NOTE 14 – Other asset impairments, restructuring and other items: Other impairments, restructuring and other items consisted of the following:
	Three months ended				Six months ended
	June 30,				June 30,
	2018		2017		2018		2017
	(U.S. $ in millions)
Restructuring expenses	$	107	$	98	$	354	$	228
Integration expenses		2		25		2		48
Contingent consideration		47		140		55		161
Impairments of long-lived assets		548		145		980		156
Other		11		11		31		66

Total	$	715	$	419	$	1,422	$	659

In determining the estimated fair value of long-lived assets, Teva utilized a discounted cash flow model. The key assumptions within the model related to forecasting future revenue and operating income, an appropriate WACC and an appropriate terminal value based on the nature of the long-lived asset. The Company’s updated forecasts of net cash flows for the impaired assets reflect, among others, the following: (i) for IPR&D assets, the impact of changes to the development programs, the projected development and regulatory timeframes and the risks associated with these assets; and (ii) for product rights, pricing and volume projections, as well as patent life and any significant changes to the competitive environment.

As a result of Teva’s plant rationalization acceleration, following the two year restructuring plan that was announced in December, 2017, to the extent the Company will change its plans on any given asset and/or the assumptions underlying such plan, there could be additional impairments in the future.

In July 2018, the FDA completed an inspection of Teva’s manufacturing plant in Davie, Florida in the United States and issued a Form FDA-483 to the site. Teva is working diligently to investigate the FDA’s observations in a manner consistent with Current Good Manufacturing Practice (CGMPs), and to address those observations as quickly and as thoroughly as possible. The impact of such investigation and remediation on the financial statements in the second quarter of 2018 was immaterial. However, if Teva is unable to remediate the findings in a timely manner, Teva may face additional consequences, including potential delays in FDA approval for future products from the site, other financial implications due to loss of revenues, inventory write offs, customer penalties, idle capacity charges and other costs of remediation.

In July 2018, Teva announced the voluntary recall of valsartan and certain combination valsartan medicines in various countries due to the detection of trace amounts of an unexpected impurity in the API provided by a third party supplier used in the preparation of such medicines. The impact of this recall on the financial statements in the second quarter of 2018 was $41 million related to recall and inventory reserves. Depending on the duration of the API outage and severity of the impurity, Teva may face additional loss of revenues and profits, customer penalties or other litigation costs prospectively.

Impairments

•

Impairments of long-lived intangible assets in the second quarter of 2018 were $520 million, mainly consisting of:

IPR&D assets of $444 million, mainly related to revaluation of generic products acquired from Actavis Generics due to development progress and changes in other key valuation indications (e.g., market size, legal landscape, launch date or discount rate).

Identifiable product rights of $67 million, mainly due to updated market assumptions regarding price, volume and/or other status changes related to products acquired from Actavis Generics currently marketed in the United States.

•

Impairments of property, plant and equipment in the second quarter of 2018 were $28 million.

•

Impairments of long-lived intangible assets in the first six months of 2018 were $727 million, mainly consisting of:

IPR&D assets of $561 million, mainly related to revaluation of generic products acquired from Actavis Generics due to development progress and changes in other key valuation indications (e.g., market size, legal landscape, launch date or discount rate).

Identifiable product rights of $143 million due to updated market assumptions regarding price, volume and/or other status changes related to products acquired from Actavis Generics currently marketed in the United States.

•

Impairments of property, plant and equipment in the first six months of 2018 were $253 million, mainly consisting of:

$155 million related to the restructuring plan, including:

•

$113 million related to site closures in Israel; and

•

$42 million related to the consolidation of headquarters and distribution sites in the United States.

Other impairment costs, mainly $64 million related to a plant located in India in connection with the P&G separation agreement. See note 3 to our consolidated financial statements.

Restructuring

In the three months ended June 30, 2018, Teva recorded $107 million of restructuring expenses, compared to $98 million in the three months ended June 30, 2017.

In the first six months of 2018, Teva recorded $354 million of restructuring expenses, compared to $228 million in the first six months of 2017. The expenses in the first six months of 2018 were primarily related to headcount reductions across all functions.

Since the announcement of its restructuring plan, Teva reduced its global headcount by approximately 8,300 full-time-equivalent employees.

During the three months ended June 30, 2018, Teva recorded an $8 million impairment of property, plant and equipment related to restructuring costs.

During the first six months of 2018 Teva recorded a $155 million impairment of property, plant and equipment related to restructuring costs as detailed in “— Impairments” above.

The following table provides the components of costs associated with Teva’s restructuring plan, including costs related to exit and disposal activities:


	Three months ended June 30,
	2018		2017
	(U.S. $ in millions)
Restructuring
Employee termination	$	90	$	79
Other		17		19

Total	$	107	$	98


	Six months ended June 30,
	2018		2017
	(U.S. $ in millions)
Restructuring
Employee termination	$	318	$	174
Other		36		54

Total	$	354	$	228

The following table provides the components of and changes in the Company’s restructuring accruals:


	Employee termination costs			Other			Total
	(U.S. $ in millions )
Balance as of January 1, 2018	$	(294	)	$	(17	)	$	(311	)
Provision		(318	)		(36	)		(354	)
Utilization and other^*		310			25			335

Balance as of June 30, 2018	$	(302	)	$	(28	)	$	(330	)

*	Includes adjustments for foreign currency translation.