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Other assets impairments, restructuring and other items | 9 Months Ended
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Sep. 30, 2022
Other assets impairments, restructuring and other items | NOTE 12 – Other assets impairments, restructuring and other items:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (U.S. $ in millions) |  |  | (U.S. $ in millions) |
Impairments of long-lived tangible assets (1) |  | $ | 4 |  |  | $ | 26 |  |  | $ | 34 |  |  | $ | 106 |
Contingent consideration |  |  | 6 |  |  |  | 9 |  |  |  | 100 |  |  |  | (7 | )
Restructuring |  |  | 25 |  |  |  | 28 |  |  |  | 117 |  |  |  | 96 |
Other |  |  | 1 |  |  |  | (1 | ) |  |  | 31 |  |  |  | 32 |
Total |  | $ | 36 |  |  | $ | 62 |  |  | $ | 282 |  |  | $ | 227 |
(1) | Including impairments related to exit and disposal activities.
Impairments
Impairments of tangible assets for the three months ended September 30, 2022 and 2021 were $4 million and $26 million, respectively. Impairments of tangible assets for the nine months ended September 30, 2022 and 2021 were $34 million and $106 million, respectively. The impairment for the nine months ended September 30, 2022 was mainly related to certain assets in North America. The impairment for the nine months ended September 30, 2021 was mainly related to certain assets in Europe and North America. 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 September 30, 2022, Teva recorded an expense of $6 million for contingent consideration, compared to an income of $9 million in the three months ended September 30, 2021. In the nine months ended September 30, 2022, Teva recorded an expense of $100 million for contingent consideration, compared to an income of $7 million in the nine months ended September 30, 2021. The expense in the first nine months of 2022 was mainly related to changes in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid ® ), which was part of the Actavis Generics a cquisition. Restructuring In the three months ended September 30, 2022, Teva recorded $25 million of restructuring expenses, compared to $28 million in the three months ended September 30, 2021. The expenses for the three months ended September 30, 2022 and September 30, 2021 were primarily related to network consolidation activities and residual expenses of the restructuring plan announced in 2017. In the nine months ended September 30, 2022, Teva recorded $117 million of restructuring expenses, compared to $96 million in the nine months ended September 30, 2021. The expenses for the nine months ended September 30, 2022 and September 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 restructuring costs:
|  | Three months ended September 30, |
|  | 2022 |  |  | 2021 |
|  | (U.S. $ in millions) |
Restructuring |  |  |  |  |  |  |  |
Employee termination |  | $ | 32 |  |  | $ | 24 |
Other |  |  | (7 | ) |  |  | 4 |
Total |  | $ | 25 |  |  | $ | 28 |
|  | Nine months ended September 30, |
|  | 2022 |  |  | 2021 |
|  | (U.S. $ in millions) |
Restructuring |  |  |  |  |  |  |  |
Employee termination |  | $ | 95 |  |  | $ | 84 |
Other |  |  | 22 |  |  |  | 12 |
Total |  | $ | 117 |  |  | $ | 96 |
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, 2022 |  | $ | (131 | ) |  | $ | (7 | ) |  | $ | (138 | )
Provision |  |  | (95 | ) |  |  | (22 | ) |  |  | (117 | )
Utilization and other* |  |  | 114 |  |  |  | 22 |  |  |  | 136 |
Balance as of September 30, 2022 |  | $ | (112 | ) |  | $ | (7 | ) |  | $ | (119 | )
|  | Employee termination costs |  |  | Other |  |  | Total |
|  | (U.S. $ in millions ) |
Balance as of January 1, 2021 |  | $ | (115 | ) |  | $ | (7 | ) |  | $ | (122 | )
Provision |  |  | (84 | ) |  |  | (12 | ) |  |  | (96 | )
Utilization and other* |  |  | 78 |  |  |  | 12 |  |  |  | 90 |
Balance as of September 30, 2021 |  | $ | (121 | ) |  | $ | (7 | ) |  | $ | (128 | )
* | Includes adjustments for foreign currency translation.
Significant regulatory and other events 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 water supply remediation is expected to be completed during the fourth quarter of 2022, and in the meantime the site is operating under an interim water solution without any material impact expected on compliance and supply capacity. The impact to Teva’s financial results for the three and nine months ended September 30, 2022 was immaterial. In June 2021, the Company temporarily paused manufacturing at its Irvine, California facility in the United States, and suspended release of product from the facility pending completion of an open manufacturing investigation. In July 2021, the FDA initiated an establishment inspection at the facility. On August 18, 2021, the Company issued field alert reports to the FDA for products manufactured at the Irvine facility and put Irvine manufactured products in Teva’s distribution center on hold. On August 20, 2021, the FDA completed its inspection and issued a Form FDA-483 to the Irvine facility with ten observations and, on December 17, 2021, the FDA notified the Company that the inspection classification of this site is “official action indicated” (“OAI”). Teva began working diligently to address the FDA’s concerns in a manner consistent with current good manufacturing practice (“CGMP”) requirements, and was in discussions with the FDA Drug Shortage Staff (DSS) and FDA Office of Manufacturing Quality (OMQ) to recommence distribution, release and manufacture of certain medically necessary products from the site under defined controls and protocols. On March 22, 2022, the Company announced its decision to permanently cease all manufacturing activities and to close the site, and to transfer certain products to other facilities. Teva will remain in contact with FDA regarding the status of the Irvine, California site to ensure that the Company continues to comply with all relevant CGMP requirements, particularly those involved with product transfers to other sites within the Teva network. If Teva is unable to address FDA inspection issues satisfactorily, it could be subject to additional regulatory actions. Teva has considered these developments and, during the nine months ended September 30, 2022, recorded $90 million costs in its financial statements related to this matter. Teva will continue to assess potential financial implications, including loss of revenues, impairments, inventory write offs, customer penalties, costs of additional remediation and/or FDA enforcement actions.

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