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Segment and Other Revenue Information (Tables)
 9 Months Ended
Oct. 02, 2016
Segment Reporting [Abstract]  
Schedule of Selected Income Statement Information by Segment
Selected Statement of Income Information                                             
 
 
Earnings
 
Depreciation and Amortization(a)
 
 
October 2,

 
September 27,

 
October 2,

 
September 27,

(MILLIONS OF DOLLARS)
 
2016

 
2015

 
2016

 
2015

Three months ended
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
Revenue
 
$
640

 
$
632

 
 
 
 
Cost of Sales
 
137

 
147

 
 
 
 
Gross Profit
 
503

 
485

 
 
 
 
    Gross Margin
 
78.6
%
 
76.7
%
 
 
 
 
Operating Expenses
 
101

 
100

 
 
 
 
Other (income)/deductions
 
—

 
(1
)
 
 
 
 
U.S. Earnings
 
402

 
386

 
$
7

 
$
5

 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
Revenue(b)
 
585

 
569

 
 
 
 
Cost of Sales
 
201

 
209

 
 
 
 
Gross Profit
 
384

 
360

 
 
 
 
    Gross Margin
 
65.6
%
 
63.3
%
 
 
 
 
Operating Expenses
 
128

 
137

 
 
 
 
Other (income)/deductions
 
—

 
4

 
 
 
 
International Earnings
 
256

 
219

 
11

 
10

 
 
 
 
 
 
 
 
 
Total operating segments
 
658

 
605

 
18

 
15

 
 
 
 
 
 
 
 
 
Other business activities
 
(71
)
 
(73
)
 
7

 
6

Reconciling Items:
 
 
 
 
 
 
 
 
Corporate
 
(159
)
 
(138
)
 
11

 
9

Purchase accounting adjustments
 
(25
)
 
(13
)
 
21

 
14

Acquisition-related costs
 
—

 
(6
)
 
—

 
—

Certain significant items(c)
 
(16
)
 
(46
)
 
2

 
1

Other unallocated
 
(54
)
 
(56
)
 
1

 
1

Total Earnings(d)
 
$
333

 
$
273

 
$
60

 
$
46


 
 
Earnings
 
Depreciation and Amortization(a)
 
 
October 2,

 
September 27,

 
October 2,

 
September 27,

(MILLIONS OF DOLLARS)
 
2016

 
2015

 
2016

 
2015

Nine months ended
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
Revenue
 
$
1,816

 
$
1,692

 
 
 
 
Cost of Sales
 
402

 
399

 
 
 
 
Gross Profit
 
1,414

 
1,293

 
 
 
 
    Gross Margin
 
77.9
%
 
76.4
%
 
 
 
 
Operating Expenses
 
293

 
274

 
 
 
 
Other (income)/deductions
 
—

 
(1
)
 
 
 
 
U.S. Earnings
 
1,121

 
1,020

 
$
20

 
$
18

 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
Revenue(b)
 
1,754

 
1,762

 
 
 
 
Cost of Sales
 
598

 
638

 
 
 
 
Gross Profit
 
1,156

 
1,124

 
 
 
 
    Gross Margin
 
65.9
%
 
63.8
%
 
 
 
 
Operating Expenses
 
361

 
423

 
 
 
 
Other (income)/deductions
 
3

 
10

 
 
 
 
International Earnings
 
792

 
691

 
33

 
34

 
 
 
 
 
 
 
 
 
Total operating segments
 
1,913

 
1,711

 
53

 
52

 
 
 
 
 
 
 
 
 
Other business activities
 
(219
)
 
(208
)
 
19

 
19

Reconciling Items:
 
 
 
 
 
 
 
 
Corporate
 
(499
)
 
(392
)
 
33

 
28

Purchase accounting adjustments
 
(79
)
 
(41
)
 
64

 
39

Acquisition-related costs
 
(3
)
 
(11
)
 
—

 
—

Certain significant items(c)
 
1

 
(406
)
 
5

 
3

Other unallocated
 
(117
)
 
(177
)
 
3

 
3

Total Earnings(d)
 
$
997

 
$
476

 
$
177

 
$
144

(a) 
Certain production facilities are shared. Depreciation and amortization is allocated to the reportable operating segments based on estimates of where the benefits of the related assets are realized.
(b) 
Revenue denominated in euros was $157 million and $469 million for the three and nine months ended October 2, 2016, respectively, and $139 million and $425 million for the three and nine months ended September 27, 2015, respectively.
(c) 
For the three months ended October 2, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $1 million; (ii) a $3 million increase in in certain employee termination accruals, exit costs of $1 million, accelerated depreciation of $2 million, inventory write-offs of $1 million, and consulting fees of $4 million related to our operational efficiency initiative, supply network strategy, and other restructuring activities, (iii) an impairment of finite-lived trademarks of $1 million related to a canine pain management product; and (iv) charges of $3 million associated with changes to our operating model. Stand-up costs include certain nonrecurring costs related to becoming an independent public company, such as the creation of standalone systems and infrastructure, site separation, new branding (including changes to the manufacturing process for required new packaging), and certain legal registration and patent assignment costs.
For the nine months ended October 2, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $18 million; (ii) a net gain of $27 million related to divestitures as a result of our operational efficiency initiative; (iii) a $20 million net reduction in certain employee termination accruals, partially offset by exit costs of $3 million, accelerated depreciation of $5 million, inventory write-offs of $1 million, and consulting fees of $14 million related to our operational efficiency initiative, supply network strategy and other restructuring activities; (iv) an impairment of finite-lived trademarks of $1 million, and (v) charges of $4 million associated with changes to our operating model.
For the three months ended September 27, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $22 million and (ii) charges related to our operational efficiency initiative and supply network strategy of $24 million.
For the nine months ended September 27, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $84 million; (ii) charges related to our operational efficiency initiative and supply network strategy of $317 million; (iii) an impairment of IPR&D assets of $2 million related to the termination of a canine oncology project; and (iv) charges due to unusual investor-related activities of $3 million.
(d) 
Defined as income before provision for taxes on income.
Schedule of Significant Product Revenues
Revenue by Species
Species revenue are as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,

 
September 27,

 
October 2,

 
September 27,

(MILLIONS OF DOLLARS)
 
2016

 
2015

 
2016

 
2015

Livestock:
 
 
 
 
 
 
 
 
Cattle
 
$
432

 
$
432

 
$
1,175

 
$
1,201

Swine
 
145

 
163

 
441

 
495

Poultry
 
111

 
132

 
351

 
399

Fish
 
25

 
—

 
64

 
—

Other
 
22

 
23

 
60

 
60

 
 
735

 
750

 
2,091

 
2,155

Companion Animal:
 
 
 
 
 
 
 
 
Horses
 
33

 
35

 
108

 
117

Dogs and Cats
 
457

 
416

 
1,371

 
1,182

 
 
490

 
451

 
1,479

 
1,299

 
 
 
 
 
 
 
 
 
Contract Manufacturing
 
16

 
13

 
41

 
37

 
 
 
 
 
 
 
 
 
Total revenue
 
$
1,241

 
$
1,214

 
$
3,611

 
$
3,491

Revenue by Major Product Category
Revenue by major product category are as follows:
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,

 
September 27,

 
October 2,

 
September 27,

(MILLIONS OF DOLLARS)
 
2016

 
2015

 
2016

 
2015

Anti-infectives
 
$
350

 
$
348

 
$
913

 
$
938

Vaccines
 
324

 
301

 
935

 
858

Parasiticides
 
158

 
158

 
492

 
504

Medicated feed additives
 
99

 
124

 
365

 
364

Other pharmaceuticals
 
255

 
226

 
724

 
650

Other non-pharmaceuticals
 
39

 
44

 
141

 
140

Contract manufacturing
 
16

 
13

 
41

 
37

Total revenue
 
$
1,241

 
$
1,214

 
$
3,611

 
$
3,491