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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2020

Summary of Financial Items Carried at Fair Value

Financial items carried at fair value as of September 30, 2020 and December 31, 2019 are classified in the tables below in one of the three categories of fair value levels:

		September 30, 2020
		Level 1				Level 2				Level 3				Total
		(U.S. $ in millions)
Cash and cash equivalents:
Money markets		$	191			$	—			$	—			$	191
Cash, deposits and other			1,636				—				—				1,636
Investment in securities:
Equity securities*			20				—				297				317
Other, mainly debt securities			1				—				9				10
Derivatives:
Asset derivatives—options and forward contracts			—				36				—				36
Liability derivatives—options and forward contracts			—				(67	)			—				(67	)
Contingent consideration**			—				—				(279	)			(279	)
Total		$	1,848			$	(31	)		$	27			$	1,844

		December 31, 2019
		Level 1				Level 2				Level 3				Total
		(U.S. $ in millions)
Cash and cash equivalents:
Money markets		$	577			$	—			$	—			$	577
Cash, deposits and other			1,398				—				—				1,398
Investment in securities:
Equity securities			42				—				—				42
Other, mainly debt securities			2				—				12				14
Derivatives:
Asset derivatives—options and forward contracts			—				32				—				32
Liability derivatives—options and forward contracts			—				(41	)			—				(41	)
Liability derivatives—interest rate and cross-currency swaps			—				(22	)			—				(22	)
Contingent consideration**			—				—				(460	)			(460	)
Total		$	2,019			$	(31	)		$	(448	)		$	1,540

* During the third quarter of 2020, Teva recorded a gain of $134 million under share in profits of associated companies, net, reflecting the difference between the book value of Teva’s investment in American Well Corporation (“American Well”) and its fair value as of the date it completed its initial public offering in September 2020. The investment was reclassified from “investment in associated companies” to “investment in marketable securities,” since Teva no longer has significant influence in American Well. On September 30, 2020, Teva recorded an additional gain of $118 million under financial expenses, net, reflecting the revaluation gain of this security as of September 30, 2020.  

** Contingent consideration represents liabilities recorded at fair value in connection with acquisitions.

Summary of Fair Value of Financial Liabilities Measured Using Level 3 Inputs

The following table summarizes the activity for those financial assets and liabilities where fair value measurements are estimated utilizing Level 3 inputs:

		Nine months ended September 30, 2020
		(U.S. $ in millions)
Fair value at the beginning of the period		$	(448	)
Transfer into Level 3- equity securities			179
Revaluation of equity securities			118
Revaluation of debt securities			(3	)
Adjustments to provisions for contingent consideration:
Actavis Generics transaction			161
Eagle transaction			(65	)
Settlement of contingent consideration:
Eagle transaction			85
Fair value at the end of the period		$	27

Summary of Financial Instrument Measured on a Basis Other Than Fair Value

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 (level 1 inputs):

		Fair value*
		September 30,				December 31,
		2020				2019
		(U.S. $ in millions)
Senior notes included under senior notes and loans		$	22,194			$	22,686
Senior notes and convertible senior debentures included under short-term debt			1,968				2,318
Total		$	24,162			$	25,004

* Based on quoted market price. See note 7 for carrying value.

X

- Definition

Tabular disclosure of assets measured at fair value measured on a recurring or nonrecurring basis. Includes, but is not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2.

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Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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