- Delivers 9% Operational Growth in Revenue and 31% Operational Growth in Adjusted Net Income, Excluding Foreign Exchange
- Third Quarter 2015 Reported Revenue of $1.2 Billion Was Flat Compared to Third Quarter 2014
- Third Quarter 2015 Reported Net Income of $189 Million, or $0.38 Per Diluted Share, Increased 14% and 15%, Respectively, Compared to Third Quarter 2014
- Third Quarter 2015 Adjusted Net Income1 of $252 Million, or Adjusted Diluted EPS1 of $0.50, Increased 22% Compared to Third Quarter 2014
- Updates Full Year 2015 Revenue Guidance to $4.700 - $4.750 Billion and Full Year 2015 Adjusted Diluted EPS1 Guidance to $1.70 - $1.74
- Updates Financial Outlook for Full Year 2016 and 2017
Zoetis
Inc. (NYSE:ZTS) today reported its financial results for the third
quarter of 2015, and updated its full year 2015 guidance, as well as its
financial outlook for full year 2016 and 2017.
The company reported revenue of $1.2 billion for the third quarter of
2015, which was flat compared to the third quarter of 2014. Revenue
reflected an operational2 increase of 9%, excluding
the impact of foreign exchange.
Net income for the third quarter of 2015 was $189 million, or $0.38 per
diluted share, an increase of 14% and 15%, respectively, compared to the
third quarter of 2014. Adjusted net income1 for the third
quarter of 2015 was $252 million, or $0.50 per diluted share, an
increase of 22% compared to the third quarter of 2014. Adjusted net
income for the third quarter of 2015 excludes the net impact of $63
million, or $0.12 per diluted share, for purchase accounting
adjustments, acquisition-related costs and certain significant items. On
an operational basis, adjusted net income for the third quarter of 2015
increased 31% compared to the third quarter of 2014, with foreign
currency having a negative impact of 9%.
EXECUTIVE COMMENTARY
“We continued to deliver strong revenue and adjusted net income growth
this quarter, based on our diverse portfolio of high-quality products
and our continued discipline on costs and expenses,” said Zoetis Chief
Executive Officer Juan Ramón Alaix. “We generated operational growth of
9% in revenue and 31% in adjusted net income, delivering adjusted
diluted EPS of 50 cents per share. This quarter’s growth was largely due
to the performance of our livestock business in the U.S., the
integration of Abbott Animal Health products into our business, and the
growth of recent product launches, led by APOQUEL."
“Despite some global economic challenges, the animal health industry
remains resilient based on the strong fundamental drivers for improved
protein production and healthier pets,” said Alaix. “Our growth
strategies and resources are aligned against these drivers to expand our
market leadership in the industry. The recently announced acquisition of
PHARMAQ, a market-leading company in aquatic health, is an example of
this growth strategy and will bring us another platform and pipeline to
strengthen our core livestock business.”
“The financial highlights of the quarter were once again operational
revenue growth across our portfolio and cost discipline that drove
significant growth in adjusted net income,” said Zoetis Chief Financial
Officer Paul Herendeen. “The productivity of our R&D engine and
performance in the U.S. and key emerging markets like Brazil and China
give us confidence in our future prospects. With this view, we are
updating our guidance for full year 2015 and our outlook for full year
2016 and 2017, while managing the expected headwinds of foreign
exchange.”
QUARTERLY HIGHLIGHTS
Zoetis organizes and manages its business across two regional operating
segments: the United States (U.S.) and International. Within these
segments, the company delivers a diverse portfolio of products for
livestock and companion animals tailored to local trends and customer
needs.
In the third quarter of 2015:
-
Revenue in the U.S. segment was $632 million, an increase of
19% compared to the third quarter of 2014. Sales of companion animal
products grew 27%, led by the addition of Abbott Animal Health
products and the performance of key brands including APOQUEL®,
as well as REVOLUTION®, CERENIA®, PROHEART®
and CONVENIA®. Sales of livestock products grew 13%, driven
by sales of cattle and swine products, due primarily to the timing of
seasonal buying patterns. Sales of poultry products declined slightly.
-
Revenue in the International segment was $569 million, an
increase of 2% on an operational basis compared to the third quarter
of 2014. In companion animal, sales grew 7% operationally, primarily
driven by sales of APOQUEL and the addition of Abbott products. Sales
in Japan grew significantly due to the termination of a distributor
agreement that resulted in a product buyback in the prior year.
Competitive pressures on REVOLUTION in certain key markets partially
offset growth in companion animal products. In livestock, sales were
flat operationally despite revenue growth in Brazil, Australia and
China. Livestock growth in Brazil was driven by cattle due to
favorable market conditions and recent product launches, as well as
growth in poultry. In Australia, growth was driven by increased
feedlot activity in the cattle market, while an improving pork market
in China drove growth across the swine portfolio. This growth was
offset by our business reduction in Venezuela and lower sales in
France, which were compared to higher sales in the prior year related
to changes in anti-infective legislation.
Zoetis continues to drive demand and strengthen its diverse portfolio of
products through lifecycle developments, strong customer relationships
and access to new markets and technologies. The company is focused on
improving the performance and delivery of its current product lines;
expanding product indications across species; pursuing approvals in new
geographies; and developing innovative medicines, treatments and
solutions for emerging diseases and unmet customer needs. Some recent
highlights include:
-
Yesterday, Zoetis announced an agreement to purchase PHARMAQ, the
global leader in vaccines and innovation for health products in
aquaculture. Acquiring PHARMAQ, the market leader in vaccines for
farmed fish, strengthens Zoetis’ core livestock business, giving the
company an increased presence in the fastest growing segment of the
animal health industry.
-
In the third quarter, Zoetis received a positive opinion from the
European Medicines Agency's Committee for Medicinal Products for
Veterinary Use (CVMP), recommending the granting of a marketing
authorization for SIMPARICATM, a once-monthly chewable
medication for the treatment of flea, tick and mange mite infestations
in dogs beginning at age eight weeks. The active substance of
SIMPARICA is sarolaner, a new ectoparasiticide belonging to the
isoxazoline group.
-
Zoetis strengthened its commitment to innovation in China with the
opening of a new research and development center near Beijing last
week. The site will serve as home to a team of scientists who will
initially focus on accelerating the development of quality vaccines
tailored to the strains of illnesses that affect livestock in China.
In addition, Zoetis opened a new global manufacturing and supply
facility in Suzhou, China, replacing its original Suzhou manufacturing
facility that opened in 1995. The site will house the manufacture of
pre-mix and soluble powder medicines that will help keep farm animals
healthy and set a strong foundation for future growth in China.
FINANCIAL GUIDANCE
Zoetis is updating its financial guidance for full year 2015 to reflect
its most recent expectations for the fourth quarter and recent changes
in foreign exchange rates:
-
Revenue of between $4.700 billion to $4.750 billion
-
Reported diluted EPS of between $0.82 to $0.89 per share
-
Adjusted diluted EPS1 of between $1.70 to $1.74 per share
The company also provided updates to its long-term outlook for:
Full Year 2016
-
Revenue of $4.750 billion to $4.875 billion
-
Reported diluted EPS of between $1.50 to $1.68 per share3
-
Adjusted cost of sales1 as a percentage of revenue of
approximately 33% to 34%
-
Adjusted EBIT margin1 of approximately 31%
-
Adjusted diluted EPS of $1.84 to $1.94
Full Year 2017
-
Revenue of $5.025 billion to $5.225 billion
-
Reported diluted EPS of between $2.04 to $2.22 per share3
-
Adjusted cost of sales1 as a percentage of revenue of
approximately 32% to 33%
-
Adjusted EBIT margin1 of approximately 34%
-
Adjusted diluted EPS of $2.24 to $2.38
Additional guidance on other items for 2015, 2016 and 2017, such as
expenses and tax rate, are included in the financial tables and will be
discussed on the company's conference call this morning.
WEBCAST & CONFERENCE CALL DETAILS
Zoetis will host a webcast and conference call at 8:30 a.m. (EST) today,
during which company executives will review third quarter financial
results, discuss 2015 financial guidance, talk about the acquisition of
PHARMAQ, 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 Nov. 3,
2015.
About Zoetis
Zoetis
(zô-EH-tis) is the leading animal health company, dedicated to
supporting its customers and their businesses. Building on more than 60
years of experience in animal health, Zoetis discovers, develops,
manufactures and markets veterinary vaccines and medicines, complemented
by diagnostic products and genetic tests and supported by a range of
services. In 2014, the company generated annual revenue of $4.8 billion.
With approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who raise
and care for farm and companion animals with sales of its products in
120 countries. For more information, visit www.zoetis.com.
1 Adjusted net income and its components 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.
3 Includes preliminary estimate of purchase price
allocation for PHARMAQ.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect the
current views of Zoetis with respect to business plans or prospects,
future operating or financial performance, expectations regarding
products, future use of cash and dividend payments, and other future
events. These statements are not guarantees of future performance or
actions. Forward-looking statements are subject to risks and
uncertainties. If one or more of these risks or uncertainties
materialize, or if management's underlying assumptions prove to be
incorrect, actual results may differ materially from those contemplated
by a forward-looking statement. Forward-looking statements speak only as
of the date on which they are made. Zoetis expressly disclaims any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. A
further list and description of risks, uncertainties and other matters
can be found in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future Results”
and “Item 1A. Risk Factors,” in our Quarterly Reports on Form 10-Q and
in our Current Reports on Form 8-K. These filings and subsequent filings
are available online at www.sec.gov,
www.zoetis.com,
or on request from Zoetis.
Use of Non-GAAP Financial Measures:
We use non-GAAP financial measures, such as adjusted net income and
adjusted diluted earnings per share, to assess and analyze our
operational results and trends and to make financial and operational
decisions. We believe these non-GAAP financial measures are also useful
to investors because they provide greater transparency regarding our
operating performance. The non-GAAP financial measures included
in this press release should not be considered alternatives to
measurements required by GAAP, such as net income, operating income, and
earnings per share, and should not be considered measures of liquidity.
These non-GAAP financial measures are unlikely to be comparable with
non-GAAP information provided by other companies. Reconciliation of
non-GAAP financial measures and GAAP financial measures are included in
the tables accompanying this press release and are posted on our website
at www.zoetis.com.
Internet Posting of Information:
We routinely post information that may be important to investors in
the 'Investors' section of our website at www.zoetis.com,
on our Facebook page at http://www.facebook.com/zoetis
and on Twitter @zoetis. We encourage investors and potential investors
to consult our website regularly and to follow us on Facebook and
Twitter for important information about us.
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)
|
|
(UNAUDITED)
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
Nine Months
|
|
|
|
|
|
2015
|
|
2014
|
|
% Change
|
|
2015
|
|
2014
|
|
% Change
|
|
Revenue
|
|
|
|
$
|
1,214
|
|
|
$
|
1,210
|
|
|
—
|
|
$
|
3,491
|
|
|
$
|
3,465
|
|
|
1
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales(b)
|
|
|
|
421
|
|
|
434
|
|
|
(3)
|
|
1,242
|
|
|
1,226
|
|
|
1
|
|
Selling, general and administrative expenses(b)
|
|
|
|
374
|
|
|
394
|
|
|
(5)
|
|
1,107
|
|
|
1,146
|
|
|
(3)
|
|
Research and development expenses(b)
|
|
|
|
91
|
|
|
93
|
|
|
(2)
|
|
255
|
|
|
272
|
|
|
(6)
|
|
Amortization of intangible assets(c)
|
|
|
|
15
|
|
|
16
|
|
|
(6)
|
|
45
|
|
|
46
|
|
|
(2)
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
13
|
|
|
2
|
|
|
*
|
|
280
|
|
|
10
|
|
|
*
|
|
Interest expense
|
|
|
|
29
|
|
|
29
|
|
|
—
|
|
86
|
|
|
87
|
|
|
(1)
|
|
Other (income)/deductions–net
|
|
|
|
(2
|
)
|
|
4
|
|
|
*
|
|
—
|
|
|
13
|
|
|
(100)
|
|
Income before provision for taxes on income
|
|
|
|
273
|
|
|
238
|
|
|
15
|
|
476
|
|
|
665
|
|
|
(28)
|
|
Provision for taxes on income
|
|
|
|
83
|
|
|
71
|
|
|
17
|
|
157
|
|
|
204
|
|
|
(23)
|
|
Net income before allocation to noncontrolling interests
|
|
|
|
190
|
|
|
167
|
|
|
14
|
|
319
|
|
|
461
|
|
|
(31)
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
1
|
|
|
1
|
|
|
—
|
|
2
|
|
|
4
|
|
|
(50)
|
|
Net income attributable to Zoetis
|
|
|
|
$
|
189
|
|
|
$
|
166
|
|
|
14
|
|
$
|
317
|
|
|
$
|
457
|
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—basic
|
|
|
|
$
|
0.38
|
|
|
$
|
0.33
|
|
|
15
|
|
$
|
0.63
|
|
|
$
|
0.91
|
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share—diluted
|
|
|
|
$
|
0.38
|
|
|
$
|
0.33
|
|
|
15
|
|
$
|
0.63
|
|
|
$
|
0.91
|
|
|
(31)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used to calculate earnings per share (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
499,239
|
|
|
501,453
|
|
|
|
|
500,186
|
|
|
500,887
|
|
|
|
|
Diluted
|
|
|
|
501,653
|
|
|
502,445
|
|
|
|
|
502,480
|
|
|
501,610
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
and nine months ended September 27, 2015 and September 28, 2014.
Subsidiaries operating outside the United States are included for
the three and nine months ended August 23, 2015 and August 24, 2014.
|
|
|
|
(b)
|
|
Exclusive of amortization of intangible assets, except as discussed
in footnote (c) below.
|
|
|
|
(c)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in Cost
of sales, Selling, general and administrative expenses or Research
and development expenses, as appropriate.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
CERTAIN LINE ITEMS
|
|
(UNAUDITED)
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended September 27, 2015
|
|
|
|
|
|
GAAP Reported(a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
Adjusted(b)
|
|
Revenue
|
|
|
|
$
|
1,214
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,214
|
|
|
Cost of sales(c)
|
|
|
|
421
|
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
|
409
|
|
|
Gross profit
|
|
|
|
793
|
|
|
2
|
|
|
—
|
|
|
10
|
|
|
805
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
374
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
346
|
|
|
Research and development expenses(c)
|
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91
|
|
|
Amortization of intangible assets(d)
|
|
|
|
15
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
13
|
|
|
—
|
|
|
(5
|
)
|
|
(8
|
)
|
|
—
|
|
|
Interest expense
|
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
Other (income)/deductions–net
|
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
Income before provision for taxes on income
|
|
|
|
273
|
|
|
13
|
|
|
6
|
|
|
46
|
|
|
338
|
|
|
Provision for taxes on income
|
|
|
|
83
|
|
|
4
|
|
|
—
|
|
|
(2
|
)
|
|
85
|
|
|
Income from continuing operations
|
|
|
|
190
|
|
|
9
|
|
|
6
|
|
|
48
|
|
|
253
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Net income attributable to Zoetis
|
|
|
|
189
|
|
|
9
|
|
|
6
|
|
|
48
|
|
|
252
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
|
0.38
|
|
|
0.02
|
|
|
0.01
|
|
|
0.09
|
|
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended September 28, 2014
|
|
|
|
|
|
GAAP Reported(a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
Adjusted(b)
|
|
Revenue
|
|
|
|
$
|
1,210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,210
|
|
|
Cost of sales(c)
|
|
|
|
434
|
|
|
(2
|
)
|
|
—
|
|
|
(3
|
)
|
|
429
|
|
|
Gross profit
|
|
|
|
776
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|
781
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
394
|
|
|
1
|
|
|
—
|
|
|
(29
|
)
|
|
366
|
|
|
Research and development expenses(c)
|
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|
Amortization of intangible assets(d)
|
|
|
|
16
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
Interest expense
|
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
Other (income)/deductions–net
|
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(1
|
)
|
|
Income before provision for taxes on income
|
|
|
|
238
|
|
|
13
|
|
|
1
|
|
|
38
|
|
|
290
|
|
|
Provision for taxes on income
|
|
|
|
71
|
|
|
4
|
|
|
1
|
|
|
6
|
|
|
82
|
|
|
Income from continuing operations
|
|
|
|
167
|
|
|
9
|
|
|
—
|
|
|
32
|
|
|
208
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Net income attributable to Zoetis
|
|
|
|
166
|
|
|
9
|
|
|
—
|
|
|
32
|
|
|
207
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
|
0.33
|
|
|
0.02
|
|
|
—
|
|
|
0.06
|
|
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
|
|
CERTAIN LINE ITEMS
|
|
(UNAUDITED)
|
|
(millions of dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months ended September 27, 2015
|
|
|
|
|
|
GAAP
Reported(a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
Adjusted(b)
|
|
Revenue
|
|
|
|
$
|
3,491
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,491
|
|
|
Cost of sales(c)
|
|
|
|
1,242
|
|
|
(7
|
)
|
|
—
|
|
|
(35
|
)
|
|
1,200
|
|
|
Gross profit
|
|
|
|
2,249
|
|
|
7
|
|
|
—
|
|
|
35
|
|
|
2,291
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
1,107
|
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|
1,009
|
|
|
Research and development expenses(c)
|
|
|
|
255
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
254
|
|
|
Amortization of intangible assets(d)
|
|
|
|
45
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
12
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
280
|
|
|
—
|
|
|
(9
|
)
|
|
|
(271
|
)
|
|
—
|
|
|
Interest expense
|
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
Other (income)/deductions–net
|
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
Income before provision for taxes on income
|
|
|
|
476
|
|
|
41
|
|
|
11
|
|
|
406
|
|
|
934
|
|
|
Provision for taxes on income
|
|
|
|
157
|
|
|
14
|
|
|
(2
|
)
|
|
88
|
|
|
257
|
|
|
Income from continuing operations
|
|
|
|
319
|
|
|
27
|
|
|
13
|
|
|
318
|
|
|
677
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
Net income attributable to Zoetis
|
|
|
|
317
|
|
|
27
|
|
|
13
|
|
|
318
|
|
|
675
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
|
0.63
|
|
|
0.05
|
|
|
0.03
|
|
|
0.63
|
|
|
1.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months ended September 28, 2014
|
|
|
|
|
|
GAAP Reported (a)
|
|
Purchase
Accounting
Adjustments
|
|
Acquisition-
Related
Costs(1)
|
|
Certain
Significant
Items(2)
|
|
Non-GAAP
Adjusted(b)
|
|
Revenue
|
|
|
|
$
|
3,465
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,465
|
|
|
Cost of sales(c)
|
|
|
|
1,226
|
|
|
(3
|
)
|
|
—
|
|
|
(14
|
)
|
|
1,209
|
|
|
Gross profit
|
|
|
|
2,239
|
|
|
3
|
|
|
—
|
|
|
14
|
|
|
2,256
|
|
|
Selling, general and administrative expenses(c)
|
|
|
|
1,146
|
|
|
1
|
|
|
—
|
|
|
(90
|
)
|
|
1,057
|
|
|
Research and development expenses(c)
|
|
|
|
272
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
271
|
|
|
Amortization of intangible assets(d)
|
|
|
|
46
|
|
|
(35
|
)
|
|
—
|
|
|
—
|
|
|
11
|
|
|
Restructuring charges and certain acquisition-related costs
|
|
|
|
10
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
|
—
|
|
|
Interest expense
|
|
|
|
87
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87
|
|
|
Other (income)/deductions–net
|
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(5
|
)
|
|
Income before provision for taxes on income
|
|
|
|
665
|
|
|
38
|
|
|
5
|
|
|
127
|
|
|
835
|
|
|
Provision for taxes on income
|
|
|
|
204
|
|
|
13
|
|
|
2
|
|
|
25
|
|
|
244
|
|
|
Income from continuing operations
|
|
|
|
461
|
|
|
25
|
|
|
3
|
|
|
102
|
|
|
591
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
Net income attributable to Zoetis
|
|
|
|
457
|
|
|
25
|
|
|
3
|
|
|
102
|
|
|
587
|
|
|
Earnings per common share attributable to Zoetis–diluted(e)
|
|
|
|
0.91
|
|
|
0.05
|
|
|
0.01
|
|
|
0.20
|
|
|
1.17
|
|
|
(a)
|
|
The condensed consolidated statements of income present the three
and nine months ended September 27, 2015 and September 28, 2014.
Subsidiaries operating outside the United States are included for
the three and nine months ended August 30, 2015 and August 31, 2014.
|
|
|
|
(b)
|
|
Non-GAAP adjusted net income and its components and non-GAAP
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS. Despite the importance of these measures to management in goal
setting and performance measurement, non-GAAP adjusted net income
and its components and non-GAAP adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, non-GAAP
adjusted net income and its components and non-GAAP adjusted diluted
EPS (unlike U.S. GAAP net income and its components and diluted EPS)
may not be comparable to the calculation of similar measures of
other companies. Non-GAAP adjusted net income and its components,
and non-GAAP adjusted diluted EPS are presented solely to permit
investors to more fully understand how management assesses
performance.
|
|
|
|
(c)
|
|
Exclusive of amortization of intangible assets, except as discussed
in footnote (d) below.
|
|
|
|
(d)
|
|
Amortization expense related to finite-lived acquired intangible
assets that contribute to our ability to sell, manufacture,
research, market and distribute products, compounds and
intellectual property is included in Amortization of intangible
assets as these intangible assets benefit multiple business
functions. Amortization expense related to acquired intangible
assets that are associated with a single function is included in Cost
of sales, Selling, general and administrative expenses or Research
and development expenses, as appropriate.
|
|
|
|
(e)
|
|
EPS amounts may not add due to rounding.
|
|
|
|
See Notes to Reconciliation of GAAP Reported to Non-GAAP Adjusted
Information for notes (1) and (2).
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED
INFORMATION
|
|
CERTAIN LINE ITEMS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
(1) Acquisition-related costs include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Integration costs(a)
|
|
|
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
9
|
|
|
$
|
5
|
|
Other(b)
|
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Total acquisition-related costs—pre-tax
|
|
|
|
6
|
|
|
1
|
|
|
11
|
|
|
5
|
|
Income taxes(c)
|
|
|
|
—
|
|
|
1
|
|
|
(2
|
)
|
|
2
|
|
Total acquisition-related costs—net of tax
|
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Integration costs represent external, incremental costs directly
related to integrating acquired businesses and primarily include
expenditures for consulting and the integration of systems and
processes. Included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
(b)
|
|
Included in Other (income)/deductions—net.
|
|
|
|
(c)
|
|
Included in Provision for taxes on income. Income taxes
include the tax effect of the associated pre-tax amounts,
calculated by determining the jurisdictional location of the
pre-tax amounts and applying that jurisdiction's applicable tax
rate, as well as a tax charge related to the acquisition of
certain assets of Abbott Animal Health.
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
(2) Certain significant items include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
Nine Months
|
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operational efficiency initiative(a)
|
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
294
|
|
|
$
|
—
|
|
|
Supply network strategy(b)
|
|
|
|
3
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
Other restructuring charges and cost-reduction/productivity
initiatives(c)
|
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
5
|
|
|
Certain asset impairment charges(d)
|
|
|
|
—
|
|
|
6
|
|
|
2
|
|
|
6
|
|
|
Stand-up costs(e)
|
|
|
|
22
|
|
|
32
|
|
|
84
|
|
|
106
|
|
|
Net gain on sale of assets(f)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
Other(g)
|
|
|
|
—
|
|
|
(1
|
)
|
|
3
|
|
|
13
|
|
|
Total certain significant items—pre-tax
|
|
|
|
46
|
|
|
38
|
|
|
406
|
|
|
127
|
|
|
Income taxes(h)
|
|
|
|
(2
|
)
|
|
6
|
|
|
88
|
|
|
25
|
|
|
Total certain significant items—net of tax
|
|
|
|
$
|
48
|
|
|
$
|
32
|
|
|
$
|
318
|
|
|
$
|
102
|
|
|
(a)
|
|
Includes restructuring charges of $8 million related to asset
impairments for the three months ended September 27, 2015 and
restructuring charges of $261 million related to employee
termination costs ($228 million) and asset impairments ($33
million) for the nine months ended September 27, 2015, included in Restructuring
charges and certain acquisition-related costs. Also includes
inventory write-offs of $5 million for the three and nine months
ended September 27, 2015, included in Cost of sales, and $8
million and $28 million primarily related to consulting fees for
the three and nine months ended September 27, 2015, respectively,
included in Selling, general and administrative expenses.
|
|
|
|
(b)
|
|
Includes restructuring charges of $10 million related to employee
termination costs ($9 million) and asset impairments ($1 million)
for the nine months ended September 27, 2015, included in Restructuring
charges and certain acquisition-related costs. Also includes
charges of $3 million and $13 million primarily related to
consulting fees for the three and nine months ended September 27,
2015, respectively, included in Cost of sales.
|
|
|
|
(c)
|
|
Amounts related to our cost-reduction/productivity initiatives and
were included in Restructuring charges and certain
acquisition-related costs.
|
|
|
|
(d)
|
|
Included in Other (income)/deductions—net. For the nine
months ended September 27, 2015, represents an impairment of IPR&D
assets related to the termination of a canine oncology project.
For the three and nine months ended September 28, 2014, represents
an impairment charge related to an IPR&D project acquired with the
FDAH acquisition in 2009.
|
|
|
|
(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. Included in Cost of sales ($2 million and $16
million) and Selling, general and administrative expenses
($20 million and $68 million) for the three and nine months ended
September 27, 2015, respectively. Included in Cost of sales
($3 million and $14 million) and Selling, general and
administrative expenses ($29 million and $90 million), and Other
(income)/deductions—net ($0 million and $2 million) for the
three and nine months ended September 28, 2014, respectively.
|
|
|
|
(f)
|
|
For the nine months ended September 28, 2014, represents the
Zoetis portion of a net gain on the sale of land by our Taiwan
joint venture, included in Other (income)/deductions—net.
|
|
|
|
(g)
|
|
The nine months ended September 27, 2015, includes charges due to
unusual investor-related activities in Selling, general and
administrative expenses ($3 million). The nine months ended
September 28, 2014, primarily includes a reserve associated with a
commercial settlement in Mexico ($13 million), partially offset by
the insurance recovery ($1 million income), and a pension plan
settlement charge related to the divestiture of a manufacturing
plant ($4 million), partially offset by an insurance recovery of
litigation related charges ($2 million income), in Other
(income)/deductions—net.
|
|
|
|
(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. The nine months ended September 27, 2015 also includes a net
tax benefit related to the revaluation of deferred taxes and other
deferred tax adjustments.
|
|
|
|
Certain amounts may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
ADJUSTED SELECTED COSTS, EXPENSES AND INCOME (a)
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign
Exchange
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
|
$
|
409
|
|
|
$
|
429
|
|
|
(5
|
)%
|
|
(12
|
)%
|
|
7
|
%
|
|
as a percent of revenue
|
|
|
|
33.7
|
%
|
|
35.5
|
%
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
Adjusted SG&A expenses
|
|
|
|
346
|
|
|
366
|
|
|
(5
|
)%
|
|
(8
|
)%
|
|
3
|
%
|
|
Adjusted R&D expenses
|
|
|
|
91
|
|
|
93
|
|
|
(2
|
)%
|
|
(5
|
)%
|
|
3
|
%
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
252
|
|
|
207
|
|
|
22
|
%
|
|
(9
|
)%
|
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign
Exchange
|
|
Operational
|
|
Adjusted cost of sales
|
|
|
|
$
|
1,200
|
|
|
$
|
1,209
|
|
|
(1
|
)%
|
|
(10
|
)%
|
|
9
|
%
|
|
as a percent of revenue
|
|
|
|
34.4
|
%
|
|
34.9
|
%
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
Adjusted SG&A expenses
|
|
|
|
1,009
|
|
|
1,057
|
|
|
(5
|
)%
|
|
(8
|
)%
|
|
3
|
%
|
|
Adjusted R&D expenses
|
|
|
|
254
|
|
|
271
|
|
|
(6
|
)%
|
|
(3
|
)%
|
|
(3
|
)%
|
|
Adjusted net income attributable to Zoetis
|
|
|
|
675
|
|
|
587
|
|
|
15
|
%
|
|
(7
|
)%
|
|
22
|
%
|
|
(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 nine months ended September
27, 2015 and September 28, 2014 are provided in the materials
accompanying this report. These adjusted income statement line item
measures are not, and should not be viewed as, substitutes for the
corresponding U.S. GAAP line items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
2015 GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
|
Full Year 2015
|
|
Revenue
|
|
|
|
$4,700 to $4,750
|
|
Operational growth
|
|
|
|
6.5% to 7.5%
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
Approximately 35%
|
|
Adjusted SG&A expenses(a)
|
|
|
|
$1,375 to $1,405
|
|
Adjusted R&D expenses(a)
|
|
|
|
$350 to $370
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
|
Approximately $110
|
|
Adjusted EBIT margin(a)
|
|
|
|
Approximately 28%
|
|
Effective tax rate on adjusted income(a)
|
|
|
|
Approximately 28%
|
|
Adjusted diluted EPS(a)
|
|
|
|
$1.70 to $1.74
|
|
Adjusted net income(a)
|
|
|
|
$855 to $875
|
|
Operational growth
|
|
|
|
16% to 19%
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
$470 to $490
|
|
Reported diluted EPS
|
|
|
|
$0.82 to $0.89
|
|
|
|
|
|
|
A reconciliation of 2015 adjusted net income and adjusted diluted EPS
guidance to 2015 reported net income attributable to Zoetis and reported
diluted EPS attributable to Zoetis common shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2015 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
|
Net Income
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
~$855 - $875
|
|
~$1.70 - $1.74
|
|
Purchase accounting adjustments
|
|
|
|
~(40)
|
|
~(0.08)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
~(385 - 400)
|
|
~(0.77 - 0.80)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance
|
|
|
|
~$415 - $450
|
|
~$0.82 - $0.89
|
|
(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. Adjusted earnings before interest
and taxes (EBIT) is defined as reported EBIT excluding purchase
accounting adjustments, acquisition-related costs and certain
significant items. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted net
income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP
net income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies. Adjusted
net income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative and supply network strategy, becoming an independent
public company, such as new branding (including changes to the
manufacturing process for required new packaging), the creation of
standalone systems and infrastructure, site separation, and certain
legal registration and patent assignment costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
2016 - 2017 GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Line Items
(millions of dollars, except per share amounts)
|
|
|
|
2016
|
|
2017
|
|
Revenue
|
|
|
|
$4,750 to $4,875
|
|
$5,025 to $5,225
|
|
Operational growth
|
|
|
|
3% to 5%
|
|
4% to 9%
|
|
Adjusted cost of sales as a percentage of revenue(a)
|
|
|
|
33% to 34%
|
|
32% to 33%
|
|
Adjusted SG&A expenses(a)
|
|
|
|
$1,310 to $1,360
|
|
$1,270 to $1,360
|
|
Adjusted R&D expenses(a)
|
|
|
|
$360 to $380
|
|
$360 to $380
|
|
Adjusted interest expense and other (income)/deductions(a)
|
|
|
|
Approximately $150
|
|
Approximately $150
|
|
Adjusted EBIT margin(a)
|
|
|
|
Approximately 31%
|
|
Approximately 34%
|
|
Effective tax rate on adjusted income(a)
|
|
|
|
Approximately 28%
|
|
Approximately 28%
|
|
Adjusted diluted EPS(a)
|
|
|
|
$1.84 to $1.94
|
|
$2.24 to $2.38
|
|
Adjusted net income(a)
|
|
|
|
$925 to $975
|
|
$1,125 to $1,195
|
|
Operational growth
|
|
|
|
14% to 20%
|
|
18% to 26%
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
$130 to $180
|
|
$50 to $80
|
|
Reported diluted EPS(c)
|
|
|
|
$1.50 to $1.68
|
|
$2.04 to $2.22
|
|
|
|
|
|
|
|
|
A reconciliation of 2016 and 2017 adjusted net income and adjusted
diluted EPS guidance to 2016 and 2017 reported net income attributable
to Zoetis and reported diluted EPS attributable to Zoetis common
shareholders guidance follows:
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2016 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
|
Net Income
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
~$925 - $975
|
|
~$1.84 - $1.94
|
|
Purchase accounting adjustments
|
|
|
|
~(45)
|
|
~(0.09)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
~(85 - 125)
|
|
~(0.17 - 0.25)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance(c)
|
|
|
|
~$755 - $845
|
|
~$1.50 - $1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2017 Guidance
|
|
(millions of dollars, except per share amounts)
|
|
|
|
Net Income
|
|
Diluted EPS
|
|
Adjusted net income/diluted EPS(a) guidance
|
|
|
|
~$1,125 - $1,195
|
|
~$2.24 - $2.38
|
|
Purchase accounting adjustments
|
|
|
|
~(45)
|
|
~(0.09)
|
|
Certain significant items(b) and acquisition-related costs
|
|
|
|
~(35 - 55)
|
|
~(0.07 - 0.11)
|
|
Reported net income attributable to Zoetis/diluted EPS guidance(c)
|
|
|
|
~$1,025 - $1,115
|
|
~$2.04 - $2.22
|
|
(a)
|
|
Adjusted net income and its components and adjusted diluted EPS are
defined as reported U.S. generally accepted accounting principles
(GAAP) net income and its components and reported diluted EPS
excluding purchase accounting adjustments, acquisition-related costs
and certain significant items. Adjusted cost of sales, adjusted
selling, general and administrative (SG&A) expenses, adjusted
research and development (R&D) expenses, adjusted interest expense,
adjusted other (income)/deductions are income statement line items
prepared on the same basis, and, therefore, components of the
overall adjusted income measure. Adjusted earnings before interest
and taxes (EBIT) is defined as reported EBIT excluding purchase
accounting adjustments, acquisition-related costs and certain
significant items. Despite the importance of these measures to
management in goal setting and performance measurement, adjusted net
income and its components and adjusted diluted EPS are non-GAAP
financial measures that have no standardized meaning prescribed by
U.S. GAAP and, therefore, have limits in their usefulness to
investors. Because of the non-standardized definitions, adjusted net
income and its components and adjusted diluted EPS (unlike U.S. GAAP
net income and its components and diluted EPS) may not be comparable
to the calculation of similar measures of other companies. Adjusted
net income and its components and adjusted diluted EPS are presented
solely to permit investors to more fully understand how management
assesses performance. Adjusted net income and its components and
adjusted diluted EPS are not, and should not be viewed as,
substitutes for U.S. GAAP net income and its components and diluted
EPS.
|
|
|
|
(b)
|
|
Primarily includes certain nonrecurring costs related to
restructuring and other charges for the operational efficiency
initiative and supply network strategy, becoming an independent
public company, such as new branding (including changes to the
manufacturing process for required new packaging), the creation of
standalone systems and infrastructure, site separation, and certain
legal registration and patent assignment costs.
|
|
|
|
(c)
|
|
Includes preliminary estimate of purchase price allocation for
PHARMAQ.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
750
|
|
|
$
|
790
|
|
|
(5
|
)%
|
|
(10
|
)%
|
|
5
|
%
|
|
Companion Animal
|
|
|
|
451
|
|
|
408
|
|
|
11
|
%
|
|
(7
|
)%
|
|
18
|
%
|
|
Contract Manufacturing
|
|
|
|
13
|
|
|
12
|
|
|
8
|
%
|
|
(5
|
)%
|
|
13
|
%
|
|
Total Revenue
|
|
|
|
$
|
1,214
|
|
|
$
|
1,210
|
|
|
—
|
%
|
|
(9
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
348
|
|
|
$
|
308
|
|
|
13
|
%
|
|
—
|
%
|
|
13
|
%
|
|
Companion Animal
|
|
|
|
284
|
|
|
224
|
|
|
27
|
%
|
|
—
|
%
|
|
27
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
632
|
|
|
$
|
532
|
|
|
19
|
%
|
|
—
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
402
|
|
|
$
|
482
|
|
|
(17
|
)%
|
|
(17
|
)%
|
|
—
|
%
|
|
Companion Animal
|
|
|
|
167
|
|
|
184
|
|
|
(9
|
)%
|
|
(16
|
)%
|
|
7
|
%
|
|
Total International Revenue
|
|
|
|
$
|
569
|
|
|
$
|
666
|
|
|
(15
|
)%
|
|
(17
|
)%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
432
|
|
|
$
|
437
|
|
|
(1
|
)%
|
|
(9
|
)%
|
|
8
|
%
|
|
Swine
|
|
|
|
163
|
|
|
179
|
|
|
(9
|
)%
|
|
(10
|
)%
|
|
1
|
%
|
|
Poultry
|
|
|
|
132
|
|
|
147
|
|
|
(10
|
)%
|
|
(10
|
)%
|
|
—
|
%
|
|
Other
|
|
|
|
23
|
|
|
27
|
|
|
(15
|
)%
|
|
(15
|
)%
|
|
—
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
750
|
|
|
$
|
790
|
|
|
(5
|
)%
|
|
(10
|
)%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
35
|
|
|
$
|
38
|
|
|
(8
|
)%
|
|
(10
|
)%
|
|
2
|
%
|
|
Dogs and Cats
|
|
|
|
416
|
|
|
370
|
|
|
12
|
%
|
|
(8
|
)%
|
|
20
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
451
|
|
|
$
|
408
|
|
|
11
|
%
|
|
(7
|
)%
|
|
18
|
%
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure. The prior period presentation has been revised
to reflect the new segment reporting structure.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY SEGMENT(a) AND SPECIES
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign Exchange
|
|
Operational
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
2,155
|
|
|
$
|
2,199
|
|
|
(2
|
)%
|
|
(9
|
)%
|
|
7
|
%
|
|
Companion Animal
|
|
|
|
1,299
|
|
|
1,227
|
|
|
6
|
%
|
|
(6
|
)%
|
|
12
|
%
|
|
Contract Manufacturing
|
|
|
|
37
|
|
|
39
|
|
|
(5
|
)%
|
|
(7
|
)%
|
|
2
|
%
|
|
Total Revenue
|
|
|
|
$
|
3,491
|
|
|
$
|
3,465
|
|
|
1
|
%
|
|
(8
|
)%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
903
|
|
|
$
|
795
|
|
|
14
|
%
|
|
—
|
%
|
|
14
|
%
|
|
Companion Animal
|
|
|
|
789
|
|
|
675
|
|
|
17
|
%
|
|
—
|
%
|
|
17
|
%
|
|
Total U.S. Revenue
|
|
|
|
$
|
1,692
|
|
|
$
|
1,470
|
|
|
15
|
%
|
|
—
|
%
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock
|
|
|
|
$
|
1,252
|
|
|
$
|
1,404
|
|
|
(11
|
)%
|
|
(14
|
)%
|
|
3
|
%
|
|
Companion Animal
|
|
|
|
510
|
|
|
552
|
|
|
(8
|
)%
|
|
(15
|
)%
|
|
7
|
%
|
|
Total International Revenue
|
|
|
|
$
|
1,762
|
|
|
$
|
1,956
|
|
|
(10
|
)%
|
|
(14
|
)%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Livestock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cattle
|
|
|
|
$
|
1,201
|
|
|
$
|
1,207
|
|
|
—
|
%
|
|
(8
|
)%
|
|
8
|
%
|
|
Swine
|
|
|
|
495
|
|
|
496
|
|
|
—
|
%
|
|
(9
|
)%
|
|
9
|
%
|
|
Poultry
|
|
|
|
399
|
|
|
428
|
|
|
(7
|
)%
|
|
(8
|
)%
|
|
1
|
%
|
|
Other
|
|
|
|
60
|
|
|
68
|
|
|
(12
|
)%
|
|
(15
|
)%
|
|
3
|
%
|
|
Total Livestock Revenue
|
|
|
|
$
|
2,155
|
|
|
$
|
2,199
|
|
|
(2
|
)%
|
|
(9
|
)%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companion Animal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Horses
|
|
|
|
$
|
117
|
|
|
$
|
127
|
|
|
(8
|
)%
|
|
(7
|
)%
|
|
(1
|
)%
|
|
Dogs and Cats
|
|
|
|
1,182
|
|
|
1,100
|
|
|
7
|
%
|
|
(7
|
)%
|
|
14
|
%
|
|
Total Companion Animal Revenue
|
|
|
|
$
|
1,299
|
|
|
$
|
1,227
|
|
|
6
|
%
|
|
(6
|
)%
|
|
12
|
%
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure. The prior period presentation has been revised
to reflect the new segment reporting structure.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
CONSOLIDATED REVENUE BY KEY INTERNATIONAL MARKETS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Total
|
|
Foreign
Exchange
|
|
Operational
|
|
Total International
|
|
|
|
$
|
569
|
|
|
$
|
666
|
|
|
(15
|
)%
|
|
(17
|
)%
|
|
2
|
%
|
|
Australia
|
|
|
|
40
|
|
|
47
|
|
|
(15
|
)%
|
|
(20
|
)%
|
|
5
|
%
|
|
Brazil
|
|
|
|
54
|
|
|
71
|
|
|
(24
|
)%
|
|
(36
|
)%
|
|
12
|
%
|
|
Canada
|
|
|
|
35
|
|
|
39
|
|
|
(10
|
)%
|
|
(15
|
)%
|
|
5
|
%
|
|
China
|
|
|
|
30
|
|
|
24
|
|
|
25
|
%
|
|
1
|
%
|
|
24
|
%
|
|
France
|
|
|
|
24
|
|
|
40
|
|
|
(40
|
)%
|
|
(13
|
)%
|
|
(27
|
)%
|
|
Germany
|
|
|
|
27
|
|
|
34
|
|
|
(21
|
)%
|
|
(19
|
)%
|
|
(2
|
)%
|
|
Italy
|
|
|
|
21
|
|
|
26
|
|
|
(19
|
)%
|
|
(17
|
)%
|
|
(2
|
)%
|
|
Japan
|
|
|
|
23
|
|
|
17
|
|
|
35
|
%
|
|
(21
|
)%
|
|
56
|
%
|
|
Mexico
|
|
|
|
19
|
|
|
20
|
|
|
(5
|
)%
|
|
(16
|
)%
|
|
11
|
%
|
|
Spain
|
|
|
|
21
|
|
|
23
|
|
|
(9
|
)%
|
|
(19
|
)%
|
|
10
|
%
|
|
United Kingdom
|
|
|
|
43
|
|
|
42
|
|
|
2
|
%
|
|
(10
|
)%
|
|
12
|
%
|
|
Other Developed
|
|
|
|
68
|
|
|
84
|
|
|
(19
|
)%
|
|
(17
|
)%
|
|
(2
|
)%
|
|
Other Emerging
|
|
|
|
164
|
|
|
199
|
|
|
(18
|
)%
|
|
(12
|
)%
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Total
|
|
Foreign
Exchange
|
|
Operational
|
|
Total International
|
|
|
|
$
|
1,762
|
|
|
$
|
1,956
|
|
|
(10
|
)%
|
|
(14
|
)%
|
|
4
|
%
|
|
Australia
|
|
|
|
109
|
|
|
125
|
|
|
(13
|
)%
|
|
(16
|
)%
|
|
3
|
%
|
|
Brazil
|
|
|
|
185
|
|
|
218
|
|
|
(15
|
)%
|
|
(27
|
)%
|
|
12
|
%
|
|
Canada
|
|
|
|
117
|
|
|
130
|
|
|
(10
|
)%
|
|
(12
|
)%
|
|
2
|
%
|
|
China
|
|
|
|
94
|
|
|
80
|
|
|
18
|
%
|
|
—
|
%
|
|
18
|
%
|
|
France
|
|
|
|
77
|
|
|
114
|
|
|
(32
|
)%
|
|
(14
|
)%
|
|
(18
|
)%
|
|
Germany
|
|
|
|
86
|
|
|
107
|
|
|
(20
|
)%
|
|
(17
|
)%
|
|
(3
|
)%
|
|
Italy
|
|
|
|
66
|
|
|
77
|
|
|
(14
|
)%
|
|
(17
|
)%
|
|
3
|
%
|
|
Japan
|
|
|
|
75
|
|
|
78
|
|
|
(4
|
)%
|
|
(14
|
)%
|
|
10
|
%
|
|
Mexico
|
|
|
|
55
|
|
|
62
|
|
|
(11
|
)%
|
|
(14
|
)%
|
|
3
|
%
|
|
Spain
|
|
|
|
60
|
|
|
67
|
|
|
(10
|
)%
|
|
(18
|
)%
|
|
8
|
%
|
|
United Kingdom
|
|
|
|
122
|
|
|
121
|
|
|
1
|
%
|
|
(9
|
)%
|
|
10
|
%
|
|
Other Developed
|
|
|
|
211
|
|
|
242
|
|
|
(13
|
)%
|
|
(14
|
)%
|
|
1
|
%
|
|
Other Emerging
|
|
|
|
505
|
|
|
535
|
|
|
(6
|
)%
|
|
(11
|
)%
|
|
5
|
%
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
SEGMENT(a) EARNINGS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign
Exchange
|
|
Operational
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
632
|
|
|
$
|
532
|
|
|
19
|
%
|
|
—
|
%
|
|
19
|
%
|
|
Cost of Sales
|
|
|
|
147
|
|
|
126
|
|
|
17
|
%
|
|
—
|
%
|
|
17
|
%
|
|
Gross Profit
|
|
|
|
485
|
|
|
406
|
|
|
19
|
%
|
|
—
|
%
|
|
19
|
%
|
|
Gross Margin
|
|
|
|
76.7
|
%
|
|
76.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
100
|
|
|
93
|
|
|
8
|
%
|
|
—
|
%
|
|
8
|
%
|
|
Other (income)/deductions
|
|
|
|
(1
|
)
|
|
—
|
|
|
*
|
|
|
—
|
%
|
|
*
|
|
|
U.S. Earnings
|
|
|
|
$
|
386
|
|
|
$
|
313
|
|
|
23
|
%
|
|
—
|
%
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
569
|
|
|
$
|
666
|
|
|
(15
|
)%
|
|
(17
|
)%
|
|
2
|
%
|
|
Cost of Sales
|
|
|
|
209
|
|
|
241
|
|
|
(13
|
)%
|
|
(13
|
)%
|
|
—
|
%
|
|
Gross Profit
|
|
|
|
360
|
|
|
425
|
|
|
(15
|
)%
|
|
(18
|
)%
|
|
3
|
%
|
|
Gross Margin
|
|
|
|
63.3
|
%
|
|
63.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
137
|
|
|
168
|
|
|
(18
|
)%
|
|
(16
|
)%
|
|
(2
|
)%
|
|
Other (income)/deductions
|
|
|
|
4
|
|
|
2
|
|
|
100
|
%
|
|
*
|
|
|
*
|
|
|
International Earnings
|
|
|
|
$
|
219
|
|
|
$
|
255
|
|
|
(14
|
)%
|
|
(21
|
)%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
$
|
605
|
|
|
$
|
568
|
|
|
7
|
%
|
|
(9
|
)%
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
(73
|
)
|
|
(76
|
)
|
|
(4
|
)%
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
(138
|
)
|
|
(142
|
)
|
|
(3
|
)%
|
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
(13
|
)
|
|
(13
|
)
|
|
—
|
%
|
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
(6
|
)
|
|
(1
|
)
|
|
*
|
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
(46
|
)
|
|
(38
|
)
|
|
21
|
%
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
(56
|
)
|
|
(60
|
)
|
|
(7
|
)%
|
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
$
|
273
|
|
|
$
|
238
|
|
|
15
|
%
|
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure and recategorized certain costs that are not
allocated to our operating segments. The prior period presentation
has been revised to reflect the new segment reporting structure.
|
|
|
|
(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 includes substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, costs associated with the
operational efficiency initiative, certain legal and commercial
settlements, and the impact of divestiture-related gains and losses.
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ZOETIS INC.
|
|
SEGMENT(a) EARNINGS
|
|
(UNAUDITED)
|
|
(millions of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
% Change
|
|
|
|
|
|
2015
|
|
2014
|
|
Total
|
|
Foreign Exchange
|
|
Operational
|
|
U.S.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
1,692
|
|
|
$
|
1,470
|
|
|
15
|
%
|
|
—
|
%
|
|
15
|
%
|
|
Cost of Sales
|
|
|
|
399
|
|
|
343
|
|
|
16
|
%
|
|
—
|
%
|
|
16
|
%
|
|
Gross Profit
|
|
|
|
1,293
|
|
|
1,127
|
|
|
15
|
%
|
|
—
|
%
|
|
15
|
%
|
|
Gross Margin
|
|
|
|
76.4
|
%
|
|
76.7
|
%
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
274
|
|
|
278
|
|
|
(1
|
)%
|
|
—
|
%
|
|
(1
|
)%
|
|
Other (income)/deductions
|
|
|
|
(1
|
)
|
|
—
|
|
|
*
|
|
|
—
|
%
|
|
*
|
|
|
U.S. Earnings
|
|
|
|
$
|
1,020
|
|
|
$
|
849
|
|
|
20
|
%
|
|
—
|
%
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
$
|
1,762
|
|
|
$
|
1,956
|
|
|
(10
|
)%
|
|
(14
|
)%
|
|
4
|
%
|
|
Cost of Sales
|
|
|
|
638
|
|
|
701
|
|
|
(9
|
)%
|
|
(11
|
)%
|
|
2
|
%
|
|
Gross Profit
|
|
|
|
1,124
|
|
|
1,255
|
|
|
(10
|
)%
|
|
(15
|
)%
|
|
5
|
%
|
|
Gross Margin
|
|
|
|
63.8
|
%
|
|
64.2
|
%
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
423
|
|
|
490
|
|
|
(14
|
)%
|
|
(14
|
)%
|
|
—
|
%
|
|
Other (income)/deductions
|
|
|
|
10
|
|
|
5
|
|
|
100
|
%
|
|
60
|
%
|
|
40
|
%
|
|
International Earnings
|
|
|
|
$
|
691
|
|
|
$
|
760
|
|
|
(9
|
)%
|
|
(17
|
)%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable Segments
|
|
|
|
$
|
1,711
|
|
|
$
|
1,609
|
|
|
6
|
%
|
|
(8
|
)%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other business activities(b)
|
|
|
|
(208
|
)
|
|
(224
|
)
|
|
(7
|
)%
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate(c)
|
|
|
|
(392
|
)
|
|
(389
|
)
|
|
1
|
%
|
|
|
|
|
|
|
Purchase accounting adjustments(d)
|
|
|
|
(41
|
)
|
|
(38
|
)
|
|
8
|
%
|
|
|
|
|
|
|
Acquisition-related costs(e)
|
|
|
|
(11
|
)
|
|
(5
|
)
|
|
*
|
|
|
|
|
|
|
|
Certain significant items(f)
|
|
|
|
(406
|
)
|
|
(127
|
)
|
|
*
|
|
|
|
|
|
|
|
Other unallocated(g)
|
|
|
|
(177
|
)
|
|
(161
|
)
|
|
10
|
%
|
|
|
|
|
|
|
Total Earnings(h)
|
|
|
|
$
|
476
|
|
|
$
|
665
|
|
|
(28
|
)%
|
|
|
|
|
|
|
* Calculation not meaningful.
|
|
|
|
(a)
|
|
Beginning in the second quarter of 2015, we changed our segment
reporting structure and recategorized certain costs that are not
allocated to our operating segments. The prior period presentation
has been revised to reflect the new segment reporting structure.
|
|
|
|
(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 includes substantive, unusual items that,
either as a result of their nature or size, would not be expected to
occur as part of our normal business on a regular basis. Such items
primarily include certain costs related to becoming an independent
public company, restructuring charges and implementation costs
associated with our cost-reduction/productivity initiatives that are
not associated with an acquisition, costs associated with the
operational efficiency initiative, certain legal and commercial
settlements, and the impact of divestiture-related gains and losses.
|
|
|
|
(g)
|
|
Includes overhead expenses associated with our manufacturing and
supply operations not directly attributable to an operating segment,
as well as procurement costs.
|
|
|
|
(h)
|
|
Defined as income before provision for taxes on income.
|
|
|
|
Certain amounts and percentages may reflect rounding adjustments.
|
Media:
Bill Price, 1-973-443-2742 (o)
[email protected]
or
Elinore White, 1-973-443-2835 (o)
[email protected]
or
Investor:
John O'Connor, 1-973-822-7088 (o)
[email protected]
or
Steve Frank, 1-973-822-7141 (o)
[email protected]