- Fourth Quarter 2013 Revenue of $1.25 Billion Increased 7% Compared to Fourth Quarter 2012
- Fourth Quarter 2013 Reported Net Income of $105 Million, or $0.21 per Diluted Share
- Fourth Quarter 2013 Adjusted Net Income of $180 Million, or Adjusted Diluted EPS1 of $0.36
- For Full Year 2013, Revenue of $4.56 Billion Increased 5%; Adjusted Net Income of $709 Million, or Adjusted Diluted EPS1 of $1.42, Increased 32% and 31%, respectively
- Company Sets Full-Year 2014 Guidance for Revenue of $4.65 - $4.75 Billion and Adjusted Diluted EPS1 of $1.48 - $1.54
Zoetis Inc. (NYSE:ZTS) today reported its financial results for the
fourth quarter and full year 2013. The company reported revenue of $1.25
billion for the fourth quarter of 2013, an increase of 7% from the
fourth quarter of 2012. Revenue reflected an operational2 increase
of 9%, with foreign currency having a negative impact of 2
percentage points.
Net income for the fourth quarter of 2013 was $105 million, or $0.21 per
diluted share. Adjusted net income1 for the fourth quarter of
2013 was $180 million, or $0.36 per diluted share. Adjusted net income1
for the fourth quarter of 2013 excludes the net impact of $75 million,
or $0.15 per diluted share, for purchase accounting adjustments,
acquisition-related costs and certain significant items.
For full year 2013, the company reported revenue of $4.56 billion, an
increase of 5% from the full year 2012. Revenue reflected an operational2
increase of 7%, with foreign currency having a negative
impact of 2 percentage points.
Net income for the full year 2013 was $504 million, or $1.01 per diluted
share, an increase of 16% compared to the full year 2012. Adjusted net
income1 for the full year 2013 was $709 million, or $1.42 per
diluted share, an increase of 32% and 31%, respectively, compared to the
adjusted full year 2012. Adjusted net income1 for the full
year 2013 excludes the net impact of $205 million, or $0.41 per diluted
share, for purchase accounting adjustments, acquisition-related costs
and certain significant items.
EXECUTIVE COMMENTARY
“In 2013, we successfully established ourselves as a new public company,
delivered on our financial objectives, and continued meeting our
customer commitments,” said Zoetis Chief Executive Officer Juan Ramón
Alaix. “Our performance in 2013, together with our guidance for 2014,
confirms our long-term objective to grow revenue in line with, or faster
than, the market; to grow adjusted net income faster than revenue; and
to bring additional value to our customers, colleagues and shareholders.”
“We continue to expand our diverse portfolio, receiving approvals and
bringing important new products to our customers, such as Apoquel for
veterinarians in the U.S., European Union and New Zealand,” said Alaix.
“We have maintained a reliable, high-quality supply of products around
the world, while managing our separation from Pfizer. We also continue
to achieve important milestones in standing up our company and achieving
our growth strategies. I am very proud of the people of Zoetis for their
dedication to our customers and for building on our legacy as the world
leader in animal health.”
“I am very pleased with our financial performance in our first year
operating as a public company and with the progress we have made in
building our infrastructure,” said Rick Passov, Executive Vice President
and Chief Financial Officer of Zoetis.
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 2013:
-
Revenue in the U.S. was $516 million, an increase of 7% over the
fourth quarter of 2012. Sales of livestock products grew 8%, with
contributions across cattle, swine and poultry. Cattle products showed
a significant increase during the quarter based on improved market
conditions. Meanwhile, swine and poultry products benefited from
continued growth in new products. Sales of companion animal products
grew 5%.
-
Revenue in EuAfME was $330 million, an increase of 9% operationally
over the fourth quarter of 2012. Sales of livestock products grew 9%
operationally, driven primarily by sales of swine and poultry
products, particularly in Germany and Russia. Sales of companion
animal products grew 9% operationally, and benefited again this
quarter from increased sales associated with third-party manufacturing
agreements. Excluding these sales, companion animal product sales grew
5% operationally.
-
Revenue in CLAR was $223 million, an increase of 8% operationally over
the fourth quarter of 2012. Sales of livestock products grew 7%
operationally, driven largely by cattle product sales in Brazil.
Poultry sales increased primarily due to medicated feed additives in
Brazil and southern Latin America, and swine products grew due to
sales of immunization products, anti-infectives and medicated feed
additives in the region. Sales of companion animal products grew 14%
operationally, largely due to increased sales in Canada and Brazil.
-
Revenue in APAC was $185 million, an increase of 14% operationally
over the fourth quarter of 2012. Sales of livestock products grew 16%
operationally, driven primarily by swine, poultry and cattle products
in India, Japan and China. Sales of companion animal products grew 8%
operationally, tempered by a decline in equine products. Companion
animal product growth was led by Japan based on continued acceptance
of recently launched products.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through brand lifecycle management, strong customer
relationships and access to new markets and technologies. The company is
focused on improving the performance and delivery of its current product
lines; expanding product indications across species; and pursuing
approvals across new geographies. Some recent highlights include:
-
Expanding the portfolio’s reach – Zoetis
continues to receive approvals that help expand its key products into
new markets or with new formulations. In swine products, for example,
the FOSTERA® PRRS vaccine received approvals in Korea, Thailand and
Mexico in the fourth quarter, and is now available in six markets
after being introduced in 2012. FOSTERA
PRRS aids in the prevention of respiratory disease associated with
porcine reproductive and respiratory syndrome (PRRS) virus that could
compromise herd health and performance. In poultry products, the
company’s POULVAC®
line of vaccines continue to receive approvals in markets across Latin
America and Europe; these vaccines help combat many common diseases,
including Marek’s disease, Newcastle disease, Salmonella, Infectious
Bronchitis and Infectious Bursal Disease.
-
Continuous innovation – Zoetis continues
to advance animal health science through innovations that address
unmet market needs or improve veterinarians’ approach to treatment. In
the fourth quarter, the company received U.S. regulatory approval for
FOSTERA® PCV MH, a new combination vaccine for swine, which is the
first vaccine to offer one-bottle, one-dose convenience with the
flexibility of two-dose administration. APOQUEL®
(oclacitinib tablet) successfully completed its early experience
program in the U.S. in the fourth quarter, and fully launched in the
U.S., UK, Austria and Germany in January; other market launches will
follow. APOQUEL is approved for the control of pruritus associated
with allergic dermatitis and the control of atopic dermatitis in dogs
at least 12 months of age.
-
Focus on emerging diseases – Zoetis also
uses its research and development expertise to address emerging
diseases. The company recently announced a research partnership with
Iowa State University (ISU) to identify and test a vaccine candidate
to help control porcine epidemic diarrhea virus (PEDv) in the United
States. Zoetis also announced recently it was first to market in the
U.S. with GA08, a conditionally licensed vaccine for an infectious
bronchitis virus in poultry.
FINANCIAL GUIDANCE AND COMMENTARY
Zoetis's guidance for full-year 2014 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 provided its financial guidance for full year 2014, reflecting
foreign exchange rates for late January:
-
Revenue of between $4.65 billion to $4.75 billion
-
Reported diluted EPS for the full year of between $1.15 to $1.21 per
share
-
Adjusted diluted EPS1 for the full year between $1.48 to
$1.54 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 2014 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,
2014.
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 2013, the company generated annual revenue of $4.6 billion.
With approximately 9,800 employees worldwide at the beginning of 2014,
Zoetis has a local presence in approximately 70 countries, including 28
manufacturing facilities in 11 countries. Its products serve
veterinarians, livestock producers and people who raise and care for
farm and companion animals in 120 countries. For more information, visit www.zoetis.com.
1 Adjusted net income and adjusted diluted earnings
per share (non-GAAP financial measures) are defined as reported net
income attributable to Zoetis and reported diluted earnings per share,
excluding purchase accounting adjustments, acquisition-related costs and
certain significant items.
2 Operational revenue growth is defined as revenue
growth excluding the impact of foreign exchange.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect
Zoetis's current views with respect to business plans or prospects,
future operating or financial performance, expectations regarding 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, 2012, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future Results”
and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as adjusted net income and
adjusted diluted earnings per share, to assess and analyze our
operational results and trends and to make financial and operational
decisions. We believe these non-GAAP financial measures are also
useful to investors because they provide greater transparency regarding
our operating performance. The non-GAAP financial measures
included in this press release should not be considered alternatives to
measurements required by GAAP, such as net income, operating income, and
earnings per share, and should not be considered measures of liquidity.
These non-GAAP financial measures are unlikely to be comparable with
non-GAAP information provided by other companies. Reconciliation
of non-GAAP financial measures and GAAP financial measures are included
in the tables accompanying this press release and are posted on our
website at www.zoetis.com.
Internet Posting of Information:
We routinely post information that may be important to investors in
the 'Investors' section of our web site at www.zoetis.com,
on our Facebook page at 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
|
|
|
% Incr./
|
|
|
Full Year
|
|
|
% Incr./
|
|
|
|
|
|
2013
|
|
|
2012
|
|
|
(Decr.)
|
|
|
2013
|
|
|
2012
|
|
|
(Decr.)
|
|
Revenue
|
|
|
|
|
$
|
1,254
|
|
|
|
$
|
1,176
|
|
|
|
7
|
|
|
|
$
|
4,561
|
|
|
|
$
|
4,336
|
|
|
|
5
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
|
|
466
|
|
|
|
433
|
|
|
|
8
|
|
|
|
1,669
|
|
|
|
1,563
|
|
|
|
7
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
458
|
|
|
|
453
|
|
|
|
1
|
|
|
|
1,613
|
|
|
|
1,470
|
|
|
|
10
|
|
|
Research and development expenses(b)
|
|
|
|
|
121
|
|
|
|
121
|
|
|
|
—
|
|
|
|
399
|
|
|
|
409
|
|
|
|
(2
|
)
|
|
Amortization of intangible assets(c)
|
|
|
|
|
15
|
|
|
|
16
|
|
|
|
(6
|
)
|
|
|
60
|
|
|
|
64
|
|
|
|
(6
|
)
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
36
|
|
|
|
80
|
|
|
|
(55
|
)
|
|
|
26
|
|
|
|
135
|
|
|
|
(81
|
)
|
|
Interest expense
|
|
|
|
|
30
|
|
|
|
8
|
|
|
|
*
|
|
|
113
|
|
|
|
31
|
|
|
|
*
|
|
Other (income)/deductions–net
|
|
|
|
|
2
|
|
|
|
(9
|
)
|
|
|
*
|
|
|
(9
|
)
|
|
|
(46
|
)
|
|
|
(80
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
126
|
|
|
|
74
|
|
|
|
70
|
|
|
|
690
|
|
|
|
710
|
|
|
|
(3
|
)
|
|
Provision for taxes on income(d)
|
|
|
|
|
22
|
|
|
|
84
|
|
|
|
(74
|
)
|
|
|
187
|
|
|
|
274
|
|
|
|
(32
|
)
|
|
Net income (loss) before allocation to noncontrolling interests(d)
|
|
|
|
|
104
|
|
|
|
(10
|
)
|
|
|
*
|
|
|
503
|
|
|
|
436
|
|
|
|
15
|
|
|
Less: Net loss attributable to noncontrolling interests
|
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Net income (loss) attributable to Zoetis(d)
|
|
|
|
|
$
|
105
|
|
|
|
$
|
(10
|
)
|
|
|
*
|
|
|
$
|
504
|
|
|
|
$
|
436
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share—basic
|
|
|
|
|
$
|
0.21
|
|
|
|
$
|
(0.02
|
)
|
|
|
*
|
|
|
$
|
1.01
|
|
|
|
$
|
0.87
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share—diluted
|
|
|
|
|
$
|
0.21
|
|
|
|
$
|
(0.02
|
)
|
|
|
*
|
|
|
$
|
1.01
|
|
|
|
$
|
0.87
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
500,007
|
|
|
500,000
|
|
|
|
|
|
500,002
|
|
|
500,000
|
|
|
|
|
Diluted
|
|
|
|
|
500,586
|
|
|
500,000
|
|
|
|
|
|
500,317
|
|
|
500,000
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
The consolidated and combined statements of income present the three
and twelve months ended December 31, 2013 and 2012. Subsidiaries
operating outside the United States are included for the three and
twelve months ended November 30, 2013 and 2012.
|
|
|
|
|
|
(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)
|
|
Fourth quarter comparisons are impacted by an elevated tax rate in
the fourth quarter of 2012, when Zoetis was still a subsidiary of
Pfizer and reported consolidated results.
|
|
|
|
|
|
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, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
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, 2012
|
|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
|
Purchase
Accounting
Adjustments
|
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
|
Certain
Significant
Items(3)
|
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
|
|
|
$
|
1,176
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
1,176
|
|
|
Cost of sales(b)
|
|
|
|
|
433
|
|
|
|
|
(1
|
)
|
|
|
|
—
|
|
|
|
|
(5
|
)
|
|
|
|
427
|
|
|
Gross profit
|
|
|
|
|
743
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
|
5
|
|
|
|
|
749
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
453
|
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
(14
|
)
|
|
|
|
440
|
|
|
Research and development expenses(b)
|
|
|
|
|
121
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
121
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
16
|
|
|
|
|
(12
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
80
|
|
|
|
|
—
|
|
|
|
|
(20
|
)
|
|
|
|
(60
|
)
|
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(9
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
11
|
|
|
|
|
2
|
|
|
Income before provision for taxes on income
|
|
|
|
|
74
|
|
|
|
|
13
|
|
|
|
|
19
|
|
|
|
|
68
|
|
|
|
|
174
|
|
|
Provision for taxes on income
|
|
|
|
|
84
|
|
|
|
|
4
|
|
|
|
|
8
|
|
|
|
|
21
|
|
|
|
|
117
|
|
|
Net income (loss) attributable to Zoetis
|
|
|
|
|
(10
|
)
|
|
|
|
9
|
|
|
|
|
11
|
|
|
|
|
47
|
|
|
|
|
57
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
(0.02
|
)
|
|
|
|
0.02
|
|
|
|
|
0.02
|
|
|
|
|
0.09
|
|
|
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, 2012
|
|
|
|
|
|
|
GAAP
Reported(1)
|
|
|
|
Purchase
Accounting
Adjustments
|
|
|
|
Acquisition-
Related
Costs(2)
|
|
|
|
Certain
Significant
Items(3)
|
|
|
|
Non-GAAP
Adjusted(a)
|
|
Revenue
|
|
|
|
|
$
|
4,336
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
4,336
|
|
|
Cost of sales(b)
|
|
|
|
|
1,563
|
|
|
|
|
(4
|
)
|
|
|
|
(9
|
)
|
|
|
|
(1
|
)
|
|
|
|
1,549
|
|
|
Gross profit
|
|
|
|
|
2,773
|
|
|
|
|
4
|
|
|
|
|
9
|
|
|
|
|
1
|
|
|
|
|
2,787
|
|
|
Selling, general and administrative expenses(b)
|
|
|
|
|
1,470
|
|
|
|
|
1
|
|
|
|
|
(1
|
)
|
|
|
|
(18
|
)
|
|
|
|
1,452
|
|
|
Research and development expenses(b)
|
|
|
|
|
409
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(10
|
)
|
|
|
|
399
|
|
|
Amortization of intangible assets(c)
|
|
|
|
|
64
|
|
|
|
|
(49
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
15
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
|
135
|
|
|
|
|
—
|
|
|
|
|
(43
|
)
|
|
|
|
(92
|
)
|
|
|
|
—
|
|
|
Interest expense
|
|
|
|
|
31
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
31
|
|
|
Other (income)/deductions–net
|
|
|
|
|
(46
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
25
|
|
|
|
|
(21
|
)
|
|
Income before provision for taxes on income
|
|
|
|
|
710
|
|
|
|
|
52
|
|
|
|
|
53
|
|
|
|
|
96
|
|
|
|
|
911
|
|
|
Provision for taxes on income
|
|
|
|
|
274
|
|
|
|
|
17
|
|
|
|
|
19
|
|
|
|
|
62
|
|
|
|
|
372
|
|
|
Net income attributable to Zoetis
|
|
|
|
|
436
|
|
|
|
|
35
|
|
|
|
|
34
|
|
|
|
|
34
|
|
|
|
|
539
|
|
|
Earnings per common share attributable to Zoetis–diluted(d)
|
|
|
|
|
0.87
|
|
|
|
|
0.07
|
|
|
|
|
0.07
|
|
|
|
|
0.07
|
|
|
|
|
1.08
|
|
|
|
|
|
|
(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, 2013 and 2012. Subsidiaries
operating outside the United States are included for the three and
twelve months ended November 30, 2013 and 2012.
|
|
|
|
|
|
(2)
|
|
Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
Full Year
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
Integration costs(a)
|
|
|
|
|
$
|
6
|
|
|
|
|
$
|
16
|
|
|
|
|
$
|
22
|
|
|
|
|
$
|
47
|
|
|
Restructuring charges(b)
|
|
|
|
|
(1
|
)
|
|
|
|
4
|
|
|
|
|
—
|
|
|
|
|
(4
|
)
|
|
Additional depreciation—asset restructuring(c)
|
|
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
|
—
|
|
|
|
|
10
|
|
|
Total acquisition-related costs—pre-tax
|
|
|
|
|
5
|
|
|
|
|
19
|
|
|
|
|
22
|
|
|
|
|
53
|
|
|
Income taxes(d)
|
|
|
|
|
2
|
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
19
|
|
|
Total acquisition-related costs—net of tax
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
11
|
|
|
|
|
$
|
14
|
|
|
|
|
$
|
34
|
|
|
|
|
(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)
|
|
Represents the impact of changes in the estimated lives of assets
involved in restructuring actions. For the three months ended
December 31, 2012, included in Selling, general and
administrative expenses. For the twelve months ended December
31, 2012 included in Cost of sales ($9 million) and Selling,
general and administrative expenses ($1 million).
|
|
|
|
|
|
(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.
|
|
|
|
|
|
(3)
|
|
Certain significant items include the following:
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
Full Year
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
2013
|
|
|
|
2012
|
|
Restructuring charges(a)
|
|
|
|
|
$
|
7
|
|
|
|
|
$
|
60
|
|
|
|
|
$
|
(20
|
)
|
|
|
|
$
|
92
|
|
|
Implementation costs and additional depreciation—asset restructuring(b)
|
|
|
|
|
5
|
|
|
|
|
9
|
|
|
|
|
8
|
|
|
|
|
23
|
|
|
Certain asset impairment charges(c)
|
|
|
|
|
19
|
|
|
|
|
—
|
|
|
|
|
20
|
|
|
|
|
—
|
|
|
Net gain on sale of assets(d)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(6
|
)
|
|
|
|
—
|
|
|
Stand-up costs(e)
|
|
|
|
|
61
|
|
|
|
|
—
|
|
|
|
|
206
|
|
|
|
|
—
|
|
|
Inventory and intercompany write-offs(f)
|
|
|
|
|
17
|
|
|
|
|
—
|
|
|
|
|
24
|
|
|
|
|
—
|
|
|
Other(g)
|
|
|
|
|
1
|
|
|
|
|
(1
|
)
|
|
|
|
8
|
|
|
|
|
(19
|
)
|
|
Total certain significant items—pre-tax
|
|
|
|
|
110
|
|
|
|
|
68
|
|
|
|
|
240
|
|
|
|
|
96
|
|
|
Income taxes(h)
|
|
|
|
|
45
|
|
|
|
|
21
|
|
|
|
|
81
|
|
|
|
|
62
|
|
|
Total certain significant items—net of tax
|
|
|
|
|
$
|
65
|
|
|
|
|
$
|
47
|
|
|
|
|
$
|
159
|
|
|
|
|
$
|
34
|
|
|
|
|
(a)
|
|
Represents charges incurred for restructuring initiatives and
allocated costs related to cost-reduction/productivity
initiatives. 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 allocated external,
incremental costs directly related to implementing
cost-reduction/productivity initiatives. 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).
For the three months ended December 31, 2012, included in Cost
of sales ($1 million) and Selling, general and
administrative expenses ($8 million). For the twelve months
ended December 31, 2012, included in Cost of sales ($1
million), Selling, general and administrative expenses ($12
million) and Research and development expenses ($10
million).
|
|
|
|
|
|
(c)
|
|
Primarily represents charges related to restructuring initiatives.
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 Restructuring
charges and certain acquisition-related costs ($19 million)
and Other (income)/deductions—net ($1 million).
|
|
|
|
|
|
(d)
|
|
Included in Other (income)/deductions—net.
|
|
|
|
|
|
(e)
|
|
Represents certain nonrecurring costs related to becoming a
standalone public company, such as new branding (including changes
to the manufacturing process for required new packaging), the
creation of standalone systems and infrastructure, site
separation, accelerated vesting and associated cash payment
related to certain Pfizer equity awards, and certain legal
registration and patent assignment costs. 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 twelve months ended December 31, 2013, primarily relates
to litigation-related charges ($5 million) and charges related to
transitional manufacturing purchase agreements associated with
divestitures ($1 million). For the twelve months ended December
31, 2012, primarily relates to income from a favorable legal
settlement for an intellectual property matter ($14 million) and
income due to a change in estimate related to transitional
manufacturing purchase agreements associated with divestitures ($4
million).
|
|
|
|
|
|
(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
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
Adjusted cost of sales(a)
|
|
|
|
|
|
$
|
444
|
|
|
|
|
$
|
427
|
|
|
|
|
4
|
%
|
|
|
|
|
(3
|
)%
|
|
|
|
7
|
%
|
|
As a percent of revenue
|
|
|
|
|
|
35.4
|
%
|
|
|
|
36.3
|
%
|
|
|
|
NA
|
|
|
|
|
NA
|
|
|
|
NA
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
|
406
|
|
|
|
|
440
|
|
|
|
|
(8
|
)%
|
|
|
|
|
(2
|
)%
|
|
|
|
(6
|
)%
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
|
119
|
|
|
|
|
121
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(1
|
)%
|
|
|
|
(1
|
)%
|
|
Total
|
|
|
|
|
|
$
|
969
|
|
|
|
|
$
|
988
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(2
|
)%
|
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
(Favorable)/Unfavorable
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
Adjusted cost of sales(a)
|
|
|
|
|
|
$
|
1,625
|
|
|
|
|
$
|
1,549
|
|
|
|
|
5
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
7
|
%
|
|
As a percent of revenue
|
|
|
|
|
|
35.6
|
%
|
|
|
|
35.7
|
%
|
|
|
|
NA
|
|
|
|
|
NA
|
|
|
|
NA
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
|
1,426
|
|
|
|
|
1,452
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(1
|
)%
|
|
|
|
(1
|
)%
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
|
391
|
|
|
|
|
399
|
|
|
|
|
(2
|
)%
|
|
|
|
|
(1
|
)%
|
|
|
|
(1
|
)%
|
|
Total
|
|
|
|
|
|
$
|
3,442
|
|
|
|
|
$
|
3,400
|
|
|
|
|
1
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
3
|
%
|
|
|
|
(a)
|
|
Adjusted cost of sales, adjusted selling, general, and
administrative (SG&A) expenses and adjusted research and development
(R&D) expenses are defined as the corresponding reported U.S.
generally accepted accounting principles (GAAP) income statement
line items excluding purchase accounting adjustments,
acquisition-related costs, and certain significant items.
Reconciliations of certain reported to adjusted information for the
three and twelve months ended December 31, 2013 and 2012 are
provided in the materials accompanying this report. These adjusted
income statement line item measures are not, and should not be
viewed as, substitutes for the corresponding U.S. GAAP line items.
|
|
|
|
|
|
ZOETIS INC.
2014 GUIDANCE
|
|
|
|
Selected Line Items
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
$4,650 to $4,750 million
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
|
|
Approximately 35.5%
|
|
Adjusted SG&A expenses(a)
|
|
|
|
|
|
$1,430 to $1,480 million
|
|
Adjusted R&D expenses(a)
|
|
|
|
|
|
$390 to $405 million
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
|
|
|
Approximately $105 million
|
|
Effective tax rate on adjusted net income(a)
|
|
|
|
|
|
Approximately 29%
|
|
Adjusted diluted EPS(a)
|
|
|
|
|
|
$1.48 to $1.54
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
|
$165 to $185 million
|
|
Reported diluted EPS
|
|
|
|
|
|
$1.15 to $1.21
|
|
Full year 2014 guidance reflects late January 2014 exchange rates.
|
|
|
|
A reconciliation of 2014 adjusted net income and adjusted diluted
EPS guidance to 2014 reported net income attributable to Zoetis
and reported diluted EPS attributable to Zoetis common
shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
Full-Year 2014 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
|
|
|
Net Income
|
|
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
|
|
~$740 - $770
|
|
|
|
~$1.48 - $1.54
|
|
Purchase accounting adjustments
|
|
|
|
|
|
~(30)
|
|
|
|
~(0.06)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
|
|
~(125 - 140)
|
|
|
|
~(0.25 - 0.28)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
|
|
~$580 - $610
|
|
|
|
~$1.15 - $1.21
|
|
|
|
(a)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense
and adjusted other (income)/deductions are income statement line
items prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Despite the importance of these
measures to management in goal setting and performance measurement,
adjusted net income and its components and adjusted diluted EPS are
non-GAAP financial measures that have no standardized meaning
prescribed by U.S. GAAP and, therefore, have limits in their
usefulness to investors. Because of the non-standardized
definitions, adjusted net income and its components and adjusted
diluted EPS (unlike U.S. GAAP net income and its components and
diluted EPS) may not be comparable to the calculation of similar
measures of other companies. Adjusted net income and its components
and adjusted diluted EPS are presented solely to permit investors to
more fully understand how management assesses performance. Adjusted
net income and its components and adjusted diluted EPS are not, and
should not be viewed as, substitutes for U.S. GAAP net income and
its components and diluted EPS.
|
|
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to becoming a
standalone public company, such as new branding (including changes
to the manufacturing process for required new packaging), the
creation of standalone systems and infrastructure, site separation,
certain legal registration and patent assignment costs, and
restructuring and other charges.
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
849
|
|
|
|
|
$
|
791
|
|
|
|
|
7
|
%
|
|
|
|
|
(3
|
)%
|
|
|
|
10
|
%
|
|
Companion Animal
|
|
|
|
|
|
405
|
|
|
|
|
385
|
|
|
|
|
5
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
7
|
%
|
|
Total Revenue
|
|
|
|
|
|
$
|
1,254
|
|
|
|
|
$
|
1,176
|
|
|
|
|
7
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
310
|
|
|
|
|
$
|
286
|
|
|
|
|
8
|
%
|
|
|
|
|
—
|
%
|
|
|
|
8
|
%
|
|
Companion Animal
|
|
|
|
|
|
206
|
|
|
|
|
196
|
|
|
|
|
5
|
%
|
|
|
|
|
—
|
%
|
|
|
|
5
|
%
|
|
Total U.S. Revenue
|
|
|
|
|
|
$
|
516
|
|
|
|
|
$
|
482
|
|
|
|
|
7
|
%
|
|
|
|
|
—
|
%
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
220
|
|
|
|
|
$
|
197
|
|
|
|
|
12
|
%
|
|
|
|
|
3
|
%
|
|
|
|
9
|
%
|
|
Companion Animal
|
|
|
|
|
|
110
|
|
|
|
|
100
|
|
|
|
|
10
|
%
|
|
|
|
|
1
|
%
|
|
|
|
9
|
%
|
|
Total EuAfME Revenue
|
|
|
|
|
|
$
|
330
|
|
|
|
|
$
|
297
|
|
|
|
|
11
|
%
|
|
|
|
|
2
|
%
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
184
|
|
|
|
|
$
|
183
|
|
|
|
|
1
|
%
|
|
|
|
|
(6
|
)%
|
|
|
|
7
|
%
|
|
Companion Animal
|
|
|
|
|
|
39
|
|
|
|
|
37
|
|
|
|
|
5
|
%
|
|
|
|
|
(9
|
)%
|
|
|
|
14
|
%
|
|
Total CLAR Revenue
|
|
|
|
|
|
$
|
223
|
|
|
|
|
$
|
220
|
|
|
|
|
1
|
%
|
|
|
|
|
(7
|
)%
|
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
135
|
|
|
|
|
$
|
125
|
|
|
|
|
8
|
%
|
|
|
|
|
(8
|
)%
|
|
|
|
16
|
%
|
|
Companion Animal
|
|
|
|
|
|
50
|
|
|
|
|
52
|
|
|
|
|
(4
|
)%
|
|
|
|
|
(12
|
)%
|
|
|
|
8
|
%
|
|
Total APAC Revenue
|
|
|
|
|
|
$
|
185
|
|
|
|
|
$
|
177
|
|
|
|
|
5
|
%
|
|
|
|
|
(9
|
)%
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
|
|
$
|
497
|
|
|
|
|
$
|
472
|
|
|
|
|
5
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
7
|
%
|
|
Swine
|
|
|
|
|
|
190
|
|
|
|
|
165
|
|
|
|
|
15
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
17
|
%
|
|
Poultry
|
|
|
|
|
|
137
|
|
|
|
|
126
|
|
|
|
|
9
|
%
|
|
|
|
|
(4
|
)%
|
|
|
|
13
|
%
|
|
Other
|
|
|
|
|
|
25
|
|
|
|
|
28
|
|
|
|
|
(11
|
)%
|
|
|
|
|
(7
|
)%
|
|
|
|
(4
|
)%
|
|
Total Livestock Revenue
|
|
|
|
|
|
$
|
849
|
|
|
|
|
$
|
791
|
|
|
|
|
7
|
%
|
|
|
|
|
(3
|
)%
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
|
|
$
|
55
|
|
|
|
|
$
|
57
|
|
|
|
|
(4
|
)%
|
|
|
|
|
—
|
%
|
|
|
|
(4
|
)%
|
|
Dogs and Cats
|
|
|
|
|
|
350
|
|
|
|
|
328
|
|
|
|
|
7
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
9
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
|
|
$
|
405
|
|
|
|
|
$
|
385
|
|
|
|
|
5
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
7
|
%
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis's combined
financial statements included in Zoetis's Form 10-K for the year
ended December 31, 2012.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
ZOETIS INC.
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
2,931
|
|
|
|
|
$
|
2,806
|
|
|
|
|
4
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
6
|
%
|
|
Companion Animal
|
|
|
|
|
|
1,630
|
|
|
|
|
1,530
|
|
|
|
|
7
|
%
|
|
|
|
|
(1
|
)%
|
|
|
|
8
|
%
|
|
Total Revenue
|
|
|
|
|
|
$
|
4,561
|
|
|
|
|
$
|
4,336
|
|
|
|
|
5
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
1,034
|
|
|
|
|
$
|
966
|
|
|
|
|
7
|
%
|
|
|
|
|
—
|
%
|
|
|
|
7
|
%
|
|
Companion Animal
|
|
|
|
|
|
868
|
|
|
|
|
810
|
|
|
|
|
7
|
%
|
|
|
|
|
—
|
%
|
|
|
|
7
|
%
|
|
Total U.S. Revenue
|
|
|
|
|
|
$
|
1,902
|
|
|
|
|
$
|
1,776
|
|
|
|
|
7
|
%
|
|
|
|
|
—
|
%
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EuAfME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
777
|
|
|
|
|
$
|
740
|
|
|
|
|
5
|
%
|
|
|
|
|
1
|
%
|
|
|
|
4
|
%
|
|
Companion Animal
|
|
|
|
|
|
391
|
|
|
|
|
356
|
|
|
|
|
10
|
%
|
|
|
|
|
2
|
%
|
|
|
|
8
|
%
|
|
Total EuAfME Revenue
|
|
|
|
|
|
$
|
1,168
|
|
|
|
|
$
|
1,096
|
|
|
|
|
7
|
%
|
|
|
|
|
1
|
%
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
605
|
|
|
|
|
$
|
603
|
|
|
|
|
—
|
%
|
|
|
|
|
(6
|
)%
|
|
|
|
6
|
%
|
|
Companion Animal
|
|
|
|
|
|
173
|
|
|
|
|
166
|
|
|
|
|
4
|
%
|
|
|
|
|
(5
|
)%
|
|
|
|
9
|
%
|
|
Total CLAR Revenue
|
|
|
|
|
|
$
|
778
|
|
|
|
|
$
|
769
|
|
|
|
|
1
|
%
|
|
|
|
|
(5
|
)%
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
|
|
$
|
515
|
|
|
|
|
$
|
497
|
|
|
|
|
4
|
%
|
|
|
|
|
(4
|
)%
|
|
|
|
8
|
%
|
|
Companion Animal
|
|
|
|
|
|
198
|
|
|
|
|
198
|
|
|
|
|
—
|
%
|
|
|
|
|
(7
|
)%
|
|
|
|
7
|
%
|
|
Total APAC Revenue
|
|
|
|
|
|
$
|
713
|
|
|
|
|
$
|
695
|
|
|
|
|
3
|
%
|
|
|
|
|
(4
|
)%
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
|
|
$
|
1,631
|
|
|
|
|
$
|
1,608
|
|
|
|
|
1
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
3
|
%
|
|
Swine
|
|
|
|
|
|
655
|
|
|
|
|
590
|
|
|
|
|
11
|
%
|
|
|
|
|
(1
|
)%
|
|
|
|
12
|
%
|
|
Poultry
|
|
|
|
|
|
541
|
|
|
|
|
501
|
|
|
|
|
8
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
10
|
%
|
|
Other
|
|
|
|
|
|
104
|
|
|
|
|
107
|
|
|
|
|
(3
|
)%
|
|
|
|
|
(3
|
)%
|
|
|
|
—
|
%
|
|
Total Livestock Revenue
|
|
|
|
|
|
$
|
2,931
|
|
|
|
|
$
|
2,806
|
|
|
|
|
4
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
|
|
$
|
179
|
|
|
|
|
$
|
187
|
|
|
|
|
(4
|
)%
|
|
|
|
|
—
|
%
|
|
|
|
(4
|
)%
|
|
Dogs and Cats
|
|
|
|
|
|
1,451
|
|
|
|
|
1,343
|
|
|
|
|
8
|
%
|
|
|
|
|
(1
|
)%
|
|
|
|
9
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
|
|
$
|
1,630
|
|
|
|
|
$
|
1,530
|
|
|
|
|
7
|
%
|
|
|
|
|
(1
|
)%
|
|
|
|
8
|
%
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis's combined
financial statements included in Zoetis's Form 10-K for the year
ended December 31, 2012.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
ZOETIS INC.
SEGMENT EARNINGS(a)
(UNAUDITED)
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
U.S.
|
|
|
|
|
|
$
|
272
|
|
|
|
|
$
|
245
|
|
|
|
|
11
|
%
|
|
|
|
|
—
|
%
|
|
|
|
11
|
%
|
|
EuAfME
|
|
|
|
|
|
120
|
|
|
|
|
92
|
|
|
|
|
30
|
%
|
|
|
|
|
6
|
%
|
|
|
|
24
|
%
|
|
CLAR
|
|
|
|
|
|
80
|
|
|
|
|
69
|
|
|
|
|
16
|
%
|
|
|
|
|
(8
|
)%
|
|
|
|
24
|
%
|
|
APAC
|
|
|
|
|
|
68
|
|
|
|
|
43
|
|
|
|
|
58
|
%
|
|
|
|
|
(12
|
)%
|
|
|
|
70
|
%
|
|
Total Reportable Segments
|
|
|
|
|
|
540
|
|
|
|
|
449
|
|
|
|
|
20
|
%
|
|
|
|
|
(1
|
)%
|
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
|
(92
|
)
|
|
|
|
(84
|
)
|
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
|
(175
|
)
|
|
|
|
(160
|
)
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
|
(11
|
)
|
|
|
|
(13
|
)
|
|
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
|
(5
|
)
|
|
|
|
(19
|
)
|
|
|
|
(74
|
)%
|
|
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
|
(110
|
)
|
|
|
|
(68
|
)
|
|
|
|
62
|
%
|
|
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
|
(21
|
)
|
|
|
|
(31
|
)
|
|
|
|
(32
|
)%
|
|
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
|
|
$
|
126
|
|
|
|
|
$
|
74
|
|
|
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year
|
|
|
|
% Change
|
|
|
|
|
|
|
|
2013
|
|
|
|
|
2012
|
|
|
|
|
Total
|
|
|
|
|
Foreign
Exchange
|
|
|
|
Operational
|
|
U.S.
|
|
|
|
|
|
$
|
1,045
|
|
|
|
|
$
|
921
|
|
|
|
|
13
|
%
|
|
|
|
|
—
|
%
|
|
|
|
13
|
%
|
|
EuAfME
|
|
|
|
|
|
420
|
|
|
|
|
375
|
|
|
|
|
12
|
%
|
|
|
|
|
1
|
%
|
|
|
|
11
|
%
|
|
CLAR
|
|
|
|
|
|
266
|
|
|
|
|
253
|
|
|
|
|
5
|
%
|
|
|
|
|
(11
|
)%
|
|
|
|
16
|
%
|
|
APAC
|
|
|
|
|
|
271
|
|
|
|
|
236
|
|
|
|
|
15
|
%
|
|
|
|
|
(3
|
)%
|
|
|
|
18
|
%
|
|
Total Reportable Segments
|
|
|
|
|
|
2,002
|
|
|
|
|
1,785
|
|
|
|
|
12
|
%
|
|
|
|
|
(2
|
)%
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
|
|
(320
|
)
|
|
|
|
(275
|
)
|
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
|
|
(567
|
)
|
|
|
|
(506
|
)
|
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
|
|
(48
|
)
|
|
|
|
(52
|
)
|
|
|
|
(8
|
)%
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
|
|
(22
|
)
|
|
|
|
(53
|
)
|
|
|
|
(58
|
)%
|
|
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
|
|
(240
|
)
|
|
|
|
(96
|
)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
|
|
(115
|
)
|
|
|
|
(93
|
)
|
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
|
|
$
|
690
|
|
|
|
|
$
|
710
|
|
|
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
* Calculation not meaningful
|
|
|
|
(a)
|
|
For a description of each segment, see Note 17A to Zoetis's combined
financial statements included in Zoetis's Form 10-K for the year
ended December 31, 2012.
|
|
|
|
|
|
(b)
|
|
Other business activities reflect the research and development costs
managed by our Research and Development organization.
|
|
|
|
|
|
(c)
|
|
Corporate includes, among other things, administration expenses,
interest expense, certain compensation and other costs not charged
to our operating segments.
|
|
|
|
|
|
(d)
|
|
Purchase accounting adjustments include certain charges related to
the fair value adjustments to inventory, intangible assets and
property, plant and equipment not charged to our operating segments.
|
|
|
|
|
|
(e)
|
|
Acquisition-related costs can include costs associated with
acquiring, integrating and restructuring newly acquired businesses,
such as transaction costs, integration costs, restructuring charges
and additional depreciation associated with asset restructuring.
|
|
|
|
|
|
(f)
|
|
Certain significant items are substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming a standalone
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition and the impact of
divestiture-related gains and losses.
|
|
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing
operations not directly attributable to an operating segment.
|
|
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
Zoetis Inc.
Media:
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:
Dina Fede, 1-973-443-2969 (o)
or
John O'Connor, 1-973-822-7088 (o)