XML 49 R36.htm IDEA: XBRL DOCUMENT v3.7.0.1
Segment and Other Revenue Information (Tables)
 6 Months Ended
Jul. 02, 2017
Segment Reporting [Abstract]  
Schedule of Selected Income Statement Information by Segment
 
 
Earnings
 
Depreciation and Amortization(a)
 
 
July 2,

 
July 3,

 
July 2,

 
July 3,

(MILLIONS OF DOLLARS)
 
2017

 
2016

 
2017

 
2016

Three months ended
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
Revenue
 
$
623

 
$
594

 
 
 
 
Cost of sales
 
134

 
134

 
 
 
 
Gross profit
 
489

 
460

 
 
 
 
    Gross margin
 
78.5
%
 
77.4
%
 
 
 
 
Operating expenses
 
113

 
100

 
 
 
 
Other (income)/deductions
 
—

 
—

 
 
 
 
U.S. Earnings
 
376

 
360

 
$
7

 
$
7

 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
Revenue(b)
 
634

 
602

 
 
 
 
Cost of sales
 
219

 
201

 
 
 
 
Gross profit
 
415

 
401

 
 
 
 
    Gross margin
 
65.5
%
 
66.6
%
 
 
 
 
Operating expenses
 
126

 
124

 
 
 
 
Other (income)/deductions
 
2

 
1

 
 
 
 
International Earnings
 
287

 
276

 
11

 
11

 
 
 
 
 
 
 
 
 
Total operating segments
 
663

 
636

 
18

 
18

 
 
 
 
 
 
 
 
 
Other business activities
 
(73
)
 
(74
)
 
6

 
6

Reconciling Items:
 
 
 
 
 
 
 
 
Corporate
 
(151
)
 
(171
)
 
13

 
12

Purchase accounting adjustments
 
(21
)
 
(28
)
 
21

 
21

Acquisition-related costs
 
(2
)
 
(2
)
 
—

 
—

Certain significant items(c)
 
1

 
4

 
—

 
2

Other unallocated
 
(72
)
 
(33
)
 
1

 
1

Total Earnings(d)
 
$
345

 
$
332

 
$
59

 
$
60




















 
 
Earnings
 
Depreciation and Amortization(a)
 
 
July 2,

 
July 3,

 
July 2,

 
July 3,

(MILLIONS OF DOLLARS)
 
2017

 
2016

 
2017

 
2016

Six months ended
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
Revenue
 
$
1,228

 
$
1,176

 
 
 
 
Cost of sales
 
271

 
265

 
 
 
 
Gross profit
 
957

 
911

 
 
 
 
    Gross margin
 
77.9
%
 
77.5
%
 
 
 
 
Operating expenses
 
209

 
192

 
 
 
 
Other (income)/deductions
 
—

 
—

 
 
 
 
U.S. Earnings
 
748

 
719

 
$
14

 
$
13

 
 
 
 
 
 
 
 
 
International
 
 
 
 
 
 
 
 
Revenue(b)
 
1,249

 
1,169

 
 
 
 
Cost of sales
 
432

 
397

 
 
 
 
Gross profit
 
817

 
772

 
 
 
 
    Gross margin
 
65.4
%
 
66.0
%
 
 
 
 
Operating expenses
 
240

 
233

 
 
 
 
Other (income)/deductions
 
(1
)
 
3

 
 
 
 
International Earnings
 
578

 
536

 
22

 
22

 
 
 
 
 
 
 
 
 
Total operating segments
 
1,326

 
1,255

 
36

 
35

 
 
 
 
 
 
 
 
 
Other business activities
 
(147
)
 
(148
)
 
12

 
12

Reconciling Items:
 
 
 
 
 
 
 
 
Corporate
 
(294
)
 
(340
)
 
25

 
22

Purchase accounting adjustments
 
(43
)
 
(54
)
 
43

 
43

Acquisition-related costs
 
(2
)
 
(3
)
 
—

 
—

Certain significant items(c)
 
(3
)
 
17

 
2

 
3

Other unallocated
 
(155
)
 
(63
)
 
3

 
2

Total Earnings(d)
 
$
682

 
$
664

 
$
121

 
$
117

(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 $155 million and $303 million for the three and six months ended July 2, 2017, respectively, and $158 million and $312 million for the three and six months ended July 3, 2016, respectively.
(c) 
For the three months ended July 2, 2017, Certain significant items primarily includes: (i) a reversal of previously accrued employee termination costs of $3 million, exit costs of $1 million, accelerated depreciation of $1 million, consulting fees of $1 million, and a net loss on sales of certain manufacturing sites and products of $2 million related to our operational efficiency initiative and supply network strategy, (ii) charges of $1 million associated with changes to our operating model, and (iii) income of $4 million related to an insurance recovery from commercial settlements in Mexico recorded in 2014 and 2016.
For the three months ended July 3, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $5 million; (ii) a net loss of $6 million related to sales of certain manufacturing sites and products as a result of our operational efficiency initiative; (iii) a $24 million net reduction in certain employee termination accruals, partially offset by exit costs of $1 million, accelerated depreciation of $2 million, and consulting fees of $5 million, related to our operational efficiency initiative, supply network strategy, and other restructuring activities, and (iv) charges of $1 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 six months ended July 2, 2017, Certain significant items primarily includes: (i) a reversal of previously accrued employee termination costs of $4 million, exit costs of $1 million, accelerated depreciation charges of $2 million, consulting fees of $3 million, and a net loss related to sales of certain manufacturing sites and products of $2 million, related to our operational efficiency initiative and supply network strategy, (ii) charges of $3 million associated with changes to our operating model, and (iii) income of $4 million related to an insurance recovery from commercial settlements in Mexico recorded in 2014 and 2016.
For the six months ended July 3, 2016, Certain significant items primarily includes: (i) Zoetis stand-up costs of $17 million; (ii) a net gain of $27 million related to sales of certain manufacturing sites and products as a result of our operational efficiency initiative, (iii) a $23 million net reduction in certain employee termination accruals, partially offset by exit costs of $2 million, accelerated depreciation of $3 million and consulting fees of $10 million related to our operational efficiency initiative, supply network strategy and other restructuring activities, and (iv) charges of $1 million associated with changes to our operating model.
(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
 
Six Months Ended
 
 
July 2,

 
July 3,

 
July 2,

 
July 3,

(MILLIONS OF DOLLARS)
 
2017

 
2016

 
2017

 
2016

Livestock:
 
 
 
 
 
 
 
 
Cattle
 
$
382

 
$
366

 
$
768

 
$
743

Swine
 
148

 
150

 
308

 
296

Poultry
 
122

 
118

 
238

 
240

Fish
 
19

 
22

 
40

 
39

Other
 
18

 
17

 
38

 
38

 
 
689

 
673

 
1,392

 
1,356

Companion Animal:
 
 
 
 
 
 
 
 
Horses
 
35

 
36

 
70

 
75

Dogs and Cats
 
533

 
487

 
1,015

 
914

 
 
568

 
523

 
1,085

 
989

 
 
 
 
 
 
 
 
 
Contract Manufacturing
 
12

 
12

 
23

 
25

 
 
 
 
 
 
 
 
 
Total revenue
 
$
1,269

 
$
1,208

 
$
2,500

 
$
2,370

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

 
July 3,

 
July 2,

 
July 3,

(MILLIONS OF DOLLARS)
 
2017

 
2016

 
2017

 
2016

Anti-infectives
 
$
278

 
$
272

 
$
546

 
$
563

Vaccines
 
324

 
310

 
643

 
611

Parasiticides
 
206

 
189

 
390

 
334

Medicated feed additives
 
121

 
128

 
244

 
266

Other pharmaceuticals
 
282

 
248

 
554

 
469

Other non-pharmaceuticals
 
46

 
49

 
100

 
102

Contract manufacturing
 
12

 
12

 
23

 
25

Total revenue
 
$
1,269

 
$
1,208

 
$
2,500

 
$
2,370