- For Fourth Quarter 2017, Zoetis Reports Revenue of $1.5 Billion, and Net Income of $81 Million, or $0.16 per Diluted Share, on a Reported Basis
- Reports Adjusted Net Income of $341 Million, or Adjusted Diluted EPS of $0.69, for Fourth Quarter 2017
- Delivers 13% Operational Growth in Revenue and 37% Operational Growth in Adjusted Net Income for Fourth Quarter 2017
- For Full Year 2017, Zoetis Reports Revenue of $5.3 Billion and Net Income of $864 Million, or $1.75 per Diluted Share, on a Reported Basis
- Reports Adjusted Net Income of $1.185 Billion, or Adjusted Diluted EPS of $2.40, for Full Year 2017
- Delivers 8% Operational Growth in Revenue and 21% Operational Growth in Adjusted Net Income for Full Year 2017
- Company Records One-Time Provisional Net Tax Charge of $212 Million Related to Recently Enacted Tax Legislation in the U.S.
- Provides Full Year 2018 Revenue Guidance of $5.675 - $5.800 Billion, with Diluted EPS of $2.77 - $2.93 on a Reported Basis, or $2.96 - $3.10 on an Adjusted Basis
Zoetis
Inc. (NYSE: ZTS) today reported its financial results for the fourth
quarter and full year 2017 and provided full year guidance for 2018.
The company reported revenue of $1.5 billion for the fourth quarter of
2017, which was an increase of 14% compared with the fourth quarter of
2016. Net income for the fourth quarter of 2017 was $81 million, or
$0.16 per diluted share compared with $154 million and $0.31 per diluted
share in the fourth quarter of 2016.
Adjusted net income1 for the fourth quarter of 2017 was $341
million, or $0.69 per diluted share, an increase of 47%. Adjusted net
income for the fourth quarter of 2017 excludes the net impact of $260
million for purchase accounting adjustments, acquisition-related costs
and certain significant items. Included in the $260 million is a
provisional net tax charge of $212 million related to recently enacted
tax legislation in the U.S.
On an operational2 basis, revenue for the fourth quarter of
2017, excluding the impact of foreign exchange, increased 13% compared
with the fourth quarter of 2016. Adjusted net income for the fourth
quarter of 2017 increased 37% operationally, excluding the impact of
foreign exchange.
For full year 2017, the company reported revenue of $5.3 billion, an
increase of 9% compared with full year 2016. Net income for full year
2017 was $864 million, or $1.75 per diluted share, an increase of 5% and
6%, respectively.
Adjusted net income for full year 2017 was $1.185 billion, or
$2.40 per diluted share, an increase of 22%. Adjusted net income for
full year 2017 excludes the net impact of $321 million for purchase
accounting adjustments, acquisition-related costs and certain
significant items. Included in the $321 million is a provisional net tax
charge of $212 million related to recently enacted tax legislation in
the U.S.
On an operational basis, revenue for full year 2017 increased 8%,
excluding the impact of foreign exchange. Adjusted net income for full
year 2017 increased 21% operationally, excluding the impact of foreign
exchange.
EXECUTIVE COMMENTARY
“In 2017, Zoetis
became the first animal health company to deliver more than $5 billion
in revenue as we continued to demonstrate the strength of our business
model and the growth opportunities that are uniquely available in animal
health,” said Juan Ramón Alaix, Chief Executive Officer of Zoetis. “We
achieved operational revenue growth for the year of 8%, based on the
diversity of our product portfolio and balanced performance across the
U.S. and all of our major international markets. We also grew our
adjusted net income faster than sales, at 21% operationally, as we
continue to deliver on our long-term value proposition.
“As we mark our fifth year as an independent company, I am grateful to
the colleagues of Zoetis who have placed us firmly on a course for
sustainable profitable growth. We continue to drive innovations, lead in
customer excellence and simplify our operations,” said Alaix. “As we
look to the future, we will remain committed to strengthening our
interconnected capabilities in direct sales, R&D and manufacturing, and
look for additional investment opportunities to enhance our short and
long term growth.”
“We finished off 2017 with strong revenue and income growth, while
almost doubling our operating cash flow for the year,” said Glenn David,
Executive Vice President and Chief Financial Officer of Zoetis. “For
full year 2018, we expect operational growth of 5% to 7% in revenue and
20% to 26% in adjusted net income, while we continue to improve our
working capital and fund investments that will support our ability to
create long-term value for our shareholders.”
QUARTERLY HIGHLIGHTS
Zoetis organizes
and manages its commercial operations across two regional segments: the
United States (U.S.) and International. Within these segments, the
company delivers a diverse portfolio of products for livestock and
companion animals tailored to local trends and customer needs. In the
fourth quarter of 2017:
-
Revenue in the U.S. segment was $712 million, an increase of
13% compared with the fourth quarter of 2016. Sales of companion
animal products grew 15%, driven by increased sales in our dermatology
portfolio and several other new products, including Simparica®
(sarolaner), our oral parasiticide. This growth was tempered by the
prior year’s initial sales of certain products into expanded
distribution relationships. Sales of livestock products grew 11%,
driven by growth in our cattle and poultry portfolios, which was
partially offset by declines in swine products. In cattle, growth was
driven by increased sales of premium products, which were supported by
favorable weather conditions that drove higher disease risk and
incidence and more placements in feedlots, as well as the timing of
promotional activities in the prior year. In poultry, growth was
driven by increased sales of medicated feed additive products, while
lower sales of medicated feed additives drove declines in swine
products. Consistent with the year, both cattle and swine products
were negatively impacted by livestock producers’ continued
implementation of the Veterinary Feed Directive.
-
Revenue in the International segment was $740 million, an
increase of 16% on a reported basis and 13% operationally compared
with the fourth quarter of 2016. Sales of companion animal products
grew 23% on a reported basis and 18% on an operational basis,
resulting primarily from increased sales of our dermatology portfolio
and Simparica. Sales of livestock products grew 14% on a reported
basis and 11% on an operational basis, driven by balanced growth
across our portfolio. New product launches drove growth in our fish
portfolio in Norway as well as in our swine portfolio, primarily
across Europe. Sales of cattle products grew primarily in Brazil and
Canada, while poultry sales grew primarily across Asia Pacific.
Zoetis continues to drive demand and strengthen its diverse portfolio
through the introduction of new products, lifecycle innovations,
business development initiatives, strong customer relationships and
entry into new markets and technologies. In the fourth quarter of 2017,
the company received approvals for new indications and formulations and
expanded major product lines into new geographies.
-
Zoetis continued to expand the availability of its oral flea and tick
medication, Simparica,
into new markets, with
additional approvals in Chile, Panama, the Philippines and
Switzerland. The product also received approval in the European Union
for the treatment of two additional types of skin mites. Simparica
delivers fast and persistent protection from fleas and ticks in dogs,
with effectiveness that lasts for a full 35 days, without losing
efficacy at the end of the month.
-
Building on the success of the company’s vaccine portfolio, Zoetis’ Vanguard
®
Rapid Resp intranasal vaccine line was granted a one-year duration
of immunity claim for canine adenovirus type 2 and canine
parainfluenza virus, in addition to the product’s prior one-year
duration of immunity claim for Bordatella bronchiseptica.
Vanguard Rapid Resp is the first and only intranasal vaccine line in
the U.S. that has been demonstrated to provide one year of protection
against these three important canine infectious respiratory diseases.
-
In the U.S., the company enhanced its medicated feed additives
portfolio with an expanded claim for Lincomix
®
(lincomycin hydrochloride), a popular feed medication. This new
claim gives pork producers more flexibility when treating swine
respiratory disease associated with Mycoplasma hyopneumoniae (M.
hyo), which can be devastating to herds.
FINANCIAL GUIDANCE
Zoetis is providing
full year 2018 guidance, which includes:
-
Revenue between $5.675 billion to $5.800 billion
-
Reported diluted EPS between $2.77 to $2.93
-
Adjusted diluted EPS between $2.96 to $3.10
-
Reported and adjusted effective tax rate between 21% to 22%
This guidance reflects foreign exchange rates as of early February.
Additional details on guidance 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. (ET) today, during
which company executives will review fourth quarter and full year 2017
results, discuss 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://investor.zoetis.com/events-presentations.
A replay of the webcast will be archived and made available on Feb. 15,
2018.
About Zoetis
Zoetis
(NYSE: ZTS) 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, genetic tests, biodevices and 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 2017, the company generated
annual revenue of $5.3 billion with approximately 9,000 employees. For
more information, visit www.zoetis.com.
1
Adjusted net income and its components and
adjusted diluted earnings per share (non-GAAP financial measures) are
defined as reported net income attributable to Zoetis and reported
diluted earnings per share, excluding purchase accounting adjustments,
acquisition-related costs and certain significant items.
2
Operational revenue growth (a non-GAAP financial
measure) 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, 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 most recent Annual Report on Form 10-K, including in the sections
thereof captioned “Forward-Looking Statements 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,
adjusted diluted earnings per share and operational results (which
exclude the impact of foreign exchange), to assess and analyze our
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.
|
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|
|
|
ZOETIS INC.
|
|
CONSOLIDATED STATEMENTS OF INCOME(a)
|
|
(UNAUDITED)
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
|
Full Year
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
Revenue
|
|
|
|
$
|
1,460
|
|
|
|
$
|
1,277
|
|
|
|
14
|
|
|
$
|
5,307
|
|
|
|
$
|
4,888
|
|
|
|
9
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
|
457
|
|
|
|
468
|
|
|
|
(2)
|
|
|
1,775
|
|
|
|
1,666
|
|
|
|
7
|
|
Selling, general and administrative expenses(b)
|
|
|
|
361
|
|
|
|
361
|
|
|
|
—
|
|
|
1,334
|
|
|
|
1,364
|
|
|
|
(2)
|
|
Research and development expenses(b)
|
|
|
|
110
|
|
|
|
108
|
|
|
|
2
|
|
|
382
|
|
|
|
376
|
|
|
|
2
|
|
Amortization of intangible assets(c)
|
|
|
|
23
|
|
|
|
21
|
|
|
|
10
|
|
|
91
|
|
|
|
85
|
|
|
|
7
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
12
|
|
|
|
20
|
|
|
|
(40)
|
|
|
19
|
|
|
|
5
|
|
|
|
*
|
|
Interest expense
|
|
|
|
50
|
|
|
|
41
|
|
|
|
22
|
|
|
175
|
|
|
|
166
|
|
|
|
5
|
|
Other (income)/deductions–net
|
|
|
|
17
|
|
|
|
27
|
|
|
|
(37)
|
|
|
6
|
|
|
|
(2
|
)
|
|
|
*
|
|
Income before provision for taxes on income
|
|
|
|
430
|
|
|
|
231
|
|
|
|
86
|
|
|
1,525
|
|
|
|
1,228
|
|
|
|
24
|
|
Provision for taxes on income
|
|
|
|
350
|
|
|
|
77
|
|
|
|
*
|
|
|
663
|
|
|
|
409
|
|
|
|
62
|
|
Net income before allocation to noncontrolling interests
|
|
|
|
80
|
|
|
|
154
|
|
|
|
(48)
|
|
|
862
|
|
|
|
819
|
|
|
|
5
|
|
Less: Net (loss)/income attributable to noncontrolling interests
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
*
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
—
|
|
Net income attributable to Zoetis
|
|
|
|
$
|
81
|
|
|
|
$
|
154
|
|
|
|
(47)
|
|
|
$
|
864
|
|
|
|
$
|
821
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
|
|
$
|
0.17
|
|
|
|
$
|
0.31
|
|
|
|
(45)
|
|
|
$
|
1.76
|
|
|
|
$
|
1.66
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.31
|
|
|
|
(48)
|
|
|
$
|
1.75
|
|
|
|
$
|
1.65
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
487,323
|
|
|
|
493,932
|
|
|
|
|
|
|
489,918
|
|
|
|
495,715
|
|
|
|
|
|
Diluted
|
|
|
|
491,022
|
|
|
|
496,638
|
|
|
|
|
|
|
493,161
|
|
|
|
498,225
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
|
The consolidated statements of income present the three and twelve
months ended December 31, 2017 and 2016. Subsidiaries operating
outside the United States are included for the three and twelve
months ended November 30, 2017 and 2016.
|
|
|
|
|
|
|
(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 finite-lived 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 December 31, 2017
|
|
|
|
|
|
GAAP
Reported
(a)
|
|
|
Purchase
Accounting
Adjustments(1)
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(b)
|
|
Cost of sales(c)
|
|
|
|
$
|
457
|
|
|
|
$
|
(2
|
)
|
|
|
$
|
—
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
454
|
|
Gross profit
|
|
|
|
1,003
|
|
|
|
2
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1,006
|
|
Selling, general and administrative expenses(c)
|
|
|
|
361
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
359
|
|
Research and development expenses(c)
|
|
|
|
110
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110
|
|
Amortization of intangible assets(d)
|
|
|
|
23
|
|
|
|
(19
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
12
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
(10
|
)
|
|
|
—
|
|
Other (income)/deductions–net
|
|
|
|
17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
14
|
|
Income before provision for taxes on income
|
|
|
|
430
|
|
|
|
22
|
|
|
|
2
|
|
|
|
15
|
|
|
|
469
|
|
Provision for taxes on income
|
|
|
|
350
|
|
|
|
21
|
|
|
|
—
|
|
|
|
(242
|
)
|
|
|
129
|
|
Net income attributable to Zoetis
|
|
|
|
81
|
|
|
|
1
|
|
|
|
2
|
|
|
|
257
|
|
|
|
341
|
|
Earnings per common share attributable to Zoetis–diluted
|
|
|
|
0.16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.53
|
|
|
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, 2016
|
|
|
|
|
|
GAAP
Reported
(a)
|
|
|
Purchase
Accounting
Adjustments(1)
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(b)
|
|
Cost of sales(c)
|
|
|
|
$
|
468
|
|
|
|
$
|
(1
|
)
|
|
|
$
|
—
|
|
|
|
$
|
(12
|
)
|
|
|
$
|
455
|
|
Gross profit
|
|
|
|
809
|
|
|
|
1
|
|
|
|
—
|
|
|
|
12
|
|
|
|
822
|
|
Selling, general and administrative expenses(c)
|
|
|
|
361
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
348
|
|
Research and development expenses(c)
|
|
|
|
108
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
107
|
|
Amortization of intangible assets(d)
|
|
|
|
21
|
|
|
|
(17
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
20
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
(19
|
)
|
|
|
—
|
|
Other (income)/deductions–net
|
|
|
|
27
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(15
|
)
|
|
|
12
|
|
Income before provision for taxes on income
|
|
|
|
231
|
|
|
|
20
|
|
|
|
1
|
|
|
|
58
|
|
|
|
310
|
|
Provision for taxes on income
|
|
|
|
77
|
|
|
|
5
|
|
|
|
1
|
|
|
|
(5
|
)
|
|
|
78
|
|
Net income attributable to Zoetis
|
|
|
|
154
|
|
|
|
15
|
|
|
|
—
|
|
|
|
63
|
|
|
|
232
|
|
Earnings per common share attributable to Zoetis–diluted
|
|
|
|
0.31
|
|
|
|
0.03
|
|
|
|
—
|
|
|
|
0.13
|
|
|
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
CERTAIN LINE ITEMS
|
|
(UNAUDITED)
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2017
|
|
|
|
|
|
GAAP
Reported
(a)
|
|
|
Purchase
Accounting
Adjustments(1)
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(b)
|
|
Cost of sales(c)
|
|
|
|
$
|
1,775
|
|
|
|
$
|
(7
|
)
|
|
|
$
|
—
|
|
|
|
$
|
(7
|
)
|
|
|
$
|
1,761
|
|
Gross profit
|
|
|
|
3,532
|
|
|
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
|
3,546
|
|
Selling, general and administrative expenses(c)
|
|
|
|
1,334
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
1,325
|
|
Research and development expenses(c)
|
|
|
|
382
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
380
|
|
Amortization of intangible assets(d)
|
|
|
|
91
|
|
|
|
(74
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
19
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
(9
|
)
|
|
|
—
|
|
Other (income)/deductions–net
|
|
|
|
6
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
1
|
|
Income before provision for taxes on income
|
|
|
|
1,525
|
|
|
|
88
|
|
|
|
10
|
|
|
|
25
|
|
|
|
1,648
|
|
Provision for taxes on income
|
|
|
|
663
|
|
|
|
37
|
|
|
|
3
|
|
|
|
(238
|
)
|
|
|
465
|
|
Net income attributable to Zoetis
|
|
|
|
864
|
|
|
|
51
|
|
|
|
7
|
|
|
|
263
|
|
|
|
1,185
|
|
Earnings per common share attributable to Zoetis–diluted
|
|
|
|
1.75
|
|
|
|
0.10
|
|
|
|
0.01
|
|
|
|
0.54
|
|
|
|
2.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2016
|
|
|
|
|
|
GAAP
Reported
(a)
|
|
|
Purchase
Accounting
Adjustments(1)
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
Certain
Significant
Items(3)
|
|
|
Non-GAAP
Adjusted(b)
|
|
Cost of sales(c)
|
|
|
|
$
|
1,666
|
|
|
|
$
|
(23
|
)
|
|
|
$
|
—
|
|
|
|
$
|
(19
|
)
|
|
|
$
|
1,624
|
|
Gross profit
|
|
|
|
3,222
|
|
|
|
23
|
|
|
|
—
|
|
|
|
19
|
|
|
|
3,264
|
|
Selling, general and administrative expenses(c)
|
|
|
|
1,364
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
(47
|
)
|
|
|
1,312
|
|
Research and development expenses(c)
|
|
|
|
376
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
374
|
|
Amortization of intangible assets(d)
|
|
|
|
85
|
|
|
|
(69
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
5
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
—
|
|
Other (income)/deductions–net
|
|
|
|
(2
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
11
|
|
|
|
8
|
|
Income before provision for taxes on income
|
|
|
|
1,228
|
|
|
|
99
|
|
|
|
4
|
|
|
|
57
|
|
|
|
1,388
|
|
Provision for taxes on income
|
|
|
|
409
|
|
|
|
39
|
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
415
|
|
Net income attributable to Zoetis
|
|
|
|
821
|
|
|
|
60
|
|
|
|
4
|
|
|
|
90
|
|
|
|
975
|
|
Earnings per common share attributable to Zoetis–diluted
|
|
|
|
1.65
|
|
|
|
0.12
|
|
|
|
0.01
|
|
|
|
0.18
|
|
|
|
1.96
|
|
(a)
|
|
|
The consolidated statements of income present the three and twelve
months ended December 31, 2017 and 2016. Subsidiaries operating
outside the United States are included for the three and twelve
months ended November 30, 2017 and 2016.
|
|
|
|
|
|
|
(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.
|
|
|
|
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)
|
|
|
Income taxes in Purchase accounting adjustments for the
three and twelve months ended December 31, 2017, includes a
provisional tax benefit of $17 million related to the
remeasurement of the company’s deferred taxes due to the reduction
in the U.S. federal corporate tax rate as provided by the U.S. Tax
Cuts and Jobs Act enacted on December 22, 2017.
|
|
|
|
|
|
|
(2)
|
|
|
Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Integration costs(a)
|
|
|
|
$
|
2
|
|
|
|
$
|
1
|
|
|
|
$
|
6
|
|
|
|
$
|
3
|
|
Restructuring charges(b)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
Other(c)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
Total acquisition-related costs—pre-tax
|
|
|
|
2
|
|
|
|
1
|
|
|
|
10
|
|
|
|
4
|
|
Income taxes(d)
|
|
|
|
—
|
|
|
|
1
|
|
|
|
3
|
|
|
|
—
|
|
Total acquisition-related costs—net of tax
|
|
|
|
$
|
2
|
|
|
|
$
|
—
|
|
|
|
$
|
7
|
|
|
|
$
|
4
|
|
(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)
|
|
|
For 2017, represents employee termination costs related to the
acquisition of an Irish biologic therapeutics company in the third
quarter of 2017, included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
(c)
|
|
|
Included in Other (income)/deductions—net.
|
|
|
|
|
|
|
(d)
|
|
|
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. For the twelve months ended December 31, 2016, also includes
a tax charge related to the acquisition of certain assets of
Abbott Animal Health.
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Operational efficiency initiative(a)
|
|
|
|
$
|
1
|
|
|
|
$
|
27
|
|
|
|
$
|
5
|
|
|
|
$
|
(9
|
)
|
|
Supply network strategy(b)
|
|
|
|
8
|
|
|
|
6
|
|
|
|
15
|
|
|
|
19
|
|
|
Other restructuring charges and cost-reduction/productivity
initiatives(c)
|
|
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
|
|
(1
|
)
|
|
Certain asset impairment charges(d)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Stand-up costs(e)
|
|
|
|
3
|
|
|
|
5
|
|
|
|
3
|
|
|
|
23
|
|
|
Other(f)
|
|
|
|
(1
|
)
|
|
|
20
|
|
|
|
(2
|
)
|
|
|
24
|
|
|
Total certain significant items—pre-tax
|
|
|
|
15
|
|
|
|
58
|
|
|
|
25
|
|
|
|
57
|
|
|
Income taxes(g)
|
|
|
|
(242
|
)
|
|
|
(5
|
)
|
|
|
(238
|
)
|
|
|
(33
|
)
|
|
Total certain significant items—net of tax
|
|
|
|
$
|
257
|
|
|
|
$
|
63
|
|
|
|
$
|
263
|
|
|
|
$
|
90
|
|
|
(a)
|
|
|
For the three months ended December 31, 2017, includes an
adjustment to inventory reserves of $2 million, included in Cost
of sales, consulting fees of $1 million, included in Selling,
general and administrative expenses, and restructuring charges
of $2 million related to a reversal of previously accrued employee
termination costs ($1 million) and an increase in exit costs ($3
million), included in Restructuring charges and certain
acquisition-related costs. For the twelve months ended
December 31, 2017, includes an adjustment to inventory reserves of
$2 million, included in Cost of sales, consulting fees of
$2 million, included in Selling, general and administrative
expenses, restructuring charges of $4 million related to
employee termination costs ($1 million) and exit costs ($3
million), included in Restructuring charges and certain
acquisition-related costs, and a net loss related to sales of
certain manufacturing sites and products of $1 million, included
in Other (income)/deductions—net.
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31, 2016, includes inventory
write-offs of $4 million, included in Cost of sales, $3
million primarily related to consulting fees, included in Selling,
general and administrative expenses, restructuring charges of
$19 million related to employee termination costs ($18 million)
and exit costs ($1 million), included in Restructuring charges
and certain acquisition-related costs, and a net loss related
to sales of certain manufacturing sites and products of $1
million, included in Other (income)/deductions—net. For the
twelve months ended December 31, 2016, includes inventory
write-offs of $5 million, included in Cost of sales,
accelerated depreciation of $1 million and consulting fees of $14
million, included in Selling, general and administrative
expenses, a net reversal of restructuring charges of $3
million related to a reduction in previously accrued employee
termination costs ($8 million) and an increase in exit costs ($5
million), included in Restructuring charges and certain
acquisition-related costs, and a $26 million net gain related
to sales of certain manufacturing sites and products, included in Other
(income)/deductions—net.
|
|
|
|
|
|
|
(b)
|
|
|
For the three months ended December 31, 2017, includes an
adjustment of $1 million related to discontinuing the depreciation
of assets located at the manufacturing site in Guarulhos, Brazil
that was sold in the fourth quarter of 2017, and consulting fees
of $1 million, included in Cost of sales, restructuring
charges of $4 million related to a net increase in employee
termination costs, included in Restructuring charges and
certain acquisition-related costs, and a net loss of $4
million related to the disposal of our manufacturing site in
Guarulhos, Brazil, included in Other (income)/deductions—net.
For the twelve months ended December 31, 2017, includes
accelerated depreciation of $2 million, an adjustment of $2
million related to discontinuing the depreciation of assets
located at the manufacturing site in Guarulhos, Brazil that was
sold in the fourth quarter of 2017, and consulting fees of $5
million, included in Cost of sales, restructuring charges
of $1 million related to a net increase in employee termination
costs, included in Restructuring charges and certain
acquisition-related costs, and a net loss of $9 million,
related to sales of certain manufacturing sites and products,
including the disposal of our manufacturing site in Guarulhos,
Brazil, included in Other (income)/deductions—net.
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31, 2016, includes accelerated
depreciation of $2 million, included in Cost of sales, and
inventory write-offs of $1 million and consulting fees of $3
million, included in Cost of sales. For the twelve months
ended December 31, 2016, includes restructuring charges of $6
million related to employee termination costs, included in Restructuring
charges and certain acquisition-related costs, accelerated
depreciation of $6 million, inventory write-offs of $1 million and
consulting fees of $6 million, included in Cost of sales.
|
|
|
|
|
|
|
(c)
|
|
|
Included in Restructuring charges and certain
acquisition-related costs. For the three and twelve months
ended December 31, 2017, represents employee termination costs in
Europe as a result of initiatives to better align our
organizational structure.
|
|
|
|
|
|
|
(d)
|
|
|
Included in Other (income)/deductions—net. For the twelve
months ended December 31, 2016, represents an impairment of
finite-lived trademarks related to a canine pain management
product.
|
|
|
|
|
|
|
(e)
|
|
|
Represents certain nonrecurring costs related to becoming an
independent public company, such as the creation of standalone
systems and infrastructure, site separation, new branding (including
changes to the manufacturing process for required new packaging),
and certain legal registration and patent assignment costs.
|
|
|
|
|
|
|
|
|
|
For the three and twelve months ended December 31, 2017, included
in Cost of sales.
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31, 2016, included in Cost
of sales ($2 million) and Selling, general and
administrative expenses ($3 million). For the twelve months
ended December 31, 2016, included in Cost of sales ($1
million) and Selling, general and administrative expenses
($22 million).
|
|
|
|
|
|
|
(f)
|
|
|
For the three and twelve months ended December 31, 2017, primarily
represents income of $1 million and $5 million, respectively,
related to an insurance recovery from commercial settlements in
Mexico recorded in 2014 and 2016, included in Other
(income)/deductions—net. For the twelve months ended December
31, 2017, also includes costs associated with changes to our
operating model of $1 million in Cost of sales and $2
million in Selling, general and administrative expenses.
|
|
|
|
|
|
|
|
|
|
For the three and twelve months ended December 31, 2016,
represents costs associated with changes to our operating model of
$6 million and $10 million, respectively, included in Selling,
general and administrative expenses, and a charge associated
with a commercial settlement in Mexico ($14 million), included in Other
(income)/deductions—net.
|
|
|
|
|
|
|
(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. For the three and twelve months ended December 31, 2017,
also includes (i) a provisional net tax charge of $229 million
related to the impact of the Tax Cuts and Jobs Act enacted on
December 22, 2017, including a one-time mandatory deemed
repatriation tax on the company’s undistributed non-U.S. earnings,
partially offset by a tax benefit related to the remeasurement of
the company’s deferred tax assets and liabilities, as of the date
of enactment, due to the reduction in the U.S. federal corporate
tax rate, (ii) a net tax charge of approximately $3 million as a
result of the implementation of certain operational changes, and
(iii) a tax charge of approximately $2 million related to the
disposal of certain assets.
|
|
|
|
|
|
|
|
|
|
The three months ended December 31, 2016, also includes a net tax
charge of approximately $22 million as a result of the
implementation of certain operational changes. The twelve months
ended December 31, 2016, also includes (i) a net tax charge of
approximately $20 million recorded in the second half of 2016, as a
result of the implementation of certain operational changes, which
represents an increase to current income tax expense of
approximately $22 million offset by a $2 million tax benefit related
to a remeasurement of the company’s deferred tax assets and
liabilities using the tax rates expected to be in place going
forward, and (ii) a net tax charge of approximately $35 million
mainly recorded in the first half of 2016, related to the impact of
the European Commission’s negative decision on the excess profits
rulings in Belgium which represents the recovery of prior tax
benefits for the periods 2013 through 2015 offset by the
remeasurement of the company’s deferred tax assets and liabilities,
using the rates expected to be in place at the time of the reversal,
and does not include any benefits associated with a successful
appeal of the decision.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
ADJUSTED SELECTED COSTS AND EXPENSES(a)
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
Adjusted cost of sales
|
|
|
|
$
|
454
|
|
|
|
$
|
455
|
|
|
|
—
|
%
|
|
|
1
|
%
|
|
|
(1
|
)%
|
|
As a percent of revenue
|
|
|
|
31.1
|
%
|
|
|
35.6
|
%
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
|
$
|
359
|
|
|
|
$
|
348
|
|
|
|
3
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
|
Adjusted R&D expenses
|
|
|
|
110
|
|
|
|
107
|
|
|
|
3
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
341
|
|
|
|
232
|
|
|
|
47
|
%
|
|
|
10
|
%
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
Adjusted cost of sales
|
|
|
|
$
|
1,761
|
|
|
|
$
|
1,624
|
|
|
|
8
|
%
|
|
|
1
|
%
|
|
|
7
|
%
|
|
As a percent of revenue
|
|
|
|
33.2
|
%
|
|
|
33.2
|
%
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
|
$
|
1,325
|
|
|
|
$
|
1,312
|
|
|
|
1
|
%
|
|
|
—
|
%
|
|
|
1
|
%
|
|
Adjusted R&D expenses
|
|
|
|
380
|
|
|
|
374
|
|
|
|
2
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
1,185
|
|
|
|
975
|
|
|
|
22
|
%
|
|
|
1
|
%
|
|
|
21
|
%
|
|
(a)
|
|
|
Adjusted cost of sales, adjusted selling, general, and
administrative (SG&A) expenses, adjusted research and development
(R&D) expenses, and adjusted net income attributable to Zoetis are
defined as the corresponding reported U.S. generally accepted
accounting principles (GAAP) income statement line items excluding
purchase accounting adjustments, acquisition-related costs, and
certain significant items. Reconciliations of certain reported to
adjusted information for the three and twelve months ended December
31, 2017 and 2016 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. For the corresponding GAAP line items, see
Consolidated Statements of Operations and Reconciliation of GAAP
Reported to Non-GAAP Adjusted Information.
|
|
|
|
|
|
|
(b)
|
|
|
Operational growth (a non-GAAP financial measure) is defined as
growth excluding the impact of foreign exchange.
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
2018 GUIDANCE
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
Full Year 2018
|
|
Revenue
|
|
|
$5,675 to $5,800
|
|
Operational growth
(a)
|
|
|
5% to 7%
|
|
Adjusted cost of sales as a percentage of revenue(b)
|
|
|
Approximately 32%
|
|
Adjusted SG&A expenses(b)
|
|
|
$1,370 to $1,420
|
|
Adjusted R&D expenses(b)
|
|
|
$400 to $420
|
|
Adjusted interest expense and other (income)/deductions(b)
|
|
|
Approximately $190
|
|
Effective tax rate on adjusted income(b)
|
|
|
21% to 22%
|
|
Adjusted diluted EPS(b)
|
|
|
$2.96 to $3.10
|
|
Adjusted net income(b)
|
|
|
$1,450 to $1,520
|
|
Operational growth
(a)(c)
|
|
|
20% to 26%
|
|
Certain significant items(d) and acquisition-related costs
|
|
|
$20 to $40
|
|
|
|
|
|
|
The guidance reflects foreign exchange rates as of early February
2018.
|
|
|
|
|
|
Reconciliations of 2018 reported guidance to 2018 adjusted
guidance follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions of dollars, except per share amounts)
|
|
|
|
Reported
|
|
|
Certain significant
items
(d)
and
acquisition-related
costs
|
|
|
Purchase
accounting
|
|
|
Adjusted
(b)
|
|
Cost of sales as a percentage of revenue
|
|
|
|
~ 32.5%
|
|
|
(0.5%)
|
|
|
|
|
|
~ 32%
|
|
SG&A expenses
|
|
|
|
$1,375 to $1,425
|
|
|
|
|
|
($5)
|
|
|
$1,370 to $1,420
|
|
R&D expenses
|
|
|
|
$400 to $420
|
|
|
|
|
|
|
|
|
$400 to $420
|
|
Interest expense and other (income)/deductions
|
|
|
|
~ $190
|
|
|
|
|
|
|
|
|
~ $190
|
|
Effective tax rate
|
|
|
|
21% to 22%
|
|
|
|
|
|
|
|
|
21% to 22%
|
|
Diluted EPS
|
|
|
|
$2.77 to $2.93
|
|
|
$0.04 to $0.06
|
|
|
$0.13
|
|
|
$2.96 to $3.10
|
|
Net income attributable to Zoetis
|
|
|
|
$1,355 to $1,435
|
|
|
$20 to $30
|
|
|
$65
|
|
|
$1,450 to $1,520
|
|
(a)
|
|
|
Operational growth (a non-GAAP financial measure) 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, and adjusted interest
expense and 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.
|
|
|
|
|
|
|
(c)
|
|
|
We do not provide a reconciliation of forward-looking non-GAAP
adjusted net income operational growth to the most directly
comparable GAAP reported financial measure because we are unable to
calculate with reasonable certainty the foreign exchange impact of
unusual gains and losses, acquisition-related expenses, potential
future asset impairments and other certain significant items,
without unreasonable effort. The foreign exchange impacts of these
items are uncertain, depend on various factors, and could have a
material impact on GAAP reported results for the guidance period.
|
|
|
|
|
|
|
(d)
|
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the supply network strategy.
Excludes potential net gains/losses on sales of assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
891
|
|
|
|
$
|
790
|
|
|
|
13
|
%
|
|
|
2
|
%
|
|
|
11
|
%
|
|
Companion Animal
|
|
|
|
561
|
|
|
|
477
|
|
|
|
18
|
%
|
|
|
2
|
%
|
|
|
16
|
%
|
|
Contract Manufacturing
|
|
|
|
8
|
|
|
|
10
|
|
|
|
(20
|
)%
|
|
|
6
|
%
|
|
|
(26
|
)%
|
|
Total Revenue
|
|
|
|
$
|
1,460
|
|
|
|
$
|
1,277
|
|
|
|
14
|
%
|
|
|
1
|
%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
374
|
|
|
|
$
|
336
|
|
|
|
11
|
%
|
|
|
—
|
%
|
|
|
11
|
%
|
|
Companion Animal
|
|
|
|
338
|
|
|
|
295
|
|
|
|
15
|
%
|
|
|
—
|
%
|
|
|
15
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
712
|
|
|
|
$
|
631
|
|
|
|
13
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
517
|
|
|
|
$
|
454
|
|
|
|
14
|
%
|
|
|
3
|
%
|
|
|
11
|
%
|
|
Companion Animal
|
|
|
|
223
|
|
|
|
182
|
|
|
|
23
|
%
|
|
|
5
|
%
|
|
|
18
|
%
|
|
Total International Revenue
|
|
|
|
$
|
740
|
|
|
|
$
|
636
|
|
|
|
16
|
%
|
|
|
3
|
%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
543
|
|
|
|
$
|
478
|
|
|
|
14
|
%
|
|
|
2
|
%
|
|
|
12
|
%
|
|
Swine
|
|
|
|
166
|
|
|
|
161
|
|
|
|
3
|
%
|
|
|
2
|
%
|
|
|
1
|
%
|
|
Poultry
|
|
|
|
122
|
|
|
|
106
|
|
|
|
15
|
%
|
|
|
—
|
%
|
|
|
15
|
%
|
|
Fish
|
|
|
|
39
|
|
|
|
26
|
|
|
|
50
|
%
|
|
|
6
|
%
|
|
|
44
|
%
|
|
Other
|
|
|
|
21
|
|
|
|
19
|
|
|
|
11
|
%
|
|
|
(1
|
)%
|
|
|
12
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
891
|
|
|
|
$
|
790
|
|
|
|
13
|
%
|
|
|
2
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
47
|
|
|
|
$
|
42
|
|
|
|
12
|
%
|
|
|
3
|
%
|
|
|
9
|
%
|
|
Dogs and Cats
|
|
|
|
514
|
|
|
|
435
|
|
|
|
18
|
%
|
|
|
2
|
%
|
|
|
16
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
561
|
|
|
|
$
|
477
|
|
|
|
18
|
%
|
|
|
2
|
%
|
|
|
16
|
%
|
|
* Calculation not meaningful.
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Zoetis' most recent Annual
Report on Form 10-K.
|
|
|
|
|
|
|
(b)
|
|
|
Operational revenue growth (a non-GAAP financial measure) is defined
as revenue growth excluding the impact of foreign exchange.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
3,037
|
|
|
|
$
|
2,881
|
|
|
|
5
|
%
|
|
|
—
|
%
|
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
2,226
|
|
|
|
1,956
|
|
|
|
14
|
%
|
|
|
—
|
%
|
|
|
14
|
%
|
|
Contract Manufacturing
|
|
|
|
44
|
|
|
|
51
|
|
|
|
(14
|
)%
|
|
|
1
|
%
|
|
|
(15
|
)%
|
|
Total Revenue
|
|
|
|
$
|
5,307
|
|
|
|
$
|
4,888
|
|
|
|
9
|
%
|
|
|
1
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
1,244
|
|
|
|
$
|
1,227
|
|
|
|
1
|
%
|
|
|
—
|
%
|
|
|
1
|
%
|
|
Companion Animal
|
|
|
|
1,376
|
|
|
|
1,220
|
|
|
|
13
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
2,620
|
|
|
|
$
|
2,447
|
|
|
|
7
|
%
|
|
|
—
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
1,793
|
|
|
|
$
|
1,654
|
|
|
|
8
|
%
|
|
|
1
|
%
|
|
|
7
|
%
|
|
Companion Animal
|
|
|
|
850
|
|
|
|
736
|
|
|
|
15
|
%
|
|
|
(1
|
)%
|
|
|
16
|
%
|
|
Total International Revenue
|
|
|
|
$
|
2,643
|
|
|
|
$
|
2,390
|
|
|
|
11
|
%
|
|
|
1
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
1,735
|
|
|
|
$
|
1,653
|
|
|
|
5
|
%
|
|
|
1
|
%
|
|
|
4
|
%
|
|
Swine
|
|
|
|
621
|
|
|
|
602
|
|
|
|
3
|
%
|
|
|
—
|
%
|
|
|
3
|
%
|
|
Poultry
|
|
|
|
479
|
|
|
|
457
|
|
|
|
5
|
%
|
|
|
—
|
%
|
|
|
5
|
%
|
|
Fish
|
|
|
|
118
|
|
|
|
90
|
|
|
|
31
|
%
|
|
|
2
|
%
|
|
|
29
|
%
|
|
Other
|
|
|
|
84
|
|
|
|
79
|
|
|
|
6
|
%
|
|
|
—
|
%
|
|
|
6
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
3,037
|
|
|
|
$
|
2,881
|
|
|
|
5
|
%
|
|
|
—
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
151
|
|
|
|
$
|
150
|
|
|
|
1
|
%
|
|
|
—
|
%
|
|
|
1
|
%
|
|
Dogs and Cats
|
|
|
|
2,075
|
|
|
|
1,806
|
|
|
|
15
|
%
|
|
|
—
|
%
|
|
|
15
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
2,226
|
|
|
|
$
|
1,956
|
|
|
|
14
|
%
|
|
|
—
|
%
|
|
|
14
|
%
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
|
For a description of each segment, see Zoetis' most recent Annual
Report on Form 10-K.
|
|
|
|
|
|
|
(b)
|
|
|
Operational revenue growth (a non-GAAP financial measure) is defined
as revenue growth excluding the impact of foreign exchange.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(a)
|
|
Total International
|
|
|
|
$
|
740
|
|
|
|
$
|
636
|
|
|
|
16
|
%
|
|
|
3
|
%
|
|
|
13
|
%
|
|
Australia
|
|
|
|
42
|
|
|
|
38
|
|
|
|
11
|
%
|
|
|
5
|
%
|
|
|
6
|
%
|
|
Brazil
|
|
|
|
95
|
|
|
|
83
|
|
|
|
14
|
%
|
|
|
1
|
%
|
|
|
13
|
%
|
|
Canada
|
|
|
|
61
|
|
|
|
53
|
|
|
|
15
|
%
|
|
|
6
|
%
|
|
|
9
|
%
|
|
China
|
|
|
|
37
|
|
|
|
32
|
|
|
|
16
|
%
|
|
|
3
|
%
|
|
|
13
|
%
|
|
France
|
|
|
|
36
|
|
|
|
28
|
|
|
|
29
|
%
|
|
|
6
|
%
|
|
|
23
|
%
|
|
Germany
|
|
|
|
41
|
|
|
|
35
|
|
|
|
17
|
%
|
|
|
6
|
%
|
|
|
11
|
%
|
|
Italy
|
|
|
|
24
|
|
|
|
20
|
|
|
|
20
|
%
|
|
|
10
|
%
|
|
|
10
|
%
|
|
Japan
|
|
|
|
37
|
|
|
|
31
|
|
|
|
19
|
%
|
|
|
(8
|
)%
|
|
|
27
|
%
|
|
Mexico
|
|
|
|
26
|
|
|
|
20
|
|
|
|
30
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
|
Spain
|
|
|
|
26
|
|
|
|
20
|
|
|
|
30
|
%
|
|
|
13
|
%
|
|
|
17
|
%
|
|
United Kingdom
|
|
|
|
44
|
|
|
|
39
|
|
|
|
13
|
%
|
|
|
5
|
%
|
|
|
8
|
%
|
|
Other Developed
|
|
|
|
99
|
|
|
|
79
|
|
|
|
25
|
%
|
|
|
3
|
%
|
|
|
22
|
%
|
|
Other Emerging
|
|
|
|
172
|
|
|
|
158
|
|
|
|
9
|
%
|
|
|
1
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(a)
|
|
Total International
|
|
|
|
$
|
2,643
|
|
|
|
$
|
2,390
|
|
|
|
11
|
%
|
|
|
1
|
%
|
|
|
10
|
%
|
|
Australia
|
|
|
|
176
|
|
|
|
157
|
|
|
|
12
|
%
|
|
|
3
|
%
|
|
|
9
|
%
|
|
Brazil
|
|
|
|
300
|
|
|
|
245
|
|
|
|
22
|
%
|
|
|
10
|
%
|
|
|
12
|
%
|
|
Canada
|
|
|
|
184
|
|
|
|
173
|
|
|
|
6
|
%
|
|
|
1
|
%
|
|
|
5
|
%
|
|
China
|
|
|
|
174
|
|
|
|
145
|
|
|
|
20
|
%
|
|
|
(4
|
)%
|
|
|
24
|
%
|
|
France
|
|
|
|
121
|
|
|
|
117
|
|
|
|
3
|
%
|
|
|
—
|
%
|
|
|
3
|
%
|
|
Germany
|
|
|
|
137
|
|
|
|
125
|
|
|
|
10
|
%
|
|
|
1
|
%
|
|
|
9
|
%
|
|
Italy
|
|
|
|
89
|
|
|
|
83
|
|
|
|
7
|
%
|
|
|
1
|
%
|
|
|
6
|
%
|
|
Japan
|
|
|
|
138
|
|
|
|
127
|
|
|
|
9
|
%
|
|
|
(3
|
)%
|
|
|
12
|
%
|
|
Mexico
|
|
|
|
86
|
|
|
|
76
|
|
|
|
13
|
%
|
|
|
(3
|
)%
|
|
|
16
|
%
|
|
Spain
|
|
|
|
93
|
|
|
|
82
|
|
|
|
13
|
%
|
|
|
2
|
%
|
|
|
11
|
%
|
|
United Kingdom
|
|
|
|
149
|
|
|
|
151
|
|
|
|
(1
|
)%
|
|
|
(7
|
)%
|
|
|
6
|
%
|
|
Other Developed
|
|
|
|
339
|
|
|
|
302
|
|
|
|
12
|
%
|
|
|
1
|
%
|
|
|
11
|
%
|
|
Other Emerging
|
|
|
|
657
|
|
|
|
607
|
|
|
|
8
|
%
|
|
|
(1
|
)%
|
|
|
9
|
%
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
(a)
|
|
|
Operational growth (a non-GAAP financial measure) is defined as
growth excluding the impact of foreign exchange.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
SEGMENT(a) EARNINGS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
712
|
|
|
|
$
|
631
|
|
|
|
13
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
Cost of sales
|
|
|
|
153
|
|
|
|
149
|
|
|
|
3
|
%
|
|
|
—
|
%
|
|
|
3
|
%
|
|
Gross profit
|
|
|
|
559
|
|
|
|
482
|
|
|
|
16
|
%
|
|
|
—
|
%
|
|
|
16
|
%
|
|
Gross margin
|
|
|
|
78.5
|
%
|
|
|
76.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
109
|
|
|
|
95
|
|
|
|
15
|
%
|
|
|
—
|
%
|
|
|
15
|
%
|
|
Other (income)/deductions
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
|
*
|
|
|
—
|
%
|
|
|
|
*
|
|
U.S. Earnings
|
|
|
|
$
|
453
|
|
|
|
$
|
387
|
|
|
|
17
|
%
|
|
|
—
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
740
|
|
|
|
$
|
636
|
|
|
|
16
|
%
|
|
|
3
|
%
|
|
|
13
|
%
|
|
Cost of sales
|
|
|
|
244
|
|
|
|
235
|
|
|
|
4
|
%
|
|
|
3
|
%
|
|
|
1
|
%
|
|
Gross profit
|
|
|
|
496
|
|
|
|
401
|
|
|
|
24
|
%
|
|
|
4
|
%
|
|
|
20
|
%
|
|
Gross margin
|
|
|
|
67.0
|
%
|
|
|
63.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
143
|
|
|
|
140
|
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
(1
|
)%
|
|
Other (income)/deductions
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
(100
|
)%
|
|
|
(30
|
)%
|
|
|
(70
|
)%
|
|
International Earnings
|
|
|
|
$
|
353
|
|
|
|
$
|
262
|
|
|
|
35
|
%
|
|
|
4
|
%
|
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
$
|
806
|
|
|
|
$
|
649
|
|
|
|
24
|
%
|
|
|
1
|
%
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(c)
|
|
|
|
(89
|
)
|
|
|
(90
|
)
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(d)
|
|
|
|
(188
|
)
|
|
|
(185
|
)
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(e)
|
|
|
|
(22
|
)
|
|
|
(20
|
)
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
Acquisition-related costs(f)
|
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
Certain significant items(g)
|
|
|
|
(15
|
)
|
|
|
(58
|
)
|
|
|
(74
|
)%
|
|
|
|
|
|
|
|
|
Other unallocated(h)
|
|
|
|
(60
|
)
|
|
|
(64
|
)
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
Total Earnings
(i)
|
|
|
|
$
|
430
|
|
|
|
$
|
231
|
|
|
|
86
|
%
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Zoetis' most recent Annual
Report on Form 10-K.
|
|
|
|
|
|
|
(b)
|
|
|
Operational growth (a non-GAAP financial measure) is defined as
growth excluding the impact of foreign exchange.
|
|
|
|
|
|
|
(c)
|
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization as well as our
contract manufacturing business.
|
|
|
|
|
|
|
(d)
|
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
|
|
|
(e)
|
|
|
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.
|
|
|
|
|
|
|
(f)
|
|
|
Acquisition-related costs can include costs associated with
acquiring and integrating newly acquired businesses, such as
transaction costs and integration costs.
|
|
|
|
|
|
|
(g)
|
|
|
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.
|
|
|
|
|
|
|
(h)
|
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
|
|
|
(i)
|
|
|
Defined as income before provision for taxes on income.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
|
SEGMENT(a) EARNINGS
|
|
|
(UNAUDITED)
|
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
% Change
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
Total
|
|
|
Foreign Exchange
|
|
|
Operational(b)
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
2,620
|
|
|
|
$
|
2,447
|
|
|
|
7
|
%
|
|
|
—
|
%
|
|
|
7
|
%
|
|
Cost of sales
|
|
|
|
565
|
|
|
|
551
|
|
|
|
3
|
%
|
|
|
—
|
%
|
|
|
3
|
%
|
|
Gross profit
|
|
|
|
2,055
|
|
|
|
1,896
|
|
|
|
8
|
%
|
|
|
—
|
%
|
|
|
8
|
%
|
|
Gross margin
|
|
|
|
78.4
|
%
|
|
|
77.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
421
|
|
|
|
388
|
|
|
|
9
|
%
|
|
|
—
|
%
|
|
|
9
|
%
|
|
Other (income)/deductions
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
|
*
|
|
|
—
|
%
|
|
|
|
*
|
|
U.S. Earnings
|
|
|
|
$
|
1,637
|
|
|
|
$
|
1,508
|
|
|
|
9
|
%
|
|
|
—
|
%
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
2,643
|
|
|
|
$
|
2,390
|
|
|
|
11
|
%
|
|
|
1
|
%
|
|
|
10
|
%
|
|
Cost of sales
|
|
|
|
889
|
|
|
|
833
|
|
|
|
7
|
%
|
|
|
1
|
%
|
|
|
6
|
%
|
|
Gross profit
|
|
|
|
1,754
|
|
|
|
1,557
|
|
|
|
13
|
%
|
|
|
1
|
%
|
|
|
12
|
%
|
|
Gross margin
|
|
|
|
66.4
|
%
|
|
|
65.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
515
|
|
|
|
501
|
|
|
|
3
|
%
|
|
|
1
|
%
|
|
|
2
|
%
|
|
Other (income)/deductions
|
|
|
|
(1
|
)
|
|
|
2
|
|
|
|
|
*
|
|
|
|
*
|
|
|
|
*
|
|
International Earnings
|
|
|
|
$
|
1,240
|
|
|
|
$
|
1,054
|
|
|
|
18
|
%
|
|
|
1
|
%
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
$
|
2,877
|
|
|
|
$
|
2,562
|
|
|
|
12
|
%
|
|
|
—
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(c)
|
|
|
|
(313
|
)
|
|
|
(309
|
)
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(d)
|
|
|
|
(625
|
)
|
|
|
(684
|
)
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(e)
|
|
|
|
(88
|
)
|
|
|
(99
|
)
|
|
|
(11
|
)%
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs(f)
|
|
|
|
(10
|
)
|
|
|
(4
|
)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Certain significant items(g)
|
|
|
|
(25
|
)
|
|
|
(57
|
)
|
|
|
(56
|
)%
|
|
|
|
|
|
|
|
|
|
Other unallocated(h)
|
|
|
|
(291
|
)
|
|
|
(181
|
)
|
|
|
61
|
%
|
|
|
|
|
|
|
|
|
|
Total Earnings
(i)
|
|
|
|
$
|
1,525
|
|
|
|
$
|
1,228
|
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
|
|
|
|
|
|
|
(a)
|
|
|
For a description of each segment, see Zoetis' most recent Annual
Report on Form 10-K.
|
|
|
|
|
|
|
(b)
|
|
|
Operational growth (a non-GAAP financial measure) is defined as
growth excluding the impact of foreign exchange.
|
|
|
|
|
|
|
(c)
|
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization as well as our
contract manufacturing business.
|
|
|
|
|
|
|
(d)
|
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
|
|
|
(e)
|
|
|
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.
|
|
|
|
|
|
|
(f)
|
|
|
Acquisition-related costs can include costs associated with
acquiring and integrating newly acquired businesses, such as
transaction costs and integration costs.
|
|
|
|
|
|
|
(g)
|
|
|
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.
|
|
|
|
|
|
|
(h)
|
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
|
|
|
(i)
|
|
|
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
or
Elinore White, 1-973-443-2835 (o)
elinore.y.white@zoetis.com
or
Investors:
Steve Frank, 1-973-822-7141 (o)
steve.frank@zoetis.com