- Second Quarter 2013 Revenue of $1.11 Billion Increased 2% Compared to Second Quarter 2012
- Second Quarter 2013 Reported Net Income of $128 Million, or Diluted EPS of $0.26, Decreased 26%, Compared to Second Quarter 2012
- Second Quarter 2013 Adjusted Net Income of $178 Million, or Adjusted Diluted EPS1 of $0.36, Increased 1% and 3%, respectively, Compared to Second Quarter 2012
- Reaffirms Full-Year 2013 Adjusted Diluted EPS1 Guidance of $1.36 - $1.42
Zoetis Inc. (NYSE: ZTS), a former business unit of Pfizer Inc., today
reported its financial results for the second quarter of 2013. The
company reported revenue of $1.11 billion for the second quarter, an
increase of 2% from the second quarter of 2012. Revenue reflected an
operational2 increase of 4%, with foreign currency
having a negative impact of 2 percentage points.
Net income for the second quarter of 2013 was $128 million, or $0.26 per
diluted share, a decrease of 26%, compared to the second quarter of
2012. Adjusted net income1 for the second quarter of 2013 was
$178 million, or $0.36 per diluted share, an increase of 1% and 3%,
respectively, compared to the second quarter of 2012. Adjusted net income1
for the second quarter of 2013 excludes the net impact of $50 million,
or $0.10 per diluted share, for purchase accounting adjustments,
acquisition-related costs and certain significant items.
EXECUTIVE COMMENTARY
“In the second quarter, we achieved positive financial results while we
completed our separation from Pfizer and continued delivering product
innovations such as the approval of APOQUEL in the U.S.,” said Zoetis
Chief Executive Officer Juan Ramón Alaix. “Our global scale, local
presence and diverse portfolio again helped us deliver growth in sales
and adjusted earnings, despite ongoing weather-related challenges and
economic issues.”
“The company performance - both for the quarter and year-to-date -
further illustrates the commitment and talent of our people and the
strength of our business model,” said Alaix. “As we look ahead, we
remain confident in our ability to fully stand up our new company, while
meeting our customers' needs for innovative animal health medicines and
vaccines.”
“This quarter, we have made good progress on building out our
infrastructure. I am pleased with our financial results year-to-date,
and we are reaffirming our guidance for full year 2013,” said Rick
Passov, Executive Vice President and Chief Financial Officer of Zoetis.
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its business across four regional operating
segments: the United States (U.S.); Europe/Africa/Middle East (EuAfME);
Canada/Latin America (CLAR); and Asia/Pacific (APAC). Within each of
these regional 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 2013:
-
Revenue in the U.S. was $437 million, an increase of 4% over the
second quarter of 2012. Growth in sales of livestock products was
driven by cattle, swine and poultry. Growth in sales of companion
animal products was driven by increases in small animal products,
partially offset by continued contraction in the equine market.
-
Revenue in EuAfME was $278 million, an increase of 1% operationally
over the second quarter of 2012. Sales of companion animal products
benefited from increased sales associated with third-party
manufacturing agreements; excluding these sales, companion animal
product sales were relatively flat. Sales of livestock products
declined, due primarily to lower sales of cattle products resulting
from cold weather conditions and overall economic weakness in Europe,
partially offset by growth in swine and poultry products.
-
Revenue in CLAR was $213 million, an increase of 4% operationally over
the second quarter of 2012. Sales of companion animal products
increased in the quarter, largely due to increased demand and
marketing programs, primarily in Brazil and Mexico, and were slightly
offset by lower sales in Canada. Growth in sales of livestock products
was driven primarily by poultry and swine, while sales of cattle
products declined.
-
Revenue in APAC was $186 million, an increase of 7% operationally over
the second quarter of 2012. Sales of companion animal products were
favorably impacted by the continued introduction of new products.
Growth of livestock product sales was driven by swine products and the
continued launch of new vaccines, while drought conditions continued
to negatively impact the sale of cattle products in Australia.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through brand lifecycle management, strong customer
relationships and access to new markets and technologies. With an
expansive and diverse product portfolio, the company focuses on
improving the performance and delivery of current product lines;
expanding product indications across species; and pursuing approvals
across new geographies. Some recent highlights include:
-
APOQUEL®,
First approval of novel JAK-1 inhibitor -- The U.S. FDA
approved APOQUEL
(oclacitinib tablet) on May 16th for the control of
pruritus associated with allergic dermatitis and the control of atopic
dermatitis in dogs at least 12 months of age. Pruritus, or itching, is
the most common sign of allergies in dogs. Developed by Zoetis,
APOQUEL is the first Janus kinase (JAK) inhibitor approved for
veterinary use that targets the itch and inflammation pathway and
marks a significant improvement in the standard of care veterinarians
can offer. APOQUEL provides fast-acting relief from itching and
improves inflammation for the estimated 8.2 million dogs in the U.S.
that suffer from short- and long-term allergic skin conditions.
Meanwhile, in Europe, the CVMP (Committee for Veterinary Medicinal
Products) has adopted a positive
opinion recommending the granting of a market authorization for
APOQUEL, an important step in the approval process with the EU
Commission; the company also continues pursuing approvals of APOQUEL
in additional markets.
-
Progress with China Joint Venture --
Zoetis's joint venture in Jilin, China, has received approval
for RUI LAN AN™ - a new high standard of innovation against highly
pathogenic porcine reproductive and respiratory syndrome (HP PRRS).
This vaccine is a key milestone for Zoetis's business in China. The
vaccine combines the global expertise of Zoetis and a strong local
vaccine development program to address vaccine needs of swine
producers in China, the world's leading pork-producing nation. The
joint venture was established
in 2011 to develop, manufacture and distribute animal health
vaccines in China.
-
Managing Brand Lifecycles -- Zoetis
continues strengthening its diverse portfolio of medicines and
vaccines with new approvals in additional markets and new formulations
for existing brands. For example, FOSTERA® PCV is a vaccine
for swine and achieved its latest approvals in Brazil and Japan this
quarter; it helps limit the very costly consequences of PCV-associated
disease that could compromise herd health and performance. Meanwhile
in poultry, the POULVAC® IB QX vaccine, which was first
approved in France in 2010, was recently granted registration in the
German market; it has also been registered in Romania, Bulgaria and
South Africa. In the case of new formulations, DRAXXIN® is
an anti-infective for livestock that was first approved in Europe in
2003, and this quarter the DRAXXIN® 25 (tulathromycin)
Injectable Solution was approved in the U.S. at a new, lower
concentration (of tulathromycin), which is more suitable for swine.
BOVI-SHIELD GOLD ONE SHOT™ was also approved in the U.S. in July. It
is a vaccine for cattle to help prevent certain respiratory diseases
and gives the company a competitive combination product in this area.
FINANCIAL GUIDANCE AND COMMENTARY
Zoetis's guidance for full-year 2013 reflects the company's confidence
in the diversity of its portfolio, the strength of its business model,
and its view of the evolving market conditions for animal health
products this year.
Zoetis reaffirmed its financial guidance for full-year 2013, including
revenue of between $4.425 billion to $4.525 billion. The company also
expects to achieve reported diluted EPS for the full year of between
$1.00 to $1.06 per share, which includes the impact of nonrecurring
costs of $200 million to $240 million, primarily associated with
becoming a standalone public company. Adjusted diluted EPS1
for the full year is expected to be between $1.36 to $1.42 per share,
excluding purchase accounting adjustments, acquisition-related costs and
certain significant items. Additional guidance on other items such as
tax rate and expenses are included in the financial tables and will be
discussed on the company's conference call.
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 2013 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. 6,
2013.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on a 60-year
history as the animal health business of Pfizer, Zoetis discovers,
develops, manufactures and markets veterinary vaccines and medicines,
with a focus on both farm and companion animals. In 2012, the company
generated annual revenues of $4.3 billion. With approximately 9,300
employees worldwide at the beginning of 2013, Zoetis has a local
presence in approximately 70 countries, including 29 manufacturing
facilities in 11 countries. Its products serve veterinarians, livestock
producers and people who raise and care for farm and companion animals
in 120 countries. For more information on the company, visit www.zoetis.com.
1 Adjusted net income 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
Zoetis's current views with respect to business plans or prospects,
future operating or financial performance, and other future events.
These statements are not guarantees of future performance.
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, 2012, 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 web site 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.
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ZOETIS INC.
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME(a)
(UNAUDITED)
(millions of dollars, except per share data)
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Second Quarter
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% Incr./
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Six Months
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% Incr./
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2013
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2012
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(Decr.)
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2013
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2012
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(Decr.)
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Revenue
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$
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1,114
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$
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1,094
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2
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$
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2,204
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$
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2,141
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3
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Costs and expenses:
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Cost of sales(b)
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416
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378
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10
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818
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771
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6
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|
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Selling, general and administrative expenses(b)
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399
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344
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16
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|
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756
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682
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11
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|
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Research and development expenses(b)
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|
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95
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|
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92
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3
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185
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194
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(5
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)
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Amortization of intangible assets(c)
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15
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16
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(6
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)
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30
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32
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(6
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)
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Restructuring charges and certain acquisition-related costs
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(20
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)
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24
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*
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(13
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)
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49
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*
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|
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Interest expense
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32
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8
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*
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54
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16
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*
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Other (income)/deductions–net
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(10
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)
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(20
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)
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(50
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)
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(5
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)
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(26
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)
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(81
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)
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Income before provision for taxes on income
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187
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|
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252
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(26
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)
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379
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423
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(10
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)
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Provision for taxes on income
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59
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79
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(25
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)
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111
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138
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(20
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)
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Net income before allocation to noncontrolling interests
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128
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173
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(26
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)
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268
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285
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(6
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)
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Less: Net income attributable to noncontrolling interests
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—
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—
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—
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—
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1
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(100
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)
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Net income attributable to Zoetis
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$
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128
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$
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173
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(26
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)
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$
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268
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$
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284
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(6
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)
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Earnings per share—basic
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$
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0.26
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$
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0.35
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(26
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$
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0.54
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$
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0.57
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(5
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)
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Earnings per share—diluted
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$
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0.26
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$
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0.35
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(26
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$
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0.54
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$
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0.57
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(5
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)
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Weighted-average shares used to calculate earnings per share (in
thousands)
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Basic
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500,000
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500,000
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500,000
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500,000
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Diluted
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500,217
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500,000
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500,164
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500,000
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* Calculation not meaningful
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(a)
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The condensed consolidated and combined statements of income present
the three and six months ended June 30, 2013 and July 1, 2012.
Subsidiaries operating outside the United States are included for
the three and six months ended May 26, 2013 and May 27, 2012.
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(b)
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Exclusive of amortization of intangible assets, except as discussed
in footnote (c) below.
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(c)
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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.
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Certain amounts and percentages may reflect rounding adjustments.
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ZOETIS INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per share data)
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|
|
|
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|
|
|
|
|
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|
|
Quarter ended June 30, 2013
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|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
Purchase
Accounting
Adjustments
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
|
|
|
$
|
1,114
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,114
|
|
|
Cost of sales(b)
|
|
|
|
|
416
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(13
|
)
|
|
|
400
|
|
|
Gross profit
|
|
|
|
|
698
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|
|
|
1
|
|
|
|
2
|
|
|
|
13
|
|
|
|
714
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
399
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(60
|
)
|
|
|
339
|
|
|
Research and development expenses(b)
|
|
|
|
|
95
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
91
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
15
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
27
|
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
32
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(10
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
(3
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
187
|
|
|
|
13
|
|
|
|
9
|
|
|
|
43
|
|
|
|
252
|
|
|
Provision for taxes on income
|
|
|
|
|
59
|
|
|
|
4
|
|
|
|
3
|
|
|
|
8
|
|
|
|
74
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
128
|
|
|
|
9
|
|
|
|
6
|
|
|
|
35
|
|
|
|
178
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
0.26
|
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
0.07
|
|
|
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 30, 2013
|
|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
Purchase
Accounting
Adjustments
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
|
|
|
$
|
2,204
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
2,204
|
|
|
Cost of sales(b)
|
|
|
|
|
818
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(16
|
)
|
|
|
798
|
|
|
Gross profit
|
|
|
|
|
1,386
|
|
|
|
2
|
|
|
|
2
|
|
|
|
16
|
|
|
|
1,406
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
756
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(95
|
)
|
|
|
661
|
|
|
Research and development expenses(b)
|
|
|
|
|
185
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
181
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
30
|
|
|
|
(23
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
(13
|
)
|
|
|
—
|
|
|
|
(13
|
)
|
|
|
26
|
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
54
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(1
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
379
|
|
|
|
25
|
|
|
|
15
|
|
|
|
85
|
|
|
|
504
|
|
|
Provision for taxes on income
|
|
|
|
|
111
|
|
|
|
8
|
|
|
|
5
|
|
|
|
23
|
|
|
|
147
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
268
|
|
|
|
17
|
|
|
|
10
|
|
|
|
62
|
|
|
|
357
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
0.54
|
|
|
|
0.03
|
|
|
|
0.02
|
|
|
|
0.12
|
|
|
|
0.71
|
|
|
|
|
|
|
(a)
|
|
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.
|
|
|
|
|
|
(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.
|
|
|
|
|
|
(d)
|
|
EPS amounts may not add due to rounding.
|
|
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1), (2) and (3).
|
|
|
|
|
|
Certain amounts 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 July 1, 2012
|
|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
Purchase
Accounting
Adjustments
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenues
|
|
|
|
|
$
|
1,094
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,094
|
|
|
Cost of sales(b)
|
|
|
|
|
378
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
7
|
|
|
|
382
|
|
|
Gross profit
|
|
|
|
|
716
|
|
|
|
1
|
|
|
|
2
|
|
|
|
(7
|
)
|
|
|
712
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
344
|
|
|
|
1
|
|
|
|
—
|
|
|
|
6
|
|
|
|
351
|
|
|
Research and development expenses(b)
|
|
|
|
|
92
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
91
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
16
|
|
|
|
(13
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
24
|
|
|
|
—
|
|
|
|
(13
|
)
|
|
|
(11
|
)
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
8
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(20
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
(7
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
252
|
|
|
|
13
|
|
|
|
15
|
|
|
|
(14
|
)
|
|
|
266
|
|
|
Provision for taxes on income
|
|
|
|
|
79
|
|
|
|
5
|
|
|
|
5
|
|
|
|
1
|
|
|
|
90
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
173
|
|
|
|
8
|
|
|
|
10
|
|
|
|
(15
|
)
|
|
|
176
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
0.35
|
|
|
|
0.02
|
|
|
|
0.02
|
|
|
|
(0.03
|
)
|
|
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended July 1, 2012
|
|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
Purchase
Accounting
Adjustments
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenues
|
|
|
|
|
$
|
2,141
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
2,141
|
|
|
Cost of sales(b)
|
|
|
|
|
771
|
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
6
|
|
|
|
770
|
|
|
Gross profit
|
|
|
|
|
1,370
|
|
|
|
2
|
|
|
|
5
|
|
|
|
(6
|
)
|
|
|
1,371
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
682
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
682
|
|
|
Research and development expenses(b)
|
|
|
|
|
194
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
184
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
32
|
|
|
|
(25
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
49
|
|
|
|
—
|
|
|
|
(24
|
)
|
|
|
(25
|
)
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(26
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
|
(13
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
423
|
|
|
|
26
|
|
|
|
29
|
|
|
|
17
|
|
|
|
495
|
|
|
Provision for taxes on income
|
|
|
|
|
138
|
|
|
|
9
|
|
|
|
10
|
|
|
|
9
|
|
|
|
166
|
|
|
Income from continuing operations
|
|
|
|
|
285
|
|
|
|
17
|
|
|
|
19
|
|
|
|
8
|
|
|
|
329
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
284
|
|
|
|
17
|
|
|
|
19
|
|
|
|
8
|
|
|
|
328
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
0.57
|
|
|
|
0.03
|
|
|
|
0.04
|
|
|
|
0.02
|
|
|
|
0.66
|
|
|
|
|
|
|
(a)
|
|
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.
|
|
|
|
|
|
(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.
|
|
|
|
|
|
(d)
|
|
EPS amounts may not add due to rounding.
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1), (2) and (3).
|
|
|
|
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)
|
|
The condensed consolidated and combined statements of income present
the three and six months ended June 30, 2013 and July 1, 2012.
Subsidiaries operating outside the United States are included for
the three and six months ended May 26, 2013 and May 27, 2012.
|
|
|
|
|
|
(2)
|
|
Acquisition-related costs include the following:
|
|
|
|
|
|
|
Second Quarter
|
|
|
Six Months
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Integration costs(a)
|
|
|
|
|
$
|
10
|
|
|
|
$
|
12
|
|
|
|
$
|
14
|
|
|
|
$
|
21
|
|
Restructuring charges(b)
|
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
Additional depreciation—asset restructuring(c)
|
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
5
|
|
Total acquisition-related costs—pre-tax
|
|
|
|
|
9
|
|
|
|
15
|
|
|
|
15
|
|
|
|
29
|
|
Income taxes(d)
|
|
|
|
|
3
|
|
|
|
5
|
|
|
|
5
|
|
|
|
10
|
|
Total acquisition-related costs—net of tax
|
|
|
|
|
$
|
6
|
|
|
|
$
|
10
|
|
|
|
$
|
10
|
|
|
|
$
|
19
|
|
|
|
|
|
(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 Cost of sales ($2 million) and Restructuring
charges and certain acquisition-related costs ($8 million) for
the three months ended June 30, 2013. Included in Cost of sales
($2 million) and Restructuring charges and certain
acquisition-related costs ($12 million) for the six months
ended June 30, 2013. Included in Restructuring charges and
certain acquisition-related costs for the three and six months
ended July 1, 2012.
|
|
|
|
|
|
(b)
|
|
Restructuring charges are associated with employees, assets and
activities that will not continue with the company. All of these
costs are included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
|
|
(c)
|
|
Represents the impact of changes in the estimated lives of assets
involved in restructuring actions. Included in Cost of sales
for the three and six months ended July 1, 2012.
|
|
|
|
|
|
(d)
|
|
Included in Provision for taxes on income.
|
|
|
|
|
|
(3)
|
|
Certain significant items include the following:
|
|
|
|
|
|
|
Second Quarter
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Restructuring charges(a)
|
|
|
|
|
$
|
(27
|
)
|
|
|
$
|
11
|
|
|
|
$
|
(26
|
)
|
|
|
$
|
25
|
|
|
Implementation costs and additional depreciation—asset restructuring(b)
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
11
|
|
|
Certain asset impairment charges(c)
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
Net gain on sale of assets(d)
|
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
|
(6
|
)
|
|
|
|
—
|
|
|
Stand-up costs(e)
|
|
|
|
|
77
|
|
|
|
—
|
|
|
|
|
111
|
|
|
|
|
—
|
|
|
Other(f)
|
|
|
|
|
(2
|
)
|
|
|
(26
|
)
|
|
|
|
2
|
|
|
|
|
(19
|
)
|
|
Total certain significant items—pre-tax
|
|
|
|
|
43
|
|
|
|
(14
|
)
|
|
|
|
85
|
|
|
|
|
17
|
|
|
Income taxes(g)
|
|
|
|
|
8
|
|
|
|
1
|
|
|
|
|
23
|
|
|
|
|
9
|
|
|
Total certain significant items—net of tax
|
|
|
|
|
$
|
35
|
|
|
|
$
|
(15
|
)
|
|
|
$
|
62
|
|
|
|
$
|
8
|
|
|
|
|
|
|
(a)
|
|
Represents restructuring charges incurred for our
cost-reduction/productivity initiatives. For the three and six
months ended June 30, 2013, includes a decrease in employee
termination expenses relating to the reversal of a previously
established termination reserve related to our operations in
Europe. Included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Related to our cost-reduction/productivity initiatives. Included
in Cost of sales for the three months ended June 30, 2013.
Included in Cost of sales ($1 million) and Selling,
general and administrative expenses ($2 million) for the six
months ended June 30, 2013. Included in Selling, general and
administrative expenses for the three months ended July 1,
2012. Included in Research and development expenses ($10
million) and Selling, general and administrative expenses
($1 million) for the six months ended July 1, 2012.
|
|
|
|
|
|
(c)
|
|
Included in Other (income)/deductions—net for the six
months ended June 30, 2013.
|
|
|
|
|
|
(d)
|
|
Included in Other (income)/deductions—net for the three and
six months ended June 30, 2013.
|
|
|
|
|
|
(e)
|
|
Represents certain nonrecurring costs related to becoming a
standalone 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, accelerated vesting and associated cash payment
related to certain Pfizer equity awards, and certain legal
registration and patent assignment costs. Included in Cost of
sales ($13 million), Selling, general and administrative
expenses ($60 million) and Research and development expenses
($4 million) for the three months ended June 30, 2013. Included in Cost
of sales ($15 million), Selling, general and administrative
expenses ($92 million) and Research and development expenses
($4 million) for the six months ended June 30, 2013.
|
|
|
|
|
|
(f)
|
|
For the three and six months ended June 30, 2012, primarily relates
to income related to a favorable legal settlement for an
intellectual property matter ($14 million) and income due to a
change in estimate related to transitional manufacturing purchase
agreements associated with divestitures ($5 million).
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
ADJUSTED SELECTED COSTS AND EXPENSES(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
% Change
(Favorable)/Unfavorable
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
Adjusted cost of sales(a)
|
|
|
|
|
$
|
400
|
|
|
|
$
|
382
|
|
|
|
5
|
%
|
|
|
|
(4
|
)%
|
|
|
9
|
%
|
|
As a percent of revenue
|
|
|
|
|
35.9
|
%
|
|
|
34.9
|
%
|
|
|
NA
|
|
|
|
|
NA
|
|
|
|
NA
|
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
339
|
|
|
|
351
|
|
|
|
(3
|
)%
|
|
|
|
(1
|
)%
|
|
|
(2
|
)%
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
91
|
|
|
|
91
|
|
|
|
—
|
%
|
|
|
|
1
|
%
|
|
|
(1
|
)%
|
|
Total
|
|
|
|
|
$
|
830
|
|
|
|
$
|
824
|
|
|
|
1
|
%
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
% Change
(Favorable)/Unfavorable
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
Adjusted Cost of Sales(1)
|
|
|
|
|
$ 798
|
|
|
|
$ 770
|
|
|
|
4
|
%
|
|
|
|
(1
|
)%
|
|
|
5
|
%
|
|
As a Percent of Revenue
|
|
|
|
|
36.2
|
%
|
|
|
36.0
|
%
|
|
|
NA
|
|
|
|
|
NA
|
|
|
|
NA
|
|
|
Adjusted SG&A Expenses(1)
|
|
|
|
|
661
|
|
|
|
682
|
|
|
|
(3
|
)%
|
|
|
|
(1
|
)%
|
|
|
(2
|
)%
|
|
Adjusted R&D Expenses(1)
|
|
|
|
|
181
|
|
|
|
184
|
|
|
|
(2
|
)%
|
|
|
|
—
|
%
|
|
|
(2
|
)%
|
|
Total
|
|
|
|
|
$1,640
|
|
|
|
$1,636
|
|
|
|
—
|
%
|
|
|
|
(1
|
)%
|
|
|
1
|
%
|
|
|
|
|
|
(a)
|
|
Adjusted cost of sales, adjusted selling, general, and
administrative (SG&A) expenses and adjusted research and development
(R&D) expenses 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
quarter and six months ended June 30 2013 and July 1, 2012 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.
2013 GUIDANCE
|
|
|
|
|
|
|
|
|
Selected Line Items
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$4,425 to $4,525 million
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
|
35% to 36%
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
$1,385 to $1,435 million
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
$385 to $415 million
|
|
Adjusted interest expense(a)
|
|
|
|
|
Approximately $115 million
|
|
Adjusted other(income)/deductions(a)
|
|
|
|
|
Approximately $20 million income
|
|
Effective tax rate on adjusted net income(a)
|
|
|
|
|
Approximately 29.5%
|
|
Reported diluted EPS
|
|
|
|
|
$1.00 to $1.06
|
|
Adjusted diluted EPS(a)
|
|
|
|
|
$1.36 to $1.42
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
$200 to $240 million
|
|
A reconciliation of 2013 adjusted net income and adjusted diluted
EPS guidance to 2013 reported net income attributable to Zoetis and
reported diluted EPS attributable to Zoetis common shareholders
guidance follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2013 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
|
|
Net Income
|
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
|
~$680 - $710
|
|
|
~$1.36 - $1.42
|
|
Purchase accounting adjustments
|
|
|
|
|
(35)
|
|
|
(0.07)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
(130 - 160)
|
|
|
(0.26 - 0.32)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
|
~$500 - $530
|
|
|
~$1.00 - $1.06
|
|
|
|
|
|
|
|
|
|
|
|
(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. 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 becoming a
standalone 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
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
670
|
|
|
|
$
|
665
|
|
|
|
1
|
%
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
Companion Animal
|
|
|
|
|
444
|
|
|
|
429
|
|
|
|
3
|
%
|
|
|
|
(2
|
)%
|
|
|
5
|
%
|
|
Total Revenue
|
|
|
|
|
$
|
1,114
|
|
|
|
$
|
1,094
|
|
|
|
2
|
%
|
|
|
|
(2
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
204
|
|
|
|
$
|
192
|
|
|
|
6
|
%
|
|
|
|
—
|
%
|
|
|
6
|
%
|
|
Companion Animal
|
|
|
|
|
233
|
|
|
|
229
|
|
|
|
2
|
%
|
|
|
|
—
|
%
|
|
|
2
|
%
|
|
Total U.S. Revenue
|
|
|
|
|
$
|
437
|
|
|
|
$
|
421
|
|
|
|
4
|
%
|
|
|
|
—
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
184
|
|
|
|
$
|
193
|
|
|
|
(5
|
)%
|
|
|
|
(3
|
)%
|
|
|
(2
|
)%
|
|
Companion Animal
|
|
|
|
|
94
|
|
|
|
90
|
|
|
|
4
|
%
|
|
|
|
(2
|
)%
|
|
|
6
|
%
|
|
Total EuAfME Revenue
|
|
|
|
|
$
|
278
|
|
|
|
$
|
283
|
|
|
|
(2
|
)%
|
|
|
|
(3
|
)%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
153
|
|
|
|
$
|
154
|
|
|
|
(1
|
)%
|
|
|
|
(5
|
)%
|
|
|
4
|
%
|
|
Companion Animal
|
|
|
|
|
60
|
|
|
|
57
|
|
|
|
5
|
%
|
|
|
|
(1
|
)%
|
|
|
6
|
%
|
|
Total CLAR Revenue
|
|
|
|
|
$
|
213
|
|
|
|
$
|
211
|
|
|
|
1
|
%
|
|
|
|
(3
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
$
|
129
|
|
|
|
$
|
126
|
|
|
|
2
|
%
|
|
|
|
(3
|
)%
|
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
|
57
|
|
|
|
53
|
|
|
|
8
|
%
|
|
|
|
(5
|
)%
|
|
|
13
|
%
|
|
Total APAC Revenue
|
|
|
|
|
$
|
186
|
|
|
|
$
|
179
|
|
|
|
4
|
%
|
|
|
|
(3
|
)%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
|
$
|
356
|
|
|
|
$
|
371
|
|
|
|
(4
|
)%
|
|
|
|
(2
|
)%
|
|
|
(2
|
)%
|
|
Swine
|
|
|
|
|
152
|
|
|
|
142
|
|
|
|
7
|
%
|
|
|
|
(2
|
)%
|
|
|
9
|
%
|
|
Poultry
|
|
|
|
|
137
|
|
|
|
129
|
|
|
|
6
|
%
|
|
|
|
(3
|
)%
|
|
|
9
|
%
|
|
Other
|
|
|
|
|
25
|
|
|
|
23
|
|
|
|
9
|
%
|
|
|
|
(1
|
)%
|
|
|
10
|
%
|
|
Total Livestock Revenue
|
|
|
|
|
$
|
670
|
|
|
|
$
|
665
|
|
|
|
1
|
%
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
|
$
|
45
|
|
|
|
$
|
50
|
|
|
|
(10
|
)%
|
|
|
|
—
|
%
|
|
|
(10
|
)%
|
|
Dogs and Cats
|
|
|
|
|
399
|
|
|
|
379
|
|
|
|
5
|
%
|
|
|
|
(2
|
)%
|
|
|
7
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
|
$
|
444
|
|
|
|
$
|
429
|
|
|
|
3
|
%
|
|
|
|
(2
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis' combined
financial statements included in Zoetis' Form 10-K for the year
ended December 31, 2012.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
% Change
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
1,376
|
|
|
|
$
|
1,356
|
|
|
|
1
|
%
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
Companion Animal
|
|
828
|
|
|
|
785
|
|
|
|
5
|
%
|
|
|
|
(1
|
)%
|
|
|
6
|
%
|
|
Total Revenue
|
|
$
|
2,204
|
|
|
|
$
|
2,141
|
|
|
|
3
|
%
|
|
|
|
(1
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
449
|
|
|
|
$
|
432
|
|
|
|
4
|
%
|
|
|
|
—
|
%
|
|
|
4
|
%
|
|
Companion Animal
|
|
442
|
|
|
|
414
|
|
|
|
7
|
%
|
|
|
|
—
|
%
|
|
|
7
|
%
|
|
Total U.S. Revenue
|
|
$
|
891
|
|
|
|
$
|
846
|
|
|
|
5
|
%
|
|
|
|
—
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
379
|
|
|
|
$
|
380
|
|
|
|
—
|
%
|
|
|
|
(1
|
)%
|
|
|
1
|
%
|
|
Companion Animal
|
|
189
|
|
|
|
178
|
|
|
|
6
|
%
|
|
|
|
—
|
%
|
|
|
6
|
%
|
|
Total EuAfME Revenue
|
|
$
|
568
|
|
|
|
$
|
558
|
|
|
|
2
|
%
|
|
|
|
—
|
%
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
292
|
|
|
|
$
|
292
|
|
|
|
—
|
%
|
|
|
|
(5
|
)%
|
|
|
5
|
%
|
|
Companion Animal
|
|
92
|
|
|
|
92
|
|
|
|
—
|
%
|
|
|
|
(3
|
)%
|
|
|
3
|
%
|
|
Total CLAR Revenue
|
|
$
|
384
|
|
|
|
$
|
384
|
|
|
|
—
|
%
|
|
|
|
(4
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
256
|
|
|
|
$
|
252
|
|
|
|
2
|
%
|
|
|
|
(1
|
)%
|
|
|
3
|
%
|
|
Companion Animal
|
|
105
|
|
|
|
101
|
|
|
|
4
|
%
|
|
|
|
(4
|
)%
|
|
|
8
|
%
|
|
Total APAC Revenue
|
|
$
|
361
|
|
|
|
$
|
353
|
|
|
|
2
|
%
|
|
|
|
(3
|
)%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
$
|
746
|
|
|
|
$
|
771
|
|
|
|
(3
|
)%
|
|
|
|
(1
|
)%
|
|
|
(2
|
)%
|
|
Swine
|
|
310
|
|
|
|
285
|
|
|
|
9
|
%
|
|
|
|
(1
|
)%
|
|
|
10
|
%
|
|
Poultry
|
|
270
|
|
|
|
250
|
|
|
|
8
|
%
|
|
|
|
(2
|
)%
|
|
|
10
|
%
|
|
Other
|
|
50
|
|
|
|
50
|
|
|
|
—
|
%
|
|
|
|
(3
|
)%
|
|
|
3
|
%
|
|
Total Livestock Revenue
|
|
$
|
1,376
|
|
|
|
$
|
1,356
|
|
|
|
1
|
%
|
|
|
|
(2
|
)%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
$
|
87
|
|
|
|
$
|
95
|
|
|
|
(8
|
)%
|
|
|
|
—
|
%
|
|
|
(8
|
)%
|
|
Dogs and Cats
|
|
741
|
|
|
|
690
|
|
|
|
7
|
%
|
|
|
|
(1
|
)%
|
|
|
8
|
%
|
|
Total Companion Animal Revenue
|
|
$
|
828
|
|
|
|
$
|
785
|
|
|
|
5
|
%
|
|
|
|
(1
|
)%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis' combined
financial statements included in Zoetis' Form 10-K for the year
ended December 31, 2012.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
SEGMENT EARNINGS(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
|
|
|
% Change
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
U.S.
|
|
|
|
|
$
|
254
|
|
|
|
$
|
227
|
|
|
|
12
|
%
|
|
|
|
—
|
%
|
|
|
12
|
%
|
|
EuAfME
|
|
|
|
|
91
|
|
|
|
88
|
|
|
|
3
|
%
|
|
|
|
2
|
%
|
|
|
1
|
%
|
|
CLAR
|
|
|
|
|
78
|
|
|
|
77
|
|
|
|
1
|
%
|
|
|
|
(6
|
)%
|
|
|
7
|
%
|
|
APAC
|
|
|
|
|
71
|
|
|
|
63
|
|
|
|
13
|
%
|
|
|
|
2
|
%
|
|
|
11
|
%
|
|
Total Reportable Segments
|
|
|
|
|
494
|
|
|
|
455
|
|
|
|
9
|
%
|
|
|
|
—
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
(74
|
)
|
|
|
(61
|
)
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
(137
|
)
|
|
|
(104
|
)
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
(13
|
)
|
|
|
(13
|
)
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
(9
|
)
|
|
|
(15
|
)
|
|
|
(40
|
)%
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
(43
|
)
|
|
|
14
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
(31
|
)
|
|
|
(24
|
)
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
|
$
|
187
|
|
|
|
$
|
252
|
|
|
|
(26
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
% Change
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Total
|
|
|
|
Foreign
exchange
|
|
|
Operational
|
|
U.S.
|
|
|
|
|
$488
|
|
|
|
$444
|
|
|
|
10
|
%
|
|
|
|
—
|
%
|
|
|
10
|
%
|
|
EuAfME
|
|
|
|
|
208
|
|
|
|
192
|
|
|
|
8
|
%
|
|
|
|
(2
|
)%
|
|
|
10
|
%
|
|
CLAR
|
|
|
|
|
130
|
|
|
|
131
|
|
|
|
(1
|
)%
|
|
|
|
(9
|
)%
|
|
|
8
|
%
|
|
APAC
|
|
|
|
|
146
|
|
|
|
134
|
|
|
|
9
|
%
|
|
|
|
—
|
%
|
|
|
9
|
%
|
|
Total Reportable Segments
|
|
|
|
|
972
|
|
|
|
901
|
|
|
|
8
|
%
|
|
|
|
(1
|
)%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
(148
|
)
|
|
|
(126
|
)
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
(253
|
)
|
|
|
(233
|
)
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
(25
|
)
|
|
|
(26
|
)
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
(15
|
)
|
|
|
(29
|
)
|
|
|
(48
|
)%
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
(85
|
)
|
|
|
(17
|
)
|
|
|
*
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
(67
|
)
|
|
|
(47
|
)
|
|
|
43
|
%
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
|
$379
|
|
|
|
$423
|
|
|
|
(10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis' combined
financial statements included in Zoetis' Form 10-K for the year
ended December 31, 2012.
|
|
|
|
|
|
(b)
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization.
|
|
|
|
|
|
(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
the fair value adjustments to inventory, 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 restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, the impact of
divestiture-related gains and losses and certain costs related to
becoming a standalone public company.
|
|
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing
operations not directly attributable to an operating segment.
|
|
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
Media:
Zoetis Inc.
Bill Price, 1-973-443-2742 (o)
william.price@zoetis.com
or
Elinore White, 1-973-443-2835 (o)
elinore.y.white@zoetis.com
or
Investors:
Dina Fede, 1-973-443-2969 (o)
or
John O'Connor, 1-973-822-7088 (o)