- For First Quarter 2016, Zoetis Delivers 12% Operational Growth in Revenue and 28% Operational Growth in Adjusted Net Income, Excluding Foreign Exchange
- Reported First Quarter 2016 Revenue of $1.2 Billion and Reported Net Income of $204 Million, or $0.41 per Diluted Share
- First Quarter 2016 Adjusted Net Income of $239 Million, or Adjusted Diluted EPS of $0.48
- Updates Full Year 2016 Revenue Guidance to $4.775 - $4.875 Billion and Adjusted Diluted EPS to $1.83 - $1.90
- Updates Full Year 2017 Revenue Guidance to $5.075 - $5.275 Billion and Adjusted Diluted EPS to $2.24 - $2.38
Zoetis
Inc. (NYSE:ZTS) today reported its financial results for the first
quarter of 2016 and updated its guidance for full year 2016 and full
year 2017.
The company reported revenue of $1.2 billion for the first quarter of
2016, an increase of 5% compared with the first quarter of 2015. Revenue
reflected an operational1 increase of 12%, excluding
the impact of foreign currency.
Net income for the first quarter of 2016 was $204 million, or $0.41 per
diluted share, an increase of 24%, compared with the first quarter of
2015. Adjusted net income2 for the first quarter of 2016 was
$239 million, or $0.48 per diluted share, an increase of 15% and 17%,
respectively. Adjusted net income for the first quarter of 2016 excludes
the net impact of $35 million, or $0.07 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 2016 increased 28%, with foreign currency having a
negative impact of 13 percentage points.
Due to accounting calendars, the first quarter of 2016 includes six
additional calendar days compared with the first quarter of 2015,
resulting in higher sales, costs and expenses. The company estimates the
impact of the additional days to be approximately 6 percentage points of
operational growth.
EXECUTIVE COMMENTARY
“Zoetis delivered solid operational revenue growth in the first quarter,
with the full benefit of our diverse portfolio and business model on
display. The growth in companion animal products drove our performance,
while we experienced softer growth in our livestock products and a
negative impact from the product rationalization and market changes in
Venezuela and India that we communicated last year,” said Zoetis Chief
Executive Officer Juan Ramón Alaix. “Our core capabilities in direct
customer interaction, R&D and manufacturing keep us well-positioned to
lead the animal health industry.”
“The execution of our operational efficiency program continues to help
us grow adjusted net income faster than sales, and we are on track to
exceed our initial targets,” said Alaix. “With improved foreign exchange
rates and the positive momentum of the business, we are increasing our
adjusted diluted EPS guidance for 2016 and 2017.”
Paul Herendeen, Executive Vice President and Chief Financial Officer of
Zoetis, said, “There was a lot going on in our results for the first
quarter including having six extra days due to our financial calendar
and seeing the impact of changes we are making to rationalize our
product portfolio and geographic footprint. Looking through the noise,
we posted another solid quarter. Foreign exchange rates continued to
constrain our reported revenue growth -- reducing reported revenue by
700 basis points compared with the prior year quarter -- but we expect a
more muted impact over the balance of the year based on current rates.
We are off to a great start in 2016 and are confident that we will enter
2017 with the right product portfolio, focused in the right countries
and with the right level of resources to deliver revenue growth over the
long term that is equal to or faster than the markets in which we
compete.”
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its business across two regional operating
segments: the United States (U.S.) and International. Within these
segments, the company delivers a diverse portfolio of products for
livestock and companion animals tailored to local trends and customer
needs. These segment results reflect the six additional calendar days
mentioned above. In the first quarter of 2016:
-
Revenue in the U.S. segment was $582 million, an increase of
12% compared with the first quarter of 2015. Sales of companion animal
products grew 32%, due primarily to increased sales of APOQUEL®,
initial sales of other products into expanded distribution
relationships, and the addition of products acquired from Abbott
Animal Health. Livestock revenue declined 4% due to decreased sales of
cattle and swine products. In cattle, our premium products were
impacted by mild winter weather that resulted in decreased disease
risk and incidence, while certain swine products were impacted by
increased competition. Poultry products partially offset these
declines as customers rotated onto our medicated feed additive
products.
-
Revenue in the International segment was $567 million, an
increase of 13% operationally compared with the first quarter of 2015.
Sales of livestock products grew 9% operationally, driven by the
addition of revenue, primarily in Chile and Norway, from recently
acquired PHARMAQ. Additionally, sales of cattle products grew in
France and Brazil. Growth in France was due to lower than normal sales
in the year-ago quarter resulting from implementation of new
legislation, while growth in Brazil was driven by price increases and
favorable market conditions. Livestock growth, however, was partially
offset by business reductions in Venezuela and India and product
rationalization. Sales of companion animal products increased 23%
operationally, driven in part from increased sales of APOQUEL in
existing markets – primarily the United Kingdom, Spain, and Germany –
and new markets – France and Australia. Growth also benefited from
performance in China and Japan. In China, growth was driven by demand
for our vaccines portfolio, while Japan’s growth was driven by
competitor supply issues and timing of customer purchases.
Additionally, sales of products acquired from Abbott Animal Health
benefited companion animal growth.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through lifecycle innovations, strong customer relationships
and access to new markets and technologies. The company is focused on
improving the performance and delivery of its current product lines;
expanding product indications across species; pursuing approvals in new
geographies; and developing innovative medicines, treatments and
solutions for emerging diseases and unmet customer needs. Some recent
highlights include:
-
Zoetis expanded its line of livestock vaccines in China in the first
quarter. In March, the company received approval for RUI LAN WEN™,
the first combination vaccine approved in China to help protect pigs
against classical swine fever (CSF) and porcine reproductive and
respiratory syndrome (PRRS) prevalent in China. This is the second
vaccine resulting from the Zoetis Jilin Guoyuan joint venture in
China. Zoetis also gained approval in China for POULVAC®
MAREK CVI+HVT, a vaccine to help prevent Marek’s disease in
poultry.
-
The company has received licenses from the USDA for a new VANGUARD®
B Oral vaccine and three new VANGUARD®
Intranasal Rapid Resp vaccines. Zoetis is now the first and only
manufacturer to offer oral, intranasal and injectable options for
vaccinating dogs against Bordetella bronchiseptica, which is
considered a common pathogen in canine infectious respiratory disease.
-
At the end of the first quarter, Zoetis was granted a conditional
license from the U.S. Department of Agriculture (USDA) for Avian
Influenza Vaccine, H5N1 Subtype, Killed Virus3.
The vaccine is intended for use in chickens as an aid in the
prevention of disease caused by avian influenza virus H5N1, a highly
pathogenic disease that caused the largest animal health emergency in
U.S. history during the spring and summer of 2015, according to the
USDA. Zoetis is participating in a competitive bidding process to
supply the USDA with this vaccine for the National Veterinary
Stockpile should they decide a vaccination strategy is needed.
Zoetis continues to expand major products into new markets.
-
Following an approval last year in the EU markets, Zoetis received
approval for SIMPARICA™ (sarolaner) in the U.S. and Canada and SIMPARIC™
in Brazil; this is a new oral parasiticide for dogs that enables the
company to compete in the fastest growing segment of the approximately
$3 billion global market of flea and tick products.
-
With the approval of APOQUEL in Japan in the first quarter, the
product is now approved in all major markets. APOQUEL®
(oclacitinib tablet) is a novel Janus Kinase inhibitor for the control
of pruritus, or itching, associated with allergic dermatitis and the
control of atopic dermatitis in dogs at least 12 months of age.
-
Zoetis also received a conditional license in Canada for Canine
Atopic Dermatitis Immunotherapeutic3, a
first-of-its-kind antibody therapy that targets and neutralizes
interleukin-31 (IL-31) to help reduce clinical signs associated with
atopic dermatitis in dogs.
FINANCIAL GUIDANCE
Zoetis' guidance for the full year 2016 and the full year 2017 continues
to reflect the company’s confidence in its diverse portfolio, the
strength of its business model, and the stability and predictability of
the animal health industry.
Zoetis has updated elements of its guidance today to reflect foreign
exchange rates as of April and current views of its operations.
Considering these factors, the company’s guidance for the full year 2016
and the full year 2017 is the following:
Full Year 2016:
-
Revenue of between $4.775 billion to $4.875 billion
-
Reported diluted EPS for the full year of between $1.41 to $1.56 per
share
-
Adjusted diluted EPS for the full year between $1.83 to $1.90 per share
Full Year 2017 (updated solely for foreign exchange rates):
-
Revenue of between $5.075 billion to $5.275 billion
-
Reported diluted EPS for the full year of between $2.01 to $2.19 per
share
-
Adjusted diluted EPS for the full year between $2.24 to $2.38 per share
Additional guidance on other items such as expenses and tax rate is
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 2016 results,
discuss 2016 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 4,
2016.
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. Zoetis serves veterinarians, livestock producers and people
who raise and care for farm and companion animals with sales of its
products in more than 100 countries. In 2015, the company generated
annual revenue of $4.8 billion with approximately 9,000 employees. For
more information, visit www.zoetis.com.
1 Operational revenue growth is defined as revenue
growth excluding the impact of foreign exchange.
2 Adjusted net income and its components and
adjusted diluted earnings per share (non-GAAP financial measures) are
defined as reported net income attributable to Zoetis and reported
diluted earnings per share, excluding purchase accounting adjustments,
acquisition-related costs and certain significant items.
3This product license is conditional. Efficacy and
potency tests are in progress.
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, future guidance, future
operating models, expectations regarding products, future use of cash
and dividend payments, tax rate and tax regimes, changes in the tax
regimes and laws in other jurisdictions, 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,
2015, 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
|
|
|
|
|
|
2016
|
|
2015
|
|
% Change
|
|
Revenue
|
|
|
$
|
1,162
|
|
|
$
|
1,102
|
|
|
5
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
389
|
|
|
394
|
|
|
(1
|
)
|
|
Selling, general and administrative expenses(b)
|
|
|
315
|
|
|
354
|
|
|
(11
|
)
|
|
Research and development expenses(b)
|
|
|
90
|
|
|
80
|
|
|
13
|
|
|
Amortization of intangible assets(c)
|
|
|
21
|
|
|
15
|
|
|
40
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
2
|
|
|
1
|
|
|
100
|
|
|
Interest expense
|
|
|
43
|
|
|
28
|
|
|
54
|
|
|
Other (income)/deductions–net
|
|
|
(30
|
)
|
|
—
|
|
|
*
|
|
|
Income before provision for taxes on income
|
|
|
332
|
|
|
230
|
|
|
44
|
|
|
Provision for taxes on income
|
|
|
128
|
|
|
65
|
|
|
97
|
|
|
Net income before allocation to noncontrolling interests
|
|
|
204
|
|
|
165
|
|
|
24
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Net income attributable to Zoetis
|
|
|
$
|
204
|
|
|
$
|
165
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
|
$
|
0.41
|
|
|
$
|
0.33
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
|
$
|
0.41
|
|
|
$
|
0.33
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
497,399
|
|
|
501,146
|
|
|
|
|
|
Diluted
|
|
|
499,539
|
|
|
503,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
months ended April 3, 2016, and March 29, 2015. Subsidiaries
operating outside the United States are included for the three
months ended February 28, 2016 and February 22, 2015.
|
|
|
|
|
|
(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 April 3, 2016
|
|
|
|
|
GAAP
Reported(a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
Adjusted(b)
|
|
Revenue
|
|
|
$
|
1,162
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,162
|
|
Cost of sales(c)
|
|
|
389
|
|
|
(7
|
)
|
|
—
|
|
|
(4
|
)
|
|
378
|
|
Gross profit
|
|
|
773
|
|
|
7
|
|
|
—
|
|
|
4
|
|
|
784
|
|
Selling, general and administrative expenses(c)
|
|
|
315
|
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
|
300
|
|
Research and development expenses(c)
|
|
|
90
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
89
|
|
Amortization of intangible assets(d)
|
|
|
21
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
|
(2
|
)
|
|
—
|
|
Interest expense
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
Other (income)/deductions–net
|
|
|
(30
|
)
|
|
—
|
|
|
(1
|
)
|
|
33
|
|
|
2
|
|
Income before provision for taxes on income
|
|
|
332
|
|
|
26
|
|
|
1
|
|
|
(13
|
)
|
|
346
|
|
Provision for taxes on income
|
|
|
128
|
|
|
17
|
|
|
(2
|
)
|
|
(36
|
)
|
|
107
|
|
Net income attributable to Zoetis
|
|
|
204
|
|
|
9
|
|
|
3
|
|
|
23
|
|
|
239
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
0.41
|
|
|
0.02
|
|
|
0.01
|
|
|
0.04
|
|
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 29, 2015
|
|
|
|
|
GAAP
Reported(a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
months ended April 3, 2016, and March 29, 2015. Subsidiaries
operating outside the United States are included for the three
months ended February 28, 2016, and February 22, 2015.
|
|
|
|
|
|
(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
|
|
|
|
|
2016
|
|
2015
|
|
Integration costs(a)
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
Other(b)
|
|
|
1
|
|
|
—
|
|
|
Total acquisition-related costs—pre-tax
|
|
|
1
|
|
|
1
|
|
|
Income taxes(c)
|
|
|
(2
|
)
|
|
(2
|
)
|
|
Total acquisition-related costs—net of tax
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Integration costs represent external, incremental costs directly
related to integrating acquired businesses and primarily include
expenditures for consulting and the integration of systems and
processes. Included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Included in Other (income)/deductions—net.
|
|
|
|
|
|
(c)
|
|
Included in Provision for taxes on income. Income taxes include the
tax effect of the associated pre-tax amounts, calculated by
determining the jurisdictional location of the pre-tax amounts and
applying that jurisdiction's applicable tax rate, as well as a tax
charge related to the acquisition of certain assets of Abbott Animal
Health.
|
|
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
(2) Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
|
|
2016
|
|
|
2015
|
|
Operational efficiency initiative(a)
|
|
|
$
|
(28
|
)
|
|
|
$
|
10
|
|
Supply network strategy(b)
|
|
|
3
|
|
|
|
5
|
|
Stand-up costs(c)
|
|
|
12
|
|
|
|
23
|
|
Other(d)
|
|
|
—
|
|
|
|
3
|
|
Total certain significant items—pre-tax
|
|
|
(13
|
)
|
|
|
41
|
|
Income taxes(e)
|
|
|
(36
|
)
|
|
|
8
|
|
Total certain significant items—net of tax
|
|
|
$
|
23
|
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
For the three months ended April 3, 2016, comprises restructuring
charges of $2 million related to employee termination costs ($1
million) and exit costs ($1 million), included in Restructuring
charges and certain acquisition-related costs, consulting fees of $3
million, included in Selling, general and administrative expenses,
and a $33 million gain related to the sale of certain manufacturing
sites and products (gross proceeds received were $75 million),
included in Other (income)/deductions—net. For the three months
ended March 29, 2015, represents consulting fees included in
Selling, general and administrative expenses.
|
|
|
|
|
|
(b)
|
|
For the three months ended April 3, 2016, comprises accelerated
depreciation charges of $1 million and consulting fees of $2
million, included in Cost of sales. For the three months ended March
29, 2015, represents consulting fees included in Cost of sales.
|
|
|
|
|
|
(c)
|
|
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 ($1 million and $2 million) and Selling, general
and administrative expenses ($11 million and $21 million) for the
three months ended April 3, 2016, and March 29, 2015, respectively.
|
|
|
|
|
|
(d)
|
|
For the three months ended March 29, 2015, represents charges due to
unusual investor-related activities in Selling, general and
administrative expenses.
|
|
|
|
|
|
(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. The three months
ended April 3, 2016, also includes a net tax charge of approximately
$35 million related to the impact of the European Commission’s
negative decision on the excess profits rulings in Belgium. The net
charge of approximately $35 million relates to the recovery of prior
tax benefits for the periods 2013 through 2015 offset by the
revaluation of the company’s deferred tax assets and liabilities
using the rates expected to be in place at the time of the reversal.
This net charge does not include any benefits associated with a
successful appeal of the decision, nor does it reflect guidance we
expect to receive from the Belgian government on the methodology and
timing of the recovery of prior tax benefits.
|
|
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
ADJUSTED SELECTED COSTS, EXPENSES AND INCOME (a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
$
|
378
|
|
|
|
$
|
385
|
|
|
|
(2
|
)%
|
|
|
(5
|
)%
|
|
|
3
|
%
|
|
as a percent of revenue
|
|
|
32.5
|
%
|
|
|
34.9
|
%
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
300
|
|
|
|
320
|
|
|
|
(6
|
)%
|
|
|
(5
|
)%
|
|
|
(1
|
)%
|
|
Adjusted R&D expenses
|
|
|
89
|
|
|
|
80
|
|
|
|
11
|
%
|
|
|
(4
|
)%
|
|
|
15
|
%
|
|
Adjusted net income attributable to Zoetis
|
|
|
239
|
|
|
|
207
|
|
|
|
15
|
%
|
|
|
(13
|
)%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 April 3, 2016, and
March 29, 2015, 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.
2016 GUIDANCE
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
Full Year 2016
|
|
Revenue
|
|
|
$4,775 to $4,875
|
|
Operational growth(a)
|
|
|
3% to 5%
|
|
Adjusted cost of sales as a percentage of revenue(b)
|
|
|
33% to 34%
|
|
Adjusted SG&A expenses(b)
|
|
|
$1,290 to $1,330
|
|
Adjusted R&D expenses(b)
|
|
|
$360 to $380
|
|
Adjusted interest expense and other (income)/deductions(b)
|
|
|
Approximately $170
|
|
Adjusted EBIT margin(b)
|
|
|
Approximately 31%
|
|
Effective tax rate on adjusted income(b)
|
|
|
Approximately 32%
|
|
Adjusted diluted EPS(b)
|
|
|
$1.83 to $1.90
|
|
Adjusted net income(b)
|
|
|
$915 to $950
|
|
Operational growth(a)
|
|
|
9% to 13%
|
|
Certain significant items(c) and acquisition-related costs
|
|
|
$70 to $120
|
|
Reported diluted EPS
|
|
|
$1.41 to $1.56
|
|
|
|
A reconciliation of 2016 adjusted net income and adjusted diluted
EPS guidance to 2016 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(b) guidance
|
|
~$915 - $950
|
|
~$1.83 - $1.90
|
|
Purchase accounting adjustments
|
|
~(65)
|
|
~(0.13)
|
|
Certain significant items(c) and acquisition-related costs
|
|
~(105 - 145)
|
|
~(0.21 - 0.29)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
~$705 - $780
|
|
~$1.41 - $1.56
|
|
|
|
|
|
|
|
(a)
|
|
Operational growth excludes the impact of foreign exchange.
|
|
|
|
|
|
(b)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense
and adjusted other (income)/deductions are income statement line
items prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Adjusted earnings before interest
and taxes (EBIT) is defined as reported EBIT excluding purchase
accounting adjustments, acquisition-related costs and certain
significant items. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted net
income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP
net income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies. Adjusted
net income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
|
|
|
|
|
|
(c)
|
|
Primarily includes certain nonrecurring costs related to
restructuring, net gains on sales of assets, and other charges for
the operational efficiency initiative and supply network strategy,
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.
2017 GUIDANCE
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
Full Year 2017
|
|
Revenue
|
|
$5,075 to $5,275
|
|
Operational growth(a)
|
|
5% to 9%
|
|
Adjusted cost of sales as a percentage of revenue(b)
|
|
32% to 33%
|
|
Adjusted SG&A expenses(b)
|
|
$1,250 to $1,340
|
|
Adjusted R&D expenses(b)
|
|
$360 to $380
|
|
Adjusted interest expense and other (income)/deductions(b)
|
|
Approximately $150
|
|
Adjusted EBIT margin(b)
|
|
Approximately 34%
|
|
Effective tax rate on adjusted income(b)
|
|
Approximately 30%
|
|
Adjusted diluted EPS(b)
|
|
$2.24 to $2.38
|
|
Adjusted net income(b)
|
|
$1,120 to $1,190
|
|
Operational growth(a)
|
|
20% to 28%
|
|
Certain significant items(c) and acquisition-related costs
|
|
$50 to $80
|
|
Reported diluted EPS
|
|
$2.01 to $2.19
|
|
|
|
|
|
|
|
A reconciliation of 2017 adjusted net income and adjusted diluted
EPS guidance to 2017 reported net income attributable to Zoetis and
reported diluted EPS attributable to Zoetis common shareholders
guidance follows:
|
|
|
|
|
|
|
|
|
|
Full-Year 2017 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
Net Income
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(b) guidance
|
|
~$1,120 - $1,190
|
|
~$2.24 - $2.38
|
|
Purchase accounting adjustments
|
|
~(60)
|
|
~(0.12)
|
|
Certain significant items(c) and acquisition-related costs
|
|
~(35 - 55)
|
|
~(0.07 - 0.11)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
~$1,005 - $1,095
|
|
~$2.01 - $2.19
|
|
|
|
|
|
|
|
(a)
|
|
Operational growth excludes the impact of foreign exchange.
|
|
|
|
|
|
(b)
|
|
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.
|
|
|
|
|
|
(c)
|
|
Primarily includes certain nonrecurring costs related to
restructuring, net gains on sales of assets, and other charges for
the operational efficiency initiative and supply network strategy,
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
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
683
|
|
|
|
$
|
715
|
|
|
|
(4
|
)%
|
|
|
(8
|
)%
|
|
|
4
|
%
|
|
Companion Animal
|
|
|
466
|
|
|
|
377
|
|
|
|
24
|
%
|
|
|
(5
|
)%
|
|
|
29
|
%
|
|
Contract Manufacturing
|
|
|
13
|
|
|
|
10
|
|
|
|
30
|
%
|
|
|
(9
|
)%
|
|
|
39
|
%
|
|
Total Revenue
|
|
|
$
|
1,162
|
|
|
|
$
|
1,102
|
|
|
|
5
|
%
|
|
|
(7
|
)%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
288
|
|
|
|
$
|
299
|
|
|
|
(4
|
)%
|
|
|
—
|
%
|
|
|
(4
|
)%
|
|
Companion Animal
|
|
|
294
|
|
|
|
222
|
|
|
|
32
|
%
|
|
|
—
|
%
|
|
|
32
|
%
|
|
Total U.S. Revenue
|
|
|
$
|
582
|
|
|
|
$
|
521
|
|
|
|
12
|
%
|
|
|
—
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
$
|
395
|
|
|
|
$
|
416
|
|
|
|
(5
|
)%
|
|
|
(14
|
)%
|
|
|
9
|
%
|
|
Companion Animal
|
|
|
172
|
|
|
|
155
|
|
|
|
11
|
%
|
|
|
(12
|
)%
|
|
|
23
|
%
|
|
Total International Revenue
|
|
|
$
|
567
|
|
|
|
$
|
571
|
|
|
|
(1
|
)%
|
|
|
(14
|
)%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
$
|
377
|
|
|
|
$
|
397
|
|
|
|
(5
|
)%
|
|
|
(8
|
)%
|
|
|
3
|
%
|
|
Swine
|
|
|
146
|
|
|
|
170
|
|
|
|
(14
|
)%
|
|
|
(7
|
)%
|
|
|
(7
|
)%
|
|
Poultry
|
|
|
122
|
|
|
|
129
|
|
|
|
(5
|
)%
|
|
|
(7
|
)%
|
|
|
2
|
%
|
|
Fish
|
|
|
17
|
|
|
|
—
|
|
|
|
*
|
|
|
*
|
|
|
*
|
|
Other
|
|
|
21
|
|
|
|
19
|
|
|
|
11
|
%
|
|
|
(8
|
)%
|
|
|
19
|
%
|
|
Total Livestock Revenue
|
|
|
$
|
683
|
|
|
|
$
|
715
|
|
|
|
(4
|
)%
|
|
|
(8
|
)%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
$
|
39
|
|
|
|
$
|
40
|
|
|
|
(3
|
)%
|
|
|
(5
|
)%
|
|
|
2
|
%
|
|
Dogs and Cats
|
|
|
427
|
|
|
|
337
|
|
|
|
27
|
%
|
|
|
(5
|
)%
|
|
|
32
|
%
|
|
Total Companion Animal Revenue
|
|
|
$
|
466
|
|
|
|
$
|
377
|
|
|
|
24
|
%
|
|
|
(5
|
)%
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
For a description of each segment, see Note 19A to Zoetis'
consolidated financial statements included in Zoetis' Form 10-K for
the year ended December 31, 2015.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
Total International
|
|
|
$
|
567
|
|
|
$
|
571
|
|
|
(1
|
)%
|
|
|
(14
|
)%
|
|
|
13
|
%
|
|
Australia
|
|
|
35
|
|
|
28
|
|
|
25
|
%
|
|
|
(13
|
)%
|
|
|
38
|
%
|
|
Brazil
|
|
|
46
|
|
|
64
|
|
|
(28
|
)%
|
|
|
(36
|
)%
|
|
|
8
|
%
|
|
Canada
|
|
|
33
|
|
|
33
|
|
|
—
|
%
|
|
|
(14
|
)%
|
|
|
14
|
%
|
|
China
|
|
|
38
|
|
|
35
|
|
|
9
|
%
|
|
|
(5
|
)%
|
|
|
14
|
%
|
|
France
|
|
|
36
|
|
|
26
|
|
|
38
|
%
|
|
|
(8
|
)%
|
|
|
46
|
%
|
|
Germany
|
|
|
29
|
|
|
28
|
|
|
4
|
%
|
|
|
(9
|
)%
|
|
|
13
|
%
|
|
Italy
|
|
|
20
|
|
|
25
|
|
|
(20
|
)%
|
|
|
(8
|
)%
|
|
|
(12
|
)%
|
|
Japan
|
|
|
31
|
|
|
26
|
|
|
19
|
%
|
|
|
1
|
%
|
|
|
18
|
%
|
|
Mexico
|
|
|
19
|
|
|
18
|
|
|
6
|
%
|
|
|
(24
|
)%
|
|
|
30
|
%
|
|
Spain
|
|
|
19
|
|
|
19
|
|
|
—
|
%
|
|
|
(8
|
)%
|
|
|
8
|
%
|
|
United Kingdom
|
|
|
50
|
|
|
42
|
|
|
19
|
%
|
|
|
(5
|
)%
|
|
|
24
|
%
|
|
Other Developed
|
|
|
68
|
|
|
65
|
|
|
5
|
%
|
|
|
(8
|
)%
|
|
|
13
|
%
|
|
Other Emerging
|
|
|
143
|
|
|
162
|
|
|
(12
|
)%
|
|
|
(13
|
)%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
SEGMENT(a) EARNINGS
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
First Quarter
|
|
|
% Change
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
582
|
|
|
|
$
|
521
|
|
|
|
12
|
%
|
|
|
—
|
%
|
|
|
12
|
%
|
|
Cost of Sales
|
|
|
131
|
|
|
|
125
|
|
|
|
5
|
%
|
|
|
—
|
%
|
|
|
5
|
%
|
|
Gross Profit
|
|
|
451
|
|
|
|
396
|
|
|
|
14
|
%
|
|
|
—
|
%
|
|
|
14
|
%
|
|
Gross Margin
|
|
|
77.5
|
%
|
|
|
76.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
92
|
|
|
|
81
|
|
|
|
14
|
%
|
|
|
—
|
%
|
|
|
14
|
%
|
|
Other (income)/deductions
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
U.S. Earnings
|
|
|
$
|
359
|
|
|
|
$
|
315
|
|
|
|
14
|
%
|
|
|
—
|
%
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
567
|
|
|
|
$
|
571
|
|
|
|
(1
|
)%
|
|
|
(14
|
)%
|
|
|
13
|
%
|
|
Cost of Sales
|
|
|
196
|
|
|
|
204
|
|
|
|
(4
|
)%
|
|
|
(13
|
)%
|
|
|
9
|
%
|
|
Gross Profit
|
|
|
371
|
|
|
|
367
|
|
|
|
1
|
%
|
|
|
(13
|
)%
|
|
|
14
|
%
|
|
Gross Margin
|
|
|
65.4
|
%
|
|
|
64.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
109
|
|
|
|
135
|
|
|
|
(19
|
)%
|
|
|
(11
|
)%
|
|
|
(8
|
)%
|
|
Other (income)/deductions
|
|
|
2
|
|
|
|
2
|
|
|
|
—
|
%
|
|
|
(19
|
)%
|
|
|
19
|
%
|
|
International Earnings
|
|
|
$
|
260
|
|
|
|
$
|
230
|
|
|
|
13
|
%
|
|
|
(15
|
)%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
$
|
619
|
|
|
|
$
|
545
|
|
|
|
14
|
%
|
|
|
(6
|
)%
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
(74
|
)
|
|
|
(68
|
)
|
|
|
9
|
%
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
(169
|
)
|
|
|
(131
|
)
|
|
|
29
|
%
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
(26
|
)
|
|
|
(13
|
)
|
|
|
100
|
%
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
—
|
%
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
13
|
|
|
|
(41
|
)
|
|
|
*
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
(30
|
)
|
|
|
(61
|
)
|
|
|
(51
|
)%
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
$
|
332
|
|
|
|
$
|
230
|
|
|
|
44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
For a description of each segment, see Note 19A to Zoetis'
consolidated financial statements included in Zoetis' Form 10-K for
the year ended December 31, 2015.
|
|
|
|
|
|
(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
the amortization of 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 and integrating newly acquired businesses, such as
transaction costs and integration costs.
|
|
|
|
|
|
(f)
|
|
Certain significant items includes substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, costs associated with the
operational efficiency initiative and supply network strategy,
certain legal and commercial settlements, and the impact of
divestiture-related gains and losses.
|
|
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
Zoetis Inc.
Media:
Bill Price, 1-973-443-2742 (o)
[email protected]
or
Elinore White, 1-973-443-2835 (o)
[email protected]
or
Investors:
John O'Connor, 1-973-822-7088 (o)
[email protected]
or
Steve Frank, 1-973-822-7141 (o)
[email protected]