(1)	Including impairments related to exit and disposal activities

Impairments

Impairments of tangible assets for the three months

ended September

30, 2020 and

2019 were $56 million and $28 million, respectively. The impairment for the three months ended September 30, 2020 was mainly related to the intention to sell certain assets

Teva’s

International

Markets

and Europe segments

Impairments of tangible assets for the nine months ended September 30, 2020 and 2019 were $408 million and $96 million, respectively. The impairment for the nine months ended September 30, 2020 was mainly related to the intention to sell certain assets from Teva’s business venture in Japan and plant rationalization. See note 2.

Teva may record additional impairments in the future, to the extent it changes its plans on any given asset and/or the assumptions underlying such plans, as a result of its plant rationalization plan.

Contingent consideration

In the three months ended September 30, 2020, Teva recorded an

income

of $179 million for contingent consideration, compared to an expense of $51 million in the three months ended September 30, 2019.

The income in the third quarter of 2020 was mainly related to a change in the future

royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

), which was part of the Actavis Generics acquisition.

In the nine months ended September 30, 2020, Teva recorded an income of $96 million for contingent consideration, compared to an expense of $4

million in the nine months ended September 30, 2019. The income in the first nine months of 2020 was mainly related to a change in the future

royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

), which was part of the Actavis Generics acquisition, partially offset by the change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales.

Restructuring

In the three months ended September 30, 2020, Teva recorded $9 million of restructuring expenses, compared to $61 million in the three months ended September 30, 2019.

In the nine months ended September 30, 2020, Teva recorded $82 million of restructuring expenses, compared to $140 million in the

nine

months ended September 30, 2019.

The expenses for the three and nine months ended September 30, 2020 were primarily related to residual expenses of the restructuring plan announced in 2017 and other network consolidation

activities

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:


	Three months ended September 30,
	2020		2019
	(U.S. $ in millions)
Restructuring
Employee termination	$	3	$	49

Other		7		11

Total	$	9	$	61


	Nine months ended September 30,
	2020		2019
	(U.S. $ in millions)
Restructuring
Employee termination	$	39	$	105

Other		43		34

Total	$	82	$	140

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, 2020	$	(208	)	$	(7	)	$	(215	)
Provision		(39	)		(43	)		(82	)
Utilization and other*		145			43			188

Balance as of September 30, 2020	$	(102	)	$	(7	)	$	(109	)

*	Includes adjustments for foreign currency translation.

Significant regulatory and other 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 contained four additional enumerated concerns related to production, quality control, and investigations at this site. Teva has been working diligently to address 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. An FDA follow up inspection occurred in January 2020, resulting in some follow up findings, and Teva received a letter from the FDA dated April 24, 2020 notifying that the site continues to be classified as OAI. If Teva is unable to remediate the findings to the FDA’s satisfaction, it may face additional consequences. These would potentially include 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 $150 million in revenues from this site in 2020, assuming remediation or enforcement does not cause any unscheduled slowdown or stoppage at the facility, however delays in FDA approvals of future products from the site may occur.

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 nitrosamine impurity called NDMA found in valsartan API supplied by Zhejiang Huahai Pharmaceuticals Co. Ltd. (“Huahai”). Since July 2018, Teva has been actively engaged with global regulatory authorities in reviewing its sartan and other products to determine whether NDMA and/or other related nitrosamine impurities are present in specific products. Where necessary, Teva has initiated additional voluntary recalls. In December 2019, Teva reached a settlement with Huahai resolving its claims related to certain sartan API supplied by Huahai. Under the settlement agreement, Huahai agreed to compensate Teva for some of its direct losses and provide it with prospective cost reductions for API. The settlement does not release Huahai from liability for any losses Teva may incur as a result of third party personal injury or product liability claims relating to the sartan API at issue. In addition, multiple lawsuits have been filed in connection with this matter, which may lead to additional customer penalties, impairments and litigation costs.

In the second quarter of 2020, Teva’s operations in its manufacturing facilities in Goa, India were temporarily suspended due to a water supply issue. During the third quarter of 2020, Teva completed the first step of remediation of this issue and restarted supply from its Goa facilities. The impact to Teva’s financial results for the nine months ended September 30, 2020 was immaterial, however, if the full remediation takes longer than expected there may be further loss of sales, customer penalties or impairments to related assets.