New Drug Submission (ANDS) is challenging only one of the two patents listed in the Canadian Patent Register for the~~ ~~Patanol~~® ~~product. The challenged patent (Canadian Patent No.~~ ~~2,195,094) is jointly owned by Kyowa and the Company and expires in May 2016. Trial had been scheduled for March 7, 2011, but was postponed by the court with no new trial having been set.~~

~~(8)~~ ~~In June 2010, Alcon announced its plans to discontinue~~ ~~TRAVATAN~~® ~~in the United States. Therefore, competition from generic versions of~~ ~~TRAVATAN~~® ~~would not be expected to impact significantly the Company's sales and profits. Apotex then withdrew its ANDA on~~ ~~TRAVATAN~~® ~~and was dismissed from the suit in July 2010. In November 2010, Barr advised that it too was withdrawing its ANDA on~~ ~~TRAVATAN~~®~~. That leaves Par as the effective first filer for both~~ ~~TRAVATAN~~® ~~and~~ ~~TRAVATAN~~ Z®~~. If Par succeeds in overcoming all of the challenged patents and/or secures FDA approval, it would be entitled to begin selling a generic travoprost product that would compete with the Company's~~ ~~TRAVATAN Z~~® product in the United States in December 2011. Such competition would be expected to impact significantly the Company's sales and profits. Another Alcon patent application is pending that, if granted, would have an expiration date in 2027.

~~(9) Apotex, Inc. notified Alcon Canada that Apotex had filed an ANDS seeking approval from the Canadian Minister of Health to market a generic version of the Company's~~ ~~Patanol~~® ~~product. The Apotex ANDS is challenging only one of the two patents listed in the Canadian Patent Register for the~~ ~~Patanol~~® product. The challenged patent (Canadian Patent No. 2,195,094) is jointly owned by Kyowa and the Company and expires in May 2016. The Company and Kyowa, by timely initiating this action, are entitled to a 24-month delay (until April 2012) in the regulatory approval from the Minister of Health, which can only be shortened if the litigation is earlier resolved or the court modifies the 24-month stay on such approval. Should Apotex succeed in overcoming the challenged patent and secure Minister of Health approval, it would be entitled to begin selling a generic olopatadine product that would compete with the Company's ~~Patanol~~® ~~product in Canada well before the patent expiration in 2016, but not before expiration of the unchallenged patent in November 2012.~~

~~The Company is also enforcing patents against generic challengers in China (Patanol~~®~~) and Chile (Vigamox~~®).

On April 16, 2008, Synergetics USA, Inc., a microsurgical device company, filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against the Company and its subsidiary, Alcon Laboratories, Inc. Synergetics asserted damages that it claimed could exceed $100. In 2008 and 2009, subsidiaries of the Company filed two suits against Synergetics for patent infringement in the U.S. District Court for the Northern District of Texas in Fort Worth. Synergetics answered the complaints. A series of counterclaims and motions followed. On April 23, 2010, the parties entered a Confidential Settlement and License Agreement together with a Supply Agreement. Under the agreements, Alcon paid $32 in exchange for worldwide rights to sell Synergetics patented vitreoretinal products. The products will be manufactured by Synergetics and supplied to Alcon. The agreements also settled all pending litigation between Alcon and Synergetics, including both the antitrust and the patent litigation, and provide a process for future dispute resolution.

On December 18, 2008, James M. Nielsen, M.D. filed a patent infringement suit against Alcon, Inc. and Alcon Laboratories, Inc. in the U.S. District Court for the Northern District of Texas in Dallas. Dr. Nielsen is asserting that his U.S. Patent No. 5,158,572 entitled "Multifocal Intraocular Lens" is being infringed by the Company's ~~AcrySof~~® ~~ReSTOR~~® intraocular lens. The patent, which expired at the end of October 2009, was previously licensed to Advanced Medical Optics, Inc. The Company filed its Answer January 12, 2009. The Answer included a counterclaim for a declaratory judgment that the patent-in-suit is invalid and not infringed. The case had been set for trial in August 2010 but has been postponed. No new trial date has been set. Summary judgment motions were filed by both parties January 7, 2011. Alcon is seeking summary judgment of noninfringement, invalidity and laches, while Dr. Nielsen is seeking partial summary judgment on invalidity and laches/estoppels. On January 10, 2011, the court ordered that both parties' motions be stricken and refiled in a "cross-motion" format, the briefing for which was extended by the court until the end of March 2011. An adverse ruling by the court, while possible, would not be expected to impact significantly the Company's sales and profits.

On January 22, 2009, Elan Pharma International Ltd. sued two of the Company's subsidiaries, Alcon Laboratories, Inc. and Alcon Research, Ltd., in the U.S. District Court for the Eastern District of Texas in Sherman, alleging infringement of two Elan patents on nanoparticle technology (U.S. Patent Nos. 5,298,262 and 5,429,842).

~~F-57~~

~~The complaint claims that the Company's~~ ~~Azopt~~® ~~product and, potentially, other products infringe the two patents. The Company answered and counterclaimed on May 12, 2009. Elan then moved to dismiss certain of the~~ Company's affirmative defenses and counterclaims. The Company has filed an amended answer and counterclaims providing greater detail with respect to the Company's inequitable conduct counterclaims. The case has been set for trial on October 17, 2011. The Company believes that it has strong defenses and intends to defend itself vigorously. An adverse ruling by the court, however, could impact significantly the Company's sales and profits.

The Company and its subsidiaries are parties to a variety of other legal proceedings arising out of the ordinary course of business, including proceedings relating to product liability and patent infringement. The Company believes that it has valid defenses and is vigorously defending the litigation pending against it.

While the results of the aforementioned contingencies cannot be predicted with certainty, management believes that the ultimate liability, if any, will not have a material adverse effect on the Company's consolidated financial position or results of operations. Litigation contingencies are subject to change based on settlements and court decisions.

The Company may be subject to future litigation and infringement claims, which could cause the Company to incur significant expenses or prevent the Company from selling its products. The Company operates in an industry susceptible to significant product liability claims. Product liability claims may be asserted against the Company in the future arising out of events not known to the Company at the present time.

~~The Company self-insures through captive insurance subsidiaries almost all of its property, business interruption and liability risks.~~

The Company was self-insured through its captive insurance subsidiary for damages incurred prior to 2006 at one of its sales and distribution facilities and was involved in legal proceedings to seek recovery of its losses and other incremental operating costs from the third parties responsible for the damages. In December 2008, the captive insurance subsidiary settled its claim against the third parties involved. Since no recovery had been recorded previously, the Company recognized a gain in the fourth quarter of 2008 related to the settlement of $15 ($3 in cost of goods sold and $12 in selling, general and administration expenses).

In the normal course of business, the Company has entered into research and development arrangements with third parties that require milestone and royalty payments to the third parties contingent upon certain future events linked to the success of the research and development efforts.

During 2008, Lehman Brothers International (Europe) London filed for administration in England. At that time, the Company's cash and cash equivalents included $707 of short term securities held in a segregated custodial account of Lehman Brothers International (Europe) London pursuant to a Custody Agreement. Nestlé invoiced the Company in December 2008 and, in 2009, the Company reimbursed Nestlé, for a total of $5 in fees paid by Nestlé to the Joint Administrators of Lehman Brothers International (Europe) London (in administration) related to the release of the short-term securities held in the custodial account. This amount of fees is subject to adjustment depending on the final costs incurred to settle the administration of Lehman Brothers International (Europe) London. In order to receive an expedited return of assets held by Lehman Brothers International (Europe) (in administration), Alcon has agreed to return any assets which the Joint Administrators determine should not have been disbursed in settlement. The amount of any funds to be returned, if any, would result from the determination by the Joint Administrators that the rights of another claimant in the proceeding have precedence over the Company's claim.

~~Commitments~~

The Company leases certain facilities and equipment under operating leases. The total costs of operating leases (inclusive of any adjustments associated with escalating rent, rent holidays, contingent rent or rent concessions) are expensed ratably over the life of the operating lease. Leasehold incentives are capitalized and amortized over the shorter of the life of the lease or the associated asset. Lease expense incurred was $73, $66 and $77 during 2010, 2009 and 2008, respectively. Future minimum aggregate lease payments under noncancelable operating leases with a term of more than one year were as follows:

~~F-58~~

Year Amount

2011                                                                                              $ 67
2012                                                                                              50
2013                                                                                              37
2014                                                                                              24
2015                                                                                              21
Thereafter                                                                                              81

Total minimum lease payments                                                                                         $ 280

The Company has entered into various fixed and variable purchase commitments and license agreements, requiring future minimum royalties, through 2021. All commitments are expected to be fulfilled with no adverse consequences to the Company's operations or financial condition. The total unconditional fixed purchase obligations and future minimum royalties at December 31, 2010 were as follows:

Year Amount

2011                                                                                              $ 41
2012                                                                                              21
2013                                                                                              9
2014                                                                                              2
2015                                                                                              1
Thereafter                                                                                              2

Total                                                                                         $ 76

Total payments related to the above unconditional purchase commitments and license agreements for the years ended December 31, 2010, 2009 and 2008 were $93, $63 and $97 respectively. In addition, at December 31, 2010, the Company had entered into various contracts with suppliers to purchase raw materials contingent upon forecasted purchases and other manufacturing requirements.

At December 31, 2010, the Company had guaranteed $7 of debt for certain customers. At December 31, 2010, the Company had outstanding letters of credit of $27. The letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions. Additionally, the Company guaranteed $33 to a third party reinsurer for the Company's captive insurance subsidiaries.

~~(18)~~

~~Acquisitions~~

~~LenSx Lasers, Inc.~~

~~Acquisition in 2010~~

On August 18, 2010, the Company acquired 100% of the outstanding common shares of LenSx Lasers, Inc. LenSx is a privately held company that has developed the first femtosecond laser to receive U.S. Food and Drug Administration clearance for use as a complimentary technology in cataract surgery. The ~~LenSx~~® laser will enable surgeons to perform specific steps of the traditional cataract procedure with micron-level laser precision, including anterior capsulorhexis, phacofragmentation and the creation of certain corneal incisions. Previously these steps were done manually with surgical instruments.

~~F-59~~

The Company paid approximately $367 in cash at closing to LenSx shareholders for their shares and agreed to maximum contingent payments of approximately $383 based upon the achievement and over-achievement of future femtosecond unit and procedure fee revenue milestones.

~~Between the acquisition date and December 31, 2010, LenSx had no revenues and its expenses were not significant.~~

~~The following table summarizes the components of the LenSx purchase price:~~

Cash paid for LenSx shares $ 367
Cash paid to a LenSx shareholder for intangible asset integral to the purchase 12
Estimated fair values of future contingent payments 72
Total purchase price $ 451

The Company engaged a third-party valuation firm to assist it in determining the estimated fair values of identifiable intangible assets and future contingent payments. Such a valuation requires significant estimates and assumptions including but not limited to estimating future cash flows and developing appropriate discount rates. The Company is continuing to obtain information and evaluate these fair value estimates. The Company's fair value estimates for these components of the transaction may change during the allowable allocation period, which is typically up to one year from the acquisition date.

~~Fair Values of Future Contingent Payments~~

In addition to the cash paid to the shareholders of LenSx at the time of the acquisition, the Company is obligated to make contingent payments of up to $383 based upon the achievement of certain sales objectives through 2015. The fair values of these payments were estimated to be $72 and were included as a cost of the acquisition.

There are a number of milestones that could potentially lead to such payments to the former shareholders of LenSx. This valuation was based on the Company's estimates of the probability and timing of these contingent payments. The fair value measurement was based on significant inputs not observable in the market and thus represents a Level 3 measurement, as described in note 5. Objectives and milestones were assigned individual probabilities based on the respective current status. The resultant probability-weighted cash flows were then discounted using a discount rate of 4.5%, which the Company believes is appropriate and representative of a market participant assumption. The probabilities assigned to payment streams ranged from 10% to 65%. An increase or decrease of 10 percentage points in the probability assumptions would result in an adjustment to the estimated value of approximately $6.

The fair values of these contingent payments will be reviewed on a periodic basis. Any future changes in this estimated value not associated with the original purchase price valuation will be recorded in the Company's results of operations.

~~Purchase Price Allocation~~

The allocation of purchase price for acquisitions requires use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired, including in process research and development, and liabilities assumed based on their respective fair values. Additionally, the Company must determine whether an acquired entity is considered to be a business or a set of net assets, because a portion of the purchase price can only be allocated to goodwill in connection with the acquisition of a business. The Company believes that LenSx's use of inputs and processes qualify it as the acquisition of a business.

~~The LenSx purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.~~

~~F-60~~

~~The valuation of these assets requires significant estimates and assumptions including but not limited to estimating future cash flows and developing appropriate discount rates.~~

~~The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill.~~

The Company believes the estimated fair values assigned to the assets acquired and liabilities assumed were based on reasonable assumptions. The following table summarizes the estimated fair values of net assets acquired:

Current assets $ 10
Property, plant and equipment 2
Identifiable intangible assets 433
Goodwill 133
Long term deferred income tax assets 32
Accounts payable and accrued liabilities (2 )
Long term deferred income tax liabilities (157 )

Net assets acquired $ 451

~~The Company's fair value estimates for the purchase price allocation may change during the allowable allocation period, which is typically up to one year from the acquisition date.~~

~~Identifiable Intangible Assets~~

Acquired identifiable intangible assets include rights for the use of proprietary technologies for the development of products. The estimated amortization period is 15 years based on the projected useful life of the products developed by the use of the technology.

The estimated fair value of the acquired intangible assets was determined based on the use of a discounted cash flow model using an income approach for products developed from the acquired technology. Estimated revenues were probability adjusted to take into account the stage of completion and the risks surrounding successful development and commercialization. The estimated after-tax cash flows were then discounted to a present value using discount rates appropriate for the risks associated with these projects.

~~Goodwill~~

Goodwill represents the excess of the LenSx purchase price over the sum of the amounts assigned to assets acquired less liabilities assumed. The Company believes that the acquisition of LenSx provides the Company access to improved technology and a highly trained LenSx work force as of the acquisition date.

The Company believes that these factors support the $133 of goodwill recognized as a result of the purchase price paid for LenSx. The goodwill was allocated between the two business segments based on the acquisition models' projected revenues. The goodwill acquired in the LenSx acquisition is not expected to be deductible for tax purposes.

~~ESBATech AG~~

~~Acquisition in 2009~~

On September 15, 2009, the Company completed the acquisition of ESBATech AG, a Swiss biotechnology company. Alcon paid ESBATech shareholders $150 in cash at closing. In addition, the Company recorded the estimated fair value of possible contingent payments of up to $439 based upon the achievement of future research and development milestones that would be expected to create value for Alcon. ESBATech is a clinical-stage biotechnology company that has been developing a pipeline of proprietary single-chain antibody fragment

~~F-61~~

~~therapeutics for topical and local delivery for safe and convenient therapy. This acquisition provides the Company with additional research and development capabilities.~~

~~The following table summarizes the components of the ESBATech purchase price:~~

Cash paid for ESBATech shares $ 150
Estimated fair values of future contingent payments 71

Total purchase price $ 221

The Company engaged a third-party valuation firm to assist it in determining the estimated fair values of in process research and development, identifiable intangible assets and certain tangible assets as well as the future contingent payments. Such a valuation requires significant estimates and assumptions including but not limited to determining the timing and estimated costs to complete the in process projects, projecting regulatory approvals, estimating future cash flows, and developing appropriate discount rates.

~~Fair Values of Future Contingent Payments~~

In addition to the cash paid to the shareholders of ESBATech at the time of the acquisition, the Company is obligated to make contingent payments of up to $439 based upon the achievement of future research and development milestones that would be expected to create value for Alcon. The fair values of these payments were estimated to be $71 and were included as a cost of the acquisition.

There are a number of milestones that could potentially lead to such payments to the former shareholders of ESBATech. This valuation was based on the Company's estimates of the probability and timing of these contingent payments. The fair value measurement was based on significant inputs not observable in the market and thus represents a Level 3 measurement, as described in note 5. Each milestone was assigned a probability based on its current status. The resultant probability-weighted cash flows were then discounted using a discount rate of 6%, which the Company believes is appropriate and representative of a market participant assumption. The probabilities assigned to payment streams ranged from 5% to 39%. An increase or decrease of 10 percentage points in the probability assumptions would result in an adjustment to the estimated value of approximately $30.

~~Purchase Price Allocation~~

The allocation of purchase price for acquisitions requires use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired, including in process research and development, and liabilities assumed based on their respective fair values. Additionally, the Company must determine whether an acquired entity is considered to be a business or a set of net assets, because a portion of the purchase price can only be allocated to goodwill in connection with the acquisition of a business. The Company believes that ESBATech's use of inputs and processes qualify it as the acquisition of a business.

~~The ESBATech purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date.~~

The valuation of these assets requires significant estimates and assumptions including but not limited to determining the timing and estimated costs to complete the in process projects, projecting regulatory approvals, estimating future cash flows, and developing appropriate discount rates.

~~The excess of the purchase price over the fair value of net assets acquired was allocated to goodwill.~~

~~The Company believes the estimated fair values assigned to the assets acquired and liabilities assumed were~~

~~F-62~~

~~based on reasonable assumptions. The following table summarizes the estimated fair values of net assets acquired:~~

Current assets $ 1
Property, plant and equipment 2
Identifiable intangible assets 77
In process research and development 104
Goodwill 40
Long term deferred income tax assets 40
Accounts payable and accrued liabilities (2 )
Long term deferred income tax liabilities (40 )
Other long term liabilities (1 )

Net assets acquired $ 221

~~Identifiable Intangible Assets~~

Acquired identifiable intangible assets include rights for the use of proprietary technologies for the development of ophthalmic pharmaceuticals. The estimated amortization period is 20 years based on the projected useful life of the products developed by the use of the technology.

~~In Process Research and Development~~

~~In conjunction with the ESBATech acquisition, the Company allocated $104 of the acquisition price to acquire in process research and development assets.~~

These in process research and development assets are comprised of projects to develop technologies in the field of ophthalmic pharmaceuticals. These assets were in an early stage of development as of the ESBATech acquisition date of September 15, 2009.

The estimated fair value of the in process research and development assets was determined based on the use of a discounted cash flow model using an income approach for the acquired technologies. Estimated revenues were probability adjusted to take into account the stage of completion and the risks surrounding successful development and commercialization. The estimated after-tax cash flows were then discounted to a present value using discount rates appropriate for the risks associated with these projects.

The major risks and uncertainties associated with the timely and successful completion of the acquired in process projects consist of the ability to confirm the safety and efficacy of the technology based on further research, the data from clinical trials, if necessary, and obtaining necessary regulatory approvals. No assurance can be given that the underlying assumptions used to forecast the cash flows or the timely and successful completion of the projects will materialize as estimated, if at all. For these reasons, among others, actual results may vary significantly from estimated results.

~~F-63~~

~~Goodwill~~

Goodwill represents the excess of the ESBATech purchase price over the sum of the amounts assigned to assets acquired less liabilities assumed. The Company believes that the acquisition of ESBATech provides the Company access to improved technology and a highly trained ESBATech work force as of the acquisition date.

The Company believes that these factors support the $40 of goodwill recognized as a result of the purchase price paid for ESBATech. The goodwill was allocated between the two business segments based on the acquisition models' projected revenues, as shown in note 6, "Intangible Assets and Goodwill." The goodwill acquired in the ESBATech acquisition is expected to be deductible for tax purposes.

~~(19)~~

~~Unaudited Quarterly Information~~

Three Months Ended
March 31, June 30, September 30, December 31,

2010
Sales                                                     $ 1,721 $ 1,886 $ 1,760 $ 1,812
Operating income                                                     653 751 495 576
Net earnings                                                     573 670 446 521

Basic earnings per common share $ 1.91 $ 2.23 $ 1.48 $ 1.72
Diluted earnings per common share $ 1.89 $ 2.21 $ 1.47 $ 1.71

2009

Sales                                                     $ 1,493 $ 1,677 $ 1,614 $ 1,715
Operating income                                                     514 632 578 537
Net earnings                                                     452 582 515 458

Basic earnings per common share $ 1.51 $ 1.95 $ 1.72 $ 1.53
Diluted earnings per common share $ 1.51 $ 1.94 $ 1.71 $ 1.51

Quarterly sales trends reflect seasonality in several products, including ocular allergy and otic products, in the form of increased sales during the spring months, which occur during the second quarter in the northern hemisphere.

During the three months ended March 31, 2010, advancements in its sales reporting system permitted the Company to better estimate allowable deductions from sales in the calculation of accrued royalties. This change in estimate resulted in a $24 addition to operating income during the period. However, the U.S. enactment of the Health Care and Education Reconciliation Act of 2010 caused a $25 write-off of deferred tax assets, reducing net earnings in the three months ended March 31, 2010.

In the three months ended March 31, 2010, June 30, 2010, September 30, 2010 and December 31, 2010, the Company incurred pretax expenses totaling $4, $4, $133 and $11, respectively, for costs related to the change of majority ownership discussed in note 16, other costs to support Alcon's board of directors in its evaluation of Novartis's merger proposal, and certain costs related to integration as a subsidiary of Novartis.

Operating income and net earnings in 2009 included costs related to a staffing reduction of approximately 260 employee positions of $18 in the three months ended March 31, 2009 and of $1 in the three months ended September 30, 2009.

~~Net earnings in the three months ended December 31, 2009 included $30 in additional tax reserves from new information related to prior years' provisions.~~

~~F-64~~

~~Operating income and net earnings after September 15, 2009 reflect the operations of ESBATech subsequent to its acquisition effective September 15, 2009, as discussed in note 18.~~

~~F-65~~


☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) ~~OR (g)~~or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR
XOR
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended ~~DECEMBER~~December 31, ~~2010~~2021
		OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR For the transition period from __________ to __________
OR
☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring the shell company report __________

	~~SEQUENTIAL~~
INDEX		~~PAGE~~	Page
~~INTRODUCTION AND USE OF CERTAIN TERMS~~ Introduction and Use of Certain Terms			3 1
~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS~~ Market Information			6 1
~~PART I~~ Special Note About Forward-Looking Statements			7 2
~~ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS~~				7PART I
~~ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE~~ Item 1.		7Identity of Directors, Senior Management and Advisers	4
~~ITEM 3. KEY INFORMATION~~ Item 2.		8Offer Statistics and Expected Timetable	5
~~ITEM 4. INFORMATION ON THE COMPANY~~ Item 3.		22Key Information	6
~~ITEM 4A. UNRESOLVED STAFF COMMENTS~~ Item 4.		51Information on the Company	26
~~ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS~~ Item 4A.		52Unresolved Staff Comments	50
~~ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES~~ Item 5.		82Operating and Financial Review and Prospects	51
~~ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS~~Item 6.		~~103~~Directors, Senior Management and Employees	77
~~ITEM 8. FINANCIAL INFORMATION~~ Item 7.		~~110~~Major Shareholders and Related Party Transactions	135
~~ITEM 9. THE OFFER AND LISTING~~ Item 8.		~~117~~Financial Information	136
~~ITEM 10. ADDITIONAL INFORMATION~~ Item 9.		~~119~~The Offer and Listing	138
~~ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Item 10.		~~135~~Additional Information	139
~~ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES~~Item 11.		~~137~~Quantitative and Qualitative Disclosures About Market Risk	146
~~PART II~~ Item 12.		~~138~~Description of Securities Other than Equity Securities	147
~~ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES~~				~~138~~PART II
~~ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS~~ Item 13.		~~138~~Defaults, Dividend Arrearages and Delinquencies	148
~~ITEM 15. CONTROLS AND PROCEDURES~~ Item 14.		~~138~~Material Modifications to the Rights of Security Holders and Use of Proceeds	149
~~ITEM 16. [RESERVED]~~ Item 15.		~~138~~Controls and Procedures	150
~~ITEM~~Item 16A. ~~AUDIT COMMITTEE FINANCIAL EXPERT~~		~~138~~Audit Committee and Financial Expert	151
~~ITEM~~Item 16B. ~~CODE OF ETHICS~~		~~138~~Code of Ethics	151
~~ITEM~~Item 16C. ~~PRINCIPAL ACCOUNTANT FEES AND SERVICES~~		~~139~~Principal Accountant Fees and Services	151
~~ITEM~~Item 16D. ~~EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES~~		~~140~~ Exemptions from the Listing Standards for Audit Committees	152
~~ITEM~~Item 16E. ~~PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS~~		~~140~~Purchases of Equity Securities by the Issuer and Affiliated Purchasers	152
~~ITEM~~Item 16F. ~~CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT~~		~~141~~Change in Registrant's Certifying Accountant	152
~~ITEM~~Item 16G. ~~CORPORATE GOVERNANCE~~		~~141~~Corporate Governance	153
~~PART III~~ Item 16H.		~~143~~Mine Safety Disclosure	153
~~ITEM 17. FINANCIAL STATEMENTS~~ Item 16I.		~~143~~Disclosure regarding Foreign Jurisdictions that Prevent Inspections	154
~~ITEM 18. FINANCIAL STATEMENTS~~				~~143~~PART III
~~ITEM 19. EXHIBITS~~ Item 17.		~~144~~Financial Statements	155
Item 18.		Financial Statements	~~SIGNATURES~~155
~~146~~Item 19.		Exhibits	156
Consolidated Financial Statements of Alcon Inc.			F-1

~~Product Brand Name~~	~~Referenced Product~~
~~A-OK~~®	~~A-OK~~® ~~ophthalmic knives~~
~~Accurus~~®	~~Accurus~~® ~~surgical system~~
~~AcrySof~~®	~~AcrySof~~® ~~intraocular lens~~
~~AcrySof~~®~~CACHET~~™	~~AcrySof~~®~~CACHET~~™ ~~phakic lens~~
~~AcrySof~~®IQ	~~AcrySof~~®IQ ~~intraocular lens~~
~~AcrySof~~®~~IQ ReSTOR~~®	~~AcrySof~~®~~IQ ReSTOR~~® ~~intraocular lens~~
~~AcrySof~~®~~IQ ReSTOR~~®~~Multifocal Toric~~	~~AcrySof~~®~~IQ ReSTOR~~® ~~Multifocal Toric~~ ~~intraocular lens~~
~~AcrySof~~®~~IQ ReSTOR~~® ~~+3.0~~	~~AcrySof~~®~~IQ ReSTOR~~®~~+3.0~~ ~~intraocular lens~~
~~AcrySof~~®~~IQ Toric~~	~~AcrySof~~®~~IQ Toric~~ ~~intraocular lens~~
~~AcrySof~~®~~Natural~~	~~AcrySof~~®~~Natural~~ ~~intraocular lens~~
~~AcrySof~~® ~~ReSTOR~~®	~~AcrySof~~® ~~ReSTOR~~® ~~intraocular lens~~
~~AcrySof~~® ~~ReSTOR~~®~~Toric~~	~~AcrySof~~® ~~ReSTOR~~®~~Toric~~ ~~intraocular lens~~
~~AcrySof~~®~~Toric~~	~~AcrySof~~®~~Toric~~ ~~intraocular lens~~
~~ALCON~~®	~~ALCON~~® ~~house trademark~~
~~ALLEGRETTO~~™	~~ALLEGRETTO~~™ ~~laser system~~
~~ALLEGRETTO~~™ ~~EX-400~~	~~ALLEGRETTO~~™~~EX-400~~ ~~laser~~
~~ALLEGRETTO~~™ ~~EX-500~~	~~ALLEGRETTO~~™~~EX-500~~ ~~laser~~
~~ALLEGRETTO WAVE~~® ~~Eye-Q~~	~~ALLEGRETTO WAVE~~® ~~Eye-Q~~ ~~400 Hz laser~~
~~ALLEGRO ANALYZER~~®	~~ALLEGRO ANALYZER~~® ~~wavefront system~~
~~ALLEGRO~~™	~~ALLEGRO~~™ ~~biometry system~~
~~ALLEGRO OCULYZER~~®	~~ALLEGRO OCULYZER~~® ~~pentacam diagnostic device~~
~~ALLEGRO TOPOLYZER~~®	~~ALLEGRO TOPOLYZER~~® ~~corneal topography system~~
~~AquaLase~~®	~~AquaLase~~® ~~liquefaction device~~
~~AZARGA~~®	~~AZARGA~~® ~~ophthalmic suspension~~
~~Azopt~~®	~~Azopt~~® ~~ophthalmic suspension~~
~~Betoptic S~~®	~~Betoptic S~~® ~~ophthalmic suspension~~
~~BSS Plus~~®	~~BSS Plus~~® ~~irrigating solution~~
~~CiloDex~~®	~~CiloDex~~® ~~otic solution~~
~~CIPRODEX~~®*	~~CIPRODEX~~® ~~otic suspension~~
~~Cipro~~®HC*	~~Cipro~~®HC ~~Otic~~
~~CONSTELLATION~~®	~~CONSTELLATION~~® ~~vitreoretinal system~~
~~Custom Pak~~®	~~Custom Pak~~® ~~surgical procedure packs~~
~~DisCoVisc~~®	~~DisCoVisc~~® ~~viscosurgical device~~
~~DuoTrav~~® ~~(EU)~~	~~DuoTrav~~® ~~ophthalmic solution~~
~~DuoTrav~~®~~APS~~ ~~(EU)~~	~~DuoTrav~~®~~APS~~ ~~ophthalmic solution~~
~~DuoVisc~~®	~~DuoVisc~~® ~~viscoelastic system~~
~~DUREZOL~~®	~~DUREZOL~~® ~~ophthalmic emulsion/steroid~~
~~EXPRESS~~®	~~EXPRESS~~® ~~contact lens care solutions~~
~~EX-PRESS~~®	~~EX-PRESS~~® ~~glaucoma filtration device~~
~~Grieshaber~~®	~~Grieshaber~~® ~~surgical instruments~~
~~ICAPS~~®	~~ICAPS~~® ~~dietary supplements~~
~~Infiniti~~®	~~Infiniti~~® ~~vision system~~
~~Laureate~~®	~~Laureate~~® ~~compact phacoemulsification system~~
~~LEGACY~~®	~~LEGACY~~® ~~surgical system~~
~~LenSx~~®	~~LenSx~~® ~~laser system~~
~~Maxitrol~~®	~~Maxitrol~~® ~~ophthalmic suspension or ointment~~
~~Moxeza~~™*	~~Moxeza~~™ ~~0.5% ophthalmic solution~~

~~Product Brand Name~~	~~Referenced Product~~
~~NEVANAC~~®	~~NEVANAC~~® ~~ophthalmic suspension~~
~~Opatanol~~® ~~(EU)~~	~~Opatanol~~® ~~ophthalmic solution~~
~~OPTI-FREE~~®	~~OPTI-FREE~~® ~~contact lens care solutions~~
~~OPTI-FREE~~® ~~EVERMOIST~~™	~~OPTI-FREE~~® ~~EVERMOIST~~™ ~~multi-purpose disinfecting solution~~
~~OPTI-FREE~~®~~EXPRESS~~®~~No-Rub~~®	~~OPTI-FREE~~®~~EXPRESS~~®~~No-Rub~~® ~~contact lens care solution~~
~~OPTI-FREE~~®~~RepleniSH~~®	~~OPTI-FREE~~®~~RepleniSH~~® ~~multi-purpose disinfecting solution~~
~~OZil~~®	~~OZil~~® ~~torsional hand piece/technology~~
~~Pataday~~™	~~Pataday~~™ ~~ophthalmic solution~~
~~Patanase~~®	~~Patanase~~® ~~nasal spray~~
~~Patanol~~®	~~Patanol~~® ~~ophthalmic solution~~
~~Perfluoron~~®	~~Perfluoron~~® ~~perfluoro-n-octane liquid~~
~~ProVisc~~®	~~ProVisc~~® ~~ophthalmic viscosurgical device~~
~~Silikon~~®	~~Silikon~~® ~~ophthalmic surgical oil~~
~~SOFZIA~~®	~~SOFZIA~~® ~~preservative system~~
~~Systane~~®	~~Systane~~® ~~lubricant eye drops~~
~~Systane~~®~~Balance~~	~~Systane~~®~~Balance~~ ~~lubricant eye drops~~
~~Systane~~®~~Ultra~~	~~Systane~~®~~Ultra~~ ~~lubricant eye drops~~
~~Tears Naturale~~®	~~Tears Naturale~~® ~~lubricant eye drops~~
~~TobraDex~~®	~~TobraDex~~® ~~ophthalmic suspension or ointment~~
~~TobraDex~~®ST	~~TobraDex~~®ST ~~ophthalmic suspension~~
~~Tobrex~~®	~~Tobrex~~® ~~ophthalmic solution or ointment~~
~~TRAVATAN~~®	~~TRAVATAN~~® ~~ophthalmic solution~~
~~TRAVATAN~~®~~APS~~	~~TRAVATAN~~®~~APS~~ ~~ophthalmic solution~~
~~TRAVATAN~~Z®	~~TRAVATAN~~Z® ~~ophthalmic solution~~
~~TRIESENCE~~®	~~TRIESENCE~~® ~~injectable suspension~~
~~Vegamox~~®* (Japan)	~~Vegamox~~® ~~ophthalmic solution~~
~~Vigadexa~~®	~~Vigadexa~~® ~~ophthalmic solution~~
~~Vigamox~~®*	~~Vigamox~~® ~~ophthalmic solution~~
~~VISCOAT~~®	~~VISCOAT~~® ~~ophthalmic viscosurgical device~~
~~WaveLight~~®	~~WaveLight~~® ~~refractive suite~~

~~Term~~	~~Definition~~
~~Affordable Care Act~~	~~Health Care and Education Reconciliation Act of 2010~~
~~AMD~~	~~Age-related macular degeneration~~
~~ANDA~~	~~Abbreviated New Drug Application~~
~~ANDS~~	~~Abbreviated New Drug Submission~~
~~AOMT~~	~~Otitis media in the presence of tympanostomy tubes~~
~~AREDS~~	~~National Eye Institute's Age Related Eye Disease Study~~
~~ASC~~	~~Accounting Standards Codification~~
~~ASERP~~	~~Alcon Supplemental Executive Retirement Plan~~
~~BAC~~	~~Benzalkonium chloride~~
~~CEO~~	~~Chief Executive Officer~~
~~CMS~~	~~The Centers for Medicare and Medicaid Services~~
~~CP Program~~	~~Alcon's Commercial Paper Program~~
~~(the) Company~~	~~Alcon, Inc. and its subsidiaries~~
~~DCP~~	~~Alcon Executive Deferred Compensation Plan~~
~~DTC~~	~~Depository Trust Company~~
~~EPS~~	~~Earnings Per Share~~
~~ESCP~~	~~Alcon's Executive Salary Continuation Plan~~
EU	~~European Union~~
~~EUCMS~~	~~Concerned member state of the European Union~~
~~Evaluation Date~~	~~End of the period covered by this annual report~~
~~Exchange Act~~	~~U.S. Securities Exchange Act of 1934~~
~~External auditors~~	~~The primary Alcon Group external auditors and additional external auditors specific to the Company subsidiary~~
~~FASB~~	~~Financial Accounting Standards Board~~
~~FDA~~	~~United States Food and Drug Administration~~
~~FDAAA~~	~~Food and Drug Administration Amendments Act of 2007~~
~~FTC~~	~~U.S. Federal Trade Commission~~
~~IFRS~~	~~International Financial Reporting Standards~~
~~IPO~~	~~The initial public offering of approximately 69,750,000 of Alcon, Inc.'s common shares on March 20, 2002~~
~~IRB~~	~~Institutional Review Board~~
~~IRC~~	~~U.S. Internal Revenue Code~~
~~LASIK~~	~~Laser-Assisted In Situ Keratomileusis~~
~~MGD~~	~~Meibomian gland dysfunction~~
~~NDA~~	~~New Drug Application~~
~~Non-U.S. Holder~~	~~A holder that is not a U.S. Holder (see definition of U.S. Holder below)~~
~~NSAID~~	~~Non-steroidal anti-inflammatory drug~~
~~NYSE~~	~~New York Stock Exchange~~
~~OTC~~	~~Over-the-Counter drugs available without a prescription~~
~~PMA~~	~~Pre-Market Approval~~
~~Purchase and Option Agreement~~	~~Purchase and Option Agreement between Nestlé S.A. and Novartis AG dated as of April 6, 2008~~
~~REMS~~	~~Risk evaluation and mitigation strategies discussed in the FDAAA~~
~~RMS~~	~~Reference member state of the European Union~~
~~RSU(s)~~	~~Restricted share unit(s)~~
~~SAB~~	~~Staff Accounting Bulletin published by the SEC~~
~~SEC~~	~~United States Securities and Exchange Commission~~
~~Second Stage Closing~~	~~The purchase and sale of Nestlé's remaining Alcon shares to Novartis under the Purchase and Option Agreement~~

~~Term~~	~~Definition~~
~~Securities Act~~	~~U.S. Securities Act of 1933, as amended~~
~~Separation Agreement~~	~~Separation Agreement between Nestlé and Alcon described in Item 7.B.5~~
~~Services Agreement~~	~~Guarantee Fee and Commercial Paper Program Services Agreement, as described in Item 7.B, "Related Party Transactions."~~
~~Shareholders Agreement~~	~~Shareholders Agreement between Nestlé and Novartis dated as of April 6, 2008~~
~~SSAR(s)~~	~~Share-settled stock appreciation right(s)~~
~~Swiss Holder~~	~~Security holder as defined in Item 10.E.~~
~~TSR~~	~~Total shareholder return~~
~~U.S. GAAP~~	~~United States generally accepted accounting principles~~
~~U.S. Holder~~	~~Security holder as defined in Item 10.E.~~
~~VHCA~~	~~Veterans Health Care Act~~

	Year Ended December 31,
		2010				2009			2008			2007			2006
		(in millions, except per share data)
Statement of Earnings Data:
Sales	$	7,179		$		6,499		$	6,294		$	5,599		$	4,897
Cost of goods sold		1,675				1,614			1,472			1,398			1,215

Gross profit		5,504				4,885			4,822			4,201			3,682
Selling, general and administrative		2,070				1,935			1,961			1,694			1,399
Research and development		747				665			619			564			512
In process research and development		--				--			--			9			--
Amortization of intangibles		60				24			29			51			199
Other operating expenses		152				--			--			--			--

Operating income		2,475				2,261			2,213			1,883			1,572
Interest income		29				46			76			69			74
Interest expense		(9	)			(16	)		(51	)		(50	)		(43	)
Other, net		32				22			(155)			27			14

Earnings before income taxes		2,527				2,313			2,083			1,929			1,617
Income taxes		317				306			36			343			269

Net earnings	$	2,210		$		2,007		$	2,047		$	1,586		$	1,348

Basic weighted-average common shares outstanding		301				299			298			298			304
Diluted weighted-average common shares outstanding		304				301			301			302			309
Basic earnings per common share	$	7.34		$		6.72		$	6.86		$	5.32		$	4.43
Diluted earnings per common share	$	7.27		$		6.66		$	6.79		$	5.25		$	4.37
Dividends paid on common shares	$	1,037		$		1,048		$	750		$	613		$	417
Dividends paid per common share: U.S. $	$	3.44		$		3.50		$	2.50		$	2.04		$	1.38
Dividends paid per common share: Swiss CHF	CHF	3.95		CHF		3.95		CHF	2. 63		CHF	2.50		CHF	1.68

Cash Flow Data:
Cash provided by (used in):
Operating activities	$	2,375		$		2,416		$	2,032		$	1,470		$	1,406
Investing activities		(1,705	)			(390	)		(365	)		(227	)		(166	)
Financing activities		(1,150	)			(1,481	)		(1,333	)		(607	)		(1,225	)

	At December 31,
		2010			2009				2008			2007			2006
Balance Sheet Data:	(in millions)
Current assets	$	6,069		$		5,833		$	5,219		$	4,825		$	3,462
Working capital		4,278				3,858			3,029			1,963			1,461
Total assets		10,073				8,686			7,551			7,016			5,427
Long term debt, net of current maturities		--				56			61			52			49
Total shareholders' equity		7,252				5,905			4,691			3,375			2,914

	Exchange Rate for 1 U.S. Dollar
Fiscal Year	Period End (1)	Average (1) (2)	High	Low

2006	1.2201	1.2529	1.3228	1.1923
2007	1.1335	1.2000	1.2535	1.0969
2008	1.0687	1.0824	1.2254	0.9844
2009	1.0352	1.0850	1.1852	0.9964
2010	0.9352	1.0423	1.1631	0.9352

	Exchange Rate for 1 U.S. Dollar
Month	Period End	Average	High	Low

September 2010	0.9825	1.0011	1.0198	0.9758
October 2010	0.9824	0.9688	0.9904	0.9530
November 2010	1.0034	0.9852	1.0036	0.9584
December 2010	0.9352	0.9670	1.0023	0.9352
January 2011	0.9440	0.9566	0.9737	0.9334
February 2011	0.9289	0.9494	0.9732	0.9264

	~~Ocular Anti-Infectives/~~
~~Glaucoma~~	~~Anti-Inflammatories~~	~~Ocular Allergy~~	~~Generics~~	~~Otic/Nasal~~
~~TRAVATAN~~® ~~TRAVATAN~~Z® ~~TRAVATAN~~® ~~APS~~ ~~DuoTrav~~® ~~AZARGA~~® ~~Azopt~~® ~~Betoptic S~~®	~~Vigamox~~®/~~Vegamox~~® ~~(1)~~ ~~Moxeza~~™~~(1)~~ ~~TobraDex~~® ~~TobraDex~~® ST ~~Tobrex~~® ~~NEVANAC~~® ~~Maxitrol~~® ~~DUREZOL~~®	~~Patanol~~®/~~Opatanol~~® ~~Pataday~~™	~~Timolol GFS~~ ~~Pred Acetate~~ ~~Dorzolamide~~ ~~Dorzolamide/Timolol~~ ~~Ciprofloxacin~~ ~~Brimonidine~~ ~~Trifluridine~~ ~~Tobramycin/~~ ~~dexamethasone~~	~~Cipro~~® HC ~~Otic (1)~~ ~~CIPRODEX~~® ~~(1)~~ ~~Patanase~~®

~~Cataract~~		~~Refractive~~		~~Vitreoretinal~~		~~General Surgical~~
~~Infiniti~~®Centurion vision system ~~Infiniti~~®, ~~AquaLase~~® ~~and~~ ~~OZil~~® ~~surgical instruments~~ ~~Infiniti~~® ~~consumables~~ ~~Laureate~~® ~~compact~~ ~~phacoemulsification system~~ ~~LenSx~~® ~~laser~~ ~~AcrySof~~ ® ~~intraocular lenses~~ ~~- AcrySof~~®~~Natural~~ ~~- AcrySof~~®IQ ~~- AcrySof~~®~~ReSTOR~~® ~~- AcrySof~~®~~IQ ReSTOR~~® ~~- AcrySof~~®~~Toric~~ ~~- AcrySof~~®~~IQ Toric~~ ~~- AcrySof~~® ~~IQ ReSTOR~~® ~~Multifocal Toric~~ ~~Viscoelastic devices~~ ~~- DuoVisc~~® ~~- DisCoVisc~~® ~~- VISCOAT~~® ~~- ProVisc~~®		~~ALLEGRETTO WAVE~~® ~~Eye-Q~~ ~~400 Hz laser~~ ~~ALLEGRO ANALYZER~~® ~~wavefront system~~ ~~ALLEGRO TOPOLYZER~~® ~~corneal topography~~ ~~system~~ ~~ALLEGRO OCULYZER~~® ~~pentacam diagnostic device~~ ~~ALLEGRO~~™ ~~biometry system~~ ~~AcrySof~~ ®~~CACHET~~™ ~~phakic lens~~ ~~WaveLight~~® ~~Refractive Suite EX 500 Excimer 500 Hz laser~~ ~~FS200~~ ~~femtosecond laser~~		~~CONSTELLATION~~® ~~surgical system~~ ~~Accurus~~® ~~surgical system~~ ~~Accurus~~® ~~cassettes and probes, including 23 gauge and 25 gauge vitreoretinal instrumentation~~ ~~Grieshaber~~® ~~microsurgical instruments~~ ~~Perfluoron~~® ~~liquid~~ ~~Silikon~~® ~~1000 ophthalmic surgical oil~~		~~BSS Plus~~® ~~surgical irrigating solution~~ ~~Custom Pak~~® ~~surgical procedure packs~~ ~~A-OK~~® ~~surgical knives~~ ~~EX-PRESS~~® ~~glaucoma filtration device~~

~~Contact Lens Care~~	~~Artificial Tears~~	~~Ocular Vitamins~~

~~OPTI-FREE~~®~~RepleniSH~~® ~~multi-purpose~~	~~Systane~~® ~~lubricant eye drops~~	~~ICAPS~~® ~~dietary supplements~~
~~disinfecting solution~~	~~(multiple formulations)~~	~~(multiple formulations)~~
~~OPTI-FREE~~® ~~EXPRESS~~® ~~No Rub~~® ~~multi-~~	~~Systane~~®~~Ultra~~ ~~lubricant eye drops~~
~~purpose disinfecting solution~~	~~(multiple formulations)~~
O~~PTI-FREE~~® ~~RepleniSH~~® ~~rewetting drops~~	~~Systane~~®~~Balance~~ ~~lubricant eye drops~~
	~~Tears Naturale~~® ~~lubricant eye drops~~
	~~(multiple formulations)~~

		~~Expected~~		~~Status at~~
~~Name~~	~~Condition~~	~~Submission Date~~		~~December 31, 2010 (1)~~

~~Pharmaceutical~~
~~Ophthalmology~~
~~DuoTrav~~® ~~APS~~	~~Glaucoma~~	~~EU Filed~~		~~Filed~~
~~AZARGA~~® ~~New combination~~	~~Glaucoma~~ ~~Glaucoma~~	~~Jpn 2012~~ ~~U.S. 2012~~ ~~EU 2013 or later~~		~~Phase III~~ ~~Phase III~~
~~NEVANAC~~®~~, new indication~~	~~Anti-inflammatory~~	~~EU Filed~~		~~Filed~~
~~Nepafenac, new formulation~~	~~Anti-inflammatory~~	~~U.S. 2012~~ ~~EU 2012~~		~~Phase III~~
~~DUREZOL~~®, ~~new indication~~	~~Anti-inflammatory~~	~~U.S. 2011~~		~~Phase III~~
~~Pataday~~™	~~Ocular allergy~~	~~Jpn Filed~~		~~Filed~~
~~AL-43,546~~	~~Dry eye~~	~~Jpn 2013 or later~~		~~Phase II~~
~~TRIESENCE~~® ~~injectable suspension~~	~~Retinal surgery~~	~~EU Filed~~		~~Filed~~
~~Otic/Nasal~~
~~CiloDex~~® ~~otic solution~~	~~Otic infections~~	~~EU Filed (2)~~		~~Withdrawn (3)~~
~~Moxifloxacin/dexamethasone~~	~~Otic infections~~	~~U.S. 2012 (4)~~ ~~EU 2012 or later~~		~~Phase III~~
~~Surgical~~
~~AcrySof~~ ®~~IQ Toric~~ ~~diopter range expansion~~	~~Cataract~~		~~U.S. Filed~~ ~~Jpn Filed~~	~~Filed~~
~~AcrySof~~ ®~~IQ Toric~~ ~~low diopter range expansion~~	~~Cataract~~		~~U.S. 2012~~	~~Advanced development~~
~~AcrySof~~ ®~~IQ ReSTOR~~® ~~Multifocal Toric~~ ~~lens~~	~~Cataract~~		~~U.S. 2012~~ ~~Jpn 2011~~	~~Advanced development~~
~~AcrySof~~ ®~~IQ ReSTOR~~®~~Toric~~ ~~diopter range expansion~~	~~Cataract~~		~~U.S. 2012 or later~~	~~Advanced development~~
~~AcrySof~~ ®~~IQ ReSTOR~~® ~~distant dominant~~	~~Cataract~~		~~U.S./EU 2012 or later~~	~~Advanced development~~
~~Infiniti~~® ~~upgrade~~	~~Cataract~~		~~U.S./EU 2011~~ ~~Jpn 2012~~	~~Advanced development~~
~~LenSx~~ ~~laser~~	~~Cataract~~		~~EU/Jpn 2011~~	~~Advanced development~~
~~AcrySof~~®~~CACHET~~™ ~~angle-supported phakic lens~~	~~Refractive~~		~~U.S. Filed~~ ~~Jpn 2012~~	~~Filed~~ ~~Advanced development~~
~~ALLEGRETTO~~™~~EX-500~~ ~~laser~~ ~~ALLEGRETTO~~™~~EX-400~~ ~~laser~~	~~Refractive~~ ~~Refractive~~		~~U.S. Filed~~ ~~Jpn Filed~~	~~Filed~~ ~~Filed~~

~~Consumer Eye Care~~
~~New formulation~~	~~Dry Eye~~		~~U.S./EU 2011~~	~~Advanced development~~
~~Lens comfort drop~~	~~Lens solution~~		~~U.S./EU 2012~~	~~Early development~~
~~OPTI-FREE~~® ~~silicone hydrogel~~	~~Lens solution~~		~~U.S. Filed~~	~~Filed~~
~~New lens solution~~	~~Lens solution~~		~~U.S./EU 2011~~	~~Advanced development~~
~~ICAPS~~® R2	~~Ocular vitamin~~		~~EU 2011~~	~~Advanced development~~
~~ICAPS~~® ~~AREDS2~~	~~Ocular vitamin~~		~~U.S./EU 2012 or later~~	~~Early development~~

~~(1)~~	~~For a description of the FDA approval process, see "– Government Regulation" below.~~
~~(2)~~	~~This application was filed in Denmark, France, Germany, Italy, Spain and the United Kingdom.~~
~~(3)~~	~~This application was withdrawn in November 2010 for administrative reasons and will be refiled early in 2011.~~
~~(4)~~	The FDA issued a notice in the fall of 2007 advising companies that they were increasing the requirements for anti-infective clinical studies and that clinical programs previously agreed upon may not be sufficient to support approval. Review of our NDA confirmed the need for an additional clinical study which was initiated in a timely manner.

~~Products~~		~~Facility~~
~~U.S. liquid ophthalmic products~~		~~Fort Worth, Texas~~
~~Intraocular lenses (l)~~		~~Huntington, West Virginia~~
~~ProVisc~~®, ~~VISCOAT~~®, ~~DuoVisc~~® ~~and~~ ~~DisCoVisc~~® ~~viscoelastics~~		~~Puurs, Belgium~~
O~~PTI-FREE~~®~~EXPRESS~~® ~~No Rub~~®~~, OPTI-FREE~~®~~RepleniSH~~® ~~solutions (2)~~		~~Fort Worth, Texas~~
~~Accurus~~®, ~~LEGACY~~®, ~~Infiniti~~®~~CONSTELLATION~~® ~~vision systems~~		~~Irvine, California~~
~~WaveLight~~® ~~ALLEGRETTO WAVE~~® ~~Eye-Q~~ ~~lasers~~		~~Pressath, Germany~~
~~Cipro~~® ~~HC, Patanase~~® ~~products~~		~~Barcelona, Spain~~
~~Vigadexa~~® ~~ophthalmic solution~~		~~Sao Paulo, Brazil~~

	~~Yes~~
X			No

										As a % of Total Sales
	2010			2009			2008			2010			2009			2008
	(in millions, except percentages)
Sales:
United States	$	3,177		$	2,914		$	2,807			44.3	%		44.8	%		44.6	%
International		4,002			3,585			3,487			55.7			55.2			55.4

Total sales		7,179			6,499			6,294			100.0			100.0			100.0
Costs of goods sold		1,675			1,614			1,472			23.3			24.8			23.4

Gross profit		5,504			4,885			4,822			76.7			75.2			76.6
Selling, general and administrative		2,070			1,935			1,961			28.8			29.8			31.1
Research and development		747			665			619			10.4			10.2			9.8
Amortization of intangibles		60			24			29			0.9			0.4			0.5
Other operating expenses		152			--			--			2.1			--			--

Operating income		2,475			2,261			2,213			34.5			34.8			35.2
Gain (loss) from foreign currency, net		(3	)		(3	)		(21	)		--			--			(0.4	)
Interest income		29			46			76			0.4			0.7			1.2
Interest expense		(9	)		(16	)		(51	)		(0.1	)		(0.3	)		(0.8	)
Other, net		35			25			(134	)		0.4			0.4			(2.1	)

Earnings before income taxes		2,527			2,313			2,083			35.2			35.6			33.1
Income taxes		317			306			36			4.4			4.7			0.6

Net earnings	$	2,210		$	2,007		$	2,047			30.8	%		30.9	%		32.5	%

									Change										Change
							Foreign		in								Foreign		in
							Currency		Constant								Currency		Constant
		2010	2009		Change		Change		Currency	(a)		2009		2008	Change		Change		Currency	(a)
		(in millions, except percentages)

Alcon United States:
Pharmaceutical	$	1,555	$	1,353	14.9	%	--	%	14.9	%	$	1,353	$	1,321	2.4	%	--	%	2.4	%
Surgical		1,214		1,167	4.0		--		4.0			1,167		1,084	7.7		--		7.7
Consumer eye care		408		394	3.6		--		3.6			394		402	(2.0	)	--		(2.0	)

Total sales	$	3,177	$	2,914	9.0		--		9.0		$	2,914	$	2,807	3.8		--		3.8

Alcon International:
Pharmaceutical	$	1,511	$	1,324	14.1		1.7		12.4		$	1,324	$	1,240	6.8		(6.3	)	13.1
Surgical		2,006		1,830	9.6		2.4		7.2			1,830		1,797	1.8		(4.9	)	6.7
Consumer eye care		485		431	12.5		3.7		8.8			431		450	(4.2	)	(6.0	)	1.8

Total sales	$	4,002	$	3,585	11.6		2.3		9.3		$	3,585	$	3,487	2.8		(5.5	)	8.3

Total:
Pharmaceutical	$	3,066	$	2,677	14.5		0.8		13.7		$	2,677	$	2,561	4.5		(3.1	)	7.6
Surgical		3,220		2,997	7.4		1.4		6.0			2,997		2,881	4.0		(3.1	)	7.1
Consumer eye care		893		825	8.2		1.9		6.3			825		852	(3.2	)	(3.2	)	--

Total sales	$	7,179	$	6,499	10.5		1.3		9.2		$	6,499	$	6,294	3.3		(3.0	)	6.3

										Foreign		Change in
										Currency		Constant
GLOBAL PRODUCT SALES		2010			2009		Change			Change		Currency	(a)
		(in millions, except percentages)

Infection/inflammation	$	980		$	829		18.2		%	0.6	%	17.6	%
Glaucoma		1,277			1,121		13.9			0.8		13.1
Allergy		539			486		10.9			1.0		9.9
Otic/nasal		409			355		15.2			0.3		14.9
Other pharmaceuticals/rebates		(139	)		(114	)	*			*		*

Total Pharmaceutical		3,066			2,677		14.5			0.8		13.7

Intraocular lenses		1,208			1,133		6.6			1.7		4.9
Cataract/vitreoretinal/other		1,895			1,759		7.7			1.4		6.3
Refractive		117			105		11.4			--		11.4

Total Surgical		3,220			2,997		7.4			1.4		6.0

Contact lens disinfectants		471			448		5.1			1.8		3.3
Artificial tears		333			283		17.7			2.2		15.5
Other		89			94		(5.3	)		2.1		(7.4	)

Total Consumer Eye Care		893			825		8.2			1.9		6.3

Total Global Sales	$	7,179		$	6,499		10.5			1.3		9.2

	Years ended December 31,
		2010			2009
	(in millions)
Realized gains (losses) on sale of investments		$	30		$	(49	)
Unrealized gains (losses) on investments classified as trading securities			6			76
Other			(1	)		(2	)

Total		$	35		$	25

	Unaudited
	2010		2009		2008
	(in millions)

First	$	1,721	$	1,493	$	1,536
Second		1,886		1,677		1,736
Third		1,760		1,614		1,524
Fourth		1,812		1,715		1,498

Total	$	7,179	$	6,499	$	6,294

	Payments Due by Period
				1 Year			2-3		4-5	More than
		Total		or Less		Years		Years		5 Years
	(in millions)
Long term debt		$	62	$	62	$	--	$	--	$	--
Operating leases			280		67		87		45		81
Purchase obligations			76		41		30		3		2
Income tax liabilities			77		1		76		--		--
Other long term liabilities			920		85		189		152		494
Total contractual obligations		$	1,415	$	256	$	382	$	200	$	577

	December 31,			December 31,
	2010			2009
	(in millions)

Level 3 assets	$	6		$	22

Total assets	$	10,073		$	8,686

Total financial assets measured at fair value	$	1,287		$	559

Level 3 assets as a percent of total assets	Less than 1 %			Less than 1 %
Level 3 assets as a percent of total financial assets measured at
fair value	Less than 1 %				4	%


Level 3 liabilities	$	160		$	71

Total liabilities	$	2,821		$	2,781

Total financial liabilities measured at fair value (including short term
borrowings)	$	571		$	736
				��
Level 3 liabilities as a percent of total liabilities		6	%		3	%
Level 3 liabilities as a percent of total financial liabilities measured
at fair value		28	%		10	%

~~Name~~	~~Age~~	~~Title~~

~~Daniel Vasella, M.D.~~	57	~~Chairman and Director~~
~~Cary R. Rayment~~	63	~~Vice Chairman and Director~~
~~Kevin J. Buehler~~	53	~~President, Chief Executive Officer and Director~~
~~Urs Bärlocher, Ph.D.~~	68	~~Director~~
~~Paul Choffat, Ph.D.~~	61	~~Director~~
~~Lodewijk J.R. de Vink~~	65	~~Director~~
~~Joan W. Miller, M.D.~~	52	~~Director~~
~~Thomas G. Plaskett~~	67	~~Director~~
~~Jacques Seydoux, M.D.~~	59	~~Director~~
~~Enrico Vanni, Ph.D.~~	59	~~Director~~
~~Norman Walker~~	58	~~Director~~
~~Patrick Bachmann~~	43	~~Attorney-in-Fact (Prokurist~~)
~~Stefan Basler~~	56	~~Attorney-in-Fact (Prokurist~~)
~~Joanne Beck~~	53	~~General Manager (Direktor~~)
~~Wes Brazell~~	44	~~Attorney-in-Fact (Prokurist~~)
~~Robert Karsunky~~	48	~~Senior Vice President, Finance, Chief Financial Officer and Corporate Strategy Officer~~
~~Elaine E. Whitbeck~~	56	~~General Counsel and Corporate Secretary~~


	Annual Compensation				Long Term Compensation Awards
							Per-
					Restricted	Securities	formance	All
				Other	Share	Under-	Share	Other
				Compensa-	Unit	Lying	Unit	Compensa-
		Salary	Bonus	tion	Awards	SSARs	Awards	ion
Name	Year	($)	($) (1)	($) (2)	($) (3)	(#) (4)	(#) (5)	($) (6)

Kevin J. Buehler(7)	2010	1,027,500	1,455,000	32,074	5,527,314	--	--	689,914
	2009	866,250	460,000	30,500	1,269,250	131,857	14,574	328,170
	2008	570,833	390,000	31,580	446,751	22,191	3,028	(123,447)

Richard J. Croarkin (8)	2010	563,333	1,020,800	21,436	1,909,490	--	--	1,412,825
	2009	585,000	430,000	20,641	470,896	48,919	5,407	144,044
	2008	550,000	170,000	21,580	383,014	19,021	2,596	64,822

Robert Karsunky (9)	2010	95,833	--	2,500	3,468,497	--	--	70,548

William K. Barton(10)	2010	533,333	438,000	31,861	1,507,492	--	--	418,622
	2009	490,000	245,000	31,861	355,414	36,920	4,081	175,384
	2008	431,667	235,000	32,519	210,687	10,462	1,428	5,370

Sabri Markabi, M.D.(11)	2010	591,667	470,000	20,824	2,110,489	--	--	151,246
	2009	541,667	298,000	19,250	507,735	52,743	5,830	124,528
	2008	380,769	--	15,573	668,865	16,916	--	42,562

Elaine E. Whitbeck	2010	541,667	380,000	35,412	1,457,164	--	--	439,123
	2009	520,833	335,000	35,769	365,517	37,975	4,197	218,811
	2008	492,500	300,000	35,474	357,489	17,753	2,423	44,691

Ed McGough(12)	2010	412,500	305,000	30,123	1,004,995	--	--	272,591
	2009	396,667	255,000	27,822	253,867	26,371	2,915	123,145
	2008	380,000	190,000	27,732	204,195	10,145	1,384	43,481

Merrick R. McCracken(13)	2010	383,334	--	65,781	1,201,017	--	--	95,603

	Total Restricted		Total Restricted		Value		Value		Value
	Shares		Share Units		Vesting		Vesting		Vesting
Name	at 12/31/10 (#)		at 12/31/10 (#)		in 2011 ($)		in 2012 ($)		in 2013 ($)

Kevin J. Buehler		--		49,608		--		2,381,392		5,724,556
Richard J. Croarkin		--		--		--		--		--
Robert Karsunky		--		21,363		957,459		2,054,526		478,729
William K. Barton		--		13,636		--		666,835		1,561,287
Sabri Markabi, M.D.		--		19,207		--		952,622		2,185,802
Elaine E. Whitbeck		--		13,433		--		685,790		1,509,162
Ed McGough		--		9,285		--		476,311		1,040,858
Merrick R. McCracken		--		7,551		--		--		1,233,833

		Estimated Future Performance Share Unit Payout
Name	Grant Date	Minimum #	Target #		Maximum #

Kevin J. Buehler	02/17/2009	--	14,574		29,148
	02/11/2008	--	3,028		6,056
Richard J. Croarkin	02/17/2009	--	--		--
	02/11/2008	--	--		--
William K. Barton	02/17/2009	--	4,081		8,162
	02/11/2008	--	1,428		2,856
Sabri Markabi, M.D.	02/17/2009	--	5,830		11,660
	02/11/2008	--	--		--
Elaine E. Whitbeck	02/17/2009	--	4,197		8,394
	02/11/2008	--	2,423	4,846
Ed McGough	02/17/2009	--	2,915	5,830
	02/11/2008	--	1,384	2,768

	Shares				Number of Securities Underlying				Value of Unexercised In-the-
	Acquired		Value		Unexercised Options/SSARs				Money Options/SSARs
	On		Realized		at 12/31/10 (#)				at 12/31/10 ($)
Name	Exercise		($)		Exercisable		Unexercisable		Exercisable		Unexercisable

Kevin J. Buehler		--		--		122,801		131,857		6,902,894		10,062,008
Richard J. Croarkin		77,912		4,304,074		--		--		--		--
William K. Barton		45,432		1,852,280		--		36,920		--		2,817,365
Sabri Markabi, M.D.		--		--		16,916		52,743		313,453		4,024,818
Elaine E. Whitbeck		--		--		58,769		37,975		1,761,744		2,897,872
Ed McGough		16,327		1,538,399		18,883		26,371		473,165		2,012,371

			Number of Years		Present Value of
Name	Plan Name		Credited Service (#)		Accumulated Benefit ($)

Kevin J. Buehler	ESCP/ASERP			20		10,241,047
Richard J. Croarkin	ASERP			8		2,055,156
Robert Karsunky		--		--		--
William K. Barton	ESCP/ASERP			19		5,197,204
Sabri Markabi, M.D.	ASERP			2		201,368
Elaine E. Whitbeck	ESCP/ASERP			20		6,040,705
Ed McGough	ESCP/ASERP			15		3,712,259
Merrick R. McCracken		--		--		--

			Total Number of
	Restricted	Beneficially Owned	Shares Owned
Name	Shares Units (1)	Shares	Direct or Indirectly

Daniel Vasella, M.D.	1,550	375	1,925
Cary R. Rayment	15,281	52,989	68,270
Kevin J. Buehler	67,210	8,753	75,963
Urs Bärlocher, Ph.D.	775	25	800
Paul J. Choffat, Ph.D. .	775	10	785
Lodewijk J.R. de Vink	1,550	5,000	6,550
Joan W. Miller, M.D.	1,550	-	1,550
Thomas G. Plaskett	1,550	2,485	4,035
Jacques Seydoux, M.D.	775	10	785
Enrico Vanni, Ph.D.	775	1	776
Norman Walker	775	100	875
Patrick Bachmann	1,599	236	1,835
Joanne Beck	2,164	200	2,364
Wes Brazell	2,726	-	2,726
Robert Karsunky	21,363	-	21,363
Elaine E. Whitbeck	20,053	-	20,053
William K. Barton	19,145	-	19,145
Sabri Markabi, M.D.	25,037	3,375	28,412
Merrick R. McCracken	7,551	-	7,551
Ed McGough	13,584	1,978	15,562

		Outstanding	Grant	Vesting	Term
Name	Year (2)	(#)	Price ($)	Year	(Years)

Daniel Vasella, M.D.	2009	3,150	96.02	2012	10
	2008	1,350	167.95	2010	10

Cary R. Rayment	2009	3,150	96.02	2012	10
	2008	100,621	147.54	2010	10
	2007	125,211	130.56	2010	10
	2006	95,652	122.90	2009	10
	2005	152,400	79.00	2008	10
	2004	22,000	63.32	2007	10
	2004	25,000	80.20	2007	10

William K. Barton.	2009	36,920	87.09	2012	10

Sabri Markabi, M.D.,	2009	52,743	87.09	2012	10
	2008	5,667	144.87	2010	10
	2008	5,667	144.87	2010	10
	2008	5,582	144.87	2009	10

Interest Rate Sensitivity

			Annual Pretax Earnings Effect
	Fair Value/		100 Basis			100 Basis
	Notional Amount		Points Decrease			Points Increase
	Segment		in Rates			in Rates
Variable Rate Instruments			(in millions)
Assets:
Cash and Cash Equivalents - Variable Rate	$	2,525	$	(25	)	$	25

Liabilities:
Short Term Debt - Variable Rate		337		3			(3	)
Interest Rate Swaps – Variable Rate		61		1			(1	)

Net			$	(21	)	$	21

	2010		2009
	(in thousands)

Audit fees (1) ��	$	7,306	$	5,790
Audit-related fees (2)		57		57
Tax fees (3)		353		240
All other fees (4)		78		47
Total fees	$	7,794	$	6,134

			Total Number of
			Shares Purchased	Maximum Number of
	Total Number of	Average Price	as Part of Publicly	Shares That May Yet
	Shares Purchased	Paid	Announced Plans or	Be Purchased under the
Period	(a)(b)(c)	per Share	Programs (a)(b)(c)	Plans or Programs (d)(e)

January 1 to 31, 2010	4,369	155.67	4,369	1,759,660
February 1 to 28, 2010	41,175	157.58	41,175	1,718,485
March 1 to 31, 2010	10,204	162.33	10,204	1,708,281
April 1 to 30, 2010	19,028	152.88	19,028	1,689,253
May 1 to 31, 2010	1,174	151.76	1,174	1,688,079
June 1 to 30, 2010	820	148.21	820	1,687,259
July 1 to 31, 2010	1,560	152.89	1,560	1,685,699
August 1 to 31, 2010	74,600	160.28	74,600	1,611,099
September 1 to 30, 2010	28,456	165.21	28,456	1,582,643
October 1 to 31, 2010	9,679	167.21	9,679	1,572,964
November 1 to 30, 2010	6,531	167.12	6,531	1,566,433
December 1 to 31, 2010	9,493	161.28	9,493	1,556,940
Total	207,089	160.18	207,089	N/A

	Common Shares									Accumulated
	Number						Additional			Other
	of Shares						Paid-in			Comprehensive			Retained			Treasury
	Outstanding			Amount			Capital			Income			Earnings			Shares			Total
	(in millions, except share data)

Balance, December 31, 2007		297,662,706		$	43		$	1,300		$	203		$	3,392		$	(1,563	)	$	3,375

Comprehensive income:
Net earnings		--			--			--			--			2,047			--			2,047
Change in net unrealized gains
(losses) on investments		--			--			--			(7	)		--			--			(7	)
Foreign currency translation
adjustments		--			--			--			(89	)		--			--			(89	)
Unrecognized postretirement
benefits losses and prior
service costs, net of taxes		--			--			--			(27	)		--			--			(27	)
Total comprehensive income																				1,924

Adjustment for new pension plan
measurement date, net of taxes		--			--			--			--			(1	)		--			(1	)
Share-based payments		--			--			83			--			--			--			83
Share award transactions		2,031,562			--			25			--			(8	)		108			125
Tax benefits on share award
transactions		--			--			61			--			--			--			61
Treasury shares acquired		(1,045,915	)		--			--			--			--			(127	)		(127	)
Share cancellation		--			(1	)		(21	)		--			(981	)		1,003			--
Dividends on common shares		--			--			1			--			(750	)		--			(749	)
Balance, December 31, 2008		298,648,353			42			1,449			80			3,699			(579	)		4,691

Comprehensive income:
Net earnings		--			--			--			--			2,007			--			2,007
Change in net unrealized gains
(losses) on investments		--			--			--			40			--			--			40
Foreign currency translation
adjustments		--			--			--			71			--			--			71
Unrecognized postretirement
benefits losses and prior
service costs, net of taxes		--			--			--			12			--			--			12
Total comprehensive income																				2,130

Adjustment for acquisition of
noncontrolling interest		--			--			(12	)		--			--			--			(12	)
Share-based payments		--			--			74			--			--			--			74
Share award transactions		977,202			--			5			--			(2	)		52			55
Tax benefits on share award
transactions		--			--			22			--			--			--			22
Treasury shares acquired		(74,822	)		--			--			--			--			(7	)		(7	)
Share cancellation		--			--			(3	)		--			(123	)		126			--
Dividends on common shares		--			--			--			--			(1,048	)		--			(1,048	)
Balance, December 31, 2009		299,550,733			42			1,535			203			4,533			(408	)		5,905

Comprehensive income:
Net earnings		--			--			--			--			2,210			--			2,210
Change in net unrealized gains
(losses) on investments		--			--			--			(30	)		--			--			(30	)
Foreign currency translation
adjustments		--			--			--			(43	)		--			--			(43	)
Unrecognized postretirement
benefits losses and prior
service costs, net of taxes		--			--			--			(32	)		--			--			(32	)
Total comprehensive income																				2,105

Share-based payments		--			--			78			--			--			--			78
Share award transactions		3,046,622			--			(9	)		--			--			178			169
Tax benefits on share award
transactions		--			--			65			--			--			--			65
Treasury shares acquired		(207,089	)		--			--			--			--			(33	)		(33	)
Dividends on common shares		--			--			--			--			(1,037	)		--			(1,037	)
Balance, December 31, 2010		302,390,266		$	42		$	1,669		$	98		$	5,706		$	(263	)	$	7,252

See accompanying notes to consolidated financial statements.