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Debt Obligations | 12 Months Ended
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Dec. 31, 2018
Debt Obligations | NOTE 11—DEBT OBLIGATIONS:
a. | Short-term debt:
|  |  |  |  |  | December 31, |
|  | Weighted average interest rate as of December 31, 2018 |  |  | Maturity |  |  | 2018 |  |  | 2017 |
|  |  |  |  |  |  |  | (U.S. $ in millions) |
Term loan JPY 28.3 billion |  |  | JPY LIBOR+0.25 | % |  |  | 2018 |  |  | $ | — |  |  |  | 251 |
Bank and financial institutions |  |  | 6.79% |  |  |  | — |  |  |  | 2 |  |  |  | 1 |
Convertible debentures |  |  | 0.25% |  |  |  | 2026 |  |  |  | 514 |  |  |  | 514 |
Current maturities of long-term liabilities |  |  |  | 1,700 |  |  |  | 2,880 |
Total short term debt |  |  | $ | 2,216 |  |  | $ | 3,646 |
Line of credit: In November 2015, the Company entered into a $3 billion five-year unsecured syndicated credit facility (which was increased to $4.5 billion upon closing of the Actavis Generics acquisition, see note 2). In February 2018, the facility was decreased to $3 billion. This revolving line of credit was not utilized as of December 31, 2018. Convertible senior debentures Teva 0.25% convertible senior debentures, due 2026, principal amount as of December 31, 2018 and 2017 were $514 million. These convertible senior debentures include a “net share settlement” feature according to which the principal amount will be paid in cash and in case of conversion, only the residual conversion value above the principal amount will be paid in Teva shares. Due to the “net share settlement” feature, exercisable at any time, these convertible senior debentures are classified in the balance sheet under short-term debt. Holders of the convertible debentures will be able to cause Teva to redeem the debentures on February 1, 2021.
b. | Long-term debt:
|  | Weighted average interest rate as of December 31, 2018 |  | Maturity |  | December 31, 2018 |  |  | December 31, 2017 |
|  | % |  |  |  | (U.S. $ in millions) |
Senior notes EUR 1,660 million (8) |  | 0.38% |  | 2020 |  | $ | 1,897 |  |  | $ | 2,095 |
Senior notes EUR 1,500 million |  | 1.13% |  | 2024 |  |  | 1,707 |  |  |  | 1,788 |
Senior notes EUR 1,300 million |  | 1.25% |  | 2023 |  |  | 1,480 |  |  |  | 1,550 |
Senior notes EUR 1,000 million (3) |  | 2.88% |  | 2019 |  |  | — |  |  |  | 1,199 |
Senior notes EUR 900 million (1) |  | 4.50% |  | 2025 |  |  | 1,029 |  |  |  | — |
Senior notes EUR 750 million |  | 1.63% |  | 2028 |  |  | 850 |  |  |  | 891 |
Senior notes EUR 700 million (1) |  | 3.25% |  | 2022 |  |  | 801 |  |  |  | — |
Senior notes EUR 700 million |  | 1.88% |  | 2027 |  |  | 798 |  |  |  | 837 |
Senior notes USD 3,500 million |  | 3.15% |  | 2026 |  |  | 3,493 |  |  |  | 3,492 |
Senior notes USD 3,000 million |  | 2.20% |  | 2021 |  |  | 2,997 |  |  |  | 2,996 |
Senior notes USD 3,000 million |  | 2.80% |  | 2023 |  |  | 2,993 |  |  |  | 2,992 |
Senior notes USD 1,700 million (8) |  | 1.70% |  | 2019 |  |  | 1,700 |  |  |  | 2,000 |
Senior notes USD 2,000 million |  | 4.10% |  | 2046 |  |  | 1,985 |  |  |  | 1,984 |
Senior notes USD 1,500 million (3) |  | 1.40% |  | 2018 |  |  | — |  |  |  | 1,500 |
Senior notes USD 1,250 million (2) |  | 6.00% |  | 2024 |  |  | 1,250 |  |  |  | — |
Senior notes USD 1,250 million (2) |  | 6.75% |  | 2028 |  |  | 1,250 |  |  |  | — |
Senior notes USD 844 million |  | 2.95% |  | 2022 |  |  | 860 |  |  |  | 864 |
Senior notes USD 789 million |  | 6.15% |  | 2036 |  |  | 782 |  |  |  | 781 |
Senior notes USD 700 million |  | 2.25% |  | 2020 |  |  | 700 |  |  |  | 700 |
Senior notes USD 613 million |  | 3.65% |  | 2021 |  |  | 621 |  |  |  | 624 |
Senior notes USD 588 million |  | 3.65% |  | 2021 |  |  | 587 |  |  |  | 587 |
Senior notes CHF 450 million (10) |  | 1.50% |  | 2018 |  |  | — |  |  |  | 461 |
Senior notes CHF 350 million |  | 0.50% |  | 2022 |  |  | 356 |  |  |  | 360 |
Senior notes CHF 350 million |  | 1.00% |  | 2025 |  |  | 356 |  |  |  | 360 |
Senior notes CHF 300 million (9) |  | 0.13% |  | 2018 |  |  | — |  |  |  | 308 |
Fair value hedge accounting adjustments |  |  |  |  |  |  | (9 | ) |  |  | (2 | )
Total senior notes |  |  |  |  |  |  | 28,483 |  |  |  | 28,367 |
Term loan USD 2.5 billion (4) |  | LIBOR +1.1375% |  | 2018 |  |  | — |  |  |  | 285 |
Term loan USD 2.5 billion (4) |  | LIBOR +1.50% |  | 2017-2020 |  |  | — |  |  |  | 2,000 |
Term loan JPY 58.5 billion (5) |  | JPY LIBOR +0.55% |  | 2022 |  |  | — |  |  |  | 519 |
Term loan JPY 35 billion (6) |  | 1.42% |  | 2019 |  |  | — |  |  |  | 311 |
Term loan JPY 35 billion (6) |  | JPY LIBOR +0.3% |  | 2018 |  |  | — |  |  |  | 311 |
Total loans |  |  |  |  |  |  | — |  |  |  | 3,426 |
Debentures USD 15 million (7) |  | 7.20% |  | 2018 |  |  | — |  |  |  | 15 |
Other |  | 4.79% |  | 2026 |  |  | 12 |  |  |  | 5 |
Total debentures and others |  |  |  |  |  |  | 12 |  |  |  | 20 |
Less current maturities |  |  |  |  |  |  | (1,700 | ) |  |  | (2,880 | )
Derivative instruments |  |  |  |  |  |  | 9 |  |  |  | 2 |
Less debt issuance costs |  |  |  |  |  |  | (104 | ) |  |  | (106 | )
Total senior notes and loans |  |  |  |  |  | $ | 26,700 |  |  | $ | 28,829 |
(1) | In March 2018, Teva Pharmaceutical Finance Netherlands II B.V., a Teva finance subsidiary, issued senior notes in an aggregate principal amount of €1.6 billion.
(2) | In March 2018, Teva Pharmaceutical Finance Netherlands III B.V., a Teva finance subsidiary, issued senior notes in an aggregate principal amount of $2.5 billion.
(3) | In March 2018, Teva redeemed in full its $1.5 billion 1.4% senior notes due in July 2018 and its €1.0 billion 2.88% senior notes due in April 2019.
(4) | During the first quarter of 2018, Teva prepaid approximately $2.3 billion principal amount of the remaining term loan facilities.
(5) | During the first quarter of 2018, Teva prepaid in full JPY 86.8 billion principal amount of the outstanding term loan facilities of which JPY 28.3 billion were in short-term debt as of December 31, 2017.
(6) | During the first quarter of 2018, Teva prepaid in full JPY 70 billion of its 1.42% and JPY LIBOR+0.3% outstanding term loans.
(7) | During the first quarter of 2018, Teva prepaid in full $15 million of its outstanding debentures.
(8) | In September 2018, Teva consummated a cash tender offer for certain of its outstanding senior notes. As a result of the offer, Teva redeemed $300 million aggregate principal amount of its 1.7% senior notes and €90 million principal amount of its 0.38% senior notes.
(9) | In July 2018, Teva repaid at maturity CHF 300 million of its 0.13% senior notes.
(10) | In October 2018, Teva repaid at maturity CHF 450 million of its 1.5% senior notes.
Long term debt was issued by several indirect wholly-owned subsidiaries of the Company and is fully and unconditionally guaranteed by the Company as to payment of all principal, interest, discount and additional amounts (as defined), if any. Long term debt as of December 31, 2018 is effectively denominated (taking into consideration cross currency swap agreements) in the following currencies: U.S. dollar 63%, euro 34% and Swiss franc 3%. Teva’s principal sources of short-term liquidity are its existing cash investments, liquid securities and available credit facilities, primarily its $3 billion syndicated revolving credit facility (“RCF”), which was not utilized as of December 31, 2018, as well as internally generated funds. In connection with the requirements of the RCF, the Company entered into negative pledge agreements with certain banks and institutional investors. Under the agreements, the Company and its subsidiaries have undertaken not to register floating charges on assets in favor of any third parties without the prior consent of the banks, to maintain certain financial ratios, including the requirement to maintain compliance with a net debt to EBITDA ratio, which becomes more restrictive over time, and to fulfill other restrictions, as stipulated by the agreements. As of December 31, 2018, the Company did not have any outstanding debt under the RCF, which is its only debt subject to the net debt to EBITDA covenant, and met all financial covenants thereunder. Teva expects that it will continue to have sufficient cash resources to support its debt service payments and all other financial obligations for at least twelve months from the date of this report, without utilizing the RCF. If Teva experiences lower than required cash flows to support its debt service payments, it may need to draw additional debt under the RCF. Under such circumstances, Teva will need to maintain compliance with its net debt to EBITDA ratio covenant. If such covenant will not be met, Teva believes it will be able to renegotiate and amend the covenants, or refinance the debt with different repayment terms to address such situation as circumstances warrant. Assuming utilization of the RCF, and under specified circumstances, including non-compliance with such covenants and the unavailability of any waiver, amendment or other modification thereto and the expiration of any applicable grace period thereto, substantially all of the Company’s debt could be negatively impacted by non-compliance with such covenants. Although Teva has been successful in the past in obtaining financing and renegotiating debt covenants at commercially acceptable terms, there are no guarantees it will be able to do so in the future. If such efforts could not be successfully completed on commercially acceptable terms, Teva may curtail additional planned spending or divest additional assets in order to generate enough cash to meet its debt requirements and all other financial obligations. The required annual principal payments of long-term debt, excluding debt issuance cost as of December 31, 2018, starting with the year 2020, are as follows:
|  | December 31, 2018 |
|  | (U.S. $ in millions) |
2020 |  | $ | 2,596 |
2021 |  |  | 4,205 |
2022 |  |  | 2,017 |
2023 |  |  | 4,473 |
2024 and thereafter |  |  | 13,513 |
|  | $ | 26,804 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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