- Third Quarter 2013 Revenue of $1.1 Billion Increased 8% Compared to Third Quarter 2012
- Third Quarter 2013 Reported Net Income of $131 Million, or Diluted EPS of $0.26, Decreased 19%, Compared to Third Quarter 2012
- Third Quarter 2013 Adjusted Net Income of $172 Million, or Adjusted Diluted EPS1 of $0.34, Increased 12% and 10%, Respectively, Compared to Third Quarter 2012
- Narrows Full-Year 2013 Adjusted Diluted EPS1 Guidance to $1.38 - $1.42
Zoetis Inc. (NYSE:ZTS) today reported its financial results for the
third quarter of 2013. The company reported revenue of $1.1 billion for
the third quarter of 2013, an increase of 8% from the third quarter of
2012. Revenue reflected an operational2 increase of
9%, with foreign currency having a negative impact of 1 percentage point.
Net income for the third quarter of 2013 was $131 million, or $0.26 per
diluted share, a decrease of 19%, compared to the third quarter of 2012.
Adjusted net income1 for the third quarter of 2013 was $172
million, or $0.34 per diluted share, an increase of 12% and 10%,
respectively, compared to the adjusted third quarter of 2012. Adjusted
net income1 for the third quarter of 2013 excludes the net
impact of $41 million, or $0.08 per diluted share, for purchase
accounting adjustments, acquisition-related costs and certain
significant items.
EXECUTIVE COMMENTARY
“With three quarters now reported in our first year, I am pleased with
how we are meeting our commitments to customers, delivering financial
results and setting a solid foundation for our future,” said Zoetis
Chief Executive Officer Juan Ramón Alaix. “We continue to build on the
commercial performance, innovative R&D and reliable supply chain that
have been critical to our success, while managing through all the
changes that come with standing up a new company.”
“This quarter, our diverse portfolio of products was once again a key
factor in delivering revenue growth across all of our regions, while our
scope and scale helped us grow our adjusted earnings faster than sales,”
said Alaix. “We saw significant growth in the U.S., our largest market,
which reflects strong sales in both companion animal and livestock
products. And, as expected, the growth in U.S. livestock products
reflects the impact of drought conditions that were experienced in the
year-ago quarter. We also saw balanced performance across our other
regions based on continued market acceptance of new products, growth in
emerging markets, and steady performance of our core product lines.”
“Through the first nine months of the year, we’ve made significant
progress toward completing the build-out of our own infrastructure and
meeting our full-year financial objectives,” said Rick Passov, Executive
Vice President and Chief Financial Officer of Zoetis. “In light of our
year-to-date financial performance, we are narrowing the range of
components of our 2013 financial guidance.”
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 third quarter of 2013:
-
Revenue in the U.S. was $495 million, an increase of 10% over the
third quarter of 2012. Sales of livestock products grew 11%, driven by
cattle, poultry and swine. Sales of cattle products increased,
benefiting from a weak year-ago quarter when the impact of the drought
was most evident. Sales of poultry and swine products increased as
well, driven primarily by medicated feed additives and continued
customer acceptance of new products. Sales of companion animal
products grew 10%, showing positive performance across our key
products.
-
Revenue in EuAfME was $270 million, an increase of 9% operationally
over the third quarter of 2012. Sales of livestock products grew 7%
operationally. This growth reflects an increase in cattle product
sales across many emerging markets, partially offset by a continued
decline in cattle product sales in Western Europe. Sales of swine
products continued to benefit from customer acceptance of a new
vaccine across many markets. Sales of companion animal products grew
15% operationally, and benefited again this quarter from increased
sales associated with third-party manufacturing agreements. Excluding
these sales, companion animal product sales grew 5% operationally,
driven by sales of anti-infective and parasiticide products.
-
Revenue in CLAR was $171 million, an increase of 9% operationally over
the third quarter of 2012. Sales of livestock products grew 6%
operationally, driven by poultry products, primarily in Brazil. Sales
of cattle products also increased based on growth in Venezuela, Mexico
and Canada. Sales of companion animal products grew 19% operationally,
largely due to a later start in 2013 of the parasiticide season in
Canada as well as increased demand in Brazil.
-
Revenue in APAC was $167 million, an increase of 7% operationally over
the third quarter of 2012. Sales of livestock products grew 8%
operationally, driven by the launch of new products for swine.
Increased poultry product sales benefited from sales to emerging
markets as well as the resolution of a license registration issue in
India. Sales of cattle products grew, driven by performance in New
Zealand, which was partially offset by the negative impact of the
drought in Australia. Sales of companion animal products grew 3%
operationally, based on increases in developed markets such as Taiwan
and Japan and in emerging markets such as China.
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 its
product portfolio, the company focuses on improving the performance and
delivery of its current product lines; expanding product indications
across species; and pursuing approvals across new geographies. Some
recent highlights include:
-
Regulatory approvals -- FACTREL®
(gonadorelin injection) was approved in the U.S. with LUTALYSE® for
fixed-time artificial insemination for dairy cattle, one of only two
products in the U.S. approved for use in this way; the approval of
FACTREL allows producers to improve the reproductive performance of
their herds in a manner that is compliant with FDA regulations. EXCENEL®
RTU EZ (ceftiofur hydrochloride), an antibiotic for cattle and
swine, was approved for use in the U.S.; this reformulation makes the
product easier to use.
-
Expanding our portfolio’s reach –
Building on approvals announced last quarter, APOQUEL®
(oclacitinib tablet) has now also been approved by the European
Commission, joining New Zealand and the U.S. as markets granting
approval of the product for the control of pruritus associated with
allergic dermatitis and the control of atopic dermatitis in dogs at
least 12 months of age. Similarly, BOVI-SHIELD
GOLD ONE SHOT™ was approved for use in cattle in Canada, joining
the U.S. as markets for this vaccine to help prevent certain bovine
respiratory diseases.
-
Branching into beta-agonists – Zoetis
also received approval in the U.S. for two branded generic ractopamine
products that add to our strong portfolio for swine and cattle.
Ractopamine is a feed additive that helps cattle and pigs direct their
food energy toward producing high-quality lean meat rather than fat,
and it is part of the beta-agonist class of drugs. ENGAIN™
(ractopamine hydrochloride) for swine and ACTOGAIN™ (ractopamine
hydrochloride) for cattle were approved in the U.S. Zoetis plans to
launch ENGAIN by the first quarter of 2014 and ACTOGAIN later in 2014.
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 narrowed the ranges of its financial guidance for full-year 2013
to reflect its performance year-to-date. The company now expects to
achieve revenue of between $4.475 billion to $4.525 billion, reflecting
current views on foreign exchange impact for the year. The company also
expects to achieve reported diluted EPS for the full year of between
$0.98 to $1.02 per share. This guidance includes the impact of
nonrecurring costs of $220 million to $240 million, primarily associated
with becoming a standalone public company. Adjusted diluted EPS1
for the full year is expected to be between $1.38 to $1.42 per share,
excluding purchase accounting adjustments, acquisition-related costs and
certain significant items such as costs associated with becoming a
standalone public company. 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. (EST) today,
during which company executives will review third 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 Nov. 5,
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 https://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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
% Incr./
|
|
Nine Months
|
% Incr./
|
|
|
2013
|
|
2012
|
|
(Decr.)
|
|
2013
|
|
2012
|
|
(Decr.)
|
|
Revenue
|
|
$
|
1,103
|
|
|
$
|
1,019
|
|
|
8
|
|
$
|
3,307
|
|
|
$
|
3,160
|
|
|
5
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
385
|
|
|
359
|
|
|
7
|
|
1,203
|
|
|
1,130
|
|
|
6
|
|
Selling, general and administrative expenses(b)
|
|
399
|
|
|
335
|
|
|
19
|
|
1,155
|
|
|
1,017
|
|
|
14
|
|
Research and development expenses(b)
|
|
93
|
|
|
94
|
|
|
(1)
|
|
278
|
|
|
288
|
|
|
(3)
|
|
Amortization of intangible assets(c)
|
|
15
|
|
|
16
|
|
|
(6)
|
|
45
|
|
|
48
|
|
|
(6)
|
|
Restructuring charges and certain acquisition-related costs
|
|
3
|
|
|
6
|
|
|
(50)
|
|
(10
|
)
|
|
55
|
|
|
*
|
|
Interest expense
|
|
29
|
|
|
7
|
|
|
*
|
|
83
|
|
|
23
|
|
|
*
|
|
Other (income)/deductions–net
|
|
(6
|
)
|
|
(11
|
)
|
|
(45)
|
|
(11
|
)
|
|
(37
|
)
|
|
(70)
|
|
Income before provision for taxes on income
|
|
185
|
|
|
213
|
|
|
(13)
|
|
564
|
|
|
636
|
|
|
(11)
|
|
Provision for taxes on income
|
|
54
|
|
|
52
|
|
|
4
|
|
165
|
|
|
190
|
|
|
(13)
|
|
Net income before allocation to noncontrolling interests
|
|
131
|
|
|
161
|
|
|
(19)
|
|
399
|
|
|
446
|
|
|
(11)
|
|
Less: Net income/(loss) attributable to noncontrolling interests
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income attributable to Zoetis
|
|
$
|
131
|
|
|
$
|
162
|
|
|
(19)
|
|
$
|
399
|
|
|
$
|
446
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
$
|
0.26
|
|
|
$
|
0.32
|
|
|
(19)
|
|
$
|
0.80
|
|
|
$
|
0.89
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
$
|
0.26
|
|
|
$
|
0.32
|
|
|
(19)
|
|
$
|
0.80
|
|
|
$
|
0.89
|
|
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
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|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
500,000
|
|
|
500,000
|
|
|
|
|
500,000
|
|
|
500,000
|
|
|
|
|
Diluted
|
|
500,354
|
|
|
500,000
|
|
|
|
|
500,227
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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* Calculation not meaningful.
|
|
|
|
|
|
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(a)
|
|
|
The condensed consolidated and combined statements of income present
the three and nine months ended September 29, 2013 and September 30,
2012. Subsidiaries operating outside the United States are included
for the three and nine months ended August 25, 2013 and August 26,
2012.
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|
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(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.
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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)
|
|
|
|
|
|
|
|
Quarter ended September 29, 2013
|
|
|
|
|
|
Purchase
|
|
Acquisition-
|
|
Certain
|
|
|
|
|
|
GAAP
|
|
Accounting
|
|
Related
|
|
Significant
|
|
Non-GAAP
|
|
|
|
Reported(1)
|
|
Adjustments
|
|
Costs(2)
|
|
Items(3)
|
|
Adjusted(a)
|
|
Revenue
|
|
$
|
1,103
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,103
|
|
|
Cost of sales(b)
|
|
385
|
|
|
—
|
|
|
2
|
|
|
(4
|
)
|
|
383
|
|
|
Gross profit
|
|
718
|
|
|
—
|
|
|
(2
|
)
|
|
4
|
|
|
720
|
|
|
Selling, general and administrative expenses(b)
|
|
399
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
359
|
|
|
Research and development expenses(b)
|
|
93
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
91
|
|
|
Amortization of intangible assets(c)
|
|
15
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
Interest expense
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
Other (income)/deductions–net
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(7
|
)
|
|
Income before provision for taxes on income
|
|
185
|
|
|
12
|
|
|
1
|
|
|
46
|
|
|
244
|
|
|
Provision for taxes on income
|
|
54
|
|
|
4
|
|
|
1
|
|
|
13
|
|
|
72
|
|
|
Net income attributable to Zoetis
|
|
131
|
|
|
8
|
|
|
—
|
|
|
33
|
|
|
172
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.26
|
|
|
0.02
|
|
|
—
|
|
|
0.06
|
|
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months ended September 29, 2013
|
|
|
|
|
|
Purchase
|
|
Acquisition-
|
|
Certain
|
|
|
|
|
|
GAAP
|
|
Accounting
|
|
Related
|
|
Significant
|
|
Non-GAAP
|
|
|
|
Reported(1)
|
|
Adjustments
|
|
Costs(2)
|
|
Items(3)
|
|
Adjusted(a)
|
|
Revenue
|
|
$
|
3,307
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,307
|
|
|
Cost of sales(b)
|
|
1,203
|
|
|
(2
|
)
|
|
—
|
|
|
(20
|
)
|
|
1,181
|
|
|
Gross profit
|
|
2,104
|
|
|
2
|
|
|
—
|
|
|
20
|
|
|
2,126
|
|
|
Selling, general and administrative expenses(b)
|
|
1,155
|
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
|
1,020
|
|
|
Research and development expenses(b)
|
|
278
|
|
|
(1
|
)
|
|
—
|
|
|
(5
|
)
|
|
272
|
|
|
Amortization of intangible assets(c)
|
|
45
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
11
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
(10
|
)
|
|
—
|
|
|
(17
|
)
|
|
27
|
|
|
—
|
|
|
Interest expense
|
|
83
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
Other (income)/deductions–net
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(8
|
)
|
|
Income before provision for taxes on income
|
|
564
|
|
|
37
|
|
|
17
|
|
|
130
|
|
|
748
|
|
|
Provision for taxes on income
|
|
165
|
|
|
12
|
|
|
6
|
|
|
36
|
|
|
219
|
|
|
Net income attributable to Zoetis
|
|
399
|
|
|
25
|
|
|
11
|
|
|
94
|
|
|
529
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.80
|
|
|
0.05
|
|
|
0.02
|
|
|
0.19
|
|
|
1.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 September 30, 2012
|
|
|
|
|
|
Purchase
|
|
Acquisition-
|
|
Certain
|
|
|
|
|
|
GAAP
|
|
Accounting
|
|
Related
|
|
Significant
|
|
Non-GAAP
|
|
|
|
Reported(1)
|
|
Adjustments
|
|
Costs(2)
|
|
Items(3)
|
|
Adjusted(a)
|
|
Revenue
|
|
$
|
1,019
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,019
|
|
|
Cost of sales(b)
|
|
359
|
|
|
(1
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|
352
|
|
|
Gross profit
|
|
660
|
|
|
1
|
|
|
4
|
|
|
2
|
|
|
667
|
|
|
Selling, general and administrative expenses(b)
|
|
335
|
|
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
|
330
|
|
|
Research and development expenses(b)
|
|
94
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94
|
|
|
Amortization of intangible assets(c)
|
|
16
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
6
|
|
|
—
|
|
|
1
|
|
|
(7
|
)
|
|
—
|
|
|
Interest expense
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
Other (income)/deductions–net
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(10
|
)
|
|
Income before provision for taxes on income
|
|
213
|
|
|
13
|
|
|
5
|
|
|
11
|
|
|
242
|
|
|
Provision for taxes on income
|
|
52
|
|
|
4
|
|
|
1
|
|
|
32
|
|
|
89
|
|
|
Income from continuing operations
|
|
161
|
|
|
9
|
|
|
4
|
|
|
(21
|
)
|
|
153
|
|
|
Net income/(loss) attributable to noncontrolling interests
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net income attributable to Zoetis
|
|
162
|
|
|
9
|
|
|
4
|
|
|
(21
|
)
|
|
154
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.32
|
|
|
0.02
|
|
|
0.01
|
|
|
(0.04
|
)
|
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2012
|
|
|
|
|
|
Purchase
|
|
Acquisition-
|
|
Certain
|
|
|
|
|
|
GAAP
|
|
Accounting
|
|
Related
|
|
Significant
|
|
Non-GAAP
|
|
|
|
Reported(1)
|
|
Adjustments
|
|
Costs(2)
|
|
Items(3)
|
|
Adjusted(a)
|
|
Revenue
|
|
$
|
3,160
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,160
|
|
|
Cost of sales(b)
|
|
1,130
|
|
|
(3
|
)
|
|
(9
|
)
|
|
4
|
|
|
1,122
|
|
|
Gross profit
|
|
2,030
|
|
|
3
|
|
|
9
|
|
|
(4
|
)
|
|
2,038
|
|
|
Selling, general and administrative expenses(b)
|
|
1,017
|
|
|
1
|
|
|
(2
|
)
|
|
(4
|
)
|
|
1,012
|
|
|
Research and development expenses(b)
|
|
288
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
278
|
|
|
Amortization of intangible assets(c)
|
|
48
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
11
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
55
|
|
|
—
|
|
|
(23
|
)
|
|
(32
|
)
|
|
—
|
|
|
Interest expense
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
Other (income)/deductions–net
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
14
|
|
|
(23
|
)
|
|
Income before provision for taxes on income
|
|
636
|
|
|
39
|
|
|
34
|
|
|
28
|
|
|
737
|
|
|
Provision for taxes on income
|
|
190
|
|
|
13
|
|
|
11
|
|
|
41
|
|
|
255
|
|
|
Net income attributable to Zoetis
|
|
446
|
|
|
26
|
|
|
23
|
|
|
(13
|
)
|
|
482
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.89
|
|
|
0.05
|
|
|
0.05
|
|
|
(0.03
|
)
|
|
0.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 nine months ended September 29, 2013 and September 30,
2012. Subsidiaries operating outside the United States are included
for the three and nine months ended August 25, 2013 and August 26,
2012.
|
|
|
|
|
|
|
(2)
|
|
|
Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Integration costs(a)
|
|
|
|
|
$
|
1
|
|
|
|
$
|
10
|
|
|
|
$
|
16
|
|
|
|
$
|
31
|
|
|
Restructuring charges(b)
|
|
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
1
|
|
|
|
(8
|
)
|
|
Additional depreciation—asset restructuring(c)
|
|
|
|
|
—
|
|
|
|
6
|
|
|
|
—
|
|
|
|
11
|
|
|
Total acquisition-related costs—pre-tax
|
|
|
|
|
1
|
|
|
|
5
|
|
|
|
17
|
|
|
|
34
|
|
|
Income taxes(d)
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
6
|
|
|
|
11
|
|
|
Total acquisition-related costs—net of tax
|
|
|
|
|
$
|
—
|
|
|
|
$
|
4
|
|
|
|
$
|
11
|
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. For the three months ended September 29, 2013, included
in Cost of sales ($2 million income) and Restructuring
charges and certain acquisition-related costs ($3 million).
For the nine months ended September 29, 2013 and the three and
nine months ended September 30, 2012, included in Restructuring
charges and certain acquisition-related costs.
|
|
|
|
|
|
|
(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. For the three and nine months
ended September 30, 2012, respectively, included in Cost of sales
($4 million and $9 million) and Selling, general and
administrative expenses ($2 million and $2 million).
|
|
|
|
|
|
|
(d)
|
|
|
Included in Provision for taxes on income.
|
|
|
|
(3) Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
|
Restructuring charges(a)
|
|
|
$
|
—
|
|
|
|
$
|
7
|
|
|
|
$
|
(27
|
)
|
|
|
$
|
32
|
|
|
Implementation costs and additional depreciation—asset restructuring(b)
|
|
|
—
|
|
|
|
3
|
|
|
|
3
|
|
|
|
14
|
|
|
Certain asset impairment charges(c)
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Net gain on sale of assets(d)
|
|
|
—
|
|
|
|
—
|
|
|
|
(6
|
)
|
|
|
—
|
|
|
Stand-up costs(e)
|
|
|
41
|
|
|
|
—
|
|
|
|
152
|
|
|
|
—
|
|
|
Other(f)
|
|
|
5
|
|
|
|
1
|
|
|
|
7
|
|
|
|
(18
|
)
|
|
Total certain significant items—pre-tax
|
|
|
46
|
|
|
|
11
|
|
|
|
130
|
|
|
|
28
|
|
|
Income taxes(g)
|
|
|
13
|
|
|
|
32
|
|
|
|
36
|
|
|
|
41
|
|
|
Total certain significant items—net of tax
|
|
|
$
|
33
|
|
|
|
$
|
(21
|
)
|
|
|
$
|
94
|
|
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
Represents restructuring charges incurred for our
cost-reduction/productivity initiatives. For the nine months ended
September 29, 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 ($1 million) and Selling, general and
administrative expenses ($2 million) for the nine months ended
September 29, 2013. Included in Selling, general and
administrative expenses ($3 million) for the three months
ended September 30, 2012. Included in Selling, general and
administrative expenses ($4 million) and Research and
development expenses ($10 million) and for the nine months
ended September 30, 2012.
|
|
|
|
|
|
|
(c)
|
|
|
Included in Other (income)/deductions—net.
|
|
|
|
|
|
|
(d)
|
|
|
Included in Other (income)/deductions—net.
|
|
|
|
|
|
|
(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 ($3 million) and Selling, general and administrative
expenses ($38 million) for the three months ended September
29, 2013. Included in Cost of sales ($18 million), Selling,
general and administrative expenses ($129 million) and Research
and development expenses ($5 million) for the nine months
ended September 29, 2013.
|
|
|
|
|
|
|
(f)
|
|
|
For the three and nine months ended September 29, 2013, primarily
relates to litigation-related charges ($5 million) and charges
related to transitional manufacturing purchase agreements
associated with divestitures ($1 million). For the nine months
ended September 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 ($4 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
Third Quarter
|
|
(Favorable)/Unfavorable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
Exchange
|
|
Operational
|
|
Adjusted cost of sales(a)
|
|
|
|
$
|
383
|
|
|
$
|
352
|
|
|
9
|
%
|
|
(1
|
)%
|
|
10
|
%
|
|
As a percent of revenue
|
|
|
|
34.7
|
%
|
|
34.5
|
%
|
|
NA
|
|
NA
|
|
NA
|
|
Adjusted SG&A expenses(a)
|
|
|
|
359
|
|
|
330
|
|
|
9
|
%
|
|
—
|
%
|
|
9
|
%
|
|
Adjusted R&D expenses(a)
|
|
|
|
91
|
|
|
94
|
|
|
(3
|
)%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
Total
|
|
|
|
$
|
833
|
|
|
$
|
776
|
|
|
7
|
%
|
|
(1
|
)%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
Nine Months
|
|
(Favorable)/Unfavorable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
Exchange
|
|
Operational
|
|
Adjusted cost of sales(1)
|
|
|
|
$
|
1,181
|
|
|
$
|
1,122
|
|
|
5
|
%
|
|
(2
|
)%
|
|
7
|
%
|
|
As a percent of revenue
|
|
|
|
35.7
|
%
|
|
35.5
|
%
|
|
NA
|
|
NA
|
|
NA
|
|
Adjusted SG&A expenses(1)
|
|
|
|
1,020
|
|
|
1,012
|
|
|
1
|
%
|
|
(1
|
)%
|
|
2
|
%
|
|
Adjusted R&D expenses(1)
|
|
|
|
272
|
|
|
278
|
|
|
(2
|
)%
|
|
—
|
%
|
|
(2
|
)%
|
|
Total
|
|
|
|
$
|
2,473
|
|
|
$
|
2,412
|
|
|
3
|
%
|
|
(1
|
)%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 nine months ended September 29, 2013 and September 30,
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
|
|
$4,475 to $4,525 million
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
Approximately 35.5%
|
|
Adjusted SG&A expenses(a)
|
|
$1,405 to $1,425 million
|
|
Adjusted R&D expenses(a)
|
|
$380 to $390 million
|
|
Adjusted interest expense(a)
|
|
Approximately $115 million
|
|
Adjusted other (income)/deductions(a)
|
|
Approximately $15 million income
|
|
Effective tax rate on adjusted net income(a)
|
|
Approximately 29.5%
|
|
Adjusted diluted EPS(a)
|
|
$1.38 to $1.42
|
|
Certain significant items(b) and acquisition-related costs
|
|
$220 to $240 million
|
|
Reported diluted EPS
|
|
$0.98 to $1.02
|
|
|
|
|
|
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
|
|
~$690 - $710
|
|
~$1.38 - $1.42
|
|
Purchase accounting adjustments
|
|
~(35)
|
|
~(0.07)
|
|
Certain significant items(b) and acquisition-related costs
|
|
(160 - 175)
|
|
(0.32 - 0.35)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
~$490 - $510
|
|
~$0.98 - $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.
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,
accelerated vesting and associated cash payment related to certain
Pfizer equity awards, certain legal registration and patent
assignment costs, and restructuring and other charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
|
Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
706
|
|
|
$
|
659
|
|
|
7
|
%
|
|
|
(1
|
)%
|
|
8
|
%
|
|
Companion Animal
|
|
|
|
397
|
|
|
360
|
|
|
10
|
%
|
|
|
(1
|
)%
|
|
11
|
%
|
|
Total Revenue
|
|
|
|
$
|
1,103
|
|
|
$
|
1,019
|
|
|
8
|
%
|
|
|
(1
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
275
|
|
|
$
|
248
|
|
|
11
|
%
|
|
|
—
|
%
|
|
11
|
%
|
|
Companion Animal
|
|
|
|
220
|
|
|
200
|
|
|
10
|
%
|
|
|
—
|
%
|
|
10
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
495
|
|
|
$
|
448
|
|
|
10
|
%
|
|
|
—
|
%
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
178
|
|
|
$
|
163
|
|
|
9
|
%
|
|
|
2
|
%
|
|
7
|
%
|
|
Companion Animal
|
|
|
|
92
|
|
|
78
|
|
|
18
|
%
|
|
|
3
|
%
|
|
15
|
%
|
|
Total EuAfME Revenue
|
|
|
|
$
|
270
|
|
|
$
|
241
|
|
|
12
|
%
|
|
|
3
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
129
|
|
|
$
|
128
|
|
|
1
|
%
|
|
|
(5
|
)%
|
|
6
|
%
|
|
Companion Animal
|
|
|
|
42
|
|
|
37
|
|
|
14
|
%
|
|
|
(5
|
)%
|
|
19
|
%
|
|
Total CLAR Revenue
|
|
|
|
$
|
171
|
|
|
$
|
165
|
|
|
4
|
%
|
|
|
(5
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
124
|
|
|
$
|
120
|
|
|
3
|
%
|
|
|
(5
|
)%
|
|
8
|
%
|
|
Companion Animal
|
|
|
|
43
|
|
|
45
|
|
|
(4
|
)%
|
|
|
(7
|
)%
|
|
3
|
%
|
|
Total APAC Revenue
|
|
|
|
$
|
167
|
|
|
$
|
165
|
|
|
1
|
%
|
|
|
(6
|
)%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
388
|
|
|
$
|
365
|
|
|
6
|
%
|
|
|
(1
|
)%
|
|
7
|
%
|
|
Swine
|
|
|
|
155
|
|
|
140
|
|
|
11
|
%
|
|
|
(1
|
)%
|
|
12
|
%
|
|
Poultry
|
|
|
|
134
|
|
|
125
|
|
|
7
|
%
|
|
|
(1
|
)%
|
|
8
|
%
|
|
Other
|
|
|
|
29
|
|
|
29
|
|
|
—
|
%
|
|
|
(5
|
)%
|
|
5
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
706
|
|
|
$
|
659
|
|
|
7
|
%
|
|
|
(1
|
)%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
37
|
|
|
$
|
35
|
|
|
6
|
%
|
|
|
1
|
%
|
|
5
|
%
|
|
Dogs and Cats
|
|
|
|
360
|
|
|
325
|
|
|
11
|
%
|
|
|
(1
|
)%
|
|
12
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
397
|
|
|
$
|
360
|
|
|
10
|
%
|
|
|
(1
|
)%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Note 17A to Zoetis's combined
financial statements included in Zoetis's 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
|
Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
2,082
|
|
|
$
|
2,015
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
1,225
|
|
|
1,145
|
|
|
7
|
%
|
|
|
(1
|
)%
|
|
8
|
%
|
|
Total Revenue
|
|
|
|
$
|
3,307
|
|
|
$
|
3,160
|
|
|
5
|
%
|
|
|
(1
|
)%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
724
|
|
|
$
|
680
|
|
|
6
|
%
|
|
|
—
|
%
|
|
6
|
%
|
|
Companion Animal
|
|
|
|
662
|
|
|
614
|
|
|
8
|
%
|
|
|
—
|
%
|
|
8
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
1,386
|
|
|
$
|
1,294
|
|
|
7
|
%
|
|
|
—
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
557
|
|
|
$
|
543
|
|
|
3
|
%
|
|
|
1
|
%
|
|
2
|
%
|
|
Companion Animal
|
|
|
|
281
|
|
|
256
|
|
|
10
|
%
|
|
|
2
|
%
|
|
8
|
%
|
|
Total EuAfME Revenue
|
|
|
|
$
|
838
|
|
|
$
|
799
|
|
|
5
|
%
|
|
|
1
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
421
|
|
|
$
|
420
|
|
|
—
|
%
|
|
|
(5
|
)%
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
134
|
|
|
129
|
|
|
4
|
%
|
|
|
(3
|
)%
|
|
7
|
%
|
|
Total CLAR Revenue
|
|
|
|
$
|
555
|
|
|
$
|
549
|
|
|
1
|
%
|
|
|
(5
|
)%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
380
|
|
|
$
|
372
|
|
|
2
|
%
|
|
|
(3
|
)%
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
148
|
|
|
146
|
|
|
1
|
%
|
|
|
(6
|
)%
|
|
7
|
%
|
|
Total APAC Revenue
|
|
|
|
$
|
528
|
|
|
$
|
518
|
|
|
2
|
%
|
|
|
(3
|
)%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
1,134
|
|
|
$
|
1,136
|
|
|
—
|
%
|
|
|
(1
|
)%
|
|
1
|
%
|
|
Swine
|
|
|
|
465
|
|
|
425
|
|
|
9
|
%
|
|
|
(2
|
)%
|
|
11
|
%
|
|
Poultry
|
|
|
|
404
|
|
|
375
|
|
|
8
|
%
|
|
|
(2
|
)%
|
|
10
|
%
|
|
Other
|
|
|
|
79
|
|
|
79
|
|
|
—
|
%
|
|
|
(2
|
)%
|
|
2
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
2,082
|
|
|
$
|
2,015
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
124
|
|
|
$
|
130
|
|
|
(5
|
)%
|
|
|
(1
|
)%
|
|
(4
|
)%
|
|
Dogs and Cats
|
|
|
|
1,101
|
|
|
1,015
|
|
|
8
|
%
|
|
|
(1
|
)%
|
|
9
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
1,225
|
|
|
$
|
1,145
|
|
|
7
|
%
|
|
|
(1
|
)%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Note 17A to Zoetis's combined
financial statements included in Zoetis's 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
|
Exchange
|
|
Operational
|
|
U.S.
|
|
|
|
$
|
285
|
|
|
$
|
232
|
|
|
23
|
%
|
|
|
—
|
%
|
|
23
|
%
|
|
EuAfME
|
|
|
|
92
|
|
|
91
|
|
|
1
|
%
|
|
|
—
|
%
|
|
1
|
%
|
|
CLAR
|
|
|
|
56
|
|
|
53
|
|
|
6
|
%
|
|
|
(18
|
)%
|
|
24
|
%
|
|
APAC
|
|
|
|
57
|
|
|
59
|
|
|
(3
|
)%
|
|
|
(6
|
)%
|
|
3
|
%
|
|
Total Reportable Segments
|
|
|
|
490
|
|
|
435
|
|
|
13
|
%
|
|
|
(3
|
)%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
(80
|
)
|
|
(65
|
)
|
|
23
|
%
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
(139
|
)
|
|
(113
|
)
|
|
23
|
%
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
(12
|
)
|
|
(13
|
)
|
|
(8
|
)%
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
(1
|
)
|
|
(5
|
)
|
|
(80
|
)%
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
(46
|
)
|
|
(11
|
)
|
|
*
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
(27
|
)
|
|
(15
|
)
|
|
80
|
%
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
$
|
185
|
|
|
$
|
213
|
|
|
(13
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Total
|
|
|
Exchange
|
|
Operational
|
|
U.S.
|
|
|
|
$
|
773
|
|
|
$
|
676
|
|
|
14
|
%
|
|
|
—
|
%
|
|
14
|
%
|
|
EuAfME
|
|
|
|
300
|
|
|
283
|
|
|
6
|
%
|
|
|
—
|
%
|
|
6
|
%
|
|
CLAR
|
|
|
|
186
|
|
|
184
|
|
|
1
|
%
|
|
|
(11
|
)%
|
|
12
|
%
|
|
APAC
|
|
|
|
203
|
|
|
193
|
|
|
5
|
%
|
|
|
(2
|
)%
|
|
7
|
%
|
|
Total Reportable Segments
|
|
|
|
1,462
|
|
|
1,336
|
|
|
9
|
%
|
|
|
(2
|
)%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
(228
|
)
|
|
(191
|
)
|
|
19
|
%
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
(392
|
)
|
|
(346
|
)
|
|
13
|
%
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
(37
|
)
|
|
(39
|
)
|
|
(5
|
)%
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
(17
|
)
|
|
(34
|
)
|
|
(50
|
)%
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
(130
|
)
|
|
(28
|
)
|
|
*
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
(94
|
)
|
|
(62
|
)
|
|
52
|
%
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
$
|
564
|
|
|
$
|
636
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Calculation not meaningful.
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Note 17A to Zoetis's
combined financial statements included in Zoetis's 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 certain costs related to becoming a
standalone public company, restructuring charges and
implementation costs associated with our
cost-reduction/productivity initiatives that are not associated
with an acquisition and the impact of divestiture-related gains
and losses.
|
|
|
|
|
|
|
(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.
|
|
|
Zoetis Inc.
Media Contacts:
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
Investor Contacts:
Dina Fede, 1-973-443-2969 (o)
or
John O'Connor, 1-973-822-7088 (o)