Press Release: Novartis issues summary financial information for the Alcon eye care business ahead of shareholder vote on proposed spin-off

Novartis International AG / Novartis issues summary financial

information for the Alcon eye care business ahead of shareholder vote on

proposed spin-off. Processed and transmitted by West Corporation. The

issuer is solely responsible for the content of this announcement.

Basel, February 25, 2019 - Novartis today published certain key

financial information for the Alcon eye care business covering the full

year 2018 ahead of a vote on the proposed 100% spin-off of Alcon at the

Novartis Annual General Meeting of Shareholders (AGM) on February 28,

2019.

The issuance of the short form financial information follows the

distribution of a brochure for Novartis shareholders that provides

further details on the proposed Alcon spin-off. The brochure can be

accessed here:

https://www.novartis.com/sites/www.novartis.com/files/2019-novartis-agm-alcon-en.pdf

Certain key core[1] Alcon financial information FY 2018[2]

Yr End Yr End Yr End Yr End

Dec 31, Dec 31, USD CC Dec 31, Dec 31, CC

($ millions) 2018 2017 % % 2017 2016 USD % %

Net sales to

third

parties 7'149 6'785 5 5 6'785 6'589 3 3

Core gross

profit 4'541 4'211 8 8 4'211 4'123 2 3

Core gross

profit

margin (%) 63.5 62.1 62.1 62.6

Core

operating

income 1'212 1'086 12 12 1'086 1'128 (4) (1)

Core

operating

income

margin (%) 17.0 16.0 16.0 17.1

Gross Profit

($ millions) 2018 2017 2016 ($ millions) 2018 2017 2016

Core

Core gross operating

profit 4'541 4'211 4'123 income 1'212 1'086 1'128

Amortization Amortization

of intangible of intangible

assets (996) (1'007) (1'006) assets (1'007) (1'017) (1'018)

Impairments (376) (19) Impairments (378) (86) (23)

Restructuring Restructuring

items (1) items (41) (30) (29)

Legal-related Legal-related

& other & other

items 24 13 items (34) (30) (48)

IFRS reported

IFRS reported operating

gross profit 3'192 3'204 3'111 (loss)/income (248) (77) 10

Alcon core to IFRS reconciliation FY 2018[1]

Carve out financial statements for 2018 will be included in the next

update to the Alcon Form 20-F registration statement filed with the US

Securities and Exchange Commission (SEC).

Notes

[1] Alcon core results, which include core operating income, core gross

profit and related margin calculations, fully exclude all amortization

and impairment charges of intangible assets, with the exception of

software, and certain acquisition related items. The following items

that exceed a threshold of USD 10 million are also excluded: integration

and divestment related income and expenses, divestment gains and losses,

restructuring charges/releases, legal related items, impairments of

property, plant and equipment and financial assets, 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 USD 10 million

threshold. Changes in the relative values of non-U.S. currencies to the

U.S. dollar can affect the financial results and financial position of

Alcon. To provide additional information that may be useful to investors,

including changes in sales volume, information about Alcon net sales is

presented adjusted for such foreign currency effects. Alcon constant

currency measures are calculated by translating the current year's

foreign currency values for sales into U.S. dollars, using the average

exchange rates from the prior year and comparing them to the prior year

values in U.S. dollars. These constant currency measures are used in

evaluating Alcon performance, since they may assist in evaluating the

ongoing performance of Alcon from year to year. However, in performing

the evaluation, management also considers equivalent measures of

performance that are not affected by changes in the relative value of

currencies.

[2] The business of Alcon did not form a separate legal group of

companies in any of the periods presented. As a result, the Alcon

financial figures were prepared on a standalone basis and are derived

(carved-out) from Novartis consolidated financial statements and

accounting records. These figures are meant to depict the Alcon business

from the perspective of how it is expected to be constituted as a

standalone company following the spin-off, if approved. The figures are

not directly comparable to the financial statements of Alcon as a

division of Novartis reported in the consolidated financial statements

of the Novartis Annual Report. These Alcon financial figures include

charges and allocation of expenses related to certain Novartis business

support functions and allocations for Novartis corporate general and

administration functions. The preparation of carve-out financial

statements required management to make certain estimates and

assumptions. Management believes that the allocation methodology and the

estimates and assumptions used were reasonable and all allocations have

been performed on a basis that reasonably reflects the services received

by and the costs incurred on behalf of Alcon.

Disclaimer

This press release contains forward-looking statements within the

meaning of the United States Private Securities Litigation Reform Act of

1995, that can generally be identified by words such as "ahead of,"

"proposed," "would," "will," "expected," or similar expressions, or by

express or implied discussions regarding the potential completion of the

announced spinoff of Alcon; regarding whether the spinoff is in the best

interests of shareholders, regarding the future commercial performance

of Novartis or a standalone Alcon company, or regarding any potential

strategic benefits, synergies or opportunities as a result of the

spinoff; or by discussions of strategy, plans, expectations or

intentions. You should not place undue reliance on these statements.

Such forward looking statements are based on our current beliefs and

expectations regarding future events, and are subject to significant

known and unknown risks and uncertainties. Should one or more of these

risks or uncertainties materialize, or should underlying assumptions

prove incorrect, actual results may vary materially from those set forth

in the forward looking statements. There can be no guarantee that the

proposed spinoff will be completed in the expected form or within the

expected time frame or at all. Neither can there be any guarantee that

Novartis or a standalone Alcon company will be able to realize any of

the potential strategic benefits, synergies or opportunities as a result

of the spinoff or any related actions, within any particular time frame,

or at all. Nor can there be any guarantee that shareholders of Novartis

or Alcon will achieve any particular level of shareholder returns.

Neither can there be any guarantee that the spinoff of Alcon will be in

the best interests of shareholders, or that the Novartis Group or any of

its divisions, or a standalone Alcon company, will be commercially

successful in the future, or achieve any particular credit rating or

financial results. In particular, our expectations could be affected by,

among other things: an unexpected failure to satisfy the required

conditions to the proposed spinoff, or to obtain the shareholder and

other approvals needed to complete these actions, or unexpected delays

in meeting these requirements; the potential that the strategic benefits,

synergies or opportunities expected from the proposed spinoff may not be

realized or may take longer to realize than expected; global trends

toward health care cost containment, including government, payor and

general public pricing and reimbursement pressures and requirements for

increased pricing transparency; regulatory actions or delays or

government regulation generally; the inherent uncertainties involved in

predicting shareholder returns; the successful separation of the Alcon

business from the Novartis Group; potential adverse reactions to the

proposed transaction by customers, suppliers, strategic partners or key

Alcon personnel and potential difficulties in maintaining relationships

with such persons; the uncertainties inherent in the research and

development of new healthcare products, including clinical trial results

and additional analysis of existing clinical data; the ability of Alcon

as a standalone company to obtain or maintain proprietary intellectual

property protection; safety, quality or manufacturing issues, including

withdrawal of products from the market; uncertainties regarding actual

or potential legal proceedings, including, among others, actual or

potential product liability litigation, litigation and investigations

regarding sales and marketing practices, intellectual property disputes

and government investigations generally; uncertainties involved in the

development or adoption of potentially transformational technologies and

business models; general political, economic and trade conditions,

including uncertainties regarding the effects of ongoing instability in

various parts of the world; uncertainties regarding future global

exchange rates; uncertainties regarding future demand for our products

or those of Alcon as a standalone company; and uncertainties regarding

(MORE TO FOLLOW) Dow Jones Newswires

February 25, 2019 17:55 ET (22:55 GMT)