NOTE 18—OTHER ASSETS IMPAIRMENTS, RESTRUCTURING AND OTHER ITEMS:


	Year ended December 31,
	2018			2017		2016
	(U.S. $ in millions)
Impairment of long-lived tangible assets (1)	$	500		$	544	$	157
Contingent consideration (see note 3)		57			154		83
Acquisition, integration and related costs		13			105		261
Restructuring		488			535		245
Venezuela deconsolidation charge (see note 1)		—			396		—
Other		(71	)		102		84

Total	$	987		$	1,836	$	830

(1)	Including impairments related to exit and disposal activities

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 changes its plans on any given asset and/or the assumptions underlying such plan, additional impairments may be recorded in the future.

Impairments

•

Impairments of property, plant and equipment for the year ended 2018 were $500 million, mainly consisting of:

$245 million mainly due to: (a) $180 million machinery and equipment impairment in Japan in connection with ongoing regulatory pricing reductions and generic competition; and (b) $28 million impairment related to a plant in China;

$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 2.

Contingent consideration

In 2018, Teva recorded $57 million of contingent consideration expenses, compared to $154 million in 2017. The expenses in 2018 consisted mainly of $40 million related to an increase in the expected future royalty payments to Eagle Pharmaceuticals due to the orphan drug status granted to BENDEKA.

Restructuring

In 2018, Teva recorded $488 million of restructuring expenses, compared to $535 million in 2017. The expenses in 2018 were primarily related to headcount reductions across all functions, as part of the restructuring plan announced in 2017.

In December 2017, Teva announced a comprehensive restructuring plan intended to significantly reduce its cost base, unify and simplify its organization and improve business performance, profitability, cash flow generation and productivity.

Since the announcement of its restructuring plan, Teva reduced its global headcount by approximately 10,300 full-time-equivalent employees.

The following tables provide the components of costs associated with Teva’s restructuring plan, including other costs associated with Teva’s restructuring plan and recorded under different items:


	Year ended December 31,
	2018		2017		2016
	(U.S. $ in millions)
Restructuring
Employee termination	$	410	$	443	$	211
Other		78		92		34

Total	$	488	$	535	$	245

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, 2017	$	(144	)	$	(9	)	$	(153	)
Provision		(443	)		(92	)		(535	)
Utilization and other*		293			84			377

Balance as of December 31, 2017	$	(294	)	$	(17	)	$	(311	)

Provision		(410	)		(78	)		(488	)
Utilization and other*		500			66			566

Balance as of December 31, 2018	$	(204	)	$	(29	)	$	(233	)

*	Includes adjustments for foreign currency translation.

Significant regulatory events

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. In October 2018, the FDA notified Teva that the inspection of the site is classified as “official action indicated” (OAI). On February 5, 2019, Teva received a warning letter from the FDA that contains four enumerated concerns related to production, quality control, and investigations at this site. Teva is working diligently to investigate the FDA’s concerns in a manner consistent with current good manufacturing practice (CGMP) requirements, and to address those concerns as quickly and as thoroughly as possible. If Teva is unable to remediate the warning letter findings to the FDA’s satisfaction, it may face additional consequences, including delays in FDA approval for future products from the site, financial implications due to loss of revenues, impairments, inventory write offs, customer penalties, idle capacity charges, costs of additional remediation and possible FDA enforcement action. Teva expects to generate approximately $255 million in revenues from this site in 2019, assuming remediation or enforcement does not cause any unscheduled slowdown or stoppage at the facility.

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 a previously unknown impurity called NDMA found in valsartan API supplied to Teva by Zhejiang Huahai Pharmaceutical. Since July 2018, Teva has been actively engaged with regulatory agencies around the world in reviewing its valsartan and other sartan products for NDMA and other related impurities and, where necessary, has initiated additional voluntary recalls. The impact of this recall on Teva’s 2018 financial statements was $51 million, primarily related to inventory reserves. Teva expects to continue to experience loss of revenues and profits in connection with this matter. In addition, multiple lawsuits have been filed in connection with this matter, for which litigation costs are currently being incurred. Teva may also incur customer penalties, impairments and litigation costs going forward.