Teva Reports Second Quarter 2012 Results

¹ For a full analysis of our quarterly revenues by geography and by product line, beginning in Q4 2010, please visit our website at www.ir.tevapharm.com

Consolidated Statements of Income
(Unaudited, U.S. dollars in millions, except share and per share data)
			Three months ended						Six months ended
			June 30,						June 30,
			2012			2011			2012			2011
Net revenues			4,994			4,212			10,096			8,292
Cost of sales			2,337			2,012			4,830			3,904
Gross profit			2,657			2,200			5,266			4,388
Research and development expenses – net			298			243			590			482
Selling and marketing expenses			981			804			1,909			1,636
General and administrative expenses			316			284			628			505
Legal settlements, acquisition, restructuring and other expenses and impairment			55			272			204			301
Operating income			1,007			597			1,935			1,464
Financial expenses (income) – net			97			(20	)		167			18
Income before income taxes			910			617			1,768			1,446
Provision for income taxes			39			27			30			76
Share in losses of associated companies – net			12			10			24			25
Net income			859			580			1,714			1,345
Net income (loss) attributable to non-controlling interests			(4	)		4			(8	)		8
Net income attributable to Teva			863			576			1,722			1,337
Earnings per share attributable to Teva:	Basic ($)		0.99			0.65			1.97			1.49
	Diluted ($)		0.99			0.64			1.96			1.49
Weighted average number of shares (in millions):	Basic		871			892			876			895
	Diluted		873			896			878			899
Non-GAAP net income attributable to Teva:*			1,117			984			2,417			1,920
Non-GAAP earnings per share attributable to Teva:	Basic ($)		1.28			1.10			2.76			2.15
	Diluted ($)		1.28			1.10			2.75			2.14
Weighted average number of shares (in millions):	Basic		871			892			876			895
	Diluted		873			896			878			899
* See reconciliation attached.

Condensed Balance Sheets
(U.S. dollars in millions)
		June 30,			December 31,
		2012			2011
ASSETS		Unaudited			Audited
Current assets:
Cash and cash equivalents		1,188			1,096
Accounts receivable		5,430			6,213
Inventories		5,293			5,012
Deferred taxes and other current assets		2,314			2,132
Total current assets		14,225			14,453
Long-term investments and receivables		1,115			991
Deferred taxes, deferred charges and other assets		112			142
Property, plant and equipment, net		6,082			5,947
Identifiable intangible assets, net		8,978			10,316
Goodwill		18,369			18,293
Total assets		48,881			50,142
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long term liabilities		889			3,749
Convertible senior debentures - short term		531			531
Sales reserves and allowances		4,603			4,428
Accounts payable and accruals		3,022			3,572
Other current liabilities		960			1,396
Total current liabilities		10,005			13,676
Long-term liabilities:
Deferred income taxes		2,041			2,610
Other taxes and long term payables		1,317			1,277
Senior notes and loans		12,625			10,236
Total long term liabilities		15,983			14,123
Equity:
Teva shareholders’ equity		22,751			22,195
Non-controlling interests		142			148
Total equity		22,893			22,343
Total liabilities and equity		48,881			50,142

		Condensed Cash Flow
		(Unaudited, U.S. Dollars in millions)
		Three months ended						Six months ended
		June 30,						June 30,
		2012			2011			2012			2011
Operating activities:
Net income		859			580			1,714			1,345
Net change in operating assets and liabilities		(64	)		613			(345	)		590
Items not involving cash flow		396			131			578			289
Net cash provided by operating activities		1,191			1,324			1,947			2,224
Net cash used in investing activities		(282	)		(240	)		(476	)		(916	)
Net cash used in financing activities		(761	)		(684	)		(1,374	)		(1,454	)
Translation adjustment on cash and cash equivalents		(22	)		18			(5	)		37
Net change in cash and cash equivalents		126			418			92			(109	)
Balance of cash and cash equivalents at the beginning of period		1,062			721			1,096			1,248
Balance of cash and cash equivalents at the end of period		1,188			1,139			1,188			1,139

				Revenues by Geographic Area
				(Unaudited)
				Three Months Ended June 30,													Percentage Change			Percentage Change
				2012			2011				% of 2012				% of 2011		2012 from 2011			2012 from 2011
				U.S. $ in millions																in local currencies
United States:
	Generic		$	1,054		$	908				21%				22%		16%			16%
	Branded			1,365			1,009				27%				24%		35%			35%
	Others			45			1				1%				§		ℓ			ℓ
Total United States				2,464			1,918				49%				46%		28%			28%
Europe*:
	Generic			884			999				18%				24%		(12%)			(1%)
	Branded			402			275				8%				6%		46%			63%
	Others			187			204				4%				5%		(8%)			9%
Total Europe				1,473			1,478				30%				35%		§			12%
Rest of the World:
	Generic			676			497				13%				12%		36%			40%
	Branded			182			140				4%				3%		30%			45%
	Others			199			179				4%				4%		11%			19%
Total Rest of the World				1,057			816				21%				19%		30%			36%
Total Revenues			$	4,994		$	4,212				100%				100%		19%			24%
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%

				Revenues by Geographic Area
				(Unaudited)
				Six Months Ended June 30,											Percentage Change				Percentage Change
				2012			2011			% of 2012			% of 2011		2012 from 2011				2012 from 2011
				U.S. $ in millions															in local currencies
United States:
	Generic		$	2,273		$	1,852			22%			22%		23%				23%
	Branded			2,862			1,944			28%			23%		47%				47%
	Others			81			4			1%			§		ℓ				ℓ
Total United States				5,216			3,800			51%			45%		37%				37%
Europe*:
	Generic			1,659			1,911			16%			23%		(13%)				(6%)
	Branded			767			530			8%			6%		45%				56%
	Others			363			381			4%			5%		(5%)				9%
Total Europe				2,789			2,822			28%			34%		(1%)				8%
Rest of the World:
	Generic			1,299			976			13%			12%		33%				35%
	Branded			394			301			4%			4%		31%				41%
	Others			398			393			4%			5%		1%				7%
Total Rest of the World				2,091			1,670			21%			21%		25%				29%
Total Revenues			$	10,096		$	8,292			100%			100%		22%				26%
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%

Revenues by Product line
(Unaudited)
		Three Months Ended								Percentage
		June 30,								Change
										2012 from
		2012		2011		% of 2012		% of 2011		2011
		U.S. $ in millions
Generic Medicines		2,614		2,404		52%		57%		9%
API		200		183		4%		4%		9%
Branded Medicines		1,949		1,424		39%		34%		37%
CNS		1,309		947		27%		22%		38%
Copaxone®		982		877		20%		21%		12%
Provigil®		48		-		1%		-		-
Azilect®		95		70		2%		2%		36%
Nuvigil®		91		-		2%		-		-
Respiratory		209		210		4%		5%		§
ProAir™		87		77		2%		2%		13%
Qvar®		80		90		2%		2%		(11%)
Women's Health		112		119		2%		3%		(6%)
Oncology		198		27		4%		1%		633%
Treanda®		139		-		3%		-		-
Other Branded		121		121		2%		3%		0%
All Others		431		384		9%		9%		12%
OTC		219		181		5%		4%		21%
Other Revenues		212		203		4%		5%		4%
Total		4,994		4,212		100%		100%		19%
§ Less than 0.5%

Revenues by Product line
(Unaudited)
		Six Months Ended								Percentage
		June 30,								Change
										2012 from
		2012		2011		% of 2012		% of 2011		2011
		U.S. $ in million
Generic Medicines.		5,231		4,739		52%		57%		10%
API		399		367		4%		4%		9%
Branded Medicines.		4,023		2,775		40%		34%		45%
CNS		2,758		1,851		27%		22%		49%
Copaxone®		1,891		1,715		19%		21%		10%
Provigil®		339		-		3%		-
Azilect®		167		136		2%		2%		23%
Nuvigil®		175		-		2%		-
Respiratory		399		393		4%		5%		2%
ProAir™		177		178		2%		2%		(1%)
Qvar®		143		145		1%		2%		(1%)
Women's Health		220		222		2%		3%		(1%)
Oncology		406		49		4%		1%		729%
Treanda®		287		-		3%		-
Other Branded		240		260		3%		3%		(8%)
All Others		842		778		8%		9%		8%
OTC		415		365		4%		4%		14%
Other Revenues		427		413		4%		5%		3%
Total		10,096		8,292		100%		100%		22%

Non GAAP reconciliation items
(Unaudited, U.S. Dollars in millions)
		Three months ended				Six months ended
		June 30,				June 30,
		2012		2011		2012		2011
Amortization of purchased intangible assets - under cost of sales		267		152		669		303
Inventory step-up - under cost of sales		7		15		63		25
Costs related to regulatory actions taken in facilities - under cost of sales		40		45		78		95
Amortization of purchased intangible assets - under selling and marketing expenses		8		10		20		17
Impairment of long-lived assets		8		3		95		14
Restructuring, acquisition and other expenses		48		48		91		70
Expense (income) in connection with legal settlements and reserves		(1)		221		18		217
Related tax effect		(123)		(86)		(339)		(158)

		Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share
				Six months ended June 30, 2012												Six months ended June 30, 2011
				U.S. dollars and shares in millions (except per share amounts)
							Non-GAAP			Non-			% of Net						Non-GAAP			Non-			% of Net
				GAAP			Adjustments			GAAP			Revenues			GAAP			Adjustments			GAAP			Revenues
		Gross profit 1		5,266			810			6,076			60	%		4,388			423			4,811			58	%
		Operating income 1,2		1,935			1,034			2,969			29	%		1,464			741			2,205			27	%
		Net income attributable to Teva 1,2,3		1,722			695			2,417			24	%		1,337			583			1,920			23	%
		Earnings per share attributable to Teva - Diluted 4		1.96			0.79			2.75						1.49			0.65			2.14
(1)		Amortization of purchased intangible assets					669												303
		Costs related to regulatory actions taken in facilities					78												95
		Inventory step-up					63												25
		Gross profit adjustments					810												423
(2)		Impairment of long-lived assets					95												14
		Restructuring, acquisition and other expenses					91												70
		Amortization of purchased intangible assets					20												17
		Expense in connection with legal settlements and reserves					18												217
							224												318
		Operating profit adjustments					1,034												741
(3)		Tax benefit					(339	)											(158	)
		Net income adjustments					695												583
(4)		The weighted average number of shares was 878 and 899 million for the six months ended June 30, 2012 and 2011, respectively. Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the amounts included in footnotes 1-3 above by the applicable weighted average share number.

		Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share
				Three months ended June 30, 2012												Three months ended June 30, 2011
				U.S. dollars and shares in millions (except per share amounts)
							Non-GAAP			Non-			% of Net						Non-GAAP			Non-			% of Net
				GAAP			Adjustments			GAAP			Revenues			GAAP			Adjustments			GAAP			Revenues
		Gross profit 1		2,657			314			2,971			59	%		2,200			212			2,412			57	%
		Operating income 1,2		1,007			377			1,384			28	%		597			494			1,091			26	%
		Net income attributable to Teva 1,2,3		863			254			1,117			22	%		576			408			984			23	%
		Earnings per share attributable to Teva - Diluted 4		0.99			0.29			1.28						0.64			0.46			1.10
(1)		Amortization of purchased intangible assets					267												152
		Costs related to regulatory actions taken in facilities					40												45
		Inventory step-up					7												15
		Gross profit adjustments					314												212
(2)		Restructuring, acquisition and other expenses					48												48
		Amortization of purchased intangible assets					8												10
		Impairment of long-lived assets					8												3
		Expense (income) in connection with legal settlements and reserves					(1	)											221
							63												282
		Operating profit adjustments					377												494
(3)		Tax benefit					(123	)											(86	)
		Net income adjustments					254												408
(4)		The weighted average number of shares was 873 and 896 million for the three months ended June 30, 2012 and 2011, respectively. Non-GAAP earnings per share can be reconciled with GAAP earnings per share by dividing each of the amounts included in footnotes 1-3 above by the applicable weighted average share number.

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