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2009-03-31
TEVA PHARMACEUTICAL INDUSTRIES LTD
0000818686
TEVA
--12-31
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<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 13 -
Contingencies:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>General</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">From time to time, Teva and
its subsidiaries are subject to legal claims for damages and/or
equitable relief arising in the ordinary course of business. In
addition, as described below, in large part as a result of the
nature of its business, Teva is frequently subject to patent
litigation. Teva believes it has meritorious defenses to the
actions to which it is a party and expects to pursue vigorously the
defense of each of the ongoing actions, including those described
below. Based upon the status of these cases, the advice of counsel,
management’s assessment of such cases and potential exposure
involved relative to insurance coverage, except as otherwise noted
below, no provision has been made in Teva’s financial
statements for any of such actions. Teva believes that none of the
proceedings described below will have a material adverse effect on
its financial condition; however, if one or more of such
proceedings were to result in judgments against Teva, such
judgments could be material to its results of operations in a given
period.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">From time to time, Teva seeks
to develop generic products for sale prior to patent expiration in
various territories. In the United States, to obtain approval for
most generic products prior to the expiration of the
originator’s patent(s), Teva must challenge the patent(s)
under the procedures set forth in the Hatch-Waxman Act of 1984, as
amended by the Medicare Prescription Drug Improvement and
Modernization Act of 2003. To the extent that it seeks to utilize
such patent challenge procedures, Teva is and expects to be
involved in patent litigation regarding the validity,
enforceability or infringement of the originator’s patent(s).
Teva may also be involved in patent litigation involving the extent
to which alternate manufacturing process techniques may infringe
originator or third-party process patents. Additionally, depending
upon a complex analysis of a variety of legal and commercial
factors, Teva may, in certain circumstances, elect to market a
generic product even though litigation is still pending. This could
be before any court decision is rendered or while an appeal of a
lower court decision is pending. To the extent Teva elects to
proceed in this manner, it could face substantial liability for
patent infringement if the final court decision is adverse to Teva.
Although the underlying generic industry legislation, as well as
the patent law, is different in other countries where Teva does
business, from time to time Teva is also involved in litigation
regarding corresponding patents in those countries. Except as
described below, Teva does not have a reasonable basis to estimate
the loss, or range of loss, that is reasonably possible with
respect to such patent infringement cases. However, if Teva were to
be required to pay damages in any such case, courts would generally
calculate the amount of any such damages based on a reasonable
royalty or lost profits of the patentee. If damages were determined
based on lost profits, the amount would be related to the sales of
the branded product. In addition, the launch of an authorized
generic and other generic competition may be relevant to the
damages estimation.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Teva’s business
inherently exposes it to potential product liability claims. Teva
believes that it maintains product liability insurance coverage in
amounts and with provisions that are reasonable and prudent in
light of its business and related risks. However, Teva sells, and
will continue to sell, pharmaceutical products that are not covered
by insurance and accordingly may be subject to claims that are not
covered by insurance as well as claims that exceed its policy
limits. Product liability coverage for pharmaceutical companies is
becoming more expensive and increasingly difficult to obtain. As a
result, Teva may not be able to obtain the type and amount of
coverage it desires.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In connection with
third-party agreements, Teva may under certain circumstances be
required to indemnify, and may be indemnified by, in unspecified
amounts, the parties to such agreements against third-party
claims.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Intellectual Property
Proceedings</i></font></p>
<p style=
"MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In October 2004, Alpharma and
Teva launched their 100 mg, 300 mg and 400 mg gabapentin capsule
products and, in December 2004, Alpharma and Teva launched their
600 mg and 800 mg gabapentin tablet products. Gabapentin capsules
and tablets are the AB-rated generic versions of Pfizer’s
anticonvulsant Neurontin<font face="Times New Roman" size=
"1"><sup>®</sup></font> capsules and tablets, which had annual
sales of</font> <font face="Times New Roman" size=
"2">approximately $2.7 billion for the twelve months ended
September 2004, based on IMS data. Teva’s subsidiary Ivax
also launched its non-AB rated tablets in August 2004 and its
AB-rated capsules and tablets in March and April 2005,
respectively. In August 2005, the United States District Court
for the District of New Jersey granted summary judgment in favor of
Teva, Alpharma and Ivax. On September 21, 2007, the Federal
Circuit reversed the summary judgment decision and remanded the
case for further proceedings. A trial has not been scheduled. The
patent at issue expires in 2017. Were Pfizer ultimately to be
successful in its allegation of patent infringement, Teva could be
required to pay damages and be enjoined from selling its gabapentin
products. Pursuant to the terms of the agreement with Alpharma,
were Pfizer to be successful in its allegation of patent
infringement against Alpharma, Teva may also be required to pay
damages related to a portion of the sales of Alpharma’s
gabapentin products.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In September and November
2004, Teva commenced sales of Impax Laboratories’ 20 mg and
10 mg omeprazole delayed release capsules, respectively, which are
the AB-rated generic versions of AstraZeneca’s
Prilosec<font face="Times New Roman" size=
"1"><sup>®</sup></font> capsules. Prilosec<font face=
"Times New Roman" size="1"><sup>®</sup></font> had sales for
the 10 mg capsule of $30 million and 20 mg capsule sales of
approximately $532 million, both for the twelve months ended June
2004, based on IMS data. As provided for in a strategic alliance
agreement between Impax and Teva, the parties agreed to certain
risk-sharing arrangements relating to the omeprazole launch. Trial
in the United States District Court for the Southern District of
New York of AstraZeneca’s patent infringement litigation
against Impax relating to its omeprazole capsules concluded in
June 2006. Following the expiration of the patent in
April 2007, the District Court issued a trial opinion in which
it found that Impax’s omeprazole capsules infringed two
formulation patents and that those patents were valid. On
August 20, 2008, the Federal Circuit affirmed the District
Court’s decision. A separate litigation against Teva with
respect to the launch of omeprazole capsules has been revived, but
no trial date has been scheduled. Were AstraZeneca ultimately to be
successful in its allegation of patent infringement, Teva and Impax
could be required to pay damages related to a portion of the sales
of Impax’s omeprazole capsules.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In May 2007, Teva commenced
sales of its 300 mg cefdinir capsule product and 125 mg/5 ml and
250 mg/5 ml cefdinir powder for oral suspension products. Cefdinir
capsules and cefdinir for oral suspension are the AB-rated generic
versions of Abbott’s antibiotic Omnicef<font face=
"Times New Roman" size="1"><sup>®</sup></font>, which had
annual sales of approximately $860 million for the twelve months
ended December 2006, based on IMS data. Teva is in litigation with
Abbott in the United States District Court for the Northern
District of Illinois with respect to a polymorph patent that
expires in 2011. In May 2007, the Court denied Abbott’s
motion for a preliminary injunction, finding that Abbott was not
likely to prevail on the merits as to Teva’s noninfringement
defense, based on the record before the Court. Oral argument on
Abbott’s appeal of the denial of the preliminary injunction
was heard on May 7, 2008. Were Abbott ultimately to be
successful in its allegation of patent infringement, Teva could be
required to pay damages relating to sales of its cefdinir products
and be enjoined from selling those products.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In May 2007, Teva commenced
sales of its 2.5mg/10mg, 5mg/10mg, 5mg/20mg, and 10mg/20mg
amlodipine besylate/benazepril capsules. Amlodipine
besylate/benazepril capsules are the AB-rated generic versions of
Novartis’ Lotrel<font face="Times New Roman" size=
"1"><sup>®</sup></font>, which had annual sales of
approximately $1.4 billion for the twelve months ended March 2007,
based on IMS data. In June 2007, the United States District
Court for the District of New Jersey denied Novartis’ motion
for a preliminary injunction, finding that Novartis was not likely
to succeed on its allegations of infringement. The patent at issue
expires in 2017. A trial date has not been scheduled. Were Novartis
ultimately to be successful in its allegation of patent
infringement, Teva could be required to pay damages related to
sales of its amlodipine besylate/benazepril capsules and be
enjoined from selling those products.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In June 2007, Novopharm,
Teva’s Canadian subsidiary, commenced sales in Canada of its
2.5 mg, 5 mg, 7.5 mg, 10 mg and 15 mg olanzapine tablets, which are
the generic versions of Eli Lilly’s Zyprexa<font face=
"Times New Roman" size="1"><sup>®</sup></font>.
Zyprexa<font face="Times New Roman" size=
"1"><sup>®</sup></font> had annual sales in Canada of
approximately $180 million for the twelve months ended May 2007,
based on IMS sales. In June 2007, the Federal Court of Canada
denied Eli Lilly’s request for an application to prohibit the
Minister of Health from issuing Novopharm’s final regulatory
approval. Shortly after Novopharm’s launch, Lilly filed an
action for patent infringement. The trial was completed on
April 3, 2009. The patent at issue expires on April 24,
2011. Were Eli Lilly ultimately to be successful in its allegation
of patent infringement, Novopharm could be required to pay damages
related to its sales of olanzapine tablets and be enjoined from
selling those products.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In September 2007, Teva
commenced sales of its 125 mg, 250 mg and 500 mg famciclovir
tablets, which are the AB-rated generic versions of Novartis’
Famvir<font face="Times New Roman" size=
"1"><sup>®</sup></font>. Famvir<font face="Times New Roman"
size="1"><sup>®</sup></font> had annual sales of approximately
$200 million for the twelve months ended June 2007. In
September 2007, the United States District Court for the
District of New Jersey denied Novartis’ motion for a
preliminary injunction, finding that Novartis was not likely to
prevail on the merits as to Teva’s invalidity and inequitable
conduct defenses, based on the record before the Court. On
June 9, 2008, the Federal Circuit denied Novartis’
appeal of the denial of the preliminary injunction. Trial is
currently scheduled to begin on November 9, 2009. Were
Novartis ultimately to be successful in its allegation of patent
infringement, Teva could be required to pay damages relating to the
sale of its famciclovir tablets and be enjoined from selling those
products.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In December 2007, Teva
commenced sales of its 20 mg and 40 mg pantoprazole sodium tablets.
Pantoprazole sodium tablets are the AB-rated generic versions of
Wyeth’s Protonix<font face="Times New Roman" size=
"1"><sup>®</sup></font>, which had annual sales of
approximately $2.5 billion for the twelve months ended September
2007, based on IMS data. In September 2007, the United States
District Court for the District of New Jersey denied
Wyeth/Altana’s motion for a preliminary injunction, finding
that Wyeth/Altana was not likely to prevail on the merits as to
Teva’s invalidity defense, based on the record before the
Court. Oral argument on Wyeth/Altana’s appeal of the denial
of the preliminary injunction was heard on June 3, 2008. The
patent at issue expires on July 19, 2010. A trial date has not been
scheduled. Were Wyeth/Altana ultimately to be successful in its
allegation of patent infringement, Teva could be required to pay
damages relating to the sale of its pantoprazole sodium tablets and
be enjoined from further selling those products.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">On July 11, 2008, Teva
learned that Sandoz Inc., the U.S. generic drug division of
Novartis AG, in conjunction with Momenta Pharmaceuticals, Inc., had
filed an ANDA with the FDA for a generic version of
Copaxone<font face="Times New Roman" size=
"1"><sup>®</sup></font> (glatiramer acetate) containing
Paragraph IV certifications to each of the patents that Teva has
listed in the FDA’s Orange Book for the product. On
August 28, 2008, Teva filed a complaint against Sandoz, Inc.,
Sandoz International GmbH, Novartis AG and Momenta Pharmaceuticals,
Inc. in the United States District Court for the Southern District
of New York, alleging infringement of four Orange Book patents, as
well as trade secret misappropriation claims. The patents, which
expire on May 24, 2014, cover the chemical composition of
Copaxone<font face="Times New Roman" size=
"1"><sup>®</sup></font>, pharmaceutical compositions
containing it, and methods of using it. The lawsuit has triggered a
stay of any FDA approval of the Sandoz ANDA until the earlier of
the expiration of a period of 30 months or a district court
decision in Sandoz’s favor. On November 3, 2008, Sandoz,
Inc. and Momenta Pharmaceuticals Inc. filed their answers to
Teva’s complaint. The answers assert several affirmative
defenses to Teva’s patent infringement claims, including
non-infringement, invalidity and unenforceability of the asserted
Orange Book patents. The answers also seek declaratory judgments of
non-infringement, invalidity and unenforceability with respect to
three unasserted Orange Book patents and two non-Orange Book
patents. On December 11, 2008 Sandoz International GmbH and
Novartis AG brought a motion to dismiss Teva’s patent claims
on personal jurisdiction grounds. Those defendants are also seeking
to dismiss Teva’s trade secret misappropriation claims,
alleging that the Court has no jurisdiction over the trade secret
claims. No trial date has been scheduled.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In August 2008, Barr
commenced sales of its 4 mg, 8 mg and 12 mg galantamine immediate
release (IR) tablets. galantamine IR tablets are the AB-rated
generic versions of Ortho-McNeil and Janssen’s
Razadyne<font face="Times New Roman" size=
"1"><sup>®</sup></font>, which had annual sales of
approximately $98 million for the twelve months ending September
2008, based on IMS data. Prior to launching the product, the United
States District Court for the District of Delaware held that the
one Orange Book method patent, which expired in December 2008, was
invalid. Janssen is appealing this decision. Were Ortho-McNeil and
Janssen ultimately to be successful in their allegations of patent
infringement, Barr could be required to pay damages relating to the
sale of its galantamine IR tablets.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In October 2008, Barr
commenced sales of its 8 mg, 16 mg and 24 mg galantamine extended
release (ER) capsules. Galantamine ER capsules are the AB-rated
generic versions of Ortho-McNeil and Janssen’s Razadyne
ER<font face="Times New Roman" size="1"><sup>®</sup></font>,
which had annual sales of approximately $110 million for the twelve
months ending September 2008, based on IMS data. The case involved
two patents – a formulation patent and a method patent. The
United States District Court for the District of New Jersey
dismissed the allegations with respect to the formulation patent.
The method patent was held invalid in the litigation involving
galantamine IR, and Janssen is appealing that decision. Were
Ortho-McNeil and Janssen ultimately to be successful in their
appeal of the method patent, Barr could be required to pay damages
relating to the sale of its galantamine ER capsules.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Product Liability
Matters</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Barr and Duramed have been
named as defendants in approximately 6,000 personal injury product
liability cases brought against them and other manufacturers by
plaintiffs claiming injuries from the use of certain estrogen and
progestin products. The cases primarily involve medroxyprogesterone
acetate (a progestin that has been prescribed to women receiving
estrogen-containing hormone therapy), and a much smaller number
involve Cenestin (an estrogen-containing product sometimes
prescribed to treat symptoms associated with menopause). A high
percentage of the plaintiffs were unable to demonstrate actual use
of a Barr or Duramed product. As a result, approximately 5,450
cases have been dismissed, leaving approximately 500 pending. To
date, Barr and Duramed products have been identified in 482 of
those cases. Additional dismissals are expected. Barr believes it
has viable defenses to the allegations in the complaints and is
defending the actions vigorously.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Commercial Matters</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In April 2004, Rhodes
Technologies and Napp Technologies (“Rhodes/Napp”)
filed a complaint in Massachusetts Superior Court, seeking an equal
share of the value to Teva of the settlement of certain claims
between GlaxoSmithKline and Teva relating to Teva’s
nabumetone products. The allegations are based upon the termination
of a nabumetone API supply agreement between Teva and Rhodes/Napp.
Teva originally assessed the value of the product rights received
in connection with the settlement at $100 million and subsequently
recorded impairment charges of $52 million in the aggregate
relating to this product. Oral argument on the parties’
cross-motions for summary judgment was held in April 2006. In April
2007, the Court granted Teva’s motion for summary judgment,
dismissing Rhodes/Napp’s claims against Teva.
Rhodes/Napp’s appeal was heard on February 6,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In October 2005,
plaintiffs Agvar Chemicals Inc., Ranbaxy Laboratories, Inc., and
Ranbaxy Pharmaceuticals, Inc. filed suit against Barr in the
Superior Court of New Jersey. In their complaint, plaintiffs seek
to recover damages and other relief, based on an alleged breach of
a contract whereby Barr was to purchase from Ranbaxy raw material
for its generic Allegra product. In February 2009, Barr settled its
claims with Agvar and in April it settled its claims with
Ranbaxy.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Environmental Matters</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Teva’s subsidiaries,
including those in the United States and its territories, are party
to a number of proceedings brought under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as the Superfund law, or other national, federal, provincial
or similar state and local laws imposing liability for the
investigation and remediation of releases of hazardous substances
and for natural resource damages. These proceedings seek to require
the generators of hazardous wastes disposed of at a third-party
owned site, or the party responsible for a release of hazardous
substances into the environment that impacted a site, to
investigate and clean up the sites or to pay for such activities
and any related damages to natural resources. Teva has been made a
party to these proceedings, along with other potentially
responsible parties, as an alleged generator of wastes that were
disposed of or treated at third-party waste disposal sites, or as a
result of an alleged release from one of Teva’s (or its
predecessors’) facilities or former facilities that may have
adversely impacted a site. In many of these cases, the government
or private litigants allege that the responsible parties are
jointly and severally liable for the investigation and cleanup
costs. Although the liability among the responsible parties may be
joint and several, these proceedings are frequently resolved so
that the allocation of cleanup costs among the parties reflects the
relative contributions of the parties to the site conditions and
takes into account other equitable factors. Teva’s potential
liability varies greatly at each of the sites in the proceedings;
for some sites the costs of the investigation, cleanup and natural
resource damages have not yet been determined, and for others
Teva’s allocable share of liability has not been determined.
At other sites, Teva has been paying its share, but the amounts
have not been, and are not expected to be, material. Teva has taken
an active role in identifying these costs, which do not include
reductions for potential recoveries of cleanup costs from insurers,
former site owners or operators. While it is not feasible to
predict the outcome of many of these proceedings, Teva believes
that they should not ultimately result in any liability that would
have a material adverse effect on its financial position, results
of operations or liquidity and capital resources.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Competition, Pricing and Regulatory
Matters</i></font></p>
<p style=
"MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; VERTICAL-ALIGN: top; TEXT-INDENT: 4%; LINE-HEIGHT: 95%">
<font face="Times New Roman" size="2">In April 2006, Teva and Barr
were sued, along with Cephalon, Inc., Mylan Laboratories, Inc.,
Ranbaxy Laboratories Ltd. and Ranbaxy Pharmaceuticals, Inc., in a
class action lawsuit filed in the United States District Court for
the Eastern District of Pennsylvania. The case alleges generally
that the settlement agreements entered into between the different
generic pharmaceutical companies and Cephalon, in their respective
patent infringement cases involving finished modafinil products
(the generic version of Provigil<font face="Times New Roman" size=
"1"><sup>®</sup></font>), were unlawful because the settlement
agreements resulted in the exclusion of generic competition. The
case seeks unspecified monetary damages, attorneys’ fees and
costs. The case was brought by King Drug Company of Florence, Inc.
on behalf of itself and as a proposed class action on behalf of any
other person or entity that purchased Provigil<font face=
"Times New Roman" size="1"><sup>®</sup></font> directly from
Cephalon from January 2006 until the alleged unlawful conduct
ceases. Similar allegations have been made in a number of
additional complaints, including those filed on behalf of proposed
classes of direct and indirect purchasers of the product, by an
individual indirect purchaser of the product and by Apotex, Inc.
The cases seek various forms of injunctive and monetary relief,
including treble damages and attorneys’ fees and costs. On
February 13, 2008, following an investigation of these
matters, the Federal Trade Commission (“FTC”) sued
Cephalon, alleging that Cephalon violated Section 5 of the
Federal Trade Commission Act, which prohibits unfair or deceptive
acts or practices in the marketplace, by unlawfully maintaining a
monopoly in the sale of Provigil<font face="Times New Roman" size=
"1"><sup>®</sup></font> and improperly excluding generic
competition. The FTC’s complaint does not name Teva or Barr
as a defendant.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Teva Pharmaceuticals USA,
Inc. (“Teva USA”) is a defendant, along with Biovail
Corp. and Elan Corporation, plc, in several civil actions currently
pending in the United States District Court for the District of
Columbia. The cases allege generally that arrangements between
Biovail and Elan relating to sales of nifedipine cc extended
release tablets, in connection with which Teva USA acted as a
distributor for Biovail, were unlawful under the federal antitrust
laws. The challenged arrangements were previously the subject of a
consent decree entered into by the FTC with Biovail and Elan, to
which Teva USA was not a party. The complaints seek unspecified
monetary damages, attorneys’ fees and costs. Four of the
cases were brought on behalf of alleged classes of persons who
allegedly purchased nifedipine cc extended release tablets made by
Elan or Biovail in the United States directly from Teva USA; two of
the cases were brought individually by alleged direct
purchasers.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Together with many other
pharmaceutical manufacturers, Teva and/or its subsidiaries in the
United States, including Teva USA, Sicor Inc.
(“Sicor”), Ivax, and Barr (collectively, the
“Teva parties”), are defendants in a number of cases
pending in state and federal courts throughout the country that
relate generally to drug price reporting by manufacturers. Such
price reporting is alleged to have caused governments and others to
pay inflated reimbursements for covered drugs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Class actions and other cases
have been filed against over two dozen pharmaceutical
manufacturers, including Sicor, regarding allegedly inflated
reimbursements or payments under Medicare or certain insurance
plans. These cases were consolidated under the federal
multi-district litigation procedures and are currently pending in
the United States District Court for the District of Massachusetts
(the “MDL”). On March 7, 2008, the “Track
2” defendants in the MDL, including Sicor, entered into a
settlement agreement to resolve the MDL. The court granted
preliminary approval of the amended MDL settlement on July 3,
2008 and recently deferred final approval of the settlement to
allow for the resolution of certain notice issues. Sicor is also a
defendant in an action brought under the federal False Claims Act,
but has not yet been served with the complaint. This matter is
under seal and includes many of the same defendants as the MDL. A
provision for these matters, including Sicor’s share of the
MDL settlement payment, has been included in the financial
statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">A number of state attorneys
general, approximately 47 counties in New York and the City of New
York have also filed various actions relating to drug price
reporting. The Teva parties (either collectively or individually)
are currently involved in one or more actions relating to
reimbursements under Medicaid or other programs in the following 17
states: Alabama, Alaska, Arizona, Florida, Hawaii, Idaho, Illinois,
Iowa, Kansas, Kentucky, Mississippi, Missouri, New York, South
Carolina, Texas, Utah and Wisconsin. In addition to its action
relating to its Medicaid program, the State of South Carolina has
brought an action in the South Carolina state courts on behalf of
its state health plan. Trials for certain Teva parties have been
scheduled in September 2009 for the Alabama action and in January
2010 for the Texas action.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In May 2008, the United
States District Court for the District of Massachusetts unsealed a
drug pricing action against several generic pharmaceutical
companies, including various Teva parties. The action was filed by
a private party pursuant to the federal False Claims Act, and it
alleges, on behalf of the federal government, drug pricing claims
arising from the federal government’s contributions to the
various state Medicaid programs. According to the complaint, the
federal government declined to intervene in the litigation. The
foregoing drug pricing cases, which seek unspecified amounts in
money damages, civil penalties, treble damages, punitive damages,
attorneys fees, and/or administrative, injunctive, equitable or
other relief, are at various stages of litigation, and the Teva
parties continue to defend them vigorously.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The Office of the United
States Attorney for the District of Massachusetts (the “U.S.
Attorney” or the “Office”) and the Civil Division
of the Department of Justice are pursuing an investigation of
allegations that IVAX Pharmaceuticals, Inc. (“IPI”)
caused Omnicare, Inc. to file false or tainted claims for Medicare
and/or Medicaid reimbursement, in violation of law, by directly or
indirectly offering or paying remuneration to Omnicare, Inc., to
induce it to recommend, prescribe or purchase IPI’s products.
IPI is cooperating in the investigation. On April 10, 2008,
the U.S. Attorney advised IPI’s counsel that criminal charges
would not be brought against IPI at that time and that the Criminal
Division of the Office was no longer investigating the Company. The
Civil Divisions of the Office and the Department of Justice are,
however, continuing their investigation into potential violations
of the False Claims Act. IPI believes that it has meritorious
defenses to the potential claims. If IPI were found liable for any
such claims, a court could impose substantial fines, treble
damages, penalties and/or injunctive or administrative remedies. A
provision for this matter has been included in the financial
statements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Barr has been named as a
co-defendant with Bayer Corporation, The Rugby Group, Inc. and
others in approximately 38 class action complaints filed in state
and federal courts by direct and indirect purchasers of
Ciprofloxacin (Cipro) from 1997 to the present. The complaints
allege that a 1997 Bayer-Barr patent litigation settlement
agreement was anti-competitive and violated federal antitrust laws
and/or state antitrust and consumer protection laws. A prior
investigation of this agreement by the Texas Attorney
General’s office on behalf of a group of state attorneys
general was closed without further action in December 2001. In
March 2005, the court in the federal multi-district litigation
granted summary judgment in Barr’s favor and dismissed all of
the federal actions before it. In November 2007, the Second
Circuit transferred the appeal involving the indirect purchaser
plaintiffs to the United States Court of Appeals for the Federal
Circuit, while retaining jurisdiction over the appeals of the
direct purchaser plaintiffs. On October 15, 2008, the Federal
Circuit affirmed the grant of summary judgment in the
defendants’ favor on all claims by the indirect purchaser
plaintiffs. The plaintiffs’ petition for panel rehearing and
rehearing en banc was denied on December 23, 2008 and the
mandate issued on December 30, 2008. The plaintiffs have filed
a petition for certiorari to the United States Supreme Court.
Briefing in the direct purchaser plaintiffs’ appeal in the
Second Circuit is complete, and oral argument was heard on
April 28, 2009. All but three of the state cases have been
dismissed. Following an earlier stay of the California case, the
parties began renewed briefing on summary judgment motions in March
2009. The Kansas action is stayed, and the Florida action is in the
very early stages, with no hearings or schedule set to date. Barr
believes that its agreement with Bayer is a valid settlement to a
patent suit and cannot form the basis of an antitrust
claim.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 9 - Comprehensive income
(loss):</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Comprehensive income (loss)
is as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="89%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="6"><font face=
"Times New Roman" size=
"1"><b>Three Months Ended</b></font><br />
<font face="Times New Roman" size=
"1"><b>March 31,</b></font><br />
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income attributed to Teva</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">451</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">139</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other comprehensive income (loss), net
of tax:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Unrealized loss from available-for-sale
securities , net of tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(65</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(74</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reclassification adjustment on available
for sale securities, net of tax*</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">46</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Currency translation adjustment, net of
tax</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(613</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">591</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(227</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">702</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Represents mainly the unrealized loss on marketable securities
valued using Level 3 inputs, which was considered other than
temporary and charged to the statement of income.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">The above amounts are after deducting
amounts attributable to non-controlling interest, which were not
material.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
54000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 3 - Accounting for convertible
debt instruments that may be settled in cash upon
conversion:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Effective January 1,
2009, the Company adopted FASB Staff Position No. APB 14-1,
“Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement)”. The FSP was issued in May 2008, and requires
issuers to account separately for the liability and equity
components of convertible debt instruments that may be settled in
cash (including partial cash settlement), in a manner that reflects
the issuer’s nonconvertible debt (unsecured debt) borrowing
rate when interest cost is recognized. The FSP requires bifurcation
of a component of the debt, classification of that component in
equity and accretion of the resulting discount on the debt to be
recognized as part of interest expense in the consolidated
statement of operations. The FSP requires retroactive application
to the terms of instruments as they existed for all periods
presented. The adoption of this FSP primarily affects the
accounting for the Company’s 0.25% Senior Convertible
Debentures due 2026 and 1.75% Senior Convertible Debentures due
2026.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The retroactive application
of this FSP resulted in (i) an increase in the opening balance in
2009 of additional paid-in capital and a decrease in retained
earnings of $175 million and $97 million, respectively, (ii) an
increase in financial expenses and a decrease in income taxes for
the three months ended March 31, 2008 of $9 million and $1
million, respectively, and (iii) a decrease in basic earnings per
share for the three months ended March 31, 2008 of $.01.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
0
1576000000
-79000000
103000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 4 - Derivative instruments and
hedging activities:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Effective January 1,
2009, the Company adopted Statement of Financial Accounting
Standard No.161 (“FAS 161”), Disclosures about
Derivative Instruments and Hedging Activities, as an amendment to
SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. FAS No. 161 was issued in March 2008 and
requires that objectives for using derivative instruments be
disclosed in terms of underlying risk and accounting designation.
The fair value of derivative instruments is presented in the table
below:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="60%"></td>
<td valign="bottom" width="3%"></td>
<td width="12%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td width="12%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Asset
derivatives</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>March 31,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>December 31,
2008</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives designated as hedging
instruments under FAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font><br /></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—</font><br /></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="10" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Liability
derivatives</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>March 31,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>December 31,
2008</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives designated as hedging
instruments under FAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Accounts
payable and accruals</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Accounts
payable and accruals</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="2" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="10" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Asset
derivatives</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>March 31,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>December 31,
2008</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives not designated as hedging
instruments under FAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">*</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">*</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Prepaid
expenses and other current accounts</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">52</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">16</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">52</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="10" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Liability
derivatives</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>March 31,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>December 31,
2008</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="9">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="1"><b>Balance sheet<br />
location</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Fair value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives not designated as hedging
instruments under FAS 133:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Accounts
payable and accruals</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">121</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size="2">Accounts
payable and accruals</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">126</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">121</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">126</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Represents an amount of less than $0.5 million.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Derivatives on foreign
exchange contracts not designated as hedging instruments under FAS
133, which hedge Teva’s balance sheet items from currency
exposure, were recognized under financial expenses in the amount of
a loss of $126 million and a gain of $52 million for the three
months ended March 31, 2009 and March 31, 2008,
respectively. Such gains or losses offset the revaluation of the
balance sheet items booked also under financial expenses. The
impact of derivatives designated as hedging instruments under FAS
133 on fair value hedges was not material.</font></p>
</div>
-71000000
6000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 5 - Fair value
measurement:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Effective January 1,
2008, the Company adopted SFAS No. 157, “Fair Value
Measurements” (“SFAS No. 157”), for
financial assets and liabilities, and related FSP’s,
including FSP FAS 157-3, “Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active”
(“FSP FAS 157-3”). This pronouncement defines fair
value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. As defined in SFAS
No. 157 and clarified by FSP FAS 157-3, fair value is based on
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Additionally effective
January 1, 2009, the company adopted the implementation of
SFAS No. 157 for non-financial assets and liabilities. The
adoption of SFAS No. 157-2 relating to non-financial assets
and liabilities did not have a significant effect on these
financial statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In order to increase
consistency and comparability in fair value measurements, SFAS
No. 157 establishes a fair value hierarchy that prioritizes
observable and unobservable inputs used to measure fair value into
three broad levels, which are described below:</font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 4%">
<font face="Times New Roman" size="2">Level 1: Quoted prices
(unadjusted) in active markets that are accessible at the
measurement date for assets or liabilities. The fair value
hierarchy gives the highest priority to Level 1 inputs.</font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 4%">
<font face="Times New Roman" size="2">Level 2: Observable prices
that are based on inputs not quoted on active markets, but
corroborated by market data.</font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 4%">
<font face="Times New Roman" size="2">Level 3: Unobservable inputs
are used when little or no market data is available. The fair value
hierarchy gives the lowest priority to Level 3 inputs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In determining fair value,
the Company utilizes valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs to
the extent possible and considers counterparty credit risk in its
assessment of fair value.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Financial items carried at
fair value as of March 31, 2009 are classified in the table
below in one of the three categories described above:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="92%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="71%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="12"><font face="Times New Roman" size=
"1"><b>March 31, 2009</b></font><br />
<font face="Times New Roman" size="1"><b>U.S. $ in
millions</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size="1"><b>Level
1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Level 2</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Level 3</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Total</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash and cash equivalents:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Treasury bills</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">*</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">*</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Money markets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">343</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">343</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Mainly cash deposits</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,007</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,007</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="4" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Marketable securities**</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Auction rate securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">76</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">76</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Collateral debt obligations</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">*</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Structures</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">35</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives – net***</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(108</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(108</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,434</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(72</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">76</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,438</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Represents an amount of less than $0.5 million.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">**</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Marketable securities consist mainly of debt securities
classified as available-for-sale and are recorded at fair value.
The fair value of quoted securities is based on current market
value (Level 1 input) or observable prices (Level 2 input). When
securities do not have an active market or observable prices, fair
value is determined using a valuation model (Level 3 input). This
model is based on reference to other instruments with similar
characteristics, or a discounted cash flow analysis, or other
pricing models making use of market inputs and relying as little as
possible on entity-specific inputs. Changes in fair value, net of
taxes, are reflected in other comprehensive income. Unrealized
losses considered to be temporary are reflected in other
comprehensive income; unrealized losses that are considered to be
other-than-temporary are charged to income as an impairment
charge.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">***</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Derivatives primarily represent foreign currency and option
contracts and interest rate swaps which are valued primarily based
on observable inputs including interest rate curves and both
forward and spot prices for currencies.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The following table
summarizes the activity for those financial assets where fair value
measurements are estimated utilizing Level 3 inputs.</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>March 31, 2009<br />
U.S. $ in millions</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Carrying Value as of January 1,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">98</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amount realized</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net change to fair value included in
other comprehensive income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(19</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Carrying value as of March 31,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">76</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
</div>
196000000
1571000000
475000000
1000000
25000000
-186000000
-9000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 7 - Inventories:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">Inventories consisted of the
following:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="92%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="80%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>March 31,</b></font><br />
<font face="Times New Roman" size="1"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>December 31,</b></font><br />
<font face="Times New Roman" size="1"><b>2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size="1"><b>U.S.
$ in millions</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Unaudited</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Audited</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Raw and packaging materials</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">890</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">903</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Products in process</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">505</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">559</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Finished products</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,782</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,904</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,177</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,366</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Materials in transit and payments on
account</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,211</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,396</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
</tbody>
</table>
</div>
-24000000
-142000000
733000000
451000000
-63000000
538000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 1 - Basis of
presentation:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The accompanying unaudited
condensed consolidated financial statements have been prepared on
the same basis, with the exception of the adoption of FASB Staff
Position No. APB 14-1 as explained in note 3, as the annual
consolidated financial statements and, in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial
position and results of operations of Teva Pharmaceutical
Industries Limited (“Teva” or the
“Company”). These consolidated financial statements and
notes thereto are unaudited and should be read in conjunction with
the Company’s audited financial statements included in its
Annual Report on Form 20-F for the year ended December 31,
2008, as filed with the Securities and Exchange Commission. The
results of operations for the three months ended March 31,
2009 are not necessarily indicative of results that could be
expected for the entire fiscal year.</font></p>
</div>
3000000
127000000
0
9000000
160000000
-154000000
268000000
30000000
41000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 2 - Certain
transactions:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>a. Acquisition of Barr
Pharmaceuticals, Inc.</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On December 23, 2008,
the Company completed the acquisition of Barr Pharmaceuticals, Inc.
(“Barr”), a U.S.-based multinational generic
pharmaceutical company with operations mainly in the United States
and Europe, for approximately $4.6 billion in cash and
69 million shares. For accounting purposes, the transaction
was valued at approximately $7.5 billion, based on the average
value of our shares during the five trading day period commencing
two trading days before the date of the merger agreement. In
addition, Barr’s net debt as of the acquisition date was
approximately $1.5 billion.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The consideration for the
acquisition was attributed to net assets on the basis of fair value
of assets acquired and liabilities assumed this. This allocation
has not been finalized.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Restructuring provisions
recorded were $323 million, mainly related to employee severance,
termination of certain agreements and other exit costs, of which
approximately $25 million has been paid through March 31,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Barr’s results of
operations are included in the consolidated financial statements of
Teva commencing January 1, 2009.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>b</b>. <b>Lonza cooperation
agreement</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">On January 20, 2009,
Teva signed a definitive agreement with Lonza Group Ltd. to
establish a joint venture to develop, manufacture and market
generic equivalents of a selected portfolio of biologic
pharmaceuticals. The joint venture is expected to commence
activities during 2009, subject to applicable regulatory
approvals.</font></p>
</div>
58000000
219000000
0
14000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 8 - Revenue
recognition:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Revenue is recognized when
title to, and risk and reward for, a given product are transferred
to the customer, with provisions for estimated chargebacks,
returns, rebates, discounts and shelf stock adjustments established
concurrently with the recognition of revenue, and deducted from
sales.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Provisions for chargebacks,
returns, rebates and other promotional items are included in
“sales reserves and allowances” under current
liabilities. Provision for doubtful debts and prompt payment
discounts are netted against “Accounts
receivable.”</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">The calculation is based on
historical experience and the specific terms in the individual
agreements. Chargebacks are the largest component of sales reserves
and allowances. Provisions for estimating chargebacks are
determined using historical chargeback experience, or expected
chargeback levels and wholesaler sales information for new
products, which are compared to externally obtained distribution
channel reports for reasonableness. Shelf-stock adjustments are
granted to customers based on the existing inventory of a customer
following actual or anticipated decreases in the invoice or
contract price of the related product. Where there is a historical
experience to customer returns, Teva records a reserve for
estimated sales returns by applying that experience to the amounts
invoiced and the amount of returned products to be destroyed versus
product that can be placed back in inventory for resale.</font></p>
</div>
3147000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 11 - Recently adopted accounting
pronouncements:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In November 2008, the FASB
ratified EITF issue No. 08-07, “Accounting for Defensive
Intangible Assets” (EITF 08-7). EITF 08-7 gives guidance for
accounting for defensive intangible assets subsequent to their
acquisition in accordance with SFAS No. 141R and SFAS
No. 157, including the estimated useful life that should be
assigned to such assets. EITF 08-7 is effective for intangible
assets acquired on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The
implementation of this standard did not have a material impact on
the Company’s consolidated financial statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In April 2008, the FASB
issued FSP 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). FSP 142-3
amends the factors that should be considered in developing renewal
or extension assumptions on legal and contractual provisions used
to determine the useful life of a recognized intangible asset under
SFAS No. 142, “Goodwill and Other Intangible
Assets”. FSP 142-3 is effective for fiscal years beginning
after December 15, 2008. The implementation of this standard
did not have a material impact on the Company’s consolidated
financial statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In December 2007, the FASB
issued SFAS No. 141 (revised 2007), “Business
Combinations” (“FAS 141R”). FAS 141R provides
revised guidance on how acquirers recognize and measure the
consideration, identifiable assets acquired, liabilities assumed,
contingencies, non-controlling interests and goodwill acquired in a
business combination, and expands disclosure requirements
surrounding the nature and financial effects of business
combinations. Key changes include: acquired in-process research and
development will no longer be expensed on acquisition, but
capitalized and assessed for impairment where relevant and
amortized over its useful life; acquisition costs will be expensed
as incurred; restructuring costs will generally be expensed in
periods after the acquisition date; the consideration in shares
would be valued at the closing date; and in the event that a
deferred tax valuation allowance relating to a business
acquisition, including from prior years, is subsequently reduced,
the adjustment will be recognized in the statement of income. Early
adoption is not permitted. As applicable to Teva, this statement
became effective, on a prospective basis, as of the year beginning
January 1, 2009. The adoption of FAS 141R did not have a
material impact on the Company’s consolidated financial
statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In December 2007, the FASB
issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—an amendment of Accounting
Research Bulletin 51” (“FAS 160”), which
establishes accounting and reporting standards for non-controlling
interests in a subsidiary and deconsolidation of a subsidiary.
Early adoption is not permitted. As applicable to Teva, this
statement became effective as of the year beginning January 1,
2009. The adoption of FAS 160 did not have a material impact on the
Company’s consolidated financial statements.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 10 - Financial information
by business segments</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Financial reports to
Teva’s chief operating decision maker evolve over time as
Teva’s business develops and following major acquisitions.
Historically, Teva presented two reportable segments:
Pharmaceutical and API. In 2009, following the acquisition of Barr
at the end of 2008, Teva commenced certain organizational changes.
Following the completion of these changes, the Company intends to
re-evaluate its segment reporting in light of such changes. For
purposes of this interim report, Teva has reported two operating
segments as in the past.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">a. Financial data relating to reportable
operating segments:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="78%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Pharmaceutical</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>API*</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>Total</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="8"><font face=
"Times New Roman" size="1"><b>U.S. $ in millions</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Three months ended March 31,
2009:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">To unaffiliated customers</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,989</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">158</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,147</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">209</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">209</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total net sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,989</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">367</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,356</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">437</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">145</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">582</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation and amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">124</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">151</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Three months ended March 31,
2008:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net sales:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">To unaffiliated customers</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,419</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">153</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,572</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Intersegment</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">357</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">357</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total net sales</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,419</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">510</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,929</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income**</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">93</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">261</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">354</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
<td colspan="3" height="8"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Depreciation and amortization</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">96</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">25</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">121</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 10%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">*</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Active pharmaceutical ingredients.</font></td>
</tr>
</tbody>
</table>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="2">**</font></td>
<td valign="top" align="left"><font face="Times New Roman" size=
"2">Operating income for three months ended March 31, 2008 of
the pharmaceutical segment included amounts of $382 million
relating to the acquisition of research and development in process
as part of the CoGenesys acquisition.</font></td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"> </p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2">b. The following is a reconciliation of
operating income and assets of the reportable segments to the data
included in the condensed consolidated financial
statements:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="middle" colspan="6"><font face=
"Times New Roman" size="1"><b>Three months ended<br />
March 31,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="6"><font face="Times New Roman" size="1"><b>U.S.
$ in millions</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"1"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total operating income:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Reportable segments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">582</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">354</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Amounts not allocated to
segments:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Profits not yet realized</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(19</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">General and administration
expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(25</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(29</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other expenses</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">—  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(14</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Financial expenses –
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(63</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(66</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">)</font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Consolidated income before income
taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">475</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">231</font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
</div>
604000000
9000000
894000000
857000000
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 6 - Earnings per
share:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">Basic earnings per share is
computed by dividing net income attributable to Teva by the
weighted average number of ordinary shares (including special
shares exchangeable into ordinary shares) outstanding during the
period, net of treasury shares.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In computing diluted earnings
per share for the three months ended March 31, 2009 and 2008,
respectively, basic earnings per share was adjusted to take into
account the potential dilution that could occur upon: (1) the
conversion of the convertible senior debentures, using the
if-converted method, by adding to net income attributable to Teva
interest expense on these debentures, and amortization of issuance
costs, net of tax benefits, and by adding to the number of shares
the weighted average number of shares issuable upon assumed
conversion of these debentures; and (2) the exercise of
options and restricted stock units granted under employee stock
compensation plans, using the treasury stock method.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In computing diluted earnings
per share for the three months ended March 31, 2009, no
account was taken of the potential dilution of the convertible
senior debentures, amounting to 16 million weighted average shares,
since they had an anti-dilutive effect on earnings per
share.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
450000000
0
<div>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>NOTE 12 - Recently issued accounting
pronouncements:</b></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In April 2009, the FASB
issued FSP FAS 157-4, “Determining Whether a Market Is Not
Active and a Transaction Is Not Distressed”. FSP FAS 157-4
provides additional guidance on factors to consider when estimating
fair value consequent to a significant decrease in market activity
for a financial asset. FSP FAS 157-4 is effective for interim and
annual periods ending after June 15, 2009. The adoption of
this standard will not have a material impact on the
Company’s consolidated financial statements.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In April 2009, the FASB
issued FSP FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (FSP FAS
115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 change the method
for determining whether an other-than-temporary impairment exists
for debt securities and the amount of the impairment to be recorded
in earnings. FSP FAS 115-2 and FAS 124-2 are effective for interim
and annual periods ending after June 15, 2009. The adoption of
this standard will not have a material impact on the
Company’s consolidated financial statements.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 4%">
<font face="Times New Roman" size="2">In April 2009, the FASB
issued FSP FAS 107-1 and APB 28-1, “Interim Disclosures About
Fair Value of Financial Instruments” (FSP FAS 107-1 and APB
28-1). FSP FAS 107-1 and APB 28-1 require fair value disclosures in
both interim as well as annual financial statements in order to
provide more timely information about the effects of current market
conditions on financial statements. FSP FAS 107-1 and APB 28-1 are
effective for interim and annual periods ending after June 15,
2009. The adoption of this standard will not have a material impact
on the Company’s consolidated financial
statements.</font></p>
</div>
451000000
0
0000818686
2009-01-01
2009-03-31
0000818686
2008-01-01
2008-03-31
0000818686
2008-12-31
0000818686
2007-12-31
0000818686
2009-03-31
0000818686
2008-03-31
iso4217:USD
shares
iso4217:USD
shares
After giving retroactive
effect to the adoption of Staff Position No. APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)", as further
described in note 3.
Represents an amount of less
than $0.5 million.