Goodwill and Other Intangible Assets

3 Months Ended

Apr. 02, 2017

Goodwill and Intangible Assets Disclosure [Abstract]


A.	Goodwill

The components of, and changes in, the carrying amount of goodwill are as follows:



(MILLIONS OF DOLLARS)	U.S.		International		Total
Balance, December 31, 2016	$	661	$	820	$	1,481
Additions^(a)	5		5		10
Other^(b)	—		6		6
Balance, April 2, 2017	$	666	$	831	$	1,497

^(a)Represents the consolidation of a European livestock monitoring company, a variable interest entity of which Zoetis is the primary beneficiary.

^(b)Includes adjustments for foreign currency translation.

The gross goodwill balance was $2,033 million and $2,017 million as of April 2, 2017, and December 31, 2016, respectively. Accumulated goodwill impairment losses were $536 million as of April 2, 2017, and December 31, 2016.


B.	Other Intangible Assets

The components of identifiable intangible assets are as follows:



	As of April 2, 2017							As of December 31, 2016
						Identifiable							Identifiable
	Gross					Intangible Assets		Gross					Intangible Assets
	Carrying		Accumulated			Less Accumulated		Carrying		Accumulated			Less Accumulated
(MILLIONS OF DOLLARS)	Amount		Amortization			Amortization		Amount		Amortization			Amortization
Finite-lived intangible assets:
Developed technology rights^(a)(b)	$	1,162	$	(364	)	$	798	$	1,064	$	(342	)	$	722
Brands	213		(135		)	78		213		(132		)	81
Trademarks and trade names	62		(45		)	17		62		(44		)	18
Other	224		(130		)	94		222		(130		)	92
Total finite-lived intangible assets	1,661		(674		)	987		1,561		(648		)	913
Indefinite-lived intangible assets:
Brands	37		—			37		37		—			37
Trademarks and trade names	66		—			66		66		—			66
In-process research and development^(b)	134		—			134		204		—			204
Product rights	8		—			8		8		—			8
Total indefinite-lived intangible assets	245		—			245		315		—			315
Identifiable intangible assets	$	1,906	$	(674	)	$	1,232	$	1,876	$	(648	)	$	1,228


^(a)	Includes the consolidation of a European livestock monitoring company, a variable interest entity of which Zoetis is the primary beneficiary, and intangible assets associated with the purchase of a Norwegian fish vaccination company, both during the first quarter of 2017.

^(b) In the first quarter of 2017, certain intangible assets, acquired in 2015 as part of the Pharmaq acquisition, were placed into service.


C.	Amortization

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 it benefits multiple business functions. Amortization expense related to finite-lived acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, general and administrative expenses or Research and development expenses, as appropriate. Total amortization expense for finite-lived intangible assets was $25 million and $24 million for the three months ended April 2, 2017, and April 3, 2016, respectively.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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