XML 24 R14.htm IDEA: XBRL DOCUMENT
v3.20.1

Goodwill | 3 Months Ended
--- | ---
Mar. 31, 2020
Goodwill | NOTE 6 – Goodwill: The changes in the carrying amount of goodwill for the period ended March 31, 2020 were as follows:
|  | North America |  |  | Europe |  |  | International Markets |  |  | Other |  |  | Total |
|  | (U.S. $ in millions) |  |  |  |
Balance as of December 3 1, 2019 |  | $ | 11,091 |  |  | $ | 8,536 |  |  | $ | 2,532 |  |  | $ | 2,687 |  |  | $ | 24,846 |
Changes during the period: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Translation differences |  |  | (31 | ) |  |  | (143 | ) |  |  | (182 | ) |  |  | — |  |  |  | (357 | )
Balance as of March 31, 2020 |  | $ | 11,060 |  |  | $ | 8,393 |  |  | $ | 2,350 |  |  | $ | 2,687 |  |  | $ | 24,490 |
Teva operates its business through three reporting segments: North America, Europe and International Markets. Each of these business segments is a reporting unit. Additional reporting units include Teva’s production and sale of APIs to third parties (“Teva API”) and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis. The Teva API and Medis reporting units are included under “Other” in the above table. See note 15 for additional segment information. Teva determines the fair value of its reporting units using the income approach. The income approach is a forward-looking approach for estimating fair value. Within the income approach, the method used is the discounted cash flow method. Teva starts with a forecast of all the expected net cash flows associated with the reporting unit, which includes the application of a terminal value, and then applies a discount rate to arrive at a net present value amount. Cash flow projections are based on Teva’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on the weighted average cost of capital (“WACC”), adjusted for the relevant risk associated with country-specific and business-specific characteristics. If any of these expectations were to vary materially from Teva’s assumptions, Teva may record an impairment of goodwill allocated to these reporting units in the future. First Quarter Developments During the first quarter of 2020, management assessed developments that occurred during the quarter to determine if it was more likely than not that the fair value of any of its reporting units was below its carrying amount. As part of this assessment, management also considered the sensitivity of its conclusions as they relate to changes in the estimates and assumptions used in the latest forecast available for each period. Teva evaluated qualitative factors, including expected effects of COVID-19 on its business. The impact of the COVID-19 pandemic on Teva’s business has been evaluated and it is not expected to significantly alter the Company’s business model at this time. Based on this assessment, management has concluded that it is not more likely than not that the fair value of any of the reporting units is below its carrying value as of March 31, 2020 and, therefore, no quantitative assessment was performed. If circumstances were to change from Teva’s expectations about the duration or impact of COVID-19, one or more business units could be impacted, which may result in an impairment. Market Capitalization Teva analyzed the aggregate fair value of its reporting units, calculated as part of the annual goodwill impairment test performed in the fourth quarter of 2019, compared to its market capitalization. At December 31, 2019, Teva’s market capitalization was below management’s assessment of the aggregate fair value of the Company’s reporting units. Management viewed this as a temporary situation mainly attributed to an acute reaction by the market primarily related to opioid and price fixing litigation risks. Management continues to believe market concerns regarding the uncertainty of these matters are impacting its market capitalization. However, developments in the case are expected to clarify the outlook with regards to the opioid litigation, assuming the proposed settlement framework is finalized in 2020. During 2020, Teva experienced additional volatility in its share price resulting from the impact of the COVID-19 pandemic on equity markets and the global economy. Management believes the current market reaction is based upon the lack of information regarding the impact the pandemic might have on Teva’s business and the entire economy. The economic uncertainties in the market related to the COVID-19 pandemic, along with the uncertainties related to Teva’s litigations, result in a similar gap between book value and market value at the date of this filing as compared to the gap that existed at December 31, 2019. Further, as of the date of this filing, the Company’s market capitalization plus a reasonable control premium exceeds its book value. Based on management’s assessment of the developments in the first quarter of 2020 and considering the Company’s current market capitalization as comparable to that of December 31, 2019, management concluded that the estimated fair value of its reporting units more likely than not exceeds its carrying amount. Management will continue to monitor business conditions, including the impact of COVID-19, and will consider future developments in Teva’s market capitalization when assessing whether additional goodwill impairment is required in future periods.

X
- Definition The entire disclosure for goodwill. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2144439 + Details
Name: | us-gaap_GoodwillDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration