[August 04, 2015] |
|
Zoetis Reports Second Quarter 2015 Results
Zoetis
Inc. (NYSE:ZTS) today reported its financial results for the second
quarter of 2015 and updated its full year 2015 guidance.
The company reported revenue of $1.2 billion for the second quarter of
2015, which increased 1% compared to the second quarter of 2014. Revenue
reflected an operational2 increase of 11%, excluding
the impact of foreign exchange.
The net loss for the second quarter of 2015 was $37 million, or $0.07
per diluted share, which includes $263 million in pre-tax charges
related to the company's previously announced comprehensive operational
efficiency initiative. Adjusted net income1 for the second
quarter of 2015 was $216 million, or $0.43 per diluted share, an
increase of 14% and 13%, respectively. Adjusted net income for the
second quarter of 2015 excludes the net impact of $253 million, or $0.50
per diluted share, for purchase accounting adjustments,
acquisition-related costs and certain significant items. On an
operational basis, adjusted net income for the second quarter of 2015
increased 20%, with foreign currency having a negative impact of 6
percentage points.
EXECUTIVE COMMENTARY
"In the second quarter, we generated operational revenue growth of 11%
based on the strength and diversity of our business. Our adjusted net
income grew 20% operationally, and we continue delivering our long-term
value proposition to shareholders -- growing adjusted net income faster
than sales," said Zoetis Chief Executive Officer Juan Ramón Alaix. "The
growth this quarter was driven by the positive performance of our
portfolio in both companion animal and livestock products, the addition
of Abbott Animal Health products, the growth of APOQUEL® and
other new products, and the continued discipline on operating expenses."
"Our broad portfolio, proven business model and dedicated Zoetis
colleagues enabled us to deliver these results as we began implementing
significant changes to become more competitive and profitable," said
Alaix. "We remain committed to maintaining our commercial, R&D and
manufacturing strengths, while reducing complexity in our business and
achieving our efficiency goals."
"With our operational efficiency initiative, we have begun the process
to re-shape our business around the key products, markets and
manufacturing sites that will make us an even stronger and more
profitable leader in animal health. Execution of these plans is
underway," said Zoetis Chief Financial Officer Paul Herendeen. "We are
pleased to see continued efficiency and expense control in this
quarter's results, along with excellent sales growth, and we are
updating our full year guidance for 2015 and reaffirming our long-term
goals for 2016 and 2017."
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its business across two regional operating
segments: the United States (U.S.) and International. Within these
segments, the company delivers a diverse portfolio of products for
livestock and companion animals tailored to local trends and customer
needs.
In the second quarter of 2015:
-
Revenue in the U.S. segment was $539 million, an increase of
17% compared to the second quarter of 2014. Sales of livestock
products grew 14% with balanced growth across cattle, swine and
poultry. Favorable market conditions drove growth in cattle across
multiple categories, including premium brands, as well as vaccines and
reproductive products. Cattle also benefited from new product growth,
primarily ACTOGAIN®. Sales of swine products delivered
broad growth due to the continued recovery in the pig population
following the PEDv outbreak, as well as new product introductions.
Growth in sales of poultry products was driven by the re-introduction
of ZOAMIX® and increased volumes in other medicated feed
additives. Companion animal product sales grew 20%, driven by the
addition of products acquired from Abbott Animal Health, as well as
significant growth of APOQUEL®.
-
Revenue in the International segment was $622 million, an
increase of 6% operationally compared to the second quarter of 2014.
Growth was driven by performance in livestock, which increased 6%
operationally, with higher sales of cattle and swine products offset
by lower sales of poultry products. Continued favorable market
conditions and new product launches in Brazil drove growth of the
cattle portfolio. The performance of our portfolio in China and other
Asian markets helped drive increased sales of swine products, which
are also benefiting from better market conditions. Companion animal
products grew 8% operationally, primarily from sales of APOQUEL®,
as well as sales of parasiticide products in key markets in Western
Europe, Australia, Canada and China. Performance was also supported by
strong vaccine sales in China.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through product lifecycle developments, strong customer
relationships and access to new markets and technologies. The company is
focused on improving the performance and delivery of its current product
lines; expanding product indications across species; pursuing approvals
in new geographies; and developing innovative medicines, treatments and
solutions for emerging diseases and unmet customer needs.
Some recent highlights include:
New Product Innovations - Zoetis continues
to advance animal health science through innovations that address unmet
market needs or improve veterinarians' approach to prevention and
treatment. The U.S. Department of Agriculture (USDA) granted Zoetis a
conditional license for a first-of-its-kind antibody therapy that
targets interleukin-31 (IL-31) to help reduce clinical signs associated
with atopic dermatitis in dogs. It represents another major breakthrough
to emerge from the proprietary research and development platform Zoetis
has built based on new scientific insights into the pathway of allergic
skin conditions.
Portfolio Lifecycle Development - As part
of enhancing the lifecycle of its products, Zoetis continues to receive
approvals for new indications and formulations of key products. The
company has also expanded major products into new markets. In the second
quarter, for example:
-
Zoetis received approval of new label claims in the U.S. and European
Union (EU) for CERENIA® (maropitant citrate),
an antiemetic to treat and prevent acute vomiting in dogs and cats. In
the U.S., the revised label now allows for once-daily tablet
administration until resolution of acute vomiting for dogs seven
months of age and older. In the EU, the injectable form of CERENIA has
been approved for intravenous use in dogs and cats. Both approvals
offer veterinarians greater latitude to treat each patient
individually.
-
The company is also expanding the breadth of its FOSTERA®
swine vaccine franchise. In Canada, Zoetis gained label claims for its
FOSTERA porcine reproductive and respiratory (PRRS) vaccine for swine,
with reproductive protection and one-day-of-age administration. The
company continued to bring its FOSTERA PCV MH vaccine to Latin
American countries with approval in Ecuador. The combination vaccine
helps protect swine from porcine circovirus-associated disease and
enzootic pneumonia caused by Mycoplasma hyopneumoniae.
-
DRAXXIN® 25, an injectable
anti-infective, which has tapped an important market for swine, was
launched in Spain, Italy, Portugal and Greece. DRAXXIN 25 offers a
convenient tool to fight swine respiratory disease (SRD) in nursery
pigs by providing a lower concentration, making it optimized for use
in small pigs.
FINANCIAL GUIDANCE
Zoetis narrowed its revenue and earnings per share guidance for full
year 2015 toward the higher end of its previous ranges to reflect its
year-to-date performance and outlook for the remainder of 2015.
Full year 2015 guidance includes:
-
Revenue of between $4.700 billion to $4.775 billion
-
Reported diluted EPS of between $0.81 to $1.02 per share
-
Adjusted diluted EPS1 of between $1.63 to $1.68 per share
The company also reaffirmed its long-term outlook for 2016 and 2017.
Additional guidance on other items for 2015, 2016 and 2017 such as
expenses and tax rate are included in the financial tables and will be
discussed on the company's conference call this morning.
WEBCAST & CONFERENCE CALL DETAILS
Zoetis will host a webcast and conference call at 8:30 a.m. (EDT) today,
during which company executives will review second quarter financial
results, discuss 2015 financial guidance, and respond to questions from
financial analysts. Investors and the public may access the live webcast
by visiting the Zoetis website at http://www.zoetis.com/events-and-presentations.
A replay of the webcast will be archived and made available on Aug. 4,
2015.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2014, the company generated annual revenue of $4.8 billion.
With approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who raise
and care for farm and companion animals with sales of its products in
120 countries. For more information, visit www.zoetis.com.
1 Adjusted net income and its components and
adjusted diluted earnings per share (non-GAAP financial measures) are
defined as reported net income attributable to Zoetis and reported
diluted earnings per share, excluding purchase accounting adjustments,
acquisition-related costs and certain significant items.
2 Operational revenue growth is defined as revenue
growth excluding the impact of foreign exchange.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, including in the sections thereof captioned
"Forward-Looking Information and Factors That May Affect Future Results"
and "Item 1A. Risk Factors," in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as adjusted net income and
adjusted diluted earnings per share, to assess and analyze our
operational results and trends and to make financial and operational
decisions. We believe these non-GAAP financial measures are also useful
to investors because they provide greater transparency regarding our
operating performance. The non-GAAP financial measures included
in this press release should not be considered alternatives to
measurements required by GAAP, such as net income, operating income, and
earnings per share, and should not be considered measures of liquidity.
These non-GAAP financial measures are unlikely to be comparable with
non-GAAP information provided by other companies. Reconciliation of
non-GAAP financial measures and GAAP financial measures are included in
the tables accompanying this press release and are posted on our website
at www.zoetis.com.
Internet Posting of Information:
We routinely post information that may be important to investors in
the 'Investors' section of our website at www.zoetis.com,
on our Facebook page at http://www.facebook.com/zoetis
and on Twitter @zoetis. We encourage investors and potential investors
to consult our website regularly and to follow us on Facebook and
Twitter for important information about us.
|
|
|
|
|
|
ZOETIS INC.
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(a)
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
% Change
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
% Change
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
1,175
|
|
|
|
|
$
|
|
|
1,158
|
|
|
|
|
1
|
|
|
|
$
|
|
|
2,277
|
|
|
|
|
$
|
|
|
2,255
|
|
|
|
|
1
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
|
|
427
|
|
|
|
|
413
|
|
|
|
|
3
|
|
|
|
821
|
|
|
|
|
792
|
|
|
|
|
4
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
379
|
|
|
|
|
396
|
|
|
|
|
(4)
|
|
|
|
733
|
|
|
|
|
752
|
|
|
|
|
(3)
|
|
|
Research and development expenses(b)
|
|
|
|
|
84
|
|
|
|
|
92
|
|
|
|
|
(9)
|
|
|
|
164
|
|
|
|
|
179
|
|
|
|
|
(8)
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
15
|
|
|
|
|
15
|
|
|
|
|
-
|
|
|
|
30
|
|
|
|
|
30
|
|
|
|
|
-
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
266
|
|
|
|
|
5
|
|
|
|
|
*
|
|
|
|
267
|
|
|
|
|
8
|
|
|
|
|
*
|
|
|
Interest expense
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
|
|
-
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
(2)
|
|
|
Other (income)/deductions-net
|
|
|
|
|
2
|
|
|
|
|
8
|
|
|
|
|
(75)
|
|
|
|
2
|
|
|
|
|
9
|
|
|
|
|
(78)
|
|
|
(Loss)/income before provision for taxes on income
|
|
|
|
|
(27
|
)
|
|
|
|
200
|
|
|
|
|
*
|
|
|
|
203
|
|
|
|
|
427
|
|
|
|
|
(52)
|
|
|
Provision for taxes on income
|
|
|
|
|
9
|
|
|
|
|
61
|
|
|
|
|
(85)
|
|
|
|
74
|
|
|
|
|
133
|
|
|
|
|
(44)
|
|
|
Net (loss)/income before allocation to noncontrolling interests
|
|
|
|
|
(36
|
)
|
|
|
|
139
|
|
|
|
|
*
|
|
|
|
129
|
|
|
|
|
294
|
|
|
|
|
(56)
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
(67)
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
(67)
|
|
|
Net (loss)/income attributable to Zoetis
|
|
|
|
|
$
|
|
|
(37
|
)
|
|
|
|
$
|
|
|
136
|
|
|
|
|
*
|
|
|
|
$
|
|
|
128
|
|
|
|
|
$
|
|
|
291
|
|
|
|
|
(56)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share-basic
|
|
|
|
|
$
|
|
|
(0.07
|
)
|
|
|
|
$
|
|
|
0.27
|
|
|
|
|
*
|
|
|
|
$
|
|
|
0.26
|
|
|
|
|
$
|
|
|
0.58
|
|
|
|
|
(55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/earnings per share-diluted
|
|
|
|
|
$
|
|
|
(0.07
|
)
|
|
|
|
$
|
|
|
0.27
|
|
|
|
|
*
|
|
|
|
$
|
|
|
0.25
|
|
|
|
|
$
|
|
|
0.58
|
|
|
|
|
(57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
500,173
|
|
|
|
|
500,975
|
|
|
|
|
|
|
|
|
500,660
|
|
|
|
|
500,603
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
500,173
|
|
|
|
|
501,684
|
|
|
|
|
|
|
|
|
502,893
|
|
|
|
|
501,193
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
The condensed consolidated statements of operations present the
three and six months ended June 28, 2015 and June 29, 2014.
Subsidiaries operating outside the United States are included for
the three and six months ended May 24, 2015 and May 25, 2014.
|
|
|
|
(b)
|
|
Exclusive of amortization of intangible assets, except as
discussed in footnote (c) below.
|
|
|
|
(c)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in Cost
of sales, Selling, general and administrative expenses or Research
and development expenses, as appropriate.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
|
CERTAIN LINE ITEMS
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 28, 2015
|
|
|
|
|
|
|
|
GAAP Reported(a)
|
|
|
|
Purchase Accounting Adjustments
|
|
|
|
Acquisition- Related Costs(1)
|
|
|
|
Certain Significant Items(2)
|
|
|
|
Non-GAAP Adjusted(b)
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
1,175
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
|
1,175
|
|
|
|
Cost of sales(c)
|
|
|
|
|
427
|
|
|
|
|
(3
|
)
|
|
|
|
-
|
|
|
|
|
(18
|
)
|
|
|
|
406
|
|
|
|
Gross profit
|
|
|
|
|
748
|
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
18
|
|
|
|
|
769
|
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
|
379
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(36
|
)
|
|
|
|
343
|
|
|
|
Research and development expenses(c)
|
|
|
|
|
84
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
83
|
|
|
|
Amortization of intangible assets(d)
|
|
|
|
|
15
|
|
|
|
|
(11
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
4
|
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
266
|
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
|
(263
|
)
|
|
|
|
-
|
|
|
|
Interest expense
|
|
|
|
|
29
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
29
|
|
|
|
Other (income)/deductions-net
|
|
|
|
|
2
|
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
|
|
(1
|
)
|
|
|
(Loss)/income before provision for taxes on income
|
|
|
|
|
(27
|
)
|
|
|
|
15
|
|
|
|
|
4
|
|
|
|
|
319
|
|
|
|
|
311
|
|
|
|
Provision for taxes on income
|
|
|
|
|
9
|
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
82
|
|
|
|
|
94
|
|
|
|
(Loss)/income from continuing operations
|
|
|
|
|
(36
|
)
|
|
|
|
12
|
|
|
|
|
4
|
|
|
|
|
237
|
|
|
|
|
217
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
Net (loss)/income attributable to Zoetis
|
|
|
|
|
(37
|
)
|
|
|
|
12
|
|
|
|
|
4
|
|
|
|
|
237
|
|
|
|
|
216
|
|
|
|
(Loss)/earnings per common share attributable to Zoetis-diluted(e)
|
|
|
|
|
(0.07
|
)
|
|
|
|
0.02
|
|
|
|
|
0.01
|
|
|
|
|
0.47
|
|
|
|
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 29, 2014
|
|
|
|
|
|
|
|
GAAP Reported(a)
|
|
|
|
Purchase Accounting Adjustments
|
|
|
|
Acquisition- Related Costs(1)
|
|
|
|
Certain Significant Items(2)
|
|
|
|
Non-GAAP Adjusted(b)
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
1,158
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
|
1,158
|
|
|
|
Cost of sales(c)
|
|
|
|
|
413
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(8
|
)
|
|
|
|
405
|
|
|
|
Gross profit
|
|
|
|
|
745
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
8
|
|
|
|
|
753
|
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
|
396
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
(31
|
)
|
|
|
|
364
|
|
|
|
Research and development expenses(c)
|
|
|
|
|
92
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
91
|
|
|
|
Amortization of intangible assets(d)
|
|
|
|
|
15
|
|
|
|
|
(11
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
4
|
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
5
|
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
|
(3
|
)
|
|
|
|
-
|
|
|
|
Interest expense
|
|
|
|
|
29
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
29
|
|
|
|
Other (income)/deductions-net
|
|
|
|
|
8
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(11
|
)
|
|
|
|
(3
|
)
|
|
|
Income before provision for taxes on income
|
|
|
|
|
200
|
|
|
|
|
13
|
|
|
|
|
2
|
|
|
|
|
53
|
|
|
|
|
268
|
|
|
|
Provision for taxes on income
|
|
|
|
|
61
|
|
|
|
|
5
|
|
|
|
|
-
|
|
|
|
|
10
|
|
|
|
|
76
|
|
|
|
Income from continuing operations
|
|
|
|
|
139
|
|
|
|
|
8
|
|
|
|
|
2
|
|
|
|
|
43
|
|
|
|
|
192
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
136
|
|
|
|
|
8
|
|
|
|
|
2
|
|
|
|
|
43
|
|
|
|
|
189
|
|
|
|
Earnings per common share attributable to Zoetis-diluted(e)
|
|
|
|
|
0.27
|
|
|
|
|
0.02
|
|
|
|
|
-
|
|
|
|
|
0.09
|
|
|
|
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
|
CERTAIN LINE ITEMS
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 28, 2015
|
|
|
|
|
|
|
|
GAAP Reported(a)
|
|
|
|
Purchase Accounting Adjustments
|
|
|
|
Acquisition- Related Costs(1)
|
|
|
|
Certain Significant Items(2)
|
|
|
|
Non-GAAP Adjusted(b)
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
2,277
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
|
2,277
|
|
|
|
Cost of sales(c)
|
|
|
|
|
821
|
|
|
|
|
(5
|
)
|
|
|
|
-
|
|
|
|
|
(25
|
)
|
|
|
|
791
|
|
|
|
Gross profit
|
|
|
|
|
1,456
|
|
|
|
|
5
|
|
|
|
|
-
|
|
|
|
|
25
|
|
|
|
|
1,486
|
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
|
733
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(70
|
)
|
|
|
|
663
|
|
|
|
Research and development expenses(c)
|
|
|
|
|
164
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
163
|
|
|
|
Amortization of intangible assets(d)
|
|
|
|
|
30
|
|
|
|
|
(22
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
8
|
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
267
|
|
|
|
|
-
|
|
|
|
|
(4
|
)
|
|
|
|
(263
|
)
|
|
|
|
-
|
|
|
|
Interest expense
|
|
|
|
|
57
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
57
|
|
|
|
Other (income)/deductions-net
|
|
|
|
|
2
|
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
(2
|
)
|
|
|
|
(1
|
)
|
|
|
Income before provision for taxes on income
|
|
|
|
|
203
|
|
|
|
|
28
|
|
|
|
|
5
|
|
|
|
|
360
|
|
|
|
|
596
|
|
|
|
Provision for taxes on income
|
|
|
|
|
74
|
|
|
|
|
10
|
|
|
|
|
(2
|
)
|
|
|
|
90
|
|
|
|
|
172
|
|
|
|
Income from continuing operations
|
|
|
|
|
129
|
|
|
|
|
18
|
|
|
|
|
7
|
|
|
|
|
270
|
|
|
|
|
424
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
128
|
|
|
|
|
18
|
|
|
|
|
7
|
|
|
|
|
270
|
|
|
|
|
423
|
|
|
|
Earnings per common share attributable to Zoetis-diluted(e)
|
|
|
|
|
0.25
|
|
|
|
|
0.04
|
|
|
|
|
0.01
|
|
|
|
|
0.54
|
|
|
|
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 29, 2014
|
|
|
|
|
|
|
|
GAAP Reported(a)
|
|
|
|
Purchase Accounting Adjustments
|
|
|
|
Acquisition- Related Costs(1)
|
|
|
|
Certain Significant Items(2)
|
|
|
|
Non-GAAP Adjusted(b)
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
2,255
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
-
|
|
|
|
|
$
|
|
|
2,255
|
|
|
|
Cost of sales(c)
|
|
|
|
|
792
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
(11
|
)
|
|
|
|
780
|
|
|
|
Gross profit
|
|
|
|
|
1,463
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
11
|
|
|
|
|
1,475
|
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
|
752
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(61
|
)
|
|
|
|
691
|
|
|
|
Research and development expenses(c)
|
|
|
|
|
179
|
|
|
|
|
(1
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
178
|
|
|
|
Amortization of intangible assets(d)
|
|
|
|
|
30
|
|
|
|
|
(23
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
7
|
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
8
|
|
|
|
|
-
|
|
|
|
|
(4
|
)
|
|
|
|
(4
|
)
|
|
|
|
-
|
|
|
|
Interest expense
|
|
|
|
|
58
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
58
|
|
|
|
Other (income)/deductions-net
|
|
|
|
|
9
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(13
|
)
|
|
|
|
(4
|
)
|
|
|
Income before provision for taxes on income
|
|
|
|
|
427
|
|
|
|
|
25
|
|
|
|
|
4
|
|
|
|
|
89
|
|
|
|
|
545
|
|
|
|
Provision for taxes on income
|
|
|
|
|
133
|
|
|
|
|
9
|
|
|
|
|
1
|
|
|
|
|
19
|
|
|
|
|
162
|
|
|
|
Income from continuing operations
|
|
|
|
|
294
|
|
|
|
|
16
|
|
|
|
|
3
|
|
|
|
|
70
|
|
|
|
|
383
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
291
|
|
|
|
|
16
|
|
|
|
|
3
|
|
|
|
|
70
|
|
|
|
|
380
|
|
|
|
Earnings per common share attributable to Zoetis-diluted(e)
|
|
|
|
|
0.58
|
|
|
|
|
0.03
|
|
|
|
|
0.01
|
|
|
|
|
0.14
|
|
|
|
|
0.76
|
|
|
|
|
|
|
(a)
|
|
The condensed consolidated statements of operations present the
three and six months ended June 28, 2015 and June 29, 2014.
Subsidiaries operating outside the United States are included for
the three and six months ended May 24, 2015 and May 25, 2014.
|
|
|
|
(b)
|
|
Non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS. Despite the importance of these measures to management in goal
setting and performance measurement, non-GAAP adjusted net income
and its components and non-GAAP adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, non-GAAP
adjusted net income and its components and non-GAAP adjusted diluted
EPS (unlike U.S. GAAP net income and its components and diluted EPS)
may not be comparable to the calculation of similar measures of
other companies. Non-GAAP adjusted net income and its components and
non-GAAP adjusted diluted EPS are presented solely to permit
investors to more fully understand how management assesses
performance.
|
|
|
|
(c)
|
|
Exclusive of amortization of intangible assets, except as discussed
in footnote (d) below.
|
|
|
|
(d)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in Cost
of sales, Selling, general and administrative expenses or
Research and development expenses, as appropriate.
|
|
|
|
(e)
|
|
EPS amounts may not add due to rounding. For the quarter ended June
28, 2015, weighted-average diluted shares used to calculate non-GAAP
adjusted net income per share were 502,563 thousand.
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1) and (2).
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION
|
|
|
CERTAIN LINE ITEMS
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
(1) Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
Integration costs(a)
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
3
|
|
|
|
|
$
|
|
|
|
|
2
|
|
|
|
|
$
|
|
|
|
|
4
|
|
|
|
|
$
|
|
|
|
|
4
|
|
|
|
Other(b)
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
Total acquisition-related costs-pre-tax
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
2
|
|
|
|
|
5
|
|
|
|
|
4
|
|
|
|
Income taxes(c)
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
|
1
|
|
|
|
Total acquisition-related costs-net of tax
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
4
|
|
|
|
|
$
|
|
|
|
|
2
|
|
|
|
|
$
|
|
|
|
|
7
|
|
|
|
|
$
|
|
|
|
|
3
|
|
|
|
|
|
|
(a)
|
|
Integration costs represent external, incremental costs directly
related to integrating acquired businesses and primarily include
expenditures for consulting and the integration of systems and
processes. Included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
(b)
|
|
Included in Other (income)/deductions-net.
|
|
|
|
(c)
|
|
Included in Provision for taxes on income. Income taxes
include the tax effect of the associated pre-tax amounts,
calculated by determining the jurisdictional location of the
pre-tax amounts and applying that jurisdiction's applicable tax
rate, as well as a tax charge related to the acquisition of
certain assets of Abbott Animal Health.
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
(2) Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
Operational efficiency initiative(a)
|
|
|
|
|
$
|
|
|
|
263
|
|
|
|
|
$
|
|
|
|
-
|
|
|
|
|
$
|
|
|
|
273
|
|
|
|
|
$
|
|
|
|
-
|
|
|
|
Supply network strategy(b)
|
|
|
|
|
15
|
|
|
|
|
-
|
|
|
|
|
20
|
|
|
|
|
-
|
|
|
|
Other restructuring charges and cost-reduction/productivity
initiatives(c)
|
|
|
|
|
-
|
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
|
4
|
|
|
|
Stand-up costs(d)
|
|
|
|
|
39
|
|
|
|
|
41
|
|
|
|
|
62
|
|
|
|
|
74
|
|
|
|
Net gain on sale of assets(e)
|
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
Other(f)
|
|
|
|
|
2
|
|
|
|
|
12
|
|
|
|
|
5
|
|
|
|
|
14
|
|
|
|
Total certain significant items-pre-tax
|
|
|
|
|
319
|
|
|
|
|
53
|
|
|
|
|
360
|
|
|
|
|
89
|
|
|
|
Income taxes(g)
|
|
|
|
|
82
|
|
|
|
|
10
|
|
|
|
|
90
|
|
|
|
|
19
|
|
|
|
Total certain significant items-net of tax
|
|
|
|
|
$
|
|
|
|
237
|
|
|
|
|
$
|
|
|
|
43
|
|
|
|
|
$
|
|
|
|
270
|
|
|
|
|
$
|
|
|
|
70
|
|
|
|
|
(a)
|
|
Includes restructuring charges of $253 million related to employee
termination costs ($228 million) and asset impairments ($25
million) for both the three and six months ended June 28, 2015,
included in Restructuring charges and certain
acquisition-related costs. Also includes other charges of $10
million and $20 million primarily related to consulting fees for
the three and six months ended June 28, 2015, respectively,
included in Selling, general and administrative expenses.
|
|
|
|
(b)
|
|
Includes restructuring charges of $10 million related to employee
termination costs ($9 million) and asset impairments ($1 million)
for both the three and six months ended June 28, 2015, included in Restructuring
charges and certain acquisition-related costs. Also includes
other charges of $5 million and $10 million primarily related to
consulting fees for the three and six months ended June 28, 2015,
respectively, included in Cost of sales.
|
|
|
|
(c)
|
|
Related to our cost-reduction/productivity initiatives and
included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
(d)
|
|
Represents certain nonrecurring costs related to becoming an
independent public company, such as new branding (including
changes to the manufacturing process for required new packaging),
the creation of standalone systems and infrastructure, site
separation, and certain legal registration and patent assignment
costs. Included in Cost of sales ($12 million and $14
million) and Selling, general and administrative expenses ($27
million and $48 million) for the three and six months ended June
28, 2015, respectively. Included in Cost of sales ($8
million and $11 million) and Selling, general and
administrative expenses ($31 million and $61 million), and Other
(income)/deductions-net ($2 million and $2 million) for the
three and six months ended June 29, 2014, respectively.
|
|
|
|
(e)
|
|
For the three and six months ended June 29, 2014, represents the
Zoetis portion of a net gain on the sale of land in our Taiwan joint
venture.
|
|
|
|
(f)
|
|
The three and six months ended June 28, 2015, includes an
impairment of IPR&D assets related to the termination of a canine
oncology project ($2 million) in Other (income)/deductions.
The six months ended June 28, 2015 also includes charges due to
unusual investor-related activities in Selling, general and
administrative expenses ($3 million). For the three and six
months ended June 29, 2014, primarily includes a reserve
associated with a commercial settlement in Mexico ($13 million) in Other
(income)/deductions. The six months ended June 29, 2014 also
includes a pension plan settlement charge related to the
divestiture of a manufacturing plant ($4 million), partially
offset by an insurance recovery of litigation related charges ($2
million income), both in Other (income)/deductions.
|
|
|
|
(g)
|
|
Included in Provision for taxes on income. Income taxes
include the tax effect of the associated pre-tax amounts,
calculated by determining the jurisdictional location of the
pre-tax amounts and applying that jurisdiction's applicable tax
rate.
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
ADJUSTED SELECTED COSTS, EXPENSES AND INCOME (a)
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
Operational
|
|
|
Adjusted cost of sales
|
|
|
|
|
$
|
|
|
|
|
406
|
|
|
|
|
$
|
|
|
|
|
405
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
(12)%
|
|
|
|
12 %
|
|
|
as a percent of revenue
|
|
|
|
|
34.6
|
%
|
|
|
|
35.0
|
%
|
|
|
|
|
|
NA
|
|
|
|
|
|
NA
|
|
|
|
NA
|
|
|
Adjusted SG&A expenses
|
|
|
|
|
343
|
|
|
|
|
364
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
|
(9)%
|
|
|
|
3 %
|
|
|
Adjusted R&D expenses
|
|
|
|
|
83
|
|
|
|
|
91
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
(5)%
|
|
|
|
(4)%
|
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
|
216
|
|
|
|
|
189
|
|
|
|
|
|
|
14
|
%
|
|
|
|
|
|
(6)%
|
|
|
|
20 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
Operational
|
|
|
Adjusted cost of sales
|
|
|
|
|
$
|
|
|
|
|
791
|
|
|
|
|
$
|
|
|
|
|
780
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
(10)%
|
|
|
|
11 %
|
|
|
as a percent of revenue
|
|
|
|
|
34.7
|
%
|
|
|
|
34.6
|
%
|
|
|
|
|
|
NA
|
|
|
|
|
|
NA
|
|
|
|
NA
|
|
|
Adjusted SG&A expenses
|
|
|
|
|
663
|
|
|
|
|
691
|
|
|
|
|
|
|
(4
|
)%
|
|
|
|
|
|
(7)%
|
|
|
|
3 %
|
|
|
Adjusted R&D expenses
|
|
|
|
|
163
|
|
|
|
|
178
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
(3)%
|
|
|
|
(5)%
|
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
|
423
|
|
|
|
|
380
|
|
|
|
|
|
|
11
|
%
|
|
|
|
|
|
(6)%
|
|
|
|
17 %
|
|
|
|
|
|
(a)
|
|
Adjusted cost of sales, adjusted selling, general, and
administrative (SG&A) expenses, adjusted research and development
(R&D) expenses, and adjusted net income attributable to Zoetis are
defined as the corresponding reported U.S. generally accepted
accounting principles (GAAP) income statement line items excluding
purchase accounting adjustments, acquisition-related costs, and
certain significant items. Reconciliations of certain reported to
adjusted information for the three and six months ended June 28,
2015 and June 29, 2014 are provided in the materials accompanying
this report. These adjusted income statement line item measures are
not, and should not be viewed as, substitutes for the corresponding
U.S. GAAP line items.
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
2015 GUIDANCE
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
|
|
Full Year 2015
|
|
|
Revenue
|
|
|
|
|
$4,700 to $4,775
|
|
|
Operational growth
|
|
|
|
|
6.0% to 7.5%
|
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
|
35.5% to 36.0%
|
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
$1,355 to $1,405
|
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
$380 to $400
|
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
|
|
Approximately $110
|
|
|
Adjusted EBIT margin(a)
|
|
|
|
|
Approximately 27%
|
|
|
Effective tax rate on adjusted income(a)
|
|
|
|
|
Approximately 29%
|
|
|
Adjusted diluted EPS(a)
|
|
|
|
|
$1.63 to $1.68
|
|
|
Adjusted net income(a)
|
|
|
|
|
$820 to $845
|
|
|
Operational growth
|
|
|
|
|
13% to 17%
|
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
$410 to $490
|
|
|
Reported diluted EPS
|
|
|
|
|
$0.81 to $1.02
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of 2015 adjusted net income and adjusted diluted EPS
guidance to 2015 reported net income attributable to Zoetis and reported
diluted EPS attributable to Zoetis common shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2015 Guidance
|
|
|
|
(millions of dollars, except per share amounts)
|
|
|
|
|
Net Income
|
|
|
|
Diluted EPS
|
|
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
|
~$820 - $845
|
|
|
|
~$1.63 - $1.68
|
|
|
|
Purchase accounting adjustments
|
|
|
|
|
~(40)
|
|
|
|
~(0.08)
|
|
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
~(290 - 370)
|
|
|
|
~(0.58 - 0.74)
|
|
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
|
~$410 - $515
|
|
|
|
~$0.81 - $1.02
|
|
|
|
(a)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense
and adjusted other (income)/deductions are income statement line
items prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Adjusted earnings before interest
and taxes (EBIT) is defined as reported EBIT excluding purchase
accounting adjustments, acquisition-related costs and certain
significant items. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted net
income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP
net income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies. Adjusted
net income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative, becoming an independent public company, such as new
branding (including changes to the manufacturing process for
required new packaging), the creation of standalone systems and
infrastructure, site separation, and certain legal registration and
patent assignment costs.
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
|
2016-2017 GUIDANCE
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
Revenue
|
|
|
|
|
$4,650 to $4,800
|
|
|
|
$4,850 to $5,050
|
|
|
|
Operational growth
|
|
|
|
|
(1)% to 2%
|
|
|
|
3% to 7%
|
|
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
|
33% to 34%
|
|
|
|
32% to 33%
|
|
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
$1,270 to $1,340
|
|
|
|
$1,240 to $1,330
|
|
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
$380 to $400
|
|
|
|
$380 to $400
|
|
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
|
|
Approximately $110
|
|
|
|
Approximately $110
|
|
|
|
Adjusted EBIT margin(a)
|
|
|
|
|
Approximately 31%
|
|
|
|
Approximately 34%
|
|
|
|
Effective tax rate on adjusted income(a)
|
|
|
|
|
Approximately 30%
|
|
|
|
Approximately 29%
|
|
|
|
Adjusted diluted EPS(a)
|
|
|
|
|
$1.81 to $1.93
|
|
|
|
$2.18 to $2.32
|
|
|
|
Adjusted net income(a)
|
|
|
|
|
$910 to $970
|
|
|
|
$1,095 to $1,165
|
|
|
|
Operational growth
|
|
|
|
|
12% to 19%
|
|
|
|
17% to 24%
|
|
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
$130 to $180
|
|
|
|
$50 to $80
|
|
|
|
Reported diluted EPS
|
|
|
|
|
$1.45 to $1.65
|
|
|
|
$1.98 to $2.16
|
|
|
|
A reconciliation of 2016 and 2017 adjusted net income and adjusted
diluted EPS guidance to 2016 and 2017 reported net income attributable
to Zoetis and reported diluted EPS attributable to Zoetis common
shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2016 Guidance
|
|
|
|
(millions of dollars, except per share amounts)
|
|
|
|
|
Net Income
|
|
|
|
Diluted EPS
|
|
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
|
~$910 - $970
|
|
|
|
~$1.81 - $1.93
|
|
|
|
Purchase accounting adjustments
|
|
|
|
|
~(40)
|
|
|
|
~(0.08)
|
|
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
~(100 - 140)
|
|
|
|
~(0.20 - 0.28)
|
|
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
|
~$730 - $830
|
|
|
|
~$1.45 - $1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2017 Guidance
|
|
|
|
(millions of dollars, except per share amounts)
|
|
|
|
|
Net Income
|
|
|
|
Diluted EPS
|
|
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
|
~$1,095 - $1,165
|
|
|
|
~$2.18 - $2.32
|
|
|
|
Purchase accounting adjustments
|
|
|
|
|
~(40)
|
|
|
|
~(0.08)
|
|
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
~(40 - 60)
|
|
|
|
~(0.08 - 0.12)
|
|
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
|
~$995 - $1,085
|
|
|
|
~$1.98 - $2.16
|
|
|
|
(a)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense,
adjusted other (income)/deductions are income statement line items
prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Adjusted earnings before interest
and taxes (EBIT) is defined as reported EBIT excluding purchase
accounting adjustments, acquisition-related costs and certain
significant items. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted net
income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP
net income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies. Adjusted
net income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative, becoming an independent public company, such as new
branding (including changes to the manufacturing process for
required new packaging), the creation of standalone systems and
infrastructure, site separation, and certain legal registration and
patent assignment costs.
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
Foreign Exchange
|
|
|
|
Operational
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
690
|
|
|
|
|
$
|
|
|
|
703
|
|
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(10
|
)%
|
|
|
|
8
|
%
|
|
|
Companion Animal
|
|
|
|
|
471
|
|
|
|
|
439
|
|
|
|
|
|
|
7
|
%
|
|
|
|
|
(8
|
)%
|
|
|
|
15
|
%
|
|
|
Contract Manufacturing
|
|
|
|
|
14
|
|
|
|
|
16
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
(16
|
)%
|
|
|
|
3
|
%
|
|
|
Total Revenue
|
|
|
|
|
$
|
|
|
|
1,175
|
|
|
|
|
$
|
|
|
|
1,158
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
(10
|
)%
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
256
|
|
|
|
|
$
|
|
|
|
224
|
|
|
|
|
|
|
14
|
%
|
|
|
|
|
-
|
%
|
|
|
|
14
|
%
|
|
|
Companion Animal
|
|
|
|
|
283
|
|
|
|
|
235
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
-
|
%
|
|
|
|
20
|
%
|
|
|
Total U.S. Revenue
|
|
|
|
|
$
|
|
|
|
539
|
|
|
|
|
$
|
|
|
|
459
|
|
|
|
|
|
|
17
|
%
|
|
|
|
|
-
|
%
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
434
|
|
|
|
|
$
|
|
|
|
479
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
(15
|
)%
|
|
|
|
6
|
%
|
|
|
Companion Animal
|
|
|
|
|
188
|
|
|
|
|
204
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
(16
|
)%
|
|
|
|
8
|
%
|
|
|
Total International Revenue
|
|
|
|
|
$
|
|
|
|
622
|
|
|
|
|
$
|
|
|
|
683
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
(15
|
)%
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
|
$
|
|
|
|
372
|
|
|
|
|
$
|
|
|
|
379
|
|
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(11
|
)%
|
|
|
|
9
|
%
|
|
|
Swine
|
|
|
|
|
162
|
|
|
|
|
157
|
|
|
|
|
|
|
3
|
%
|
|
|
|
|
(11
|
)%
|
|
|
|
14
|
%
|
|
|
Poultry
|
|
|
|
|
138
|
|
|
|
|
146
|
|
|
|
|
|
|
(5
|
)%
|
|
|
|
|
(6
|
)%
|
|
|
|
1
|
%
|
|
|
Other
|
|
|
|
|
18
|
|
|
|
|
21
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
(19
|
)%
|
|
|
|
5
|
%
|
|
|
Total Livestock Revenue
|
|
|
|
|
$
|
|
|
|
690
|
|
|
|
|
$
|
|
|
|
703
|
|
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(10
|
)%
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
|
$
|
|
|
|
42
|
|
|
|
|
$
|
|
|
|
46
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
(8
|
)%
|
|
|
|
(1
|
)%
|
|
|
Dogs and Cats
|
|
|
|
|
429
|
|
|
|
|
393
|
|
|
|
|
|
|
9
|
%
|
|
|
|
|
(8
|
)%
|
|
|
|
17
|
%
|
|
|
Total Companion Animal Revenue
|
|
|
|
|
$
|
|
|
|
471
|
|
|
|
|
$
|
|
|
|
439
|
|
|
|
|
|
|
7
|
%
|
|
|
|
|
(8
|
)%
|
|
|
|
15
|
%
|
|
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure. The prior period presentation has been revised
to reflect the new segment reporting structure.
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
|
Operational
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
1,405
|
|
|
|
|
$
|
|
|
|
1,409
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
8
|
%
|
|
|
Companion Animal
|
|
|
|
|
848
|
|
|
|
|
819
|
|
|
|
|
|
|
4
|
%
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
10
|
%
|
|
|
Contract Manufacturing
|
|
|
|
|
24
|
|
|
|
|
27
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
(3
|
)%
|
|
|
Total Revenue
|
|
|
|
|
$
|
|
|
|
2,277
|
|
|
|
|
$
|
|
|
|
2,255
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
|
(7
|
)%
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
555
|
|
|
|
|
$
|
|
|
|
487
|
|
|
|
|
|
|
14
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
14
|
%
|
|
|
Companion Animal
|
|
|
|
|
505
|
|
|
|
|
451
|
|
|
|
|
|
|
12
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
12
|
%
|
|
|
Total U.S. Revenue
|
|
|
|
|
$
|
|
|
|
1,060
|
|
|
|
|
$
|
|
|
|
938
|
|
|
|
|
|
|
13
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
|
|
|
850
|
|
|
|
|
$
|
|
|
|
922
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(12
|
)%
|
|
|
|
|
4
|
%
|
|
|
Companion Animal
|
|
|
|
|
343
|
|
|
|
|
368
|
|
|
|
|
|
|
(7
|
)%
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
7
|
%
|
|
|
Total International Revenue
|
|
|
|
|
$
|
|
|
|
1,193
|
|
|
|
|
$
|
|
|
|
1,290
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
|
$
|
|
|
|
769
|
|
|
|
|
$
|
|
|
|
770
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
8
|
%
|
|
|
Swine
|
|
|
|
|
332
|
|
|
|
|
317
|
|
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
13
|
%
|
|
|
Poultry
|
|
|
|
|
267
|
|
|
|
|
281
|
|
|
|
|
|
|
(5
|
)%
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
1
|
%
|
|
|
Other
|
|
|
|
|
37
|
|
|
|
|
41
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
4
|
%
|
|
|
Total Livestock Revenue
|
|
|
|
|
$
|
|
|
|
1,405
|
|
|
|
|
$
|
|
|
|
1,409
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
|
$
|
|
|
|
82
|
|
|
|
|
$
|
|
|
|
89
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(5
|
)%
|
|
|
|
|
(3
|
)%
|
|
|
Dogs and Cats
|
|
|
|
|
766
|
|
|
|
|
730
|
|
|
|
|
|
|
5
|
%
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
11
|
%
|
|
|
Total Companion Animal Revenue
|
|
|
|
|
$
|
|
|
|
848
|
|
|
|
|
$
|
|
|
|
819
|
|
|
|
|
|
|
4
|
%
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
10
|
%
|
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure. The prior period presentation has been revised
to reflect the new segment reporting structure.
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
|
Operational
|
|
|
Total International
|
|
|
|
|
$
|
|
|
|
622
|
|
|
|
|
$
|
|
|
|
683
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
6
|
%
|
|
|
Australia
|
|
|
|
|
41
|
|
|
|
|
45
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
6
|
%
|
|
|
Brazil
|
|
|
|
|
67
|
|
|
|
|
83
|
|
|
|
|
|
|
(19
|
)%
|
|
|
|
|
|
|
(28
|
)%
|
|
|
|
|
9
|
%
|
|
|
Canada
|
|
|
|
|
49
|
|
|
|
|
55
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
-
|
%
|
|
|
China
|
|
|
|
|
29
|
|
|
|
|
23
|
|
|
|
|
|
|
26
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
26
|
%
|
|
|
France
|
|
|
|
|
27
|
|
|
|
|
34
|
|
|
|
|
|
|
(21
|
)%
|
|
|
|
|
|
|
(22
|
)%
|
|
|
|
|
1
|
%
|
|
|
Germany
|
|
|
|
|
31
|
|
|
|
|
40
|
|
|
|
|
|
|
(23
|
)%
|
|
|
|
|
|
|
(19
|
)%
|
|
|
|
|
(4
|
)%
|
|
|
Italy
|
|
|
|
|
20
|
|
|
|
|
24
|
|
|
|
|
|
|
(17
|
)%
|
|
|
|
|
|
|
(23
|
)%
|
|
|
|
|
6
|
%
|
|
|
Japan
|
|
|
|
|
26
|
|
|
|
|
32
|
|
|
|
|
|
|
(19
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
(4
|
)%
|
|
|
Mexico
|
|
|
|
|
18
|
|
|
|
|
21
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
|
|
(16
|
)%
|
|
|
|
|
2
|
%
|
|
|
Spain
|
|
|
|
|
20
|
|
|
|
|
23
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
|
|
(23
|
)%
|
|
|
|
|
10
|
%
|
|
|
United Kingdom
|
|
|
|
|
37
|
|
|
|
|
36
|
|
|
|
|
|
|
3
|
%
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
12
|
%
|
|
|
Other Developed
|
|
|
|
|
78
|
|
|
|
|
87
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
4
|
%
|
|
|
Other Emerging
|
|
|
|
|
179
|
|
|
|
|
180
|
|
|
|
|
|
|
(1
|
)%
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
|
Operational
|
|
|
Total International
|
|
|
|
|
$
|
|
|
|
1,193
|
|
|
|
|
$
|
|
|
|
1,290
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
5
|
%
|
|
|
Australia
|
|
|
|
|
69
|
|
|
|
|
78
|
|
|
|
|
|
|
(12
|
)%
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
2
|
%
|
|
|
Brazil
|
|
|
|
|
131
|
|
|
|
|
147
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
(22
|
)%
|
|
|
|
|
11
|
%
|
|
|
Canada
|
|
|
|
|
82
|
|
|
|
|
91
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
1
|
%
|
|
|
China
|
|
|
|
|
64
|
|
|
|
|
56
|
|
|
|
|
|
|
14
|
%
|
|
|
|
|
|
|
(1
|
)%
|
|
|
|
|
15
|
%
|
|
|
France
|
|
|
|
|
53
|
|
|
|
|
74
|
|
|
|
|
|
|
(28
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
(13
|
)%
|
|
|
Germany
|
|
|
|
|
59
|
|
|
|
|
73
|
|
|
|
|
|
|
(19
|
)%
|
|
|
|
|
|
|
(16
|
)%
|
|
|
|
|
(3
|
)%
|
|
|
Italy
|
|
|
|
|
45
|
|
|
|
|
51
|
|
|
|
|
|
|
(12
|
)%
|
|
|
|
|
|
|
(18
|
)%
|
|
|
|
|
6
|
%
|
|
|
Japan
|
|
|
|
|
52
|
|
|
|
|
61
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
(2
|
)%
|
|
|
Mexico
|
|
|
|
|
36
|
|
|
|
|
42
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
(1
|
)%
|
|
|
Spain
|
|
|
|
|
39
|
|
|
|
|
44
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
(18
|
)%
|
|
|
|
|
7
|
%
|
|
|
United Kingdom
|
|
|
|
|
79
|
|
|
|
|
79
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
8
|
%
|
|
|
Other Developed
|
|
|
|
|
143
|
|
|
|
|
158
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
(12
|
)%
|
|
|
|
|
3
|
%
|
|
|
Other Emerging
|
|
|
|
|
341
|
|
|
|
|
336
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
11
|
%
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
|
SEGMENT(a) EARNINGS
|
|
|
|
(UNAUDITED)
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
|
Operational
|
|
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
|
539
|
|
|
|
|
$
|
|
|
|
459
|
|
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
17
|
%
|
|
|
Cost of Sales
|
|
|
|
|
127
|
|
|
|
|
106
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
20
|
%
|
|
|
Gross Profit
|
|
|
|
|
412
|
|
|
|
|
353
|
|
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
17
|
%
|
|
|
Gross Margin
|
|
|
|
|
76.4
|
%
|
|
|
|
76.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
93
|
|
|
|
|
95
|
|
|
|
|
|
|
(2
|
)%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
(2
|
)%
|
|
|
Other (income)/deductions
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
-
|
%
|
|
|
U.S. Earnings
|
|
|
|
|
$
|
|
|
|
319
|
|
|
|
|
$
|
|
|
|
258
|
|
|
|
|
|
|
24
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
|
622
|
|
|
|
|
$
|
|
|
|
683
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
6
|
%
|
|
|
Cost of Sales
|
|
|
|
|
225
|
|
|
|
|
243
|
|
|
|
|
|
|
(7
|
)%
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
4
|
%
|
|
|
Gross Profit
|
|
|
|
|
397
|
|
|
|
|
440
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
(17
|
)%
|
|
|
|
|
7
|
%
|
|
|
Gross Margin
|
|
|
|
|
63.8
|
%
|
|
|
|
64.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
151
|
|
|
|
|
175
|
|
|
|
|
|
|
(14
|
)%
|
|
|
|
|
|
|
(16
|
)%
|
|
|
|
|
2
|
%
|
|
|
Other (income)/deductions
|
|
|
|
|
4
|
|
|
|
|
2
|
|
|
|
|
|
|
100
|
%
|
|
|
|
|
|
|
*
|
|
|
|
|
|
*
|
|
|
|
International Earnings
|
|
|
|
|
$
|
|
|
|
242
|
|
|
|
|
$
|
|
|
|
263
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(18
|
)%
|
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
|
$
|
|
|
|
561
|
|
|
|
|
$
|
|
|
|
521
|
|
|
|
|
|
|
8
|
%
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
(67
|
)
|
|
|
|
(75
|
)
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
(123
|
)
|
|
|
|
(125
|
)
|
|
|
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
(15
|
)
|
|
|
|
(13
|
)
|
|
|
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
(4
|
)
|
|
|
|
(2
|
)
|
|
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
(319
|
)
|
|
|
|
(53
|
)
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
(60
|
)
|
|
|
|
(53
|
)
|
|
|
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (Loss)/Earnings(h)
|
|
|
|
|
$
|
|
|
|
(27
|
)
|
|
|
|
$
|
|
|
|
200
|
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure and recategorized certain costs that are not
allocated to our operating segments. The prior period presentation
has been revised to reflect the new segment reporting structure.
|
|
|
|
(b)
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization as well as our
contract manufacturing business.
|
|
|
|
(c)
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
(d)
|
|
Purchase accounting adjustments include certain charges related to
intangible assets and property, plant and equipment not charged to
our operating segments.
|
|
|
|
(e)
|
|
Acquisition-related costs can include costs associated with
acquiring, integrating and restructuring newly acquired businesses,
such as transaction costs, integration costs, restructuring charges
and additional depreciation associated with asset restructuring.
|
|
|
|
(f)
|
|
Certain significant items are substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, costs associated with the
operational efficiency initiative, certain legal and commercial
settlements, and the impact of divestiture-related gains and losses.
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
(h)
|
|
Defined as income/(loss) before provision for taxes on income.
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
|
SEGMENT(a) EARNINGS
|
|
|
|
(UNAUDITED)
|
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Foreign Exchange
|
|
|
|
|
Operational
|
|
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
|
1,060
|
|
|
|
|
$
|
|
|
|
938
|
|
|
|
|
|
|
13
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
13
|
%
|
|
|
Cost of Sales
|
|
|
|
|
252
|
|
|
|
|
217
|
|
|
|
|
|
|
16
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
16
|
%
|
|
|
Gross Profit
|
|
|
|
|
808
|
|
|
|
|
721
|
|
|
|
|
|
|
12
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
12
|
%
|
|
|
Gross Margin
|
|
|
|
|
76.2
|
%
|
|
|
|
76.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
174
|
|
|
|
|
185
|
|
|
|
|
|
|
(6
|
)%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
(6
|
)%
|
|
|
Other (income)/deductions
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
-
|
%
|
|
|
U.S. Earnings
|
|
|
|
|
$
|
|
|
|
634
|
|
|
|
|
$
|
|
|
|
536
|
|
|
|
|
|
|
18
|
%
|
|
|
|
|
|
|
-
|
%
|
|
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
|
|
|
1,193
|
|
|
|
|
$
|
|
|
|
1,290
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
5
|
%
|
|
|
Cost of Sales
|
|
|
|
|
429
|
|
|
|
|
460
|
|
|
|
|
|
|
(7
|
)%
|
|
|
|
|
|
|
(10
|
)%
|
|
|
|
|
3
|
%
|
|
|
Gross Profit
|
|
|
|
|
764
|
|
|
|
|
830
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
(15
|
)%
|
|
|
|
|
7
|
%
|
|
|
Gross Margin
|
|
|
|
|
64.0
|
%
|
|
|
|
64.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
286
|
|
|
|
|
322
|
|
|
|
|
|
|
(11
|
)%
|
|
|
|
|
|
|
(13
|
)%
|
|
|
|
|
2
|
%
|
|
|
Other (income)/deductions
|
|
|
|
|
6
|
|
|
|
|
3
|
|
|
|
|
|
|
100
|
%
|
|
|
|
|
|
|
*
|
|
|
|
|
|
*
|
|
|
|
International Earnings
|
|
|
|
|
$
|
|
|
|
472
|
|
|
|
|
$
|
|
|
|
505
|
|
|
|
|
|
|
(7
|
)%
|
|
|
|
|
|
|
(16
|
)%
|
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
|
$
|
|
|
|
1,106
|
|
|
|
|
$
|
|
|
|
1,041
|
|
|
|
|
|
|
6
|
%
|
|
|
|
|
|
|
(8
|
)%
|
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
(135
|
)
|
|
|
|
(148
|
)
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
(254
|
)
|
|
|
|
(247
|
)
|
|
|
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
(28
|
)
|
|
|
|
(25
|
)
|
|
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
(5
|
)
|
|
|
|
(4
|
)
|
|
|
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
(360
|
)
|
|
|
|
(89
|
)
|
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
(121
|
)
|
|
|
|
(101
|
)
|
|
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
|
$
|
|
|
|
203
|
|
|
|
|
$
|
|
|
|
427
|
|
|
|
|
|
|
(52
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure and recategorized certain costs that are not
allocated to our operating segments. The prior period presentation
has been revised to reflect the new segment reporting structure.
|
|
|
|
(b)
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization as well as our
contract manufacturing business.
|
|
|
|
(c)
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
(d)
|
|
Purchase accounting adjustments include certain charges related to
intangible assets and property, plant and equipment not charged to
our operating segments.
|
|
|
|
(e)
|
|
Acquisition-related costs can include costs associated with
acquiring, integrating and restructuring newly acquired businesses,
such as transaction costs, integration costs, restructuring charges
and additional depreciation associated with asset restructuring.
|
|
|
|
(f)
|
|
Certain significant items are substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, costs associated with the
operational efficiency initiative, certain legal and commercial
settlements, and the impact of divestiture-related gains and losses.
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
(h)
|
|
Defined as income/(loss) before provision for taxes on income.
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150804005881/en/
[ Back To TMCnet.com's Homepage ]
|