Zoetis Inc. (NYSE:ZTS) today reported its financial results for the
fourth quarter and full year 2014 and updated its guidance for full year
2015.
The company reported revenue of $1.3 billion for the fourth quarter of
2014, an increase of 5% from the fourth quarter of 2013; revenue
reflected an operational2 increase of 9%, excluding
the impact of foreign currency.
Net income for the fourth quarter of 2014 was $126 million, or $0.25 per
diluted share, an increase of 20% and 19% respectively, compared to the
fourth quarter of 2013. Adjusted net income1 for the fourth
quarter of 2014 was $203 million, or $0.40 per diluted share, an
increase of 13% and 11%, respectively. Adjusted net income for the
fourth quarter of 2014 excludes the net impact of $77 million, or $0.15
per diluted share, for purchase accounting adjustments,
acquisition-related costs and certain significant items. On an
operational basis, adjusted net income for the fourth quarter of 2014
increased 12%, with foreign currency having a positive impact of 1
percentage point. In the fourth quarter, the company benefited from a
lower than expected tax rate primarily due to the resolution of prior
tax matters and the extension of the R&D tax credit; operational,
adjusted pre-tax earnings for the fourth quarter declined 1%.
For full year 2014, the company reported revenue of $4.8 billion, an
increase of 5% from the full year 2013. Revenue reflected an operational
increase of 7%, with foreign currency having a negative
impact of 2 percentage points.
Net income for the full year 2014 was $583 million, or $1.16 per diluted
share, an increase of 16% and 15%, respectively, compared to the full
year 2013. Adjusted net income for the full year 2014 was $790 million,
or $1.57 per diluted share, an increase of 11%, compared to the adjusted
full year 2013. Adjusted net income for the full year 2014 excludes the
net impact of $207 million, or $0.41 per diluted share, for purchase
accounting adjustments, acquisition-related costs and certain
significant items. On an operational basis, adjusted net income for the
full year 2014 increased 13%, with foreign currency having a negative
impact of 2 percentage points. In the fourth quarter, the company
benefited from a lower than expected tax rate primarily due to the
resolution of prior tax matters and the extension of the R&D tax credit;
operational, adjusted pre-tax earnings for the full year increased 10%.
EXECUTIVE COMMENTARY
“We completed a very successful year in 2014 as we continue to create
value for shareholders, delivering operational growth of 7% in revenue
and 13% in adjusted net income for the full year,” said Zoetis Chief
Executive Officer Juan Ramón Alaix. “We generated growth across all four
of our regional segments for the year based on our market-leading
franchises and the continued adoption of our newer products. Our 9%
operational growth in our livestock products for the year demonstrated
very favorable market conditions for meat and dairy producers, and the
value our premium medicines and vaccines bring to protecting animals and
improving productivity.”
“On the companion animal side, we grew 4% operationally for the year,
mainly driven by the introduction of APOQUEL and growth in emerging
markets. This growth was tempered by additional competition in certain
key product categories. We expect to see stronger performance in this
area in the future as we significantly increase the supply of APOQUEL in
April 2015 and continue our investment in discovering, acquiring and
launching new products for companion animals.”
“The people of Zoetis take great pride and ownership in serving our
customers and delivering results for our shareholders,” concluded Alaix.
“As we enter the final stages of our stand-up, we will build on our
leadership positions in animal health and continue to improve the
efficiency and value of our business model.”
“In 2014, we continued to deliver on our total value proposition for
shareholders – growing revenue faster than the market, growing adjusted
net income faster than sales, and returning excess capital to our
shareholders,” said Paul Herendeen, Executive Vice President and Chief
Financial Officer of Zoetis. “We continued to see strong underlying
growth in our business in the fourth quarter, and we see good sales
momentum as we head into 2015, despite ongoing currency headwinds.”
“We are updating our full year guidance for 2015 to reflect foreign
exchange rates as of late January, the closing of the Abbott Animal
Health transaction, and other changes in our operating assumptions for
2015,” said Herendeen. “There continue to be opportunities to grow our
revenue and improve our margins over the next few years as we finalize
our manufacturing strategy and focus on continuous improvement in our
operations.”
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its business across four regional operating
segments: the United States (U.S.); Europe/Africa/Middle East (EuAfME);
Canada/Latin America (CLAR); and Asia/Pacific (APAC). Within each of
these regional segments, the company delivers a diverse portfolio of
products for livestock and companion animals tailored to local trends
and customer needs.
In the fourth quarter of 2014:
-
Revenue in the U.S. was $589 million, an increase of 14% compared to
the fourth quarter of 2013. Sales of livestock products grew 19%, led
by strong anti-infective sales in cattle. Sales of swine products also
saw notable growth as the result of new product introductions. Sales
of companion animal products grew 7%, driven by APOQUEL® and other key
brands such as CERENIA® and CONVENIA®. Growth was offset by
competition to our RIMADYL® franchise and competitive pressure in
vaccines and parasiticides.
-
Revenue in EuAfME was $294 million, a decrease of 1% on an operational
basis compared to the fourth quarter of 2013. Sales of livestock
products declined 3% operationally as gains in swine products were
offset by declines in poultry and cattle. Growth in livestock product
sales in southern Europe and Germany were offset primarily by sales
declines in the UK and France. Overall, emerging markets saw strong
livestock product sales, partially offset by a decline in sales in
Russia. Companion animal products generated growth of 2% operationally
due to strong APOQUEL sales in Germany and the UK, as well as
continued growth across the small animal portfolio of medicines. This
growth was tempered by the competitive environment for small animal
vaccines in developed markets.
-
Revenue in CLAR was $239 million, an increase of 16% operationally
compared to the fourth quarter of 2013. Overall for the segment, sales
of livestock products grew 15% operationally and sales of companion
animal products grew 18% operationally. The CLAR segment results were
largely driven by growth in Canada, Brazil and Venezuela. Livestock
products were driven by cattle sales in Canada as producers are taking
advantage of strong profitability in the industry. Swine
anti-infective sales also saw positive growth, primarily in Canada and
Brazil. Sales of companion animal products benefited from growth in
Venezuela and Brazil across all therapeutic areas.
-
Revenue in APAC was $187 million, an increase of 4% operationally
compared to the fourth quarter of 2013. Sales of livestock products
grew 8% operationally, driven primarily by the growth of swine
products in Southeast Asia, and sales of cattle and sheep products in
Australia, including the launch of a new parasiticide. Emerging
markets performed well across the board, including China, despite soft
market conditions in poultry and swine. Sales of companion animal
products declined 6% operationally, primarily due to the termination
of a distributor agreement in Japan and increased competition in
parasiticides.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through product lifecycle development, 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:
-
Expanding the portfolio’s reach – As part
of developing the lifecycle of its products, Zoetis continues to
receive approvals that help expand its key products into new markets
or with new indications and formulations. In the fourth quarter, for
example:
-
The company received approval of new label claims in the U.S. for DRAXXIN®
25, an injectable anti-infective, which can now be used to
treat bovine respiratory disease in small calves. DRAXXIN 25
contains a lower concentration of tulathromycin than standard
DRAXXIN, making it easier to dose small calves. DRAXXIN 25 was
first approved in the U.S. in November 2013 for treatment of swine
respiratory disease (SRD) in nursery pigs by providing a lower
concentration and making it optimized for use in small pigs to
treat and control SRD.
-
The company also received approval of additional label claims for
its FOSTERA® PRRS vaccine for swine, with reproductive
protection licensed in the U.S. FOSTERA PRRS is now licensed for
whole herd protection against both the respiratory and
reproductive forms of the disease caused by porcine reproductive
and respiratory syndrome (PRRS) virus.
-
In the fourth quarter in China, Zoetis launched SUVAXYN® MH-One,
a vaccine for swine that was first approved in April 2014, to help
in the prevention of Mycoplasma hyopneumoniae infections.
This product adds to the company’s broad range of vaccines in the
world’s largest market for swine production.
-
Strengthening our portfolio with business
development – Zoetis recently completed the acquisition of the
assets of Abbott Animal Health, a transaction that was announced in
the fourth quarter. The products from Abbott focus on the veterinary
surgical suite and strengthen Zoetis’ companion animal product
portfolio, while expanding its diagnostics business. Zoetis continues
to look at acquisitions as an important way to use capital to create
long-term value for its shareholders and build more customized
solutions for customers.
-
Advancing standards of care – Zoetis
continues to be viewed as a partner of choice in the industry,
advancing standards of animal care by forming research partnerships in
areas like precision farming. In the fourth quarter, Zoetis announced
its participation in a project with the UK Research Consortium to
develop visual imaging methods and digital technologies to help
improve the health and wellness of pig herds and enhance production
efficiency.
FINANCIAL GUIDANCE AND COMMENTARY
Zoetis' guidance for full year 2015 reflects the company's confidence in
the diversity of its portfolio, the strength of its business model, and
its view of the evolving market conditions for animal health products
this year.
Zoetis originally provided its financial guidance for full year 2015 in
November 2014, and has updated guidance today to reflect foreign
exchange rates as of late January, the recent completion of its
acquisition of the assets of Abbott Animal Health, and other changes in
its operating assumptions for 2015:
-
Revenue of between $4.8 billion to $4.9 billion
-
Reported diluted EPS for the full year of between $1.32 to $1.39 per
share
-
Adjusted diluted EPS for the full year between $1.61 to $1.68 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. (EST) today,
during which company executives will review fourth quarter and full year
financial results, discuss 2015 financial guidance, and respond to
questions from financial analysts. Investors and the public may access
the live webcast by visiting the Zoetis website at http://www.zoetis.com/events-and-presentations.
A replay of the webcast will be archived and made available on Feb. 11,
2015.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2014, the company generated annual revenue of $4.8 billion.
With approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who raise
and care for farm and companion animals with sales of its products in
120 countries. For more information, visit www.zoetis.com.
1 Adjusted net income and adjusted diluted earnings
per share (non-GAAP financial measures) are defined as reported net
income attributable to Zoetis and reported diluted earnings per share,
excluding purchase accounting adjustments, acquisition-related costs and
certain significant items.
2 Operational revenue growth is defined as revenue
growth excluding the impact of foreign exchange.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2013, 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.
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME(a)
(UNAUDITED)
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
Full Year
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
|
Revenue
|
|
$
|
1,320
|
|
|
$
|
1,254
|
|
|
5
|
|
|
$
|
4,785
|
|
|
$
|
4,561
|
|
|
5
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
491
|
|
|
466
|
|
|
5
|
|
|
1,717
|
|
|
1,669
|
|
|
3
|
|
|
Selling, general and administrative expenses(b)
|
|
497
|
|
|
458
|
|
|
9
|
|
|
1,643
|
|
|
1,613
|
|
|
2
|
|
|
Research and development expenses(b)
|
|
124
|
|
|
121
|
|
|
2
|
|
|
396
|
|
|
399
|
|
|
(1
|
)
|
|
Amortization of intangible assets(c)
|
|
14
|
|
|
15
|
|
|
(7
|
)
|
|
60
|
|
|
60
|
|
|
—
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
15
|
|
|
36
|
|
|
(58
|
)
|
|
25
|
|
|
26
|
|
|
(4
|
)
|
|
Interest expense
|
|
30
|
|
|
30
|
|
|
—
|
|
|
117
|
|
|
113
|
|
|
4
|
|
|
Other (income)/deductions–net
|
|
(6
|
)
|
|
2
|
|
|
*
|
|
7
|
|
|
(9
|
)
|
|
*
|
|
Income before provision for taxes on income
|
|
155
|
|
|
126
|
|
|
23
|
|
|
820
|
|
|
690
|
|
|
19
|
|
|
Provision for taxes on income
|
|
29
|
|
|
22
|
|
|
32
|
|
|
233
|
|
|
187
|
|
|
25
|
|
|
Net income before allocation to noncontrolling interests
|
|
126
|
|
|
104
|
|
|
21
|
|
|
587
|
|
|
503
|
|
|
17
|
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
—
|
|
|
(1
|
)
|
|
*
|
|
4
|
|
|
(1
|
)
|
|
*
|
|
Net income attributable to Zoetis
|
|
$
|
126
|
|
|
$
|
105
|
|
|
20
|
|
|
$
|
583
|
|
|
$
|
504
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
$
|
0.25
|
|
|
$
|
0.21
|
|
|
19
|
|
|
$
|
1.16
|
|
|
$
|
1.01
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
$
|
0.25
|
|
|
$
|
0.21
|
|
|
19
|
|
|
$
|
1.16
|
|
|
$
|
1.01
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
501,560
|
|
|
500,007
|
|
|
|
|
501,055
|
|
|
500,002
|
|
|
|
|
Diluted
|
|
503,269
|
|
|
500,586
|
|
|
|
|
502,025
|
|
|
500,317
|
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
|
|
(a)
|
|
The consolidated and combined statements of income present the three
and twelve months ended December 31, 2014 and 2013. Subsidiaries
operating outside the United States are included for the three and
twelve months ended November 30, 2014 and 2013.
|
|
|
|
|
|
(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 December 31, 2014
|
|
|
|
GAAP
Reported(1)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(2)
|
|
Certain
Significant
Items(3)
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
$
|
1,320
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,320
|
|
|
Cost of sales(b)
|
|
491
|
|
|
(1
|
)
|
|
—
|
|
|
(19
|
)
|
|
471
|
|
|
Gross profit
|
|
829
|
|
|
1
|
|
|
—
|
|
|
19
|
|
|
849
|
|
|
Selling, general and administrative expenses(b)
|
|
497
|
|
|
(1
|
)
|
|
—
|
|
|
(46
|
)
|
|
450
|
|
|
Research and development expenses(b)
|
|
124
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
122
|
|
|
Amortization of intangible assets(c)
|
|
14
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
15
|
|
|
—
|
|
|
(3
|
)
|
|
(12
|
)
|
|
—
|
|
|
Interest expense
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
Other (income)/deductions–net
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
Income before provision for taxes on income
|
|
155
|
|
|
13
|
|
|
3
|
|
|
78
|
|
|
249
|
|
|
Provision for taxes on income
|
|
29
|
|
|
4
|
|
|
1
|
|
|
12
|
|
|
46
|
|
|
Net income attributable to Zoetis
|
|
126
|
|
|
9
|
|
|
2
|
|
|
66
|
|
|
203
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.25
|
|
|
0.02
|
|
|
—
|
|
|
0.13
|
|
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, 2013
|
|
|
|
GAAP
Reported(1)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(2)
|
|
Certain
Significant
Items(3)
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
$
|
1,254
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,254
|
|
|
Cost of sales(b)
|
|
466
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
444
|
|
|
Gross profit
|
|
788
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
810
|
|
|
Selling, general and administrative expenses(b)
|
|
458
|
|
|
1
|
|
|
—
|
|
|
(53
|
)
|
|
406
|
|
|
Research and development expenses(b)
|
|
121
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
119
|
|
|
Amortization of intangible assets(c)
|
|
15
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
36
|
|
|
—
|
|
|
(5
|
)
|
|
(31
|
)
|
|
—
|
|
|
Interest expense
|
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
Other (income)/deductions–net
|
|
2
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
Income before provision for taxes on income
|
|
126
|
|
|
11
|
|
|
5
|
|
|
110
|
|
|
252
|
|
|
Provision for taxes on income
|
|
22
|
|
|
4
|
|
|
2
|
|
|
45
|
|
|
73
|
|
|
Income from continuing operations
|
|
104
|
|
|
7
|
|
|
3
|
|
|
65
|
|
|
179
|
|
|
Net loss attributable to noncontrolling interests
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net income attributable to Zoetis
|
|
105
|
|
|
7
|
|
|
3
|
|
|
65
|
|
|
180
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
0.21
|
|
|
0.01
|
|
|
0.01
|
|
|
0.13
|
|
|
0.36
|
|
|
|
|
|
|
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, 2014
|
|
|
|
GAAP
Reported(1)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(2)
|
|
Certain
Significant
Items(3)
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
$
|
4,785
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,785
|
|
|
Cost of sales(b)
|
|
1,717
|
|
|
(4
|
)
|
|
—
|
|
|
(33
|
)
|
|
1,680
|
|
|
Gross profit
|
|
3,068
|
|
|
4
|
|
|
—
|
|
|
33
|
|
|
3,105
|
|
|
Selling, general and administrative expenses(b)
|
|
1,643
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
1,507
|
|
|
Research and development expenses(b)
|
|
396
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
393
|
|
|
Amortization of intangible assets(c)
|
|
60
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
15
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
25
|
|
|
—
|
|
|
(8
|
)
|
|
(17
|
)
|
|
—
|
|
|
Interest expense
|
|
117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117
|
|
|
Other (income)/deductions–net
|
|
7
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(11
|
)
|
|
Income before provision for taxes on income
|
|
820
|
|
|
51
|
|
|
8
|
|
|
205
|
|
|
1,084
|
|
|
Provision for taxes on income
|
|
233
|
|
|
17
|
|
|
3
|
|
|
37
|
|
|
290
|
|
|
Income from continuing operations
|
|
587
|
|
|
34
|
|
|
5
|
|
|
168
|
|
|
794
|
|
|
Net income attributable to noncontrolling interests
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Net income attributable to Zoetis
|
|
583
|
|
|
34
|
|
|
5
|
|
|
168
|
|
|
790
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
1.16
|
|
|
0.07
|
|
|
0.01
|
|
|
0.33
|
|
|
1.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2013
|
|
|
|
GAAP
Reported(1)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(2)
|
|
Certain
Significant
Items(3)
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
$
|
4,561
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,561
|
|
|
Cost of sales(b)
|
|
1,669
|
|
|
(2
|
)
|
|
—
|
|
|
(42
|
)
|
|
1,625
|
|
|
Gross profit
|
|
2,892
|
|
|
2
|
|
|
—
|
|
|
42
|
|
|
2,936
|
|
|
Selling, general and administrative expenses(b)
|
|
1,613
|
|
|
1
|
|
|
—
|
|
|
(188
|
)
|
|
1,426
|
|
|
Research and development expenses(b)
|
|
399
|
|
|
(1
|
)
|
|
—
|
|
|
(7
|
)
|
|
391
|
|
|
Amortization of intangible assets(c)
|
|
60
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
14
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
26
|
|
|
—
|
|
|
(22
|
)
|
|
(4
|
)
|
|
—
|
|
|
Interest expense
|
|
113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
Other (income)/deductions–net
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
(8
|
)
|
|
Income before provision for taxes on income
|
|
690
|
|
|
48
|
|
|
22
|
|
|
240
|
|
|
1,000
|
|
|
Provision for taxes on income
|
|
187
|
|
|
16
|
|
|
8
|
|
|
81
|
|
|
292
|
|
|
Income from continuing operations
|
|
503
|
|
|
32
|
|
|
14
|
|
|
159
|
|
|
708
|
|
|
Net loss attributable to noncontrolling interests
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
Net income attributable to Zoetis
|
|
504
|
|
|
32
|
|
|
14
|
|
|
159
|
|
|
709
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
1.01
|
|
|
0.06
|
|
|
0.03
|
|
|
0.32
|
|
|
1.42
|
|
|
|
|
(a)
|
|
Non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS. Despite the importance of these measures to management in goal
setting and performance measurement, non-GAAP adjusted net income
and its components and non-GAAP adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, non-GAAP
adjusted net income and its components and non-GAAP adjusted diluted
EPS (unlike U.S. GAAP net income and its components and diluted EPS)
may not be comparable to the calculation of similar measures of
other companies. Non-GAAP adjusted net income and its components and
non-GAAP adjusted diluted EPS are presented solely to permit
investors to more fully understand how management assesses
performance.
|
|
|
|
|
|
(b)
|
|
Exclusive of amortization of intangible assets, except as discussed
in footnote (c) below.
|
|
|
|
|
|
(c)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in Cost
of sales, Selling, general and administrative expenses or Research
and development expenses, as appropriate.
|
|
|
|
|
|
(d)
|
|
EPS amounts may not add due to rounding.
|
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1), (2) and (3).
Certain amounts may reflect rounding adjustments.
|
|
|
ZOETIS INC.
|
|
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION
|
|
CERTAIN LINE ITEMS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
(1) The consolidated and combined statements of income present the three
and twelve months ended December 31, 2014 and 2013. Subsidiaries
operating outside the United States are included for the three and
twelve months ended November 30, 2014 and 2013.
(2) Acquisition-related costs include the following:
|
|
|
|
Fourth Quarter
|
|
Full Year
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Integration costs(a)
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
22
|
|
Restructuring charges(b)
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
Total acquisition-related costs—pre-tax
|
|
|
3
|
|
|
5
|
|
|
8
|
|
|
22
|
|
Income taxes(c)
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
8
|
|
Total acquisition-related costs—net of tax
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
|
|
|
(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. All of these costs are included in Restructuring
charges and certain acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Restructuring charges are associated with employees, assets and
activities that will not continue with the company. All of these
costs are included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
|
|
(c)
|
|
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.
|
|
|
|
|
(3) Certain significant items include the following:
|
|
|
|
Fourth Quarter
|
|
Full Year
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
Restructuring charges(a)
|
|
|
$
|
13
|
|
|
$
|
7
|
|
|
$
|
17
|
|
|
$
|
(20
|
)
|
|
Implementation costs and additional depreciation—asset restructuring(b)
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
8
|
|
|
Certain asset impairment charges(c)
|
|
|
—
|
|
|
19
|
|
|
6
|
|
|
20
|
|
|
Net gain on sale of assets(d)
|
|
|
(2
|
)
|
|
—
|
|
|
(5
|
)
|
|
(6
|
)
|
|
Stand-up costs(e)
|
|
|
62
|
|
|
61
|
|
|
168
|
|
|
206
|
|
|
Inventory and intercompany write-offs(f)
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
24
|
|
|
Other(g)
|
|
|
5
|
|
|
1
|
|
|
18
|
|
|
8
|
|
|
Total certain significant items—pre-tax
|
|
|
78
|
|
|
110
|
|
|
205
|
|
|
240
|
|
|
Income taxes(h)
|
|
|
12
|
|
|
45
|
|
|
37
|
|
|
81
|
|
|
Total certain significant items—net of tax
|
|
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
168
|
|
|
$
|
159
|
|
|
|
|
|
|
(a)
|
|
Represents charges incurred for restructuring and
cost-reduction/productivity initiatives. For the three and twelve
months ended December 31, 2014, represents employee severance
costs in Europe and our global manufacturing operations. For the
twelve months ended December 31, 2013, includes a decrease in
employee termination expenses relating to the reversal of a
previously established termination reserve related to our
operations in Europe. Included in Restructuring charges and
certain acquisition-related costs.
|
|
|
|
|
|
(b)
|
|
Represents the impact of changes in the estimated lives of assets
involved in restructuring actions and cost-reduction/productivity
initiatives. For the twelve months ended December 31, 2014,
included in Research and development expenses. For the
three months ended December 31, 2013, included in Restructuring
charges and certain acquisition-related costs. For the twelve
months ended December 31, 2013, included in Cost of sales
($1 million), Selling, general and administrative expenses ($2
million) and Restructuring charges and certain
acquisition-related costs ($5 million).
|
|
|
|
|
|
(c)
|
|
For the twelve months ended December 31, 2014, represents an
impairment charge related to an IPR&D project acquired with the
FDAH acquisition in 2009 and is included in Other
(income)/deductions—net. For the three months ended December
31, 2013, primarily represents charges related to restructuring
initiatives and is included in Restructuring charges and
certain acquisition-related costs. For the twelve months ended
December 31, 2013, primarily represents charges related to
restructuring initiatives and is included in Restructuring
charges and certain acquisition-related costs ($19 million)
and Other (income)/deductions—net ($1 million).
|
|
|
|
|
|
(d)
|
|
For the three months ended December 31, 2014, represents the net
gain on the government-mandated sale of certain product rights in
Argentina that were acquired with the FDAH acquisition in 2009 and
is included in Other (income)/deductions—net. For the
twelve months ended December 31, 2014, primarily represents the
Zoetis portion of a net gain on the sale of land by our Taiwan
joint venture ($3 million) and the net gain on the
government-mandated sale of certain product rights in Argentina
that were acquired with the FDAH acquisition in 2009 ($2 million),
and is included in Other (income)/deductions—net. For the
twelve months ended December 31, 2013, represents the net gain on
the government-mandated sale of certain product rights in Brazil
that were acquired with the FDAH acquisition in 2009, and is
included in Other (income)/deductions—net.
|
|
|
|
|
|
(e)
|
|
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. For the three months ended December 31, 2014, included in Cost
of sales ($18 million), Selling, general and administrative
expenses ($41 million), and Other (income)/deductions—net
($3 million). For the twelve months ended December 31, 2014,
included in Cost of sales ($32 million), Selling,
general and administrative expenses ($131 million), and Other
(income)/deductions—net ($5 million). For the three months
ended December 31, 2013, included in Cost of sales ($10
million), Selling, general and administrative expenses ($48
million), Research and development expenses ($2 million)
and Other (income)/deductions—net ($1 million). For the
twelve months ended December 31, 2013, included in Cost of sales
($21 million), Selling, general and administrative expenses
($177 million), Research and development expenses ($7
million) and Other (income)/deductions—net ($1 million)
|
|
|
|
|
|
(f)
|
|
For the three months ended December 31, 2013, included in Cost
of sales ($12 million) and Selling, general and
administrative expenses ($5 million). For the twelve months
ended December 31, 2013, included in Cost of sales ($19
million) and Selling, general and administrative expenses
($5 million).
|
|
|
|
|
|
(g)
|
|
For the three months ended December 31, 2014, represents charges
due to unusual investor-related activities. For the twelve months
ended December 31, 2014, primarily includes a charge associated
with a commercial settlement in Mexico ($13 million), partially
offset by the insurance recovery ($1 million income), charges due
to unusual investor-related activities ($5 million), a pension
plan settlement charge related to the divestiture of a
manufacturing plant ($4 million), and an insurance recovery of
other litigation related charge ($2 million income). For the
twelve months ended December 31, 2013, primarily represents
litigation-related charges ($5 million) and charges related to
transitional manufacturing purchase agreements associated with
divestitures ($1 million).
|
|
|
|
|
|
(h)
|
|
Included in Provision for taxes on income. Income taxes
include the tax effect of the associated pre-tax amounts,
calculated by determining the jurisdictional location of the
pre-tax amounts and applying that jurisdiction's applicable tax
rate.
|
|
|
|
|
|
ZOETIS INC.
ADJUSTED SELECTED COSTS AND EXPENSES(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
% Change
|
|
|
|
|
Fourth Quarter
|
|
(Favorable)/Unfavorable
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
$
|
471
|
|
|
$
|
444
|
|
|
6
|
%
|
|
|
(6)%
|
|
12%
|
|
As a percent of revenue
|
|
|
35.7
|
%
|
|
35.4
|
%
|
|
NA
|
|
|
NA
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
450
|
|
|
406
|
|
|
11
|
%
|
|
|
(3)%
|
|
14%
|
|
Adjusted R&D expenses
|
|
|
122
|
|
|
119
|
|
|
3
|
%
|
|
|
(1)%
|
|
4%
|
|
Adjusted net income attributable to Zoetis
|
|
|
203
|
|
|
180
|
|
|
13
|
%
|
|
|
1%
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
Full Year
|
|
(Favorable)/Unfavorable
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
$
|
1,680
|
|
|
$
|
1,625
|
|
|
3
|
%
|
|
|
(4)%
|
|
7%
|
|
As a percent of revenue
|
|
|
35.1
|
%
|
|
35.6
|
%
|
|
NA
|
|
|
NA
|
|
NA
|
|
Adjusted SG&A expenses
|
|
|
1,507
|
|
|
1,426
|
|
|
6
|
%
|
|
|
(1)%
|
|
7%
|
|
Adjusted R&D expenses
|
|
|
393
|
|
|
391
|
|
|
1
|
%
|
|
|
—%
|
|
1%
|
|
Adjusted net income attributable to Zoetis
|
|
|
790
|
|
|
709
|
|
|
11
|
%
|
|
|
(2)%
|
|
13%
|
|
|
(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, 2014 and 2013 are provided in
the materials accompanying this report. These adjusted income statement
line item measures are not, and should not be viewed as, substitutes for
the corresponding U.S. GAAP line items.
|
ZOETIS INC.
2015 GUIDANCE
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
As provided on
Investor Day on
November 18, 2014
|
|
Foreign
Exchange(a)
|
|
Other
|
|
Abbott(b)
|
|
Updated
Full Year 2015
|
|
Revenue
|
|
$4,850 to $4,950
|
|
($125)
|
|
|
|
$75
|
|
$4,800 to $4,900
|
|
Operational growth
|
|
6.5% to 8.5%
|
|
|
|
|
|
|
|
6.5% to 8.5%
|
|
Adjusted cost of sales as a percentage of revenue(c)
|
|
Approximately 35.5%
|
|
|
|
|
|
0.5%
|
|
35.5% to 36.0%
|
|
Adjusted SG&A expenses(c)
|
|
$1,470 to $1,520
|
|
($35)
|
|
($35)
|
|
$20
|
|
$1,420 to $1,470
|
|
Adjusted R&D expenses(c)
|
|
$385 to $405
|
|
($5)
|
|
|
|
$5
|
|
$385 to $405
|
|
Adjusted interest expense and other (income)/deductions(c)
|
|
Approximately $110
|
|
|
|
|
|
|
|
Approximately $110
|
|
Effective tax rate on adjusted income(c)
|
|
Approximately 29%
|
|
|
|
|
|
|
|
Approximately 29%
|
|
Adjusted diluted EPS(c)
|
|
$1.61 to $1.68
|
|
($0.06)
|
|
$0.05
|
|
$0.01
|
|
$1.61 to $1.68
|
|
Adjusted net income(c)
|
|
$810 to $845
|
|
($30)
|
|
$25
|
|
$5
|
|
$810 to $845
|
|
Operational growth
|
|
12% to 16%
|
|
|
|
|
|
|
|
11% to 16%
|
|
Certain significant items(d) and acquisition-related costs
|
|
$130 to $150
|
|
|
|
|
|
$10
|
|
$140 to $160
|
|
Reported diluted EPS
|
|
$1.36 to $1.43
|
|
($0.06)
|
|
$0.05
|
|
($0.03)
|
|
$1.32 to $1.39
|
|
|
In updating our guidance for full year 2015, we have considered current
exchange rates and other factors.
A reconciliation of 2015 adjusted net income and adjusted diluted EPS
guidance to 2015 reported net income attributable to Zoetis and reported
diluted EPS guidance follows:
|
|
|
|
Full Year 2015 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
Net Income
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(c) guidance
|
|
|
~$810 - $845
|
|
~$1.61 - $1.68
|
|
Purchase accounting adjustments
|
|
|
~(35)
|
|
~(0.07)
|
|
Certain significant items(d) and acquisition-related costs
|
|
|
~(105 - 120)
|
|
~(0.21 - 0.24)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
~$665 - $700
|
|
~$1.32 - $1.39
|
|
|
|
|
|
(a)
|
|
Reflects the impact of changes between mid-November 2014 and current
foreign exchange rates.
|
|
|
|
|
|
(b)
|
|
Reflects the expected impact of acquiring the assets of Abbott
Animal Health, subject to the final purchase price allocation.
|
|
|
|
|
|
(c)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense
and adjusted other (income)/deductions are income statement line
items prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Despite the importance of these
measures to management in goal setting and performance measurement,
adjusted net income and its components and adjusted diluted EPS are
non-GAAP financial measures that have no standardized meaning
prescribed by U.S. GAAP and, therefore, have limits in their
usefulness to investors. Because of the non-standardized
definitions, adjusted net income and its components and adjusted
diluted EPS (unlike U.S. GAAP net income and its components and
diluted EPS) may not be comparable to the calculation of similar
measures of other companies. Adjusted net income and its components
and adjusted diluted EPS are presented solely to permit investors to
more fully understand how management assesses performance. Adjusted
net income and its components and adjusted diluted EPS are not, and
should not be viewed as, substitutes for U.S. GAAP net income and
its components and diluted EPS.
|
|
|
|
|
|
(d)
|
|
Primarily includes certain nonrecurring costs related to 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,
certain legal registration and patent assignment costs, as well as
other charges.
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
% Change
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
904
|
|
|
$
|
844
|
|
|
7
|
%
|
|
|
(4
|
)%
|
|
11%
|
|
Companion Animal
|
|
405
|
|
|
394
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
5%
|
|
Contract Manufacturing
|
|
11
|
|
|
16
|
|
|
(31
|
)%
|
|
|
(8
|
)%
|
|
(23)%
|
|
Total Revenue
|
|
$
|
1,320
|
|
|
$
|
1,254
|
|
|
5
|
%
|
|
|
(4
|
)%
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
368
|
|
|
$
|
310
|
|
|
19
|
%
|
|
|
—
|
%
|
|
19%
|
|
Companion Animal
|
|
221
|
|
|
206
|
|
|
7
|
%
|
|
|
—
|
%
|
|
7%
|
|
Total U.S. Revenue
|
|
$
|
589
|
|
|
$
|
516
|
|
|
14
|
%
|
|
|
—
|
%
|
|
14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
199
|
|
|
$
|
215
|
|
|
(7
|
)%
|
|
|
(4
|
)%
|
|
(3)%
|
|
Companion Animal
|
|
95
|
|
|
99
|
|
|
(4
|
)%
|
|
|
(6
|
)%
|
|
2%
|
|
Total EuAfME Revenue
|
|
$
|
294
|
|
|
$
|
314
|
|
|
(6
|
)%
|
|
|
(5
|
)%
|
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
196
|
|
|
$
|
184
|
|
|
7
|
%
|
|
|
(8
|
)%
|
|
15%
|
|
Companion Animal
|
|
43
|
|
|
39
|
|
|
10
|
%
|
|
|
(8
|
)%
|
|
18%
|
|
Total CLAR Revenue
|
|
$
|
239
|
|
|
$
|
223
|
|
|
7
|
%
|
|
|
(9
|
)%
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
141
|
|
|
$
|
135
|
|
|
4
|
%
|
|
|
(4
|
)%
|
|
8%
|
|
Companion Animal
|
|
46
|
|
|
50
|
|
|
(8
|
)%
|
|
|
(2
|
)%
|
|
(6)%
|
|
Total APAC Revenue
|
|
$
|
187
|
|
|
$
|
185
|
|
|
1
|
%
|
|
|
(3
|
)%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
$
|
540
|
|
|
$
|
496
|
|
|
9
|
%
|
|
|
(3
|
)%
|
|
12%
|
|
Swine
|
|
199
|
|
|
189
|
|
|
5
|
%
|
|
|
(4
|
)%
|
|
9%
|
|
Poultry
|
|
140
|
|
|
139
|
|
|
1
|
%
|
|
|
(3
|
)%
|
|
4%
|
|
Other
|
|
25
|
|
|
20
|
|
|
25
|
%
|
|
|
(5
|
)%
|
|
30%
|
|
Total Livestock Revenue
|
|
$
|
904
|
|
|
$
|
844
|
|
|
7
|
%
|
|
|
(4
|
)%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
$
|
55
|
|
|
$
|
55
|
|
|
—
|
%
|
|
|
(2
|
)%
|
|
2%
|
|
Dogs and Cats
|
|
350
|
|
|
339
|
|
|
3
|
%
|
|
|
(3
|
)%
|
|
6%
|
|
Total Companion Animal Revenue
|
|
$
|
405
|
|
|
$
|
394
|
|
|
3
|
%
|
|
|
(2
|
)%
|
|
5%
|
|
|
(a) For a description of each segment, see Note 18A to Zoetis’
consolidated and combined financial statements included in Zoetis’ Form
10-K for the year ended December 31, 2013. Beginning in the first
quarter of 2014, contract manufacturing is presented separately and we
have revised our segment results for the comparable 2013 period.
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
Full Year
|
|
% Change
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
3,103
|
|
|
$
|
2,916
|
|
|
6
|
%
|
|
|
(3
|
)%
|
|
9
|
%
|
|
Companion Animal
|
|
1,632
|
|
|
1,592
|
|
|
3
|
%
|
|
|
(1
|
)%
|
|
4
|
%
|
|
Contract Manufacturing
|
|
50
|
|
|
53
|
|
|
(6
|
)%
|
|
|
(1
|
)%
|
|
(5
|
)%
|
|
Total Revenue
|
|
$
|
4,785
|
|
|
$
|
4,561
|
|
|
5
|
%
|
|
|
(2
|
)%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
1,163
|
|
|
$
|
1,034
|
|
|
12
|
%
|
|
|
—
|
%
|
|
12
|
%
|
|
Companion Animal
|
|
896
|
|
|
868
|
|
|
3
|
%
|
|
|
—
|
%
|
|
3
|
%
|
|
Total U.S. Revenue
|
|
$
|
2,059
|
|
|
$
|
1,902
|
|
|
8
|
%
|
|
|
—
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
772
|
|
|
$
|
762
|
|
|
1
|
%
|
|
|
(1
|
)%
|
|
2
|
%
|
|
Companion Animal
|
|
369
|
|
|
353
|
|
|
5
|
%
|
|
|
1
|
%
|
|
4
|
%
|
|
Total EuAfME Revenue
|
|
$
|
1,141
|
|
|
$
|
1,115
|
|
|
2
|
%
|
|
|
—
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
633
|
|
|
$
|
605
|
|
|
5
|
%
|
|
|
(8
|
)%
|
|
13
|
%
|
|
Companion Animal
|
|
182
|
|
|
173
|
|
|
5
|
%
|
|
|
(8
|
)%
|
|
13
|
%
|
|
Total CLAR Revenue
|
|
$
|
815
|
|
|
$
|
778
|
|
|
5
|
%
|
|
|
(8
|
)%
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
$
|
535
|
|
|
$
|
515
|
|
|
4
|
%
|
|
|
(4
|
)%
|
|
8
|
%
|
|
Companion Animal
|
|
185
|
|
|
198
|
|
|
(7
|
)%
|
|
|
(5
|
)%
|
|
(2
|
)%
|
|
Total APAC Revenue
|
|
$
|
720
|
|
|
$
|
713
|
|
|
1
|
%
|
|
|
(4
|
)%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
$
|
1,747
|
|
|
$
|
1,628
|
|
|
7
|
%
|
|
|
(3
|
)%
|
|
10
|
%
|
|
Swine
|
|
695
|
|
|
652
|
|
|
7
|
%
|
|
|
(2
|
)%
|
|
9
|
%
|
|
Poultry
|
|
568
|
|
|
551
|
|
|
3
|
%
|
|
|
(3
|
)%
|
|
6
|
%
|
|
Other
|
|
93
|
|
|
85
|
|
|
9
|
%
|
|
|
(4
|
)%
|
|
13
|
%
|
|
Total Livestock Revenue
|
|
$
|
3,103
|
|
|
$
|
2,916
|
|
|
6
|
%
|
|
|
(3
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
$
|
182
|
|
|
$
|
179
|
|
|
2
|
%
|
|
|
(1
|
)%
|
|
3
|
%
|
|
Dogs and Cats
|
|
1,450
|
|
|
1,413
|
|
|
3
|
%
|
|
|
(1
|
)%
|
|
4
|
%
|
|
Total Companion Animal Revenue
|
|
$
|
1,632
|
|
|
$
|
1,592
|
|
|
3
|
%
|
|
|
(1
|
)%
|
|
4
|
%
|
|
|
(a) For a description of each segment, see Note 18A to Zoetis’
consolidated and combined financial statements included in Zoetis’ Form
10-K for the year ended December 31, 2013. Beginning in the first
quarter of 2014, contract manufacturing is presented separately and we
have revised our segment results for the comparable 2013 period.
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
ZOETIS INC.
SEGMENT EARNINGS(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
Fourth Quarter
|
|
% Change
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
U.S.
|
|
$
|
327
|
|
|
$
|
272
|
|
|
20
|
%
|
|
|
—
|
%
|
|
|
20
|
%
|
|
EuAfME
|
|
106
|
|
|
115
|
|
|
(8
|
)%
|
|
|
(4
|
)%
|
|
|
(4
|
)%
|
|
CLAR
|
|
90
|
|
|
80
|
|
|
13
|
%
|
|
|
(7
|
)%
|
|
|
20
|
%
|
|
APAC
|
|
69
|
|
|
68
|
|
|
1
|
%
|
|
|
(5
|
)%
|
|
|
6
|
%
|
|
Total Reportable Segments
|
|
592
|
|
|
535
|
|
|
11
|
%
|
|
|
(2
|
)%
|
|
|
13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
(93
|
)
|
|
(87
|
)
|
|
7
|
%
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
(173
|
)
|
|
(175
|
)
|
|
(1
|
)%
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
(13
|
)
|
|
(11
|
)
|
|
18
|
%
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
(3
|
)
|
|
(5
|
)
|
|
(40
|
)%
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
(78
|
)
|
|
(110
|
)
|
|
(29
|
)%
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
(77
|
)
|
|
(21
|
)
|
|
*
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
$
|
155
|
|
|
$
|
126
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
% Change
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Total
|
|
|
Foreign
Exchange
|
|
|
Operational
|
|
U.S.
|
|
$
|
1,176
|
|
|
$
|
1,045
|
|
|
13
|
%
|
|
|
—
|
%
|
|
|
13
|
%
|
|
EuAfME
|
|
437
|
|
|
412
|
|
|
6
|
%
|
|
|
(1
|
)%
|
|
|
7
|
%
|
|
CLAR
|
|
310
|
|
|
266
|
|
|
17
|
%
|
|
|
—
|
%
|
|
|
17
|
%
|
|
APAC
|
|
278
|
|
|
271
|
|
|
3
|
%
|
|
|
(6
|
)%
|
|
|
9
|
%
|
|
Total Reportable Segments
|
|
2,201
|
|
|
1,994
|
|
|
10
|
%
|
|
|
(2
|
)%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
(314
|
)
|
|
(312
|
)
|
|
1
|
%
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
(571
|
)
|
|
(567
|
)
|
|
1
|
%
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
(51
|
)
|
|
(48
|
)
|
|
6
|
%
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
(8
|
)
|
|
(22
|
)
|
|
(64
|
)%
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
(205
|
)
|
|
(240
|
)
|
|
(15
|
)%
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
(232
|
)
|
|
(115
|
)
|
|
*
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
$
|
820
|
|
|
$
|
690
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
|
|
|
|
|
|
(a)
|
|
For a description of each segment, see Note 18A to Zoetis’
consolidated and combined financial statements included in Zoetis’
Form 10-K for the year ended December 31, 2013. Beginning in the
first quarter of 2014, contract manufacturing is presented
separately and we have revised our segment results for the
comparable 2013 period.
|
|
|
|
|
|
(b)
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization as well as our
contract manufacturing business.
|
|
|
|
|
|
(c)
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
|
|
(d)
|
|
Purchase accounting adjustments include certain charges related to
intangible assets and property, plant and equipment not charged to
our operating segments.
|
|
|
|
|
|
(e)
|
|
Acquisition-related costs can include costs associated with
acquiring, integrating and restructuring newly acquired businesses,
such as transaction costs, integration costs, restructuring charges
and additional depreciation associated with asset restructuring.
|
|
|
|
|
|
(f)
|
|
Certain significant items are substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, certain legal and commercial
settlements, and the impact of divestiture-related gains and losses.
|
|
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing
operations not directly attributable to an operating segment.
|
|
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
Copyright Business Wire 2015