(1)	Including impairments related to exit and disposal activities

Impairments

Impairments of tangible assets for the three months ended June 30, 2021 and 2020 were $32 million and $277

million, respectively. The impairment for the three months ended June 30, 2021 was mainly related to certain assets in Europe. The impairment for the three months ended June 30, 2020 was mainly related to the agreement to sell certain assets from Teva’s business venture in Japan, which was completed in February 2021.

Impairments of tangible assets for the six months ended June 30, 2021 and 2020 were $80 million and $352

million, respectively. The impairment for the six months ended June 30, 2021 was mainly related to certain assets in Europe. The impairment for the six months ended June 30, 2020 was mainly related to the agreement to sell certain assets from Teva’s business venture in Japan, which was completed in February 2021 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 network consolidation

activities.

Contingent consideration

In the three months ended June 30, 2021, Teva recorded income of $19 million for contingent consideration, compared to an expense of $76

million in the three months ended June 30, 2020. The income in the second quarter of 2021 was mainly related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid®), which was part of the Actavis Generics acquisition. The expense in the second quarter of 2020 was mainly related to a change in the estimated future royalty payments to Eagle Pharmaceuticals, Inc. (“Eagle”) in connection with expected future bendamustine sales.

In the six months ended June 30, 2021, Teva recorded

income of $16 million for contingent consideration, compared to an expense of $83

million in the six months ended June 30, 2020. The income in the first six months of 2021 was mainly related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid®), which was part of the Actavis Generics acquisition. The expense in the first six months of 2020 was mainly related to a change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales.

Restructuring

In the three months ended June 30, 2021, Teva recorded $13 million of restructuring income, compared to $33

million of restructuring expenses in the three months ended June 30, 2020. The income for the three months ended June 30, 2021 was primarily related to reassessment of the estimate of a prior employee termination provision.

In the six months ended June 30, 2021, Teva recorded $69 million of restructuring expenses, compared to $73 million in the six months ended June 30, 2020. The expenses for the

six months ended June 30, 2021 were primarily related to network consolidation activities and residual expenses of the restructuring plan announced in 2017.

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 June 30,
	2021			2020
	(U.S. $ in millions)
Restructuring
Employee termination	$	(19	)	$	3
Other		6			30

Total	$	(13	)	$	33


	Six months ended June 30,
	2021		2020
	(U.S. $ in millions)
Restructuring
Employee termination	$	61	$	36
Other		8		36

Total	$	69	$	73

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, 2021	$	(115	)	$	(7	)	$	(122	)
Provision		(61	)		(8	)		(69	)
Utilization and other*		56			8			64

Balance as of June 30, 2021	$	(120	)	$	(7	)	$	(127	)


	Employee termination costs			Other			Total
	(U.S. $ in millions )
Balance as of January 1, 2020	$	(208	)	$	(7	)	$	(215	)
Provision		(36	)		(36	)		(73	)
Utilization and other*		114			36			150

Balance as of June 30, 2020	$	(130	)	$	(7	)	$	(137	)

*	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 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 it that the site continues to be classified as OAI. A subsequent FDA inspection in May 2021 concluded with five observations, which Teva addressed in its response. The response is pending with the FDA. If Teva is unable to remediate the findings to the FDA’s satisfaction, Teva may face additional consequences. These would potentially include continued 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 $46.3 million in revenues from this site during the remainder of 2021, 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 Teva’s 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 second half of 2020, Teva completed partial remediation of this issue and restarted limited supply from its Goa facilities. The site experienced some additional delays in the first quarter of 2021 due to labor related issues, but the situation stabilized during the second quarter of 2021. The impact to Teva’s financial results for the six months ended June 30, 2021 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.

In June 2021, the Company temporarily paused manufacturing at its Irvine, California facility pending completion of an open manufacturing investigation. In July 2021, the FDA initiated an establishment inspection at the facility. During the inspection, the Company opened additional investigations, and considered proactively to suspend distribution of product from the Irvine facility until completion of these investigations. Teva continues to manage the ongoing FDA inspection, and will address any concerns raised by FDA. A decision to suspend distribution for an extended period or if Teva is unable to address additional inspection issues satisfactorily, could subject Teva to additional consequences. Teva has considered these developments and has not recorded an impairment or other loss in the financial statements. Teva will continue to assess potential financial implications, including due to loss of revenues, impairments, inventory write offs, customer penalties, idle capacity charges, costs of additional remediation and/or FDA enforcement actions.