false--12-31Q3201900015552801599000000172500000024000000250000001000000700000000.010.0160000000005018912435018912434795623264767457890.032500.047000.03450.0450P1YP60D5360000000P15YP1Y0.010.01100000000000P3YP3YP3Y2232891725145454P1Y3.503.503.503.504.00 0001555280 2019-01-01 2019-09-30 0001555280 2019-11-01 0001555280 2019-07-01 2019-09-30 0001555280 2018-01-01 2018-09-30 0001555280 2018-07-01 2018-09-30 0001555280 2019-09-30 0001555280 2018-12-31 0001555280 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-09-30 0001555280 us-gaap:RetainedEarningsMember 2019-01-01 2019-09-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-09-30 0001555280 us-gaap:TreasuryStockMember 2018-01-01 2018-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2017-12-31 0001555280 us-gaap:RetainedEarningsMember 2018-12-31 0001555280 us-gaap:CommonStockMember 2018-12-31 0001555280 2017-12-31 0001555280 us-gaap:RetainedEarningsMember 2018-01-01 2018-09-30 0001555280 us-gaap:CommonStockMember 2018-09-30 0001555280 zts:ShareRepurchaseProgramMember us-gaap:TreasuryStockMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0001555280 zts:ShareRepurchaseProgramMember 2018-01-01 2018-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-09-30 0001555280 us-gaap:CommonStockMember 2019-09-30 0001555280 us-gaap:TreasuryStockMember 2018-09-30 0001555280 us-gaap:TreasuryStockMember 2017-12-31 0001555280 us-gaap:CommonStockMember 2017-12-31 0001555280 us-gaap:RetainedEarningsMember 2018-09-30 0001555280 us-gaap:TreasuryStockMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2018-12-31 0001555280 us-gaap:TreasuryStockMember 2018-12-31 0001555280 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001555280 us-gaap:NoncontrollingInterestMember 2018-01-01 2018-09-30 0001555280 2018-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001555280 us-gaap:RetainedEarningsMember 2017-12-31 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001555280 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001555280 us-gaap:TreasuryStockMember 2019-09-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001555280 us-gaap:NoncontrollingInterestMember 2019-09-30 0001555280 us-gaap:RetainedEarningsMember 2019-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2018-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0001555280 us-gaap:TreasuryStockMember 2018-07-01 2018-09-30 0001555280 us-gaap:RetainedEarningsMember 2018-06-30 0001555280 us-gaap:TreasuryStockMember 2019-07-01 2019-09-30 0001555280 us-gaap:CommonStockMember 2018-06-30 0001555280 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0001555280 2018-06-30 0001555280 us-gaap:TreasuryStockMember 2019-06-30 0001555280 zts:ShareRepurchaseProgramMember us-gaap:TreasuryStockMember 2019-07-01 2019-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2018-07-01 2018-09-30 0001555280 us-gaap:NoncontrollingInterestMember 2019-06-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001555280 us-gaap:TreasuryStockMember 2018-06-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001555280 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001555280 2019-06-30 0001555280 us-gaap:NoncontrollingInterestMember 2018-06-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001555280 us-gaap:RetainedEarningsMember 2019-06-30 0001555280 us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0001555280 us-gaap:CommonStockMember 2019-06-30 0001555280 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001555280 zts:ShareRepurchaseProgramMember us-gaap:TreasuryStockMember 2018-07-01 2018-09-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001555280 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001555280 us-gaap:ProductMember 2019-09-30 0001555280 zts:TotalGeographicalAreaMember 2019-01-01 2019-09-30 0001555280 zts:OtherEmergingMarketsMember 2019-07-01 2019-09-30 0001555280 country:FR 2019-01-01 2019-09-30 0001555280 zts:ContractManufacturingandHumanHealthDiagnosticsMember 2019-07-01 2019-09-30 0001555280 country:MX 2019-01-01 2019-09-30 0001555280 country:FR 2019-07-01 2019-09-30 0001555280 country:US 2019-07-01 2019-09-30 0001555280 country:MX 2019-07-01 2019-09-30 0001555280 zts:ContractManufacturingandHumanHealthDiagnosticsMember 2019-01-01 2019-09-30 0001555280 country:CN 2019-07-01 2019-09-30 0001555280 country:BR 2019-01-01 2019-09-30 0001555280 country:IT 2019-01-01 2019-09-30 0001555280 zts:ContractManufacturingandHumanHealthDiagnosticsMember 2018-01-01 2018-09-30 0001555280 country:CA 2019-07-01 2019-09-30 0001555280 country:CN 2018-01-01 2018-09-30 0001555280 country:JP 2018-01-01 2018-09-30 0001555280 country:DE 2019-07-01 2019-09-30 0001555280 country:JP 2018-07-01 2018-09-30 0001555280 country:DE 2018-07-01 2018-09-30 0001555280 country:BR 2019-07-01 2019-09-30 0001555280 country:MX 2018-01-01 2018-09-30 0001555280 country:BR 2018-07-01 2018-09-30 0001555280 country:ES 2019-07-01 2019-09-30 0001555280 country:AU 2018-01-01 2018-09-30 0001555280 zts:TotalGeographicalAreaMember 2019-07-01 2019-09-30 0001555280 country:CN 2019-01-01 2019-09-30 0001555280 country:DE 2019-01-01 2019-09-30 0001555280 country:IT 2018-01-01 2018-09-30 0001555280 country:DE 2018-01-01 2018-09-30 0001555280 country:FR 2018-07-01 2018-09-30 0001555280 country:BR 2018-01-01 2018-09-30 0001555280 country:ES 2018-01-01 2018-09-30 0001555280 country:IT 2018-07-01 2018-09-30 0001555280 country:IT 2019-07-01 2019-09-30 0001555280 country:AU 2019-01-01 2019-09-30 0001555280 country:ES 2019-01-01 2019-09-30 0001555280 country:AU 2019-07-01 2019-09-30 0001555280 country:FR 2018-01-01 2018-09-30 0001555280 country:GB 2018-07-01 2018-09-30 0001555280 country:CN 2018-07-01 2018-09-30 0001555280 country:CA 2019-01-01 2019-09-30 0001555280 zts:TotalGeographicalAreaMember 2018-01-01 2018-09-30 0001555280 zts:OtherEmergingMarketsMember 2019-01-01 2019-09-30 0001555280 country:GB 2019-01-01 2019-09-30 0001555280 country:MX 2018-07-01 2018-09-30 0001555280 zts:OtherDevelopedMarketsMember 2019-01-01 2019-09-30 0001555280 zts:TotalGeographicalAreaMember 2018-07-01 2018-09-30 0001555280 zts:OtherEmergingMarketsMember 2018-01-01 2018-09-30 0001555280 country:GB 2019-07-01 2019-09-30 0001555280 zts:OtherDevelopedMarketsMember 2018-01-01 2018-09-30 0001555280 zts:ContractManufacturingandHumanHealthDiagnosticsMember 2018-07-01 2018-09-30 0001555280 country:US 2019-01-01 2019-09-30 0001555280 country:GB 2018-01-01 2018-09-30 0001555280 country:JP 2019-01-01 2019-09-30 0001555280 zts:OtherDevelopedMarketsMember 2019-07-01 2019-09-30 0001555280 country:CA 2018-01-01 2018-09-30 0001555280 zts:OtherEmergingMarketsMember 2018-07-01 2018-09-30 0001555280 country:ES 2018-07-01 2018-09-30 0001555280 country:AU 2018-07-01 2018-09-30 0001555280 country:CA 2018-07-01 2018-09-30 0001555280 country:JP 2019-07-01 2019-09-30 0001555280 country:US 2018-07-01 2018-09-30 0001555280 zts:OtherDevelopedMarketsMember 2018-07-01 2018-09-30 0001555280 country:US 2018-01-01 2018-09-30 0001555280 zts:FishMember 2018-07-01 2018-09-30 0001555280 us-gaap:ManufacturedProductOtherMember 2019-01-01 2019-09-30 0001555280 zts:DogsAndCatsMember 2018-07-01 2018-09-30 0001555280 zts:CattleMember 2018-01-01 2018-09-30 0001555280 zts:CompanionAnimalMember 2018-07-01 2018-09-30 0001555280 zts:LivestockMember 2018-07-01 2018-09-30 0001555280 zts:CompanionAnimalMember 2018-01-01 2018-09-30 0001555280 us-gaap:ManufacturedProductOtherMember 2018-07-01 2018-09-30 0001555280 zts:HorsesMember 2019-01-01 2019-09-30 0001555280 zts:LivestockMember 2018-01-01 2018-09-30 0001555280 zts:DogsAndCatsMember 2018-01-01 2018-09-30 0001555280 zts:FishMember 2019-07-01 2019-09-30 0001555280 zts:PoultryMember 2019-01-01 2019-09-30 0001555280 zts:FishMember 2019-01-01 2019-09-30 0001555280 zts:CattleMember 2019-01-01 2019-09-30 0001555280 zts:CompanionAnimalMember 2019-07-01 2019-09-30 0001555280 us-gaap:ManufacturedProductOtherMember 2018-01-01 2018-09-30 0001555280 zts:PoultryMember 2018-07-01 2018-09-30 0001555280 zts:LivestockMember 2019-07-01 2019-09-30 0001555280 us-gaap:ManufacturedProductOtherMember 2019-07-01 2019-09-30 0001555280 zts:CattleMember 2019-07-01 2019-09-30 0001555280 zts:SwineMember 2018-01-01 2018-09-30 0001555280 zts:CattleMember 2018-07-01 2018-09-30 0001555280 zts:DogsAndCatsMember 2019-07-01 2019-09-30 0001555280 zts:LivestockMember 2019-01-01 2019-09-30 0001555280 zts:PoultryMember 2018-01-01 2018-09-30 0001555280 zts:SwineMember 2019-07-01 2019-09-30 0001555280 zts:SwineMember 2019-01-01 2019-09-30 0001555280 zts:HorsesMember 2018-01-01 2018-09-30 0001555280 zts:DogsAndCatsMember 2019-01-01 2019-09-30 0001555280 zts:HorsesMember 2018-07-01 2018-09-30 0001555280 zts:HorsesMember 2019-07-01 2019-09-30 0001555280 zts:PoultryMember 2019-07-01 2019-09-30 0001555280 zts:SwineMember 2018-07-01 2018-09-30 0001555280 zts:FishMember 2018-01-01 2018-09-30 0001555280 zts:CompanionAnimalMember 2019-01-01 2019-09-30 0001555280 zts:CompanionAnimalMember zts:UnitedStatesSegmentMember 2018-07-01 2018-09-30 0001555280 zts:LivestockMember zts:UnitedStatesSegmentMember 2018-07-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:UnitedStatesSegmentMember 2019-07-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:UnitedStatesSegmentMember 2018-07-01 2018-09-30 0001555280 zts:CompanionAnimalMember zts:UnitedStatesSegmentMember 2018-01-01 2018-09-30 0001555280 zts:LivestockMember zts:InternationalSegmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:InternationalSegmentMember 2019-07-01 2019-09-30 0001555280 zts:LivestockMember zts:UnitedStatesSegmentMember 2018-01-01 2018-09-30 0001555280 zts:CompanionAnimalMember zts:InternationalSegmentMember 2018-01-01 2018-09-30 0001555280 zts:CompanionAnimalMember zts:UnitedStatesSegmentMember 2019-07-01 2019-09-30 0001555280 zts:CompanionAnimalMember zts:InternationalSegmentMember 2018-07-01 2018-09-30 0001555280 zts:LivestockMember zts:InternationalSegmentMember 2018-07-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:UnitedStatesSegmentMember 2018-01-01 2018-09-30 0001555280 zts:CompanionAnimalMember zts:InternationalSegmentMember 2019-07-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:InternationalSegmentMember 2019-01-01 2019-09-30 0001555280 zts:LivestockMember zts:UnitedStatesSegmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:UnitedStatesSegmentMember 2019-01-01 2019-09-30 0001555280 zts:LivestockMember zts:InternationalSegmentMember 2018-01-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:InternationalSegmentMember 2018-07-01 2018-09-30 0001555280 zts:CompanionAnimalMember zts:InternationalSegmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember zts:InternationalSegmentMember 2018-01-01 2018-09-30 0001555280 zts:LivestockMember zts:InternationalSegmentMember 2019-07-01 2019-09-30 0001555280 zts:LivestockMember zts:UnitedStatesSegmentMember 2019-07-01 2019-09-30 0001555280 zts:CompanionAnimalMember zts:UnitedStatesSegmentMember 2019-01-01 2019-09-30 0001555280 zts:OtherNonPharmaceuticalsMember 2019-07-01 2019-09-30 0001555280 zts:MedicatedFeedAdditivesMember 2018-07-01 2018-09-30 0001555280 zts:OtherPharmaceuticalsMember 2019-01-01 2019-09-30 0001555280 zts:AnimalHealthDiagnosticsMember 2018-07-01 2018-09-30 0001555280 zts:ParasiticidesMember 2019-07-01 2019-09-30 0001555280 zts:AnimalHealthDiagnosticsMember 2018-01-01 2018-09-30 0001555280 zts:OtherPharmaceuticalsMember 2019-07-01 2019-09-30 0001555280 zts:AnimalHealthDiagnosticsMember 2019-01-01 2019-09-30 0001555280 zts:VaccinesMember 2018-07-01 2018-09-30 0001555280 zts:VaccinesMember 2019-07-01 2019-09-30 0001555280 zts:AntiInfectiveProductsMember 2018-07-01 2018-09-30 0001555280 zts:OtherPharmaceuticalsMember 2018-07-01 2018-09-30 0001555280 zts:AntiInfectiveProductsMember 2019-01-01 2019-09-30 0001555280 zts:TotalProductsandServicesMember 2018-07-01 2018-09-30 0001555280 zts:AnimalHealthDiagnosticsMember 2019-07-01 2019-09-30 0001555280 zts:VaccinesMember 2018-01-01 2018-09-30 0001555280 zts:MedicatedFeedAdditivesMember 2019-07-01 2019-09-30 0001555280 zts:OtherNonPharmaceuticalsMember 2018-01-01 2018-09-30 0001555280 zts:MedicatedFeedAdditivesMember 2018-01-01 2018-09-30 0001555280 zts:TotalProductsandServicesMember 2019-07-01 2019-09-30 0001555280 zts:VaccinesMember 2019-01-01 2019-09-30 0001555280 zts:AntiInfectiveProductsMember 2018-01-01 2018-09-30 0001555280 zts:ParasiticidesMember 2018-07-01 2018-09-30 0001555280 zts:OtherPharmaceuticalsMember 2018-01-01 2018-09-30 0001555280 zts:TotalProductsandServicesMember 2019-01-01 2019-09-30 0001555280 zts:MedicatedFeedAdditivesMember 2019-01-01 2019-09-30 0001555280 zts:TotalProductsandServicesMember 2018-01-01 2018-09-30 0001555280 zts:ParasiticidesMember 2019-01-01 2019-09-30 0001555280 zts:ParasiticidesMember 2018-01-01 2018-09-30 0001555280 zts:AntiInfectiveProductsMember 2019-07-01 2019-09-30 0001555280 zts:OtherNonPharmaceuticalsMember 2018-07-01 2018-09-30 0001555280 zts:OtherNonPharmaceuticalsMember 2019-01-01 2019-09-30 0001555280 zts:AbaxisIncMember 2018-07-01 2018-09-30 0001555280 zts:AbaxisIncMember 2018-01-01 2018-09-30 0001555280 zts:AbaxisIncMember 2018-07-31 2018-07-31 0001555280 zts:AbaxisIncMember 2018-07-31 0001555280 zts:AbaxisIncMember zts:BusinessCombinationPreMergerServiceMember 2018-07-31 0001555280 zts:AbaxisIncMember zts:MeasurementperiodadjustmentMember 2018-07-31 0001555280 srt:ProFormaMember zts:AbaxisIncMember 2019-07-01 2019-09-30 0001555280 zts:AbaxisIncMember 2019-01-01 2019-09-30 0001555280 2018-07-31 2018-07-31 0001555280 zts:AbaxisIncMember 2019-07-01 2019-09-30 0001555280 srt:ProFormaMember zts:AbaxisIncMember 2019-01-01 2019-09-30 0001555280 us-gaap:EmployeeSeveranceMember 2018-07-01 2018-09-30 0001555280 zts:DirectCostMember 2018-07-01 2018-09-30 0001555280 zts:DirectCostMember 2019-07-01 2019-09-30 0001555280 us-gaap:EmployeeSeveranceMember 2019-07-01 2019-09-30 0001555280 us-gaap:EmployeeSeveranceMember 2019-01-01 2019-09-30 0001555280 zts:DirectCostMember 2018-01-01 2018-09-30 0001555280 us-gaap:EmployeeSeveranceMember 2018-01-01 2018-09-30 0001555280 zts:DirectCostMember 2019-01-01 2019-09-30 0001555280 zts:InternationalSegmentMember 2018-07-01 2018-09-30 0001555280 zts:ManufacturingResearchCorporateMember 2019-01-01 2019-09-30 0001555280 us-gaap:OtherNoncurrentLiabilitiesMember 2018-12-31 0001555280 us-gaap:OtherCurrentLiabilitiesMember 2019-09-30 0001555280 zts:AbaxisIncMember us-gaap:EmployeeSeveranceMember 2019-01-01 2019-09-30 0001555280 zts:InternationalSegmentMember 2018-01-01 2018-09-30 0001555280 zts:ManufacturingResearchCorporateMember 2018-01-01 2018-09-30 0001555280 us-gaap:OtherNoncurrentLiabilitiesMember 2019-09-30 0001555280 zts:ManufacturingResearchCorporateMember 2018-07-01 2018-09-30 0001555280 us-gaap:OtherCurrentLiabilitiesMember 2018-12-31 0001555280 zts:ManufacturingResearchCorporateMember 2019-07-01 2019-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember zts:ZoetisInitiativesMember 2019-07-01 2019-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember zts:ZoetisInitiativesMember 2018-01-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember zts:ZoetisInitiativesMember 2018-07-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember zts:ZoetisInitiativesMember 2019-01-01 2019-09-30 0001555280 zts:NonU.S.StatutoryTaxRatesMember 2019-01-01 2019-09-30 0001555280 zts:SharebasedPaymentsMember 2018-07-01 2018-09-30 0001555280 zts:NoncurrentDeferredTaxAssetsMember 2019-09-30 0001555280 zts:SharebasedPaymentsMember 2019-07-01 2019-09-30 0001555280 zts:OtherTaxesPayableMember 2019-09-30 0001555280 zts:SharebasedPaymentsMember 2019-01-01 2019-09-30 0001555280 zts:NoncurrentDeferredTaxAssetsMember 2018-12-31 0001555280 zts:SharebasedPaymentsMember 2018-01-01 2018-09-30 0001555280 zts:NonU.S.StatutoryTaxRatesMember 2018-01-01 2018-09-30 0001555280 zts:OtherTaxesPayableMember 2018-12-31 0001555280 zts:OperationalEfficiencyMember 2019-09-30 0001555280 zts:SeniorNotes3.900Due2028Member us-gaap:SeniorNotesMember 2018-08-20 0001555280 us-gaap:SeniorNotesMember 2018-08-20 0001555280 us-gaap:SeniorNotesMember 2017-09-12 0001555280 zts:SeniorNotesDue2018Member us-gaap:SeniorNotesMember 2017-10-31 0001555280 zts:SeniorNotes3.000Due2027Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 us-gaap:SeniorNotesMember 2013-01-28 0001555280 us-gaap:RevolvingCreditFacilityMember 2019-09-30 0001555280 zts:SeniorNotesDue2018Member us-gaap:SeniorNotesMember 2013-01-28 0001555280 us-gaap:SeniorNotesMember 2015-11-13 0001555280 zts:SeniorNotes3.950Due2047Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes3.000Due2027Member us-gaap:SeniorNotesMember 2017-09-12 0001555280 us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 us-gaap:CommercialPaperMember 2013-02-28 0001555280 zts:SeniorNotes4.450Due2048Member us-gaap:SeniorNotesMember 2018-08-20 0001555280 zts:SeniorNotes3.250Due2021Member us-gaap:SeniorNotesMember 2018-08-20 0001555280 us-gaap:FairValueInputsLevel2Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotesFloatingDue2021Member us-gaap:SeniorNotesMember 2018-08-20 0001555280 zts:SeniorNotes3.950Due2047Member us-gaap:SeniorNotesMember 2017-09-12 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-01-01 2018-09-30 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-07-01 2018-09-30 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-01-01 2019-09-30 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-07-01 2019-09-30 0001555280 zts:SeniorNotes3.000Due2027Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotesFloatingDue2021Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes3.950Due2047Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes3.900Due2028Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes4.450Due2048Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes3.450Due2020Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotesFloatingDue2021Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes3.250Due2021Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes3.900Due2028Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotesDue2043Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes4.450Due2048Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes3.250Due2021Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotesDue2043Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes4.500Due2025Member us-gaap:SeniorNotesMember 2018-12-31 0001555280 zts:SeniorNotes3.450Due2020Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 zts:SeniorNotes4.500Due2025Member us-gaap:SeniorNotesMember 2019-09-30 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-09-30 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-12-31 0001555280 us-gaap:OtherCurrentLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-12-31 0001555280 us-gaap:OtherNoncurrentAssetsMember us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-09-30 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-09-30 0001555280 us-gaap:OtherCurrentLiabilitiesMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-09-30 0001555280 us-gaap:OtherNoncurrentAssetsMember us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001555280 us-gaap:OtherCurrentAssetsMember us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2018-12-31 0001555280 us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-09-30 0001555280 us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001555280 us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001555280 us-gaap:USTreasuryAndGovernmentMember 2019-09-30 0001555280 us-gaap:USTreasuryAndGovernmentMember 2018-12-31 0001555280 us-gaap:CrossCurrencyInterestRateContractMember 2018-12-31 0001555280 us-gaap:CrossCurrencyInterestRateContractMember 2019-09-30 0001555280 us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-12-31 0001555280 us-gaap:InterestRateSwapMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-01-01 2018-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2018-07-01 2018-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-07-01 2019-09-30 0001555280 us-gaap:CrossCurrencyInterestRateContractMember us-gaap:DesignatedAsHedgingInstrumentMember 2019-01-01 2019-09-30 0001555280 zts:SeniorNotes4.500Due2025Member us-gaap:SeniorNotesMember 2015-11-13 0001555280 srt:MaximumMember us-gaap:ForeignExchangeForwardMember us-gaap:NondesignatedMember 2019-01-01 2019-09-30 0001555280 zts:SeniorNotesDue2043Member us-gaap:SeniorNotesMember 2013-01-28 0001555280 zts:SeniorNotesDue2023Member us-gaap:SeniorNotesMember 2013-01-28 0001555280 zts:SeniorNotes3.450Due2020Member us-gaap:SeniorNotesMember 2015-11-13 0001555280 us-gaap:RevolvingCreditFacilityMember 2018-07-27 0001555280 2018-01-01 2018-12-31 0001555280 srt:MinimumMember 2019-09-30 0001555280 srt:MaximumMember 2019-09-30 0001555280 us-gaap:InProcessResearchAndDevelopmentMember 2019-09-30 0001555280 zts:BrandsMember 2019-09-30 0001555280 us-gaap:DevelopedTechnologyRightsMember 2018-12-31 0001555280 us-gaap:TrademarksAndTradeNamesMember 2019-09-30 0001555280 us-gaap:OtherIntangibleAssetsMember 2019-09-30 0001555280 zts:BrandsMember 2018-12-31 0001555280 us-gaap:TrademarksAndTradeNamesMember 2018-12-31 0001555280 us-gaap:InProcessResearchAndDevelopmentMember 2018-12-31 0001555280 zts:ProductRightsMember 2018-12-31 0001555280 us-gaap:DevelopedTechnologyRightsMember 2019-09-30 0001555280 us-gaap:TrademarksAndTradeNamesMember 2019-09-30 0001555280 us-gaap:OtherIntangibleAssetsMember 2018-12-31 0001555280 zts:ProductRightsMember 2019-09-30 0001555280 zts:BrandsMember 2019-09-30 0001555280 us-gaap:TrademarksAndTradeNamesMember 2018-12-31 0001555280 zts:BrandsMember 2018-12-31 0001555280 country:US 2018-12-31 0001555280 zts:InternationalMember 2019-09-30 0001555280 country:US 2019-09-30 0001555280 zts:InternationalMember 2019-01-01 2019-09-30 0001555280 zts:InternationalMember 2018-12-31 0001555280 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-09-30 0001555280 zts:PeerCompaniesMember us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0001555280 us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0001555280 srt:MaximumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0001555280 srt:MinimumMember us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0001555280 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-09-30 0001555280 us-gaap:EmployeeStockOptionMember 2018-07-01 2018-09-30 0001555280 us-gaap:PerformanceSharesMember 2018-01-01 2018-09-30 0001555280 us-gaap:PerformanceSharesMember 2019-07-01 2019-09-30 0001555280 us-gaap:RestrictedStockUnitsRSUMember 2018-01-01 2018-09-30 0001555280 us-gaap:PerformanceSharesMember 2018-07-01 2018-09-30 0001555280 us-gaap:RestrictedStockUnitsRSUMember 2018-07-01 2018-09-30 0001555280 us-gaap:EmployeeStockOptionMember 2019-07-01 2019-09-30 0001555280 us-gaap:RestrictedStockUnitsRSUMember 2019-07-01 2019-09-30 0001555280 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0001555280 zts:December2016ShareRepurchaseProgramMember 2017-12-31 0001555280 zts:December2018ShareRepurchaseProgramMember 2018-12-31 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-09-30 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2017-12-31 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-09-30 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-01-01 2018-09-30 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2017-12-31 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2018-01-01 2018-09-30 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-01-01 2018-09-30 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2018-09-30 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-09-30 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2017-12-31 0001555280 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-09-30 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2017-12-31 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-09-30 0001555280 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-30 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-09-30 0001555280 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-12-31 0001555280 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-01-01 2018-09-30 0001555280 zts:LascadoilMember 2019-01-01 2019-09-30 0001555280 zts:LascadoilMember 2014-08-01 2014-08-31 0001555280 zts:LascadoilMember 2015-06-03 2015-06-03 0001555280 zts:EuropeanCommissionMember 2013-06-19 0001555280 zts:UlianopolisBrazilMember 2012-02-29 0001555280 zts:LascadoilMember 2016-05-16 2016-05-16 0001555280 zts:UlianopolisBrazilMember 2012-04-01 2012-04-30 0001555280 us-gaap:MaterialReconcilingItemsMember 2019-07-01 2019-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember 2018-07-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember 2019-07-01 2019-09-30 0001555280 us-gaap:CorporateNonSegmentMember 2018-07-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember 2018-07-01 2018-09-30 0001555280 us-gaap:AllOtherSegmentsMember 2019-07-01 2019-09-30 0001555280 us-gaap:CorporateNonSegmentMember 2019-07-01 2019-09-30 0001555280 us-gaap:AcquisitionRelatedCostsMember 2019-07-01 2019-09-30 0001555280 us-gaap:AllOtherSegmentsMember 2018-07-01 2018-09-30 0001555280 us-gaap:AcquisitionRelatedCostsMember 2018-07-01 2018-09-30 0001555280 us-gaap:AllOtherSegmentsMember 2018-01-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember 2018-01-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember 2019-01-01 2019-09-30 0001555280 us-gaap:CorporateNonSegmentMember 2018-01-01 2018-09-30 0001555280 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember 2019-01-01 2019-09-30 0001555280 us-gaap:AllOtherSegmentsMember 2019-01-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember 2018-01-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember currency:EUR zts:InternationalSegmentMember 2018-07-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember country:CN 2018-01-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember currency:EUR zts:InternationalSegmentMember 2019-07-01 2019-09-30 0001555280 us-gaap:OperatingSegmentsMember currency:EUR zts:InternationalSegmentMember 2018-01-01 2018-09-30 0001555280 us-gaap:MaterialReconcilingItemsMember srt:EuropeMember us-gaap:EmployeeSeveranceMember 2018-01-01 2018-09-30 0001555280 us-gaap:OperatingSegmentsMember currency:EUR zts:InternationalSegmentMember 2019-01-01 2019-09-30 zts:species xbrli:shares iso4217:USD xbrli:pure iso4217:USD xbrli:shares zts:country zts:region zts:category zts:product_category zts:customer zts:count zts:defendant zts:swap iso4217:CHF zts:segment iso4217:DKK zts:animal iso4217:EUR zts:producer
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
 
September 30, 2019
 
or
TRANSITION REPORT PURSUANT TO SECTION 13
 
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from __________ to __________
Commission File Number:
001-35797
Zoetis Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
46-0696167
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
10 Sylvan Way,
Parsippany,
New Jersey
 
07054
(Address of principal executive offices)
 
(Zip Code)
(973)-822-7000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
ZTS
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
At November 1, 2019, there were 476,299,250 shares of common stock outstanding.


Table of Contents

TABLE OF CONTENTS
 
 
 
 
Page
 
Item 1.
 
 
 
 
Condensed Consolidated Statements of Income (Unaudited)
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
 
 
Condensed Consolidated Statements of Equity (Unaudited)
 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
 
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
 
 
Review Report of Independent Registered Public Accounting Firm
 
Item 2.
 
 
Item 3.
 
 
Item 4.
 
 
 
Item 1.
 
 
Item 1A.
 
 
Item 2.
 
 
Item 3.
 
Defaults Upon Senior Securities
 
Item 4.
 
Mine Safety Disclosures
 
Item 5.
 
Other Information
 
Item 6.
 
 
 




Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.
Financial Statements


ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA)
 
2019
 
2018
 
2019
 
2018
Revenue
 
$
1,584

 
$
1,480

 
$
4,586

 
$
4,261

Costs and expenses:
 
 
 
 
 
 
 
 
Cost of sales
 
479

 
473

 
1,462

 
1,367

Selling, general and administrative expenses
 
391

 
367

 
1,166

 
1,064

Research and development expenses
 
112

 
108

 
325

 
307

Amortization of intangible assets
 
38

 
32

 
115

 
78

Restructuring charges and certain acquisition-related costs
 
6

 
47

 
33

 
54

Interest expense, net of capitalized interest
 
56

 
54

 
167

 
147

Other (income)/deductions—net
 
(26
)
 
(19
)
 
(46
)
 
(28
)
Income before provision for taxes on income
 
528

 
418

 
1,364

 
1,272

Provision for taxes on income
 
95

 
71

 
248

 
193

Net income before allocation to noncontrolling interests
 
433

 
347

 
1,116

 
1,079

Less: Net loss attributable to noncontrolling interests
 

 

 

 
(4
)
Net income attributable to Zoetis Inc.
 
$
433

 
$
347

 
$
1,116

 
$
1,083

Earnings per share attributable to Zoetis Inc. stockholders:
 
 
 
 
 
 
 
 
 Basic
 
$
0.91

 
$
0.72

 
$
2.33

 
$
2.24

 Diluted
 
$
0.90

 
$
0.71

 
$
2.31

 
$
2.22

Weighted-average common shares outstanding:
 
 
 
 
 
 
 
 
 Basic
 
477.8

 
482.0

 
478.7

 
483.9

 Diluted
 
481.5

 
485.8

 
482.3

 
487.7

Dividends declared per common share
 
$

 
$

 
$
0.328

 
$
0.252



See notes to condensed consolidated financial statements.
1 |

Table of Contents


ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
(MILLIONS OF DOLLARS)
 
2019
 
2018
 
2019
 
2018
Net income before allocation to noncontrolling interests
 
$
433

 
$
347

 
$
1,116

 
$
1,079

Other comprehensive income, net of taxes and reclassification adjustments:
 
 
 
 
 
 
 
 
Unrealized losses on derivatives for cash flow hedges, net
 
(4
)
 
(1
)
 
(3
)
 
(1
)
Unrealized gains on derivatives for net investment hedges, net
 
23

 

 
28

 

Foreign currency translation adjustments, net
 
(49
)
 
(75
)
 
(95
)
 
(113
)
Total other comprehensive loss, net of tax
 
(30
)
 
(76
)
 
(70
)
 
(114
)
Comprehensive income before allocation to noncontrolling interests
 
403

 
271

 
1,046

 
965

Less: Comprehensive loss attributable to noncontrolling interests
 

 

 

 
(4
)
Comprehensive income attributable to Zoetis Inc.
 
$
403

 
$
271

 
$
1,046

 
$
969






See notes to condensed consolidated financial statements.
2 |

Table of Contents

ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
September 30,
 
December 31,
 
 
2019
 
2018
(MILLIONS OF DOLLARS, EXCEPT SHARE AND PER SHARE DATA)
 
(Unaudited)
 
 
Assets
 
 
 
 
Cash and cash equivalents(a)
 
$
1,815

 
$
1,602

Short term investments
 
12

 
99

Accounts receivable, less allowance for doubtful accounts of $25 in 2019 and $24 in 2018
 
1,030

 
1,036

Inventories
 
1,439

 
1,391

Other current assets
 
322

 
271

Total current assets
 
4,618

 
4,399

Property, plant and equipment, less accumulated depreciation of $1,725 in 2019 and $1,599 in 2018
 
1,813

 
1,658

Operating lease right of use assets
 
193

 

Goodwill
 
2,550

 
2,519

Identifiable intangible assets, less accumulated amortization
 
1,935

 
2,046

Noncurrent deferred tax assets
 
72

 
61

Other noncurrent assets
 
91

 
94

Total assets
 
$
11,272

 
$
10,777

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Short-term borrowings
 
$

 
$
9

Accounts payable
 
284

 
313

Dividends payable
 

 
79

Accrued expenses
 
451

 
487

Accrued compensation and related items
 
217

 
266

Income taxes payable
 
52

 
35

Other current liabilities
 
48

 
34

Total current liabilities
 
1,052

 
1,223

Long-term debt, net of discount and issuance costs
 
6,447

 
6,443

Noncurrent deferred tax liabilities
 
473

 
474

Operating lease liabilities
 
169

 

Other taxes payable
 
255

 
265

Other noncurrent liabilities
 
198

 
187

Total liabilities
 
8,594

 
8,592

Commitments and contingencies (Note 16)
 


 


Stockholders' equity:
 
 
 
 
Preferred stock, $0.01 par value: 1,000,000,000 authorized, none issued
 

 

Common stock, $0.01 par value: 6,000,000,000 authorized; 501,891,243 and 501,891,243 shares issued; 476,745,789 and 479,562,326 shares outstanding at September 30, 2019, and December 31, 2018, respectively
 
5

 
5

Treasury stock, at cost, 25,145,454 and 22,328,917 shares of common stock at September 30, 2019, and December 31, 2018, respectively
 
(1,876
)
 
(1,487
)
Additional paid-in capital
 
1,031

 
1,026

Retained earnings
 
4,217

 
3,270

Accumulated other comprehensive loss
 
(699
)
 
(629
)
Total equity
 
2,678

 
2,185

Total liabilities and equity
 
$
11,272

 
$
10,777


(a) 
As of September 30, 2019, and December 31, 2018, includes $4 million and $5 million, respectively, of restricted cash.

See notes to condensed consolidated financial statements.
3 |

Table of Contents

ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)
Three months ended September 30, 2019
 
Zoetis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated

 
Equity

 
 
 
 
 
 
 
 
 
 
 
 
Additional

 
 
 
Other

 
Attributable to

 
 
 
 
Common Stock
 
 
Treasury Stock
 
 
Paid-in

 
Retained

 
Comprehensive

 
Noncontrolling

 
Total

(MILLIONS OF DOLLARS AND SHARES)
 
Shares (a)

 
Amount

 
Shares (a)

 
Amount

 
Capital

 
Earnings

 
Loss

 
Interests

 
Equity

Balance, June 30, 2019
 
501.9

 
$
5

 
24.1

 
$
(1,732
)
 
$
1,019

 
$
3,788

 
$
(669
)
 
$

 
$
2,411

Net income
 

 

 

 

 

 
433

 

 

 
433

Other comprehensive loss
 

 

 

 

 

 

 
(30
)
 

 
(30
)
Share-based compensation awards
 

 

 
(0.2
)
 
6

 
11

 
(4
)
 

 

 
13

Treasury stock acquired
 

 

 
1.2

 
(150
)
 

 

 

 

 
(150
)
Employee benefit plan contribution from Pfizer Inc.(b)
 

 

 

 

 
1

 

 

 

 
1

Balance, September 30, 2019
 
501.9

 
$
5

 
25.1

 
$
(1,876
)
 
$
1,031

 
$
4,217

 
$
(699
)
 
$

 
$
2,678

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2018
 
Zoetis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated

 
Equity

 
 
 
 
 
 
 
 
 
 
 
 
Additional

 
 
 
Other

 
Attributable to

 
 
 
 
Common Stock
 
 
Treasury Stock
 
 
Paid-in

 
Retained

 
Comprehensive

 
Noncontrolling

 
Total

(MILLIONS OF DOLLARS AND SHARES)
 
Shares (a)

 
Amount

 
Shares (a)

 
Amount

 
Capital

 
Earnings

 
Loss

 
Interests

 
Equity

Balance, June 30, 2018
 
501.9

 
$
5

 
19.6

 
$
(1,215
)
 
$
1,001

 
$
2,722

 
$
(543
)
 
$
12

 
$
1,982

Net income
 

 

 

 

 

 
347

 

 

 
347

Other comprehensive loss
 

 

 

 

 

 

 
(76
)
 

 
(76
)
Acquisition of a noncontrolling interest(c)
 

 

 

 

 
(14
)
 

 

 
(12
)
 
(26
)
Share-based compensation awards
 

 

 
(0.3
)
 
13

 
22

 
(2
)
 

 

 
33

Treasury stock acquired
 

 

 
1.6

 
(143
)
 

 

 

 

 
(143
)
Employee benefit plan contribution from Pfizer Inc.(b)
 

 

 

 

 
1

 

 

 

 
1

Balance, September 30, 2018
 
501.9

 
$
5

 
20.9

 
$
(1,345
)
 
$
1,010

 
$
3,067

 
$
(619
)
 
$

 
$
2,118

(a) 
Shares may not add due to rounding.
(b) 
Represents contributed capital from Pfizer Inc. associated with service credit continuation for certain Zoetis Inc. employees in Pfizer Inc.'s U.S. qualified defined benefit and U.S. retiree medical plans.
(c) 
Represents the consolidation of a European livestock monitoring company.













See notes to condensed consolidated financial statements.
4 |

Table of Contents

ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - Continued
(UNAUDITED)
Nine months ended September 30, 2019
 
Zoetis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated

 
Equity

 
 
 
 
 
 
 
 
 
 
 
 
Additional

 
 
 
Other

 
Attributable to

 
 
 
 
Common Stock
 
 
Treasury Stock
 
 
Paid-in

 
Retained

 
Comprehensive

 
Noncontrolling

 
Total

(MILLIONS OF DOLLARS AND SHARES)
 
Shares (a)

 
Amount

 
Shares (a)

 
Amount

 
Capital

 
Earnings

 
Loss

 
Interests

 
Equity

Balance, December 31, 2018
 
501.9

 
$
5

 
22.3

 
$
(1,487
)
 
$
1,026

 
$
3,270

 
$
(629
)
 
$

 
$
2,185

Net income
 

 

 

 

 

 
1,116

 

 

 
1,116

Other comprehensive loss
 

 

 

 

 

 

 
(70
)
 

 
(70
)
Share-based compensation awards
 

 

 
(1.6
)
 
61

 
3

 
(12
)
 

 


 
52

Treasury stock acquired
 

 

 
4.4

 
(450
)
 

 

 

 

 
(450
)
Employee benefit plan contribution from Pfizer Inc.(b)
 

 

 

 

 
2

 

 

 

 
2

Dividends declared
 

 

 

 

 

 
(157
)
 

 

 
(157
)
Balance, September 30, 2019
 
501.9

 
$
5

 
25.1

 
$
(1,876
)
 
$
1,031

 
$
4,217

 
$
(699
)
 
$

 
$
2,678

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2018
 
Zoetis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated

 
Equity

 
 
 
 
 
 
 
 
 
 
 
 
Additional

 
 
 
Other

 
Attributable to

 
 
 
 
Common Stock
 
 
Treasury Stock
 
 
Paid-in

 
Retained

 
Comprehensive

 
Noncontrolling

 
Total

(MILLIONS OF DOLLARS AND SHARES)
 
Shares (a)

 
Amount

 
Shares (a)

 
Amount

 
Capital

 
Earnings

 
Loss

 
Interests

 
Equity

Balance, December 31, 2017
 
501.9

 
$
5

 
15.8

 
$
(852
)
 
$
1,013

 
$
2,109

 
$
(505
)
 
$
16

 
$
1,786

Net income/(loss)
 

 

 

 

 

 
1,083

 

 
(4
)
 
1,079

Other comprehensive loss
 

 

 

 

 

 

 
(114
)
 

 
(114
)
Acquisition of a noncontrolling interest (c)
 

 

 

 

 
(14
)
 

 

 
(12
)
 
(26
)
Share-based compensation awards
 

 

 
(1.4
)
 
55

 
9

 
(3
)
 

 

 
61

Treasury stock acquired
 

 

 
6.6

 
(548
)
 

 

 

 

 
(548
)
Employee benefit plan contribution from Pfizer Inc.(b)
 

 

 

 

 
2

 

 

 

 
2

Dividends declared
 

 

 

 

 

 
(122
)
 

 

 
(122
)
Balance, September 30, 2018
 
501.9

 
$
5

 
20.9

 
$
(1,345
)
 
$
1,010

 
$
3,067

 
$
(619
)
 
$

 
$
2,118


(a) 
Shares may not add due to rounding.
(b) 
Represents contributed capital from Pfizer Inc. associated with service credit continuation for certain Zoetis Inc. employees in Pfizer Inc.'s U.S. qualified defined benefit and U.S. retiree medical plans.
(c) 
Represents the consolidation of a European livestock monitoring company.





See notes to condensed consolidated financial statements.
5 |

Table of Contents

ZOETIS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
Nine Months Ended
 
 
September 30,
(MILLIONS OF DOLLARS)
 
2019
 
2018
Operating Activities
 
 
 
 
Net income before allocation to noncontrolling interests
 
$
1,116

 
$
1,079

Adjustments to reconcile net income before noncontrolling interests to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization expense
 
303

 
207

Share-based compensation expense
 
51

 
36

Asset write-offs and asset impairments
 
6

 
4

Net gain on sale of assets
 
(20
)
 

Provision for losses on inventory
 
44

 
37

Deferred taxes(a)
 
(30
)
 
(155
)
Employee benefit plan contribution from Pfizer Inc.
 
2

 
2

Other non-cash adjustments
 
(11
)
 
(17
)
Other changes in assets and liabilities, net of acquisitions and divestitures:
 
 
 
 
    Accounts receivable
 
(18
)
 
37

    Inventories
 
(103
)
 
29

    Other assets
 
(39
)
 
(77
)
    Accounts payable
 
(28
)
 
(39
)
    Other liabilities
 
(68
)
 
(31
)
    Other tax accounts, net(a)
 
8

 
94

Net cash provided by operating activities
 
1,213

 
1,206

Investing Activities
 
 
 
 
Capital expenditures
 
(294
)
 
(200
)
Acquisition of Abaxis, net of cash acquired
 

 
(1,884
)
Other acquisitions
 
(137
)
 
(110
)
Proceeds from maturities and redemptions of investments
 
89

 

Net proceeds on swaps designated as net investment hedges
 
37

 

Net proceeds from sale of assets
 
20

 
8

Other investing activities
 
(6
)