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6-K
TEVA PHARMACEUTICAL INDUSTRIES LTD filed this Form 6-K on 08/03/2017
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Table of Contents

Impairments, Restructuring and Others

In the second quarter of 2017, we recorded expenses of $419 million for impairments, restructuring and others, compared to expenses of $712 million in the second quarter of 2016. The expenses recorded in the second quarter of 2017 were comprised of:

 

    Impairment of long-lived assets of $145 million, including $68 million related to our facility in Godollo, Hungary and $43 million related to IPR&D in Rimsa;

 

    Restructuring expenses of $98 million, mainly related to the integration of Actavis Generics and other efficiency measures;

 

    Contingent consideration expenses of $140 million, mainly related to Bendeka® royalties; and

 

    Integration and acquisition expenses of $33 million.

Further integration and other efficiency initiatives may drive additional restructuring expenses throughout the year.

Legal Settlements and Loss Contingencies

In the second quarter of 2017, we recorded expenses of $324 million for legal settlements and loss contingencies, compared to income of $166 million in the second quarter of 2016. The expense in the second quarter of 2017 mainly consisted of a reserve for an award to GSK with respect to the carvedilol patent litigation.

Goodwill Impairment Charge

We recognized a goodwill impairment charge of $6.1 billion in the second quarter of 2017 in connection with our U.S. generics reporting unit. See note 7 to our consolidated financial statements.

Operating (Loss) Income

Operating loss was $5.7 billion in the second quarter of 2017, compared to operating income of $361 million in the second quarter of 2016.

The operating loss was mainly due to the goodwill impairment charge.

The decrease in operating margin was 108.1 points, mainly due to the goodwill impairment charge (107.3 points).

The following table presents a reconciliation of our segment profit to our consolidated operating income for the three months ended June 30, 2017 and 2016:

 

     Three months ended  
     June 30,  
     2017      2016  
     U.S. $ in millions  

Generic medicines profit

   $ 691      $ 604  

Specialty medicines profit

     1,162        1,265  
  

 

 

    

 

 

 

Total segment profit

     1,853        1,869  

Profit of other activities

     18        13  
  

 

 

    

 

 

 
     1,871        1,882  

Amounts not allocated to segments:

     

Amortization

     411        193  

General and administrative expenses

     272        311  

Goodwill impairment charge

     6,100        —    

Impairments, restructuring and others

     419        712  

Inventory step-up

     3        85  

Purchase of research and development in process

     26        —    

Costs related to regulatory actions taken in facilities

     15        39  

Legal settlements and loss contingencies

     324        166  

Other unallocated amounts

     41        15  
  

 

 

    

 

 

 

Consolidated operating income (loss)

     (5,740      361  
  

 

 

    

 

 

 

Financial expenses - net

     238        105  
  

 

 

    

 

 

 

Consolidated income (loss) before income taxes

   $ (5,978    $ 256  
  

 

 

    

 

 

 

 

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