- First Quarter 2015 Revenue of $1.1 Billion Was Flat Compared to First Quarter 2014; an Increase of 6% Excluding Foreign Exchange
- First Quarter 2015 Reported Net Income of $165 Million, or $0.33 per Diluted Share, Increased 6%
- First Quarter 2015 Adjusted Net Income1 of $207 Million, or Adjusted Diluted EPS1 of $0.41, Increased 8%; an Increase of 14% Excluding Foreign Exchange
- Announces Comprehensive Initiative to Simplify Operations, Improve Cost Structure, and Better Allocate Resources to Generate Cost Savings of Approximately $300 Million by 2017
- Updates Full Year 2015 Revenue Guidance to $4.675 - $4.775 Billion and Reaffirms Full Year 2015 Adjusted Diluted EPS1 Guidance of $1.61 - $1.68
Zoetis Inc. (NYSE:ZTS) today reported its financial results for the
first quarter of 2015 and announced a comprehensive operational
efficiency initiative to enhance its long-term competitive position and
profitability. The company also updated its guidance for full year 2015
and provided additional details on its outlook for 2016 and 2017 to
reflect the impact of the operational efficiency plans and other factors.
The company reported revenue of $1.1 billion for the first quarter of
2015, which was flat compared to the first quarter of 2014; revenue
reflected an operational2 increase of 6%, excluding
the impact of foreign currency.
Net income for the first quarter of 2015 was $165 million, or $0.33 per
diluted share, an increase of 6% compared to the first quarter of 2014.
Adjusted net income1 for the first quarter of 2015 was $207
million, or $0.41 per diluted share, an increase of 8%. Adjusted net
income for the first quarter of 2015 excludes the net impact of $42
million, or $0.08 per diluted share, for purchase accounting
adjustments, acquisition-related costs and certain significant items. On
an operational basis, adjusted net income for the first quarter of 2015
increased 14%, with foreign currency having a negative impact of 6
percentage points.
EXECUTIVE COMMENTARY
“For the first quarter, we continued our solid financial performance
from last year,” said Zoetis Chief Executive Officer Juan Ramón Alaix.
“Our first quarter revenue grew 6% operationally, based on strength in
the U.S. and Latin American markets, and our adjusted net income grew
14% operationally, in line with our objective to grow adjusted net
income faster than sales.”
“Our business model – based on direct customer interaction, R&D and
manufacturing capabilities – along with excellence in execution and a
singular focus on animal health are key elements of our success,” said
Alaix. “As we look ahead, we intend to build on that formula and perform
even better.”
“For the past two years, our focus has been on delivering our operating
and financial targets, while successfully establishing Zoetis as a
standalone company,” continued Alaix. “Now having entered the final
stage of our stand-up projects and building on the strong momentum in
our business, we are announcing plans to further improve our operations
and better position Zoetis to drive long-term profitable growth. The
implementation of our plans will allow us to become more competitive by
being more focused and cost-efficient, while taking full advantage of
our scale and business model.”
Paul Herendeen, Executive Vice President and Chief Financial Officer of
Zoetis, said, “This initiative is a natural next step in the evolution
of our company. We took a comprehensive look across our business and
identified opportunities to generate higher quality, profitable growth,
while preserving and enhancing our competitive advantages – our
customer-facing sales approach, research and development of innovative
products, and high-quality manufacturing and supply.”
“The operational efficiency initiative we announced today will result in
a company that will generate more profit from a slightly smaller, more
focused revenue base. We expect to generate cost savings of
approximately $300 million in 2017 and to improve our adjusted operating
margin from 25% in 2014 to approximately 34% in 2017,” said Herendeen.
“By 2017, we will be a company that can grow our re-based organic
revenue in line with or faster than the mid-single digit growth of our
markets, while holding growth in our leaned-out operating expenses to
the inflation rate, thereby delivering long-term profit growth greater
than our revenue growth. We will also be better positioned to create
value from potential business development opportunities,” concluded
Herendeen.
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 first quarter of 2015:
-
Revenue in the U.S. was $521 million, an increase of 9% compared to
the first quarter of 2014. Sales of livestock products grew 14%, led
by growth in cattle products due to the strength of our portfolio and
continued favorable market conditions. Increases in the sales of swine
products were driven by a higher population of pigs as well as sales
of the PEDv vaccine. Sales of poultry products grew primarily due to
the re-introduction of ZOAMIX®, a medicated feed additive. Companion
animal product sales grew 3% driven by the performance of key brands
such as PROHEART® and REVOLUTION®, the addition of products from
Abbott Animal Health, promotional programs, improved weather
conditions, and new product launches in diagnostics. This growth was
partially offset by competitive challenges to RIMADYL® and sedation
products, as well as declines in equine products.
-
Revenue in EuAfME was $237 million, operationally flat compared to the
first quarter of 2014. Sales of anti-infectives declined in both
livestock and companion animal products due to the implementation of
new legislation in France. Livestock sales declined 2% operationally
due to the French legislation and declines in Russia, but were
somewhat offset by growth in other emerging markets. Companion animal
products grew 4% operationally, led by broad growth in key brands such
as CERENIA® and STRONGHOLD®, as well as improved product availability
in equine products.
-
Revenue in CLAR was $173 million, an increase of 13% operationally
compared to the first quarter of 2014, with strong growth in both
livestock and companion animal products. Sales of livestock products
grew 13% operationally, as favorable cattle and swine market dynamics
across the region drove growth of premium brands, particularly in
Brazil and Venezuela. Poultry product sales declined due primarily to
timing of customer product rotations in several countries. Sales of
companion animal products grew 14% operationally, driven by sales in
Venezuela and performance of key brands in Brazil.
-
Revenue in APAC was $161 million, an increase of 1% compared to the
first quarter of 2014. Growth in emerging markets was offset by
declines in developed markets. Sales of livestock products grew 1%
operationally, primarily based on strong swine product sales in
Southeast Asia. Swine sales in China declined as weaker market
conditions led to softer demand for premium products. Poultry sales
experienced a slight decline due to weaker market conditions in South
Korea and the Philippines. Cattle sales declined in the quarter due to
prolonged drought conditions in Australia and New Zealand, partially
offset by emerging market growth, particularly in China and India.
Sales of companion animal products were operationally flat in the
quarter, mainly due to declines in Australia and the prior termination
of a distributor agreement in Japan.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through product lifecycle developments, strong customer
relationships and access to new markets and technologies. The company is
focused on improving the performance and delivery of its current product
lines; expanding product indications across species; pursuing approvals
in new geographies; and developing innovative medicines, treatments and
solutions for emerging diseases and unmet customer needs.
Some highlights of the company’s product lifecycle development this
quarter include expanding the reach of key products into new markets and
with new indications. For example, the BOVI-SHIELD GOLD® FP line of
vaccines for certain bovine respiratory and reproductive diseases
received approval for additional claims in the U.S. to help prevent
fetal infections caused by bovine viral diarrhea (BVD) virus Types 1 and
2; this product line was first approved in the U.S. in 2009. FOSTERA™
PCV MH, a vaccine that helps prevent certain diseases in swine,
expanded into new markets such as Thailand and Russia in the first
quarter; it was first approved in the U.S. in 2013. And, CERENIA®,
an antiemetic to treat and prevent acute vomiting in dogs and cats, was
approved for cats in Japan; it was first approved in Europe in 2006.
OVERVIEW OF COMPREHENSIVE OPERATIONAL EFFICIENCY
INITIATIVE
Zoetis also announced a company-wide operational efficiency initiative
designed to reduce complexity in its global operations and optimize its
resource allocation and efficiency. All plans are subject to
consultations with works councils and unions in certain markets.
The main actions in the program will be:
-
Reducing complexity in the company’s product portfolio and structure
-
Increasing focus on key products, key markets and strategic
manufacturing sites
-
Improving profitability and enhancing the reliability and
efficiency of the supply network by eliminating approximately
5,000 lower-revenue, lower-margin product SKUs
-
Continuing to re-shape the company’s supply network, including
plans to sell or exit 10 manufacturing sites over the long term
-
Changing its selling approach in approximately 30 markets by
shifting to indirect sales or reducing its presence in certain
countries
-
Consolidating from a four-region structure to a two-region
structure -- U.S. and International -- resulting in a more
cost-efficient infrastructure and more standardized processes. The
U.S Region will be led by Kristin Peck, and the International
Region will be led by Clint Lewis; both are current members of the
Zoetis executive team
-
Optimizing resource allocation and efficiency
-
Streamlining corporate functions and significantly reducing
general and administrative (G&A) costs by improving execution and
efficiency
-
Focusing resources closer to customers and reducing the allocation
of resources to non-customer facing commercial activities
-
Reducing management layers, increasing spans of control and
operating more efficiently as a result of less internal complexity
and more standardization of processes
-
Enhancing R&D focus to support a smaller portfolio of products and
better prioritize R&D projects with the highest returns
The implementation of this initiative increases the company’s outlook
for 2017 operating profit by $200 million, driven by $300 million in
expected cost savings, which is expected to more than offset a reduction
of revenue and gross profit of $280 million and $100 million,
respectively.
The operational efficiency initiative is incremental to the Supply
Network Strategy that was previously announced and that is expected to
add an additional 200 basis points to gross margin by 2020.
Separately, the company has decided to reduce its business in Venezuela.
The impact of this change will reduce the company-wide outlook for 2017
revenue, gross profit, and operating profit by approximately $90
million, $65 million, and $55 million, respectively.
As a result of the operational efficiency initiative and supply network
strategy, Zoetis expects to record restructuring charges and other
one-time cash charges of $400-500 million, primarily by the end of 2016.
Additional, primarily non-cash charges related to the company’s
long-term supply network strategy will occur as the specific plans for
each manufacturing site are finalized in the coming years.
FINANCIAL GUIDANCE
Zoetis is updating its financial guidance for full year 2015 to reflect
the impact of the operational efficiency program, a reduction of its
presence in Venezuela, and changes in foreign exchange rates:
-
Revenue of between $4.675 billion to $4.775 billion
-
Reported diluted EPS of between $0.79 to $1.02 per share
-
Adjusted diluted EPS1 between $1.61 to $1.68 per share
The company also provided updates to its long-term outlook for 2017:
-
Revenue of $4.850 billion to $5.050 billion
-
Reported diluted EPS of between $1.98 to $2.16 per share
-
Adjusted cost of sales1 as a percentage of revenue of
approximately 32% to 33%
-
Adjusted EBIT margin1 of approximately 34%
-
Adjusted diluted EPS of $2.18 to $2.32
Additional guidance on other items for 2015, 2016 and 2017 such as
expenses and tax rate are included in the financial tables and will be
discussed on the company's conference call this morning.
WEBCAST & CONFERENCE CALL DETAILS
Zoetis will host a webcast and conference call at 8:30 a.m. (EDT) today,
during which company executives will review first quarter financial
results, discuss 2015 financial guidance, and respond to questions from
financial analysts. Investors and the public may access the live webcast
by visiting the Zoetis website at http://www.zoetis.com/events-and-presentations.
A replay of the webcast will be archived and made available on May 5,
2015.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2014, the company generated annual revenue of $4.8 billion.
With approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who raise
and care for farm and companion animals with sales of its products in
120 countries. For more information, visit www.zoetis.com.
1 Adjusted net income and its components, adjusted
diluted earnings per share, and adjusted earnings before interest and
taxes (EBIT) (non-GAAP financial measures) are defined as reported net
income attributable to Zoetis, reported diluted earnings per share and
reported EBIT, excluding purchase accounting adjustments,
acquisition-related costs and certain significant items.
2 Operational revenue growth is defined as revenue
growth excluding the impact of foreign exchange.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future Results”
and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as adjusted net income and
adjusted diluted earnings per share, to assess and analyze our
operational results and trends and to make financial and operational
decisions. We believe these non-GAAP financial measures are also
useful to investors because they provide greater transparency regarding
our operating performance. The non-GAAP financial measures
included in this press release should not be considered alternatives to
measurements required by GAAP, such as net income, operating income, and
earnings per share, and should not be considered measures of liquidity.
These non-GAAP financial measures are unlikely to be comparable with
non-GAAP information provided by other companies. Reconciliation
of non-GAAP financial measures and GAAP financial measures are included
in the tables accompanying this press release and are posted on our
website at www.zoetis.com.
Internet Posting of Information:
We routinely post information that may be important to investors in
the 'Investors' section of our website at www.zoetis.com,
on our Facebook page at http://www.facebook.com/zoetis
and on Twitter @zoetis. We encourage investors and potential investors
to consult our website regularly and to follow us on Facebook and
Twitter for important information about us.
|
|
|
|
|
|
|
|
|
ZOETIS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)
(UNAUDITED)
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
% Change
|
|
Revenue
|
|
|
$
|
1,102
|
|
|
|
$
|
1,097
|
|
|
|
—
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
394
|
|
|
|
379
|
|
|
|
4
|
|
Selling, general and administrative expenses(b)
|
|
|
354
|
|
|
|
356
|
|
|
|
(1)
|
|
Research and development expenses(b)
|
|
|
80
|
|
|
|
87
|
|
|
|
(8)
|
|
Amortization of intangible assets(c)
|
|
|
15
|
|
|
|
15
|
|
|
|
—
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
1
|
|
|
|
3
|
|
|
|
(67)
|
|
Interest expense
|
|
|
28
|
|
|
|
29
|
|
|
|
(3)
|
|
Other (income)/deductions–net
|
|
|
—
|
|
|
|
1
|
|
|
|
(100)
|
|
Income before provision for taxes on income
|
|
|
230
|
|
|
|
227
|
|
|
|
1
|
|
Provision for taxes on income
|
|
|
65
|
|
|
|
72
|
|
|
|
(10)
|
|
Net income before allocation to noncontrolling interests
|
|
|
165
|
|
|
|
155
|
|
|
|
6
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net income attributable to Zoetis
|
|
|
$
|
165
|
|
|
|
$
|
155
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
|
$
|
0.33
|
|
|
|
$
|
0.31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
|
$
|
0.33
|
|
|
|
$
|
0.31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
501,146
|
|
|
|
500,231
|
|
|
|
|
|
Diluted
|
|
|
503,224
|
|
|
|
500,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
months ended March 29, 2015 and March 30, 2014. Subsidiaries
operating outside the United States are included for the three
months ended February 22, 2015 and February 23, 2014.
|
|
|
|
|
|
(b)
|
|
Exclusive of amortization of intangible assets, except as
discussed in footnote (c) below.
|
|
|
|
|
|
(c)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in
Cost of sales, Selling, general and administrative expenses or
Research and development expenses, as appropriate.
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
Quarter ended March 29, 2015
|
|
|
|
|
|
|
|
Purchase
|
|
|
Acquisition-
|
|
|
Certain
|
|
|
|
|
|
|
|
GAAP
|
|
|
Accounting
|
|
|
Related
|
|
|
Significant
|
|
|
Non-GAAP
|
|
|
|
|
Reported(a)
|
|
|
Adjustments
|
|
|
Costs(1)
|
|
|
Items(2)
|
|
|
Adjusted(b)
|
|
Revenue
|
|
|
$
|
1,102
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,102
|
|
|
Cost of sales(c)
|
|
|
394
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
385
|
|
|
Gross profit
|
|
|
708
|
|
|
|
2
|
|
|
|
—
|
|
|
|
7
|
|
|
|
717
|
|
|
Selling, general and administrative expenses(c)
|
|
|
354
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(34
|
)
|
|
|
320
|
|
|
Research and development expenses(c)
|
|
|
80
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80
|
|
|
Amortization of intangible assets(d)
|
|
|
15
|
|
|
|
(11
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Interest expense
|
|
|
28
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
|
Other (income)/deductions–net
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Income before provision for taxes on income
|
|
|
230
|
|
|
|
13
|
|
|
|
1
|
|
|
|
41
|
|
|
|
285
|
|
|
Provision for taxes on income
|
|
|
65
|
|
|
|
7
|
|
|
|
(2
|
)
|
|
|
8
|
|
|
|
78
|
|
|
Net income attributable to Zoetis
|
|
|
165
|
|
|
|
6
|
|
|
|
3
|
|
|
|
33
|
|
|
|
207
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
0.33
|
|
|
|
0.01
|
|
|
|
0.01
|
|
|
|
0.06
|
|
|
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 30, 2014
|
|
|
|
|
|
|
|
Purchase
|
|
|
Acquisition-
|
|
|
Certain
|
|
|
|
|
|
|
|
GAAP
|
|
|
Accounting
|
|
|
Related
|
|
|
Significant
|
|
|
Non-GAAP
|
|
|
|
|
Reported(a)
|
|
|
Adjustments
|
|
|
Costs(1)
|
|
|
Items(2)
|
|
|
Adjusted(b)
|
|
Revenue
|
|
|
$
|
1,097
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,097
|
|
|
Cost of sales(c)
|
|
|
379
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
375
|
|
|
Gross profit
|
|
|
718
|
|
|
|
1
|
|
|
|
—
|
|
|
|
3
|
|
|
|
722
|
|
|
Selling, general and administrative expenses(c)
|
|
|
356
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(30
|
)
|
|
|
327
|
|
|
Research and development expenses(c)
|
|
|
87
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
87
|
|
|
Amortization of intangible assets(d)
|
|
|
15
|
|
|
|
(12
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
3
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
3
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
|
Interest expense
|
|
|
29
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29
|
|
|
Other (income)/deductions–net
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
Income before provision for taxes on income
|
|
|
227
|
|
|
|
12
|
|
|
|
2
|
|
|
|
36
|
|
|
|
277
|
|
|
Provision for taxes on income
|
|
|
72
|
|
|
|
4
|
|
|
|
1
|
|
|
|
9
|
|
|
|
86
|
|
|
Net income attributable to Zoetis
|
|
|
155
|
|
|
|
8
|
|
|
|
1
|
|
|
|
27
|
|
|
|
191
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
0.31
|
|
|
|
0.02
|
|
|
|
—
|
|
|
|
0.05
|
|
|
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
months ended March 29, 2015 and March 30, 2014. Subsidiaries
operating outside the United States are included for the three
months ended February 22, 2015 and February 23, 2014.
|
|
|
|
|
|
(b)
|
|
Non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and
diluted EPS. Despite the importance of these measures to
management in goal setting and performance measurement, non-GAAP
adjusted net income and its components and non-GAAP adjusted
diluted EPS are non-GAAP financial measures that have no
standardized meaning prescribed by U.S. GAAP and, therefore, have
limits in their usefulness to investors. Because of the
non-standardized definitions, non-GAAP adjusted net income and its
components and non-GAAP adjusted diluted EPS (unlike U.S. GAAP net
income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies.
Non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are presented solely to permit investors to
more fully understand how management assesses performance.
|
|
|
|
|
|
(c)
|
|
Exclusive of amortization of intangible assets, except as
discussed in footnote (d) below.
|
|
|
|
|
|
(d)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in
Cost of sales, Selling, general and administrative expenses or
Research and development expenses, as appropriate.
|
|
|
|
|
|
(e)
|
|
EPS amounts may not add due to rounding.
|
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1) and (2).
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION
CERTAIN LINE ITEMS
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
(1) Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
2015
|
|
|
|
2014
|
|
Integration costs(a)
|
|
|
$
|
1
|
|
|
|
$
|
2
|
|
Total acquisition-related costs—pre-tax
|
|
|
1
|
|
|
|
2
|
|
Income taxes(b)
|
|
|
(2
|
)
|
|
|
1
|
|
Total acquisition-related costs—net of tax
|
|
|
$
|
3
|
|
|
|
$
|
1
|
|
|
|
|
|
(a)
|
|
Integration costs represent external, incremental costs directly
related to integrating acquired businesses and primarily include
expenditures for consulting and the integration of systems and
processes. Included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Included in Provision for taxes on income. Income taxes include
the tax effect of the associated pre-tax amounts, calculated by
determining the jurisdictional location of the pre-tax amounts and
applying that jurisdiction's applicable tax rate, as well as a tax
charge related to the acquisition of certain assets of Abbott
Animal Health.
|
|
|
|
|
|
|
|
|
|
|
(2) Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
2015
|
|
|
|
2014
|
|
Restructuring charges(a)
|
|
|
$
|
—
|
|
|
|
$
|
1
|
|
Stand-up costs(b)
|
|
|
23
|
|
|
|
33
|
|
Operational efficiency initiative(c)
|
|
|
15
|
|
|
|
—
|
|
Other(d)
|
|
|
3
|
|
|
|
2
|
|
Total certain significant items—pre-tax
|
|
|
41
|
|
|
|
36
|
|
Income taxes(e)
|
|
|
8
|
|
|
|
9
|
|
Total certain significant items—net of tax
|
|
|
$
|
33
|
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Related to our cost-reduction/productivity initiatives. Included
in Restructuring charges and certain acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Represents certain nonrecurring costs related to becoming an
independent public company, such as new branding (including
changes to the manufacturing process for required new packaging),
the creation of standalone systems and infrastructure, site
separation, and certain legal registration and patent assignment
costs. Included in Cost of sales ($2 million and $3 million) and
Selling, general and administrative expenses ($21 million and $30
million) for the three months ended March 29, 2015 and March 30,
2014, respectively.
|
|
|
|
|
|
(c)
|
|
Represents consulting fees related to our operational efficiency
initiative. Included in Cost of sales ($5 million) and Selling,
general and administrative expenses ($10 million).
|
|
|
|
|
|
(d)
|
|
For the three months ended March 29, 2015, represents charges due
to unusual investor-related activities, included in Selling,
general and administrative expenses. For the three months ended
March 30, 2014, represents a pension plan settlement charge
related to the divestiture of a manufacturing plant ($4 million),
partially offset by an insurance recovery of litigation related
charges ($2 million income), both included in Other
(income)/deductions.
|
|
|
|
|
|
(e)
|
|
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, EXPENSES AND INCOME (a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
First Quarter
|
|
|
(Favorable)/Unfavorable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Total
|
|
|
|
Exchange
|
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
$
|
385
|
|
|
|
$
|
375
|
|
|
|
3%
|
|
|
|
(6)%
|
|
|
9%
|
|
as a percent of revenue
|
|
|
34.9
|
%
|
|
|
34.2
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
320
|
|
|
|
327
|
|
|
|
(2)%
|
|
|
|
(5)%
|
|
|
3%
|
|
Adjusted R&D expenses
|
|
|
80
|
|
|
|
87
|
|
|
|
(8)%
|
|
|
|
(2)%
|
|
|
(6)%
|
|
Adjusted net income attributable to Zoetis
|
|
|
207
|
|
|
|
191
|
|
|
|
8%
|
|
|
|
(6)%
|
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Adjusted cost of sales, adjusted selling, general, and
administrative (SG&A) expenses, adjusted research and development
(R&D) expenses, and adjusted net income attributable to Zoetis are
defined as the corresponding reported U.S. generally accepted
accounting principles (GAAP) income statement line items excluding
purchase accounting adjustments, acquisition-related costs, and
certain significant items. Reconciliations of certain reported to
adjusted information for the three months ended March 29, 2015 and
March 30, 2014 are provided in the materials accompanying this
report. These adjusted income statement line item measures are
not, and should not be viewed as, substitutes for the
corresponding U.S. GAAP line items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
2015 GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
As provided on
February 11, 2015
|
|
|
Foreign exchange(a)
|
|
|
Venezuela business(b)
|
|
|
Operational efficiency initiative
|
|
|
Updated Full Year 2015
|
|
Revenue
|
|
|
$4,800 to $4,900
|
|
|
($75)
|
|
|
($50)
|
|
|
|
|
|
$4,675 to $4,775
|
|
Operational growth
|
|
|
6.5% to 8.5%
|
|
|
|
|
|
|
|
|
|
|
|
5.5% to 7.5%
|
|
Adjusted cost of sales as a percentage of revenue(c)
|
|
|
35.5% to 36.0%
|
|
|
|
|
|
|
|
|
|
|
|
35.5% to 36.0%
|
|
Adjusted SG&A expenses(c)
|
|
|
$1,420 to $1,470
|
|
|
($20)
|
|
|
($5)
|
|
|
($40)
|
|
|
$1,355 to $1,405
|
|
Adjusted R&D expenses(c)
|
|
|
$385 to $405
|
|
|
|
|
|
|
|
|
($5)
|
|
|
$380 to $400
|
|
Adjusted interest expense and other (income)/deductions(c)
|
|
|
Approximately $110
|
|
|
|
|
|
|
|
|
|
|
|
Approximately $110
|
|
Effective tax rate on adjusted income(c)
|
|
|
Approximately 29%
|
|
|
|
|
|
|
|
|
|
|
|
Approximately 29%
|
|
Adjusted diluted EPS(c)
|
|
|
$1.61 to $1.68
|
|
|
($0.01)
|
|
|
($0.05)
|
|
|
$0.06
|
|
|
$1.61 to $1.68
|
|
Adjusted net income(c)
|
|
|
$810 to $845
|
|
|
($5)
|
|
|
($25)
|
|
|
$30
|
|
|
$810 to $845
|
|
Operational growth
|
|
|
11% to 16%
|
|
|
|
|
|
|
|
|
|
|
|
12% to 17%
|
|
Certain significant items(d) and acquisition-related costs
|
|
|
$140 to $160
|
|
|
|
|
|
|
|
|
$270 to $330
|
|
|
$410 to $490
|
|
Reported diluted EPS
|
|
|
$1.32 to $1.39
|
|
|
($0.01)
|
|
|
($0.05)
|
|
|
($0.34 to $0.46)
|
|
|
$0.79 to $1.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of 2015 adjusted net income and adjusted diluted EPS
guidance to 2015 reported net income attributable to Zoetis and reported
diluted EPS attributable to Zoetis common shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2015 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
Net Income
|
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(c) guidance
|
|
|
~$810 - $845
|
|
|
~$1.61 - $1.68
|
|
Purchase accounting adjustments
|
|
|
~(40)
|
|
|
~(0.08)
|
|
Certain significant items(d) and acquisition-related costs
|
|
|
~(290 - 370)
|
|
|
~(0.58 - 0.74)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
~$400 - $515
|
|
|
~$0.79 - $1.02
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Reflects the impact of changes to foreign exchange rates
underlying prior guidance and current foreign exchange rates.
|
|
|
|
|
|
(b)
|
|
Reflects the expected impact of our business reduction in
Venezuela.
|
|
|
|
|
|
(c)
|
|
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.
|
|
|
|
|
|
(d)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative, becoming an independent public company, such as new
branding (including changes to the manufacturing process for
required new packaging), the creation of standalone systems and
infrastructure, site separation, and certain legal registration
and patent assignment costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
2016-2017 GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
2016
|
|
|
2017
|
|
Revenue
|
|
|
$4,650 to $4,800
|
|
|
$4,850 to $5,050
|
|
Operational growth
|
|
|
(1)% to 2%
|
|
|
3% to 7%
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
33% to 34%
|
|
|
32% to 33%
|
|
Adjusted SG&A expenses(a)
|
|
|
$1,270 to $1,340
|
|
|
$1,240 to $1,330
|
|
Adjusted R&D expenses(a)
|
|
|
$380 to $400
|
|
|
$380 to $400
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
Approximately $110
|
|
|
Approximately $110
|
|
Adjusted EBIT margin(a)
|
|
|
Approximately 31%
|
|
|
Approximately 34%
|
|
Effective tax rate on adjusted income(a)
|
|
|
Approximately 30%
|
|
|
Approximately 29%
|
|
Adjusted diluted EPS(a)
|
|
|
$1.81 to $1.93
|
|
|
$2.18 to $2.32
|
|
Adjusted net income(a)
|
|
|
$910 to $970
|
|
|
$1,095 to $1,165
|
|
Operational growth
|
|
|
12% to 19%
|
|
|
17% to 24%
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
$130 to $180
|
|
|
$50 to $80
|
|
Reported diluted EPS
|
|
|
$1.45 to $1.65
|
|
|
$1.98 to $2.16
|
|
|
|
|
|
|
|
|
A reconciliation of 2016 and 2017 adjusted net income and adjusted
diluted EPS guidance to 2016 and 2017 reported net income attributable
to Zoetis and reported diluted EPS attributable to Zoetis common
shareholders guidance follows:
|
|
|
|
|
|
|
|
|
Full-Year 2016 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
Net Income
|
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
~$910 - $970
|
|
|
~$1.81 - $1.93
|
|
Purchase accounting adjustments
|
|
|
~(40)
|
|
|
~(0.08)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
~(100 - 140)
|
|
|
~(0.20 - 0.28)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
~$730 - $830
|
|
|
~$1.45 - $1.65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2017 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
Net Income
|
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
~$1,095 - $1,165
|
|
|
~$2.18 - $2.32
|
|
Purchase accounting adjustments
|
|
|
~(40)
|
|
|
~(0.08)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
~(40 - 60)
|
|
|
~(0.08 - 0.12)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
~$995 - $1,085
|
|
|
~$1.98 - $2.16
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Adjusted net income and its components and adjusted diluted EPS
are defined as reported U.S. generally accepted accounting
principles (GAAP) net income and its components and reported
diluted EPS excluding purchase accounting adjustments,
acquisition-related costs and certain significant items. Adjusted
cost of sales, adjusted selling, general and administrative (SG&A)
expenses, adjusted research and development (R&D) expenses,
adjusted interest expense, adjusted other (income)/deductions are
income statement line items prepared on the same basis, and,
therefore, components of the overall adjusted income measure.
Adjusted earnings before interest and taxes (EBIT) is defined as
reported EBIT excluding purchase accounting adjustments,
acquisition-related costs and certain significant items. Despite
the importance of these measures to management in goal setting and
performance measurement, adjusted net income and its components
and adjusted diluted EPS are non-GAAP financial measures that have
no standardized meaning prescribed by U.S. GAAP and, therefore,
have limits in their usefulness to investors. Because of the
non-standardized definitions, adjusted net income and its
components and adjusted diluted EPS (unlike U.S. GAAP net income
and its components and diluted EPS) may not be comparable to the
calculation of similar measures of other companies. Adjusted net
income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and
diluted EPS.
|
|
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative, becoming an independent public company, such as new
branding (including changes to the manufacturing process for
required new packaging), the creation of standalone systems and
infrastructure, site separation, and certain legal registration
and patent assignment costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Total
|
|
|
|
Exchange
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
715
|
|
|
|
$
|
706
|
|
|
|
1
|
%
|
|
|
|
(6
|
)%
|
|
|
7
|
%
|
|
Companion Animal
|
|
|
377
|
|
|
|
380
|
|
|
|
(1
|
)%
|
|
|
|
(5
|
)%
|
|
|
4
|
%
|
|
Contract Manufacturing
|
|
|
10
|
|
|
|
11
|
|
|
|
(9
|
)%
|
|
|
|
3
|
%
|
|
|
(12
|
)%
|
|
Total Revenue
|
|
|
$
|
1,102
|
|
|
|
$
|
1,097
|
|
|
|
—
|
%
|
|
|
|
(6
|
)%
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
299
|
|
|
|
$
|
263
|
|
|
|
14
|
%
|
|
|
|
—
|
%
|
|
|
14
|
%
|
|
Companion Animal
|
|
|
222
|
|
|
|
216
|
|
|
|
3
|
%
|
|
|
|
—
|
%
|
|
|
3
|
%
|
|
Total U.S. Revenue
|
|
|
$
|
521
|
|
|
|
$
|
479
|
|
|
|
9
|
%
|
|
|
|
—
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
156
|
|
|
|
$
|
181
|
|
|
|
(14
|
)%
|
|
|
|
(12
|
)%
|
|
|
(2
|
)%
|
|
Companion Animal
|
|
|
81
|
|
|
|
89
|
|
|
|
(9
|
)%
|
|
|
|
(13
|
)%
|
|
|
4
|
%
|
|
Total EuAfME Revenue
|
|
|
$
|
237
|
|
|
|
$
|
270
|
|
|
|
(12
|
)%
|
|
|
|
(12
|
)%
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
138
|
|
|
|
$
|
135
|
|
|
|
2
|
%
|
|
|
|
(11
|
)%
|
|
|
13
|
%
|
|
Companion Animal
|
|
|
35
|
|
|
|
33
|
|
|
|
6
|
%
|
|
|
|
(8
|
)%
|
|
|
14
|
%
|
|
Total CLAR Revenue
|
|
|
$
|
173
|
|
|
|
$
|
168
|
|
|
|
3
|
%
|
|
|
|
(10
|
)%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
122
|
|
|
|
$
|
127
|
|
|
|
(4
|
)%
|
|
|
|
(5
|
)%
|
|
|
1
|
%
|
|
Companion Animal
|
|
|
39
|
|
|
|
42
|
|
|
|
(7
|
)%
|
|
|
|
(7
|
)%
|
|
|
—
|
%
|
|
Total APAC Revenue
|
|
|
$
|
161
|
|
|
|
$
|
169
|
|
|
|
(5
|
)%
|
|
|
|
(6
|
)%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
$
|
397
|
|
|
|
$
|
391
|
|
|
|
2
|
%
|
|
|
|
(5
|
)%
|
|
|
7
|
%
|
|
Swine
|
|
|
170
|
|
|
|
160
|
|
|
|
6
|
%
|
|
|
|
(7
|
)%
|
|
|
13
|
%
|
|
Poultry
|
|
|
129
|
|
|
|
135
|
|
|
|
(4
|
)%
|
|
|
|
(5
|
)%
|
|
|
1
|
%
|
|
Other
|
|
|
19
|
|
|
|
20
|
|
|
|
(5
|
)%
|
|
|
|
(9
|
)%
|
|
|
4
|
%
|
|
Total Livestock Revenue
|
|
|
$
|
715
|
|
|
|
$
|
706
|
|
|
|
1
|
%
|
|
|
|
(6
|
)%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
$
|
40
|
|
|
|
$
|
43
|
|
|
|
(7
|
)%
|
|
|
|
(3
|
)%
|
|
|
(4
|
)%
|
|
Dogs and Cats
|
|
|
337
|
|
|
|
337
|
|
|
|
—
|
%
|
|
|
|
(5
|
)%
|
|
|
5
|
%
|
|
Total Companion Animal Revenue
|
|
|
$
|
377
|
|
|
|
$
|
380
|
|
|
|
(1
|
)%
|
|
|
|
(5
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 18A to Zoetis's
consolidated and combined financial statements included in
Zoetis's Form 10-K for the year ended December 31, 2014.
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
SEGMENT EARNINGS(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
Total
|
|
|
Exchange
|
|
|
|
Operational
|
|
U.S.
|
|
|
$
|
315
|
|
|
|
$
|
278
|
|
|
|
13
|
%
|
|
|
—
|
%
|
|
|
|
13
|
%
|
|
EuAfME
|
|
|
102
|
|
|
|
112
|
|
|
|
(9
|
)%
|
|
|
(12
|
)%
|
|
|
|
3
|
%
|
|
CLAR
|
|
|
66
|
|
|
|
64
|
|
|
|
3
|
%
|
|
|
(23
|
)%
|
|
|
|
26
|
%
|
|
APAC
|
|
|
62
|
|
|
|
66
|
|
|
|
(6
|
)%
|
|
|
(4
|
)%
|
|
|
|
(2
|
)%
|
|
Total Reportable Segments
|
|
|
545
|
|
|
|
520
|
|
|
|
5
|
%
|
|
|
(6
|
)%
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
(67
|
)
|
|
|
(72
|
)
|
|
|
(7
|
)%
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
(133
|
)
|
|
|
(125
|
)
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
(13
|
)
|
|
|
(12
|
)
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(50
|
)%
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
(41
|
)
|
|
|
(36
|
)
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
(60
|
)
|
|
|
(46
|
)
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
$
|
230
|
|
|
|
$
|
227
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 18A to Zoetis's
consolidated and combined financial statements included in
Zoetis's Form 10-K for the year ended December 31, 2014.
|
|
|
|
|
|
(b)
|
|
Other business activities reflect the research and development
costs managed by our Research and Development organization as well
as our contract manufacturing business.
|
|
|
|
|
|
(c)
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
|
|
(d)
|
|
Purchase accounting adjustments include certain charges related to
intangible assets and property, plant and equipment not charged to
our operating segments.
|
|
|
|
|
|
(e)
|
|
Acquisition-related costs can include costs associated with
acquiring, integrating and restructuring newly acquired
businesses, such as transaction costs, integration costs,
restructuring charges and additional depreciation associated with
asset restructuring.
|
|
|
|
|
|
(f)
|
|
Certain significant items are substantive, unusual items that,
either as a result of their nature or size, would not be expected
to occur as part of our normal business on a regular basis. Such
items primarily include certain costs related to becoming an
independent public company, restructuring charges and
implementation costs associated with our
cost-reduction/productivity initiatives that are not associated
with an acquisition, costs associated with corporate strategy
reviews, certain legal and commercial settlements, 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:
Bill Price, 1-973-443-2742 (o)
william.price@zoetis.com
Elinore White, 1-973-443-2835 (o)
elinore.y.white@zoetis.com
or
Investors:
John O'Connor, 1-973-822-7088 (o)
john.oconnor@zoetis.com
Steve Frank, 1-973-822-7141 (o)
steve.frank@zoetis.com