TEVA PHARMACEUTICAL INDUSTRIES LTD
For the period ended Jun 5, 2025. Filed Apr 9, 2025.
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Jun 5, 2025 · Filed Apr 9, 2025
Contents
Appendix A
Reconciliations of GAAP Reported to Non-GAAP Financial Information
This Proxy Statement contains certain financial information that differs from what is reported under accounting principles generally accepted in the United States (“GAAP”). Thesenon-GAAP financial measures includenon-GAAP net income, non-GAAP earnings per share (“EPS”), non-GAAP operating income, non-GAAP operating margin and free cash flow. We present thesenon-GAAP financial measures as management believes that such data provide useful information to investors because they are used by management and our Board of Directors, in conjunction with other performance metrics, to evaluate our operational performance, to prepare and evaluate our work plans and annual budgets and ultimately to evaluate the performance of management, including annual compensation. While other qualitative factors and judgment also affect annual compensation, the principal quantitative element in the determination of such compensation are performance targets tied to the work plan, which are based on thesenon-GAAP measures.
Non-GAAP financial measures have no standardized meaning and accordingly have limitations in their usefulness to investors. Investors are cautioned that, unlike financial measures prepared in accordance with U.S. GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies. Thesenon-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses our performance. The limitations of usingnon-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all events during a period and may not provide a comparable view of our performance to other companies in the pharmaceutical industry. Investors should consider ournon-GAAP financial measures in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP.
123 |Teva Pharmaceutical Industries Ltd. 2025 Proxy Statement
APPENDIX A
Non-GAAP Net Income and Non-GAAP EPS
The following table presents ournon-GAAP net income andnon-GAAP EPS for the years ended December 31, 2024 and 2023, as well as reconciliations of each measure to their nearest GAAP equivalents:
| Year ended December 31, | |||
|---|---|---|---|
| ($ in millions except per share amounts) · 2024 · 2023 | |||
| Net income (Loss) attributable to Teva | ($) | (1,639) | (559) |
| Increase (decrease) for excluded items: | |||
| Amortization of purchased intangible assets | 588 | 616 | |
| Legal settlements and loss contingencies(1) | 761 | 1,043 | |
| Goodwill impairment(2) | 1,280 | 700 | |
| Impairment of long-lived assets(3) | 1,275 | 378 | |
| Restructuring costs | 74 | 111 | |
| Equity compensation | 123 | 121 | |
| Contingent consideration(4) | 303 | 548 | |
| Loss (Gain) on sale of business | (15) | (3) | |
| Accelerated depreciation | 13 | 80 | |
| Financial expenses | 49 | 66 | |
| Items attributable to non-controlling interests(3) | (339) | (92) | |
| Other non-GAAP items(5) | 229 | 335 | |
| Corresponding tax effects and unusual tax items(6) | 157 | (446) | |
| Non-GAAP net income attributable to Teva | ($) | 2,860 | 2,898 |
| Non-GAAP tax rate(7) | 15.3% | 13.0% | |
| GAAP diluted earnings (loss) per share attributable to Teva | ($) | (1.45) | (0.50) |
| EPS difference(8) | 3.94 | 3.06 | |
| Non-GAAP diluted EPS attributable to Teva(8) | ($) | 2.49 | 2.56 |
| Non-GAAP average number of shares (in millions)(8) | 1,150 | 1,131 | |
| (1) | Adjustments for legal settlements and loss contingencies in 2024 were mainly related to legal expenses of $357 million recorded in connection with a decision by the European Commission in its antitrust investigation into COPAXONE, and an update to the estimated settlement provision of $278 million for the opioid cases (mainly the effect of the passage of time on the net present value of the discounted payments and the settlement agreement with the city of Baltimore). Adjustments for legal settlements and loss contingencies in 2023 were mainly related to an update to the estimated provision of $370 million related to the DOJ patient assistance program litigation, an update to the estimated settlement provision of $269 million related to the remaining opioid cases, the provision of $207 million relating to the U.S. DOJ criminal antitrust charges on the marketing and pricing of certain Teva USA generic products and the provision of $100 million related to the settlement of the reverse-payment antitrust litigation over certain HIV medicines. |
| (2) | In 2024 goodwill impairment charges of $1,280 million were recorded related to our API reporting unit. In 2023 goodwill impairment charges of $700 million were recorded related to our International Markets reporting unit. |
| (3) | Adjustments for impairment of long-lived assets and items attributable to non-controlling interests in 2024 primarily consisted of $715 million and $342 million, respectively, related to the classification of our business venture in Japan as held for sale. In addition, in 2024 we recognized an impairment of $275 million related to the classification of our API business (including its R&D, manufacturing and commercial activities) as held for sale. |
| (4) | Adjustments for contingent consideration primarily related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide capsules (the generic version of Revlimid®) of $270 million and $422 million, in 2024 and 2023, respectively. |
| (5) | Other non-GAAP items include other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, primarily related to the rationalization of our plants, certain inventory write-offs, material litigation fees and other unusual events. |
| (6) | Adjustments for corresponding tax effects and unusual tax items in 2024 include a tax item in an amount of $495 million related to the settlement agreement with the ITA to settle certain litigation with respect to taxes payable for the Company’s taxable years 2008 through 2020. |
| (7) | Non-GAAP tax rate is tax expenses (benefit) excluding the impact of non-GAAP tax adjustments presented above as a percentage of income (loss) before income taxes excluding the impact of non-GAAP adjustments presented above. |
| (8) | EPS difference and diluted non-GAAP EPS are calculated by dividing our non-GAAP net income attributable to Teva by our non-GAAP diluted weighted average number of shares. |
124 |Teva Pharmaceutical Industries Ltd. 2025 Proxy Statement
APPENDIX A
Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin
The following table presents ournon-GAAP operating income (loss) andnon-GAAP operating margin for the years ended December 31, 2024 and 2023, as well as reconciliations of each measure to its nearest GAAP equivalent:
| Year ended December 31, | ||
|---|---|---|
| ($ in millions) | 2024 | 2023 |
| GAAP operating income (loss) | $(303) | 433 |
| GAAP operating margin | (1.8%)% | 2.7% |
| Increase (decrease) for excluded items:(1) | ||
| Amortization of purchased intangible assets | 588 | 616 |
| Legal settlements and loss contingencies | 761 | 1,043 |
| Goodwill impairment | 1,280 | 700 |
| Impairment of long-lived assets | 1,275 | 378 |
| Restructuring costs | 74 | 111 |
| Equity compensation | 123 | 121 |
| Contingent consideration | 303 | 548 |
| Loss (gain) on sale of business | (15) | (3) |
| Accelerated depreciation | 13 | 80 |
| Other non-GAAP items | 229 | 336 |
| Non-GAAP operating income (loss) | $4,329 | 4,361 |
| Non-GAAP operating margin(2) | 26.2% | 27.5% |
| (1) | For further explanations, refer to the footnotes under the “Reconciliation of net income (loss) attributable to Teva to Non-GAAP net income (loss) attributable to Teva” table. |
| (2) | Non-GAAP operating margin is Non-GAAP operating income as a percentage of revenues. |
Free Cash Flow
The following table presents our Free Cash Flow for the years ended December 31, 2024 and 2023, as well as reconciliations of Free Cash Flow for such periods to its nearest GAAP equivalent:
| Year ended December 31, | ||
|---|---|---|
| ($ in millions) | 2024 | 2023 |
| Net cash provided by (used in) operating activities | 1,247 | 1,368 |
| Beneficial interest collected in exchange for securitized account receivables | 1,291 | 1,477 |
| Purchases of property, plant and equipment and intangible assets | (498) | (526) |
| Acquisition of business, net of cash acquired | (15) | — |
| Proceeds from divestitures of businesses and other assets | 43 | 68 |
| Free cash flow | $2,068 | $2,387 |
125 |Teva Pharmaceutical Industries Ltd. 2025 Proxy Statement
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