XML 29 R19.htm IDEA: XBRL DOCUMENT
v3.19.1

Fair Value Measurement | 3 Months Ended
--- | ---
Mar. 31, 2019
Fair Value Measurement | NOTE 12 – Fair value measurement: Teva’s financial instruments consist mainly of cash and cash equivalents, investment in securities, current and non-current receivables, short-term debt, current and non-current payables, contingent consideration, senior notes and loans, convertible senior debentures and derivatives. The fair value of the financial instruments included in working capital and non-current receivables and payables approximates their carrying value. The fair value of loans and bank facilities approximates their carrying value, since they bear interest at rates close to the prevailing market rates. Financial instruments measured at fair value The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable inputs that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible, and considers counterparty credit risk in its assessment of fair value. There were no transfers between Level 1, Level 2 and Level 3 during the first three months of 2019. Financial items carried at fair value as of March 31, 2019 and December 31, 2018 are classified in the tables below in one of the three categories described above:
|  | March 31, 2019 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (U.S. $ in millions) |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money markets |  | $ | 319 |  |  | $ | — |  |  | $ | — |  |  | $ | 319 |
Cash, deposits and other |  |  | 1,654 |  |  |  | — |  |  |  | — |  |  |  | 1,654 |
Investment in securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 52 |  |  |  | — |  |  |  | — |  |  |  | 52 |
Other, mainly debt securities |  |  | 2 |  |  |  | — |  |  |  | 13 |  |  |  | 15 |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset derivatives—options and forward contracts |  |  | — |  |  |  | 32 |  |  |  | — |  |  |  | 32 |
Asset derivatives—cross currency swaps |  |  | — |  |  |  | 76 |  |  |  | — |  |  |  | 76 |
Liabilities derivatives—options and forward contracts |  |  | — |  |  |  | (11 | ) |  |  | — |  |  |  | (11 | )
Liabilities derivatives—interest rate and cross-currency swaps |  |  | — |  |  |  | (28 | ) |  |  | — |  |  |  | (28 | )
Contingent consideration* |  |  | — |  |  |  | — |  |  |  | (405 | ) |  |  | (405 | )
Total |  | $ | 2,027 |  |  | $ | 69 |  |  | $ | (392 | ) |  | $ | 1,704 |
|  | December 31, 2018 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | (U.S. $ in millions) |
Cash and cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money markets |  | $ | 203 |  |  | $ | — |  |  | $ | — |  |  | $ | 203 |
Cash, deposits and other |  |  | 1,579 |  |  |  | — |  |  |  | — |  |  |  | 1,579 |
Investment in securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | 51 |  |  |  | — |  |  |  | — |  |  |  | 51 |
Other, mainly debt securities |  |  | 2 |  |  |  | — |  |  |  | 10 |  |  |  | 12 |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Asset derivatives—options and forward contracts |  |  | — |  |  |  | 18 |  |  |  | — |  |  |  | 18 |
Asset derivatives—cross-currency swaps |  |  | — |  |  |  | 58 |  |  |  | — |  |  |  | 58 |
Liability derivatives—options and forward contracts |  |  | — |  |  |  | (26 | ) |  |  | — |  |  |  | (26 | )
Liabilities derivatives—interest rate and cross-currency swaps |  |  | — |  |  |  | (50 | ) |  |  | — |  |  |  | (50 | )
Contingent consideration* |  |  | — |  |  |  | — |  |  |  | (507 | ) |  |  | (507 | )
Total |  | $ | 1,835 |  |  | $ | — |  |  | $ | (497 | ) |  | $ | 1,338 |
* | Contingent consideration represents liabilities recorded at fair value in connection with acquisitions.
Teva determined the fair value of the liability for the contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration is based on several factors, such as: the cash flows projected from the success of unapproved product candidates; the probability of success of product candidates, including risks associated with uncertainty regarding achievement and payment of milestone events; the time and resources needed to complete the development and approval of product candidates; the life of the potential commercialized products and associated risks of obtaining regulatory approvals in the U.S. and Europe, and the risk adjusted discount rate for fair value measurement. The contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate. Changes in the fair value of contingent consideration are recorded in earnings. Significant changes in unobservable inputs, mainly the probability of success and cash flows projected, could result in material changes to the contingent consideration liability. The following table summarizes the activity for those financial assets and liabilities where fair value measurements are estimated utilizing Level 3 inputs:
|  | Three months ended |
|  | March 31, 2019 |
|  | (U.S. $ in millions) |
Fair value at the beginning of the period |  | $ | (497 | )
Revaluation of debt securities |  |  | 3 |
Adjustments to provisions for contingent consideration: |  |  |  |
Actavis Generics transaction—see note 14 |  |  | 106 |
Labrys transaction |  |  |  |
Eagle transaction |  |  | (35 | )
Settlement of contingent consideration: |  |  |  |
Eagle transaction |  |  | 31 |
Fair value at the end of the period |  | $ | (392 | )
Financial instruments not measured at fair value Financial instruments measured on a basis other than fair value mostly consist of senior notes and convertible senior debentures and are presented in the table below in terms of fair value:
|  | Estimated fair value* |
|  | March 31, |  |  | December 31, |
|  | 2019 |  |  | 2018 |
|  | (U.S. $ in millions) |
Senior notes included under senior notes and loans |  | $ | 23,622 |  |  | $ | 23,560 |
Senior notes and convertible senior debentures included under short-term debt |  |  | 2,732 |  |  |  | 2,140 |
Total |  | $ | 26,354 |  |  | $ | 25,700 |
* | The fair value was estimated based on quoted market prices, where available.

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration