Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 29, 2015 | 1-May-15 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 29-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | ZTS | |
Entity Registrant Name | Zoetis Inc. | |
Entity Central Index Key | 1555280 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 499,964,316 |
CONDENSED_CONSOLIDATED_AND_COM
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (UNAUDITED) (USD $) | 3 Months Ended | |||
In Millions, except Share data in Thousands, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Income Statement [Abstract] | ||||
Revenue | $1,102 | [1] | $1,097 | [1] |
Costs and expenses: | ||||
Cost of sales(a) | 394 | [2] | 379 | [2] |
Selling, general and administrative expenses(a) | 354 | [2] | 356 | [2] |
Research and development expenses(a) | 80 | [2] | 87 | [2] |
Amortization of intangible assets(a) | 15 | [2] | 15 | [2] |
Restructuring charges and certain acquisition-related costs | 1 | 3 | ||
Interest expense, net of capitalized interest | 28 | 29 | ||
Other (income)/deductions—net | 0 | 1 | ||
Income before provision for taxes on income | 230 | [3] | 227 | [3] |
Provision for taxes on income | 65 | 72 | ||
Net income before allocation to noncontrolling interests | 165 | 155 | ||
Less: Net income attributable to noncontrolling interests | 0 | 0 | ||
Net income attributable to Zoetis Inc. | $165 | $155 | ||
Earnings per share attributable to Zoetis Inc. stockholders: | ||||
Basic (in dollars per share) | $0.33 | $0.31 | ||
Diluted (in dollars per share) | $0.33 | $0.31 | ||
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 501,146 | 500,231 | ||
Diluted (in shares) | 503,224 | 500,702 | ||
Dividends paid per common share (in dollars per share) | $0.08 | $0.07 | ||
[1] | Revenue denominated in euros was $135 million and $168 million for the three months ended March 29, 2015, and March 30, 2014, respectively. | |||
[2] | 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 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, in the condensed consolidated statements of income. | |||
[3] | Defined as income before provision for taxes on income. |
CONDENSED_CONSOLIDATED_AND_COM1
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Statement of Comprehensive Income [Abstract] | ||||
Net income before allocation to noncontrolling interests | $165 | $155 | ||
Other comprehensive income/(loss), net of taxes and reclassification adjustments: | ||||
Foreign currency translation adjustments, net | -118 | -11 | ||
Benefit plans: Actuarial gains, net(a) | 1 | [1] | 0 | [1] |
Plan settlement, net(b) | 0 | [2] | 3 | [2] |
Total other comprehensive loss, net of tax | -117 | -8 | ||
Comprehensive income before allocation to noncontrolling interests | 48 | 147 | ||
Less: Comprehensive income attributable to noncontrolling interests | 1 | 0 | ||
Comprehensive income attributable to Zoetis Inc. | $47 | $147 | ||
[1] | Presented net of reclassification adjustments and tax impacts, which are not significant in any period presented. Reclassification adjustments related to benefit plans are generally reclassified, as part of net periodic pension cost, into Cost of sales, Selling, general and administrative expenses, and/or Research and development expenses, as appropriate, in the condensed consolidated statements of income. | |||
[2] | Reflects the 2014 settlement charge associated with the 2012 sale of our Netherlands manufacturing facility which was recorded to Other (income)/deductions—net. See Note 12. Benefit Plans for additional information. |
CONDENSED_CONSOLIDATED_AND_COM2
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (UNAUDITED) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Assets | ||
Cash and cash equivalents | $559 | $882 |
Accounts receivable, less allowance for doubtful accounts of $31 in 2015 and $32 in 2014 | 905 | 980 |
Inventories | 1,346 | 1,289 |
Current deferred tax assets | 87 | 109 |
Other current assets | 213 | 205 |
Total current assets | 3,110 | 3,465 |
Property, plant and equipment, less accumulated depreciation of $1,155 in 2015 and $1,145 in 2014 | 1,301 | 1,318 |
Goodwill | 1,169 | 976 |
Identifiable intangible assets, less accumulated amortization | 735 | 727 |
Noncurrent deferred tax assets | 57 | 54 |
Other noncurrent assets | 58 | 67 |
Total assets | 6,430 | 6,607 |
Liabilities and Equity | ||
Short-term borrowings | 2 | 7 |
Current portion of long-term debt | 400 | 0 |
Accounts payable | 256 | 290 |
Dividends payable | 42 | 42 |
Accrued compensation and related items | 173 | 238 |
Income taxes payable | 41 | 26 |
Accrued expenses | 426 | 475 |
Other current liabilities | 30 | 8 |
Total current liabilities | 1,370 | 1,086 |
Long-term debt | 3,243 | 3,643 |
Noncurrent deferred tax liabilities | 256 | 277 |
Other taxes payable | 57 | 57 |
Other noncurrent liabilities | 199 | 207 |
Total liabilities | 5,125 | 5,270 |
Commitments and contingencies | ||
Preferred stock, $0.01 par value: 1,000,000,000 authorized, none issued | 0 | 0 |
Common stock, $0.01 par value: 6,000,000,000 authorized; 501,454,917 and 501,342,267 shares issued; 500,367,604 and 501,327,524 shares outstanding at March 29, 2015, and December 31, 2014, respectively | 5 | 5 |
Treasury stock, at cost, 1,087,313 and 14,743 shares of common stock at March 29, 2015, and December 31, 2014, respectively | -49 | 0 |
Additional paid-in capital | 969 | 958 |
Retained earnings | 832 | 709 |
Accumulated other comprehensive loss | -479 | -361 |
Total Zoetis Inc. equity | 1,278 | 1,311 |
Equity attributable to noncontrolling interests | 27 | 26 |
Total equity | 1,305 | 1,337 |
Total liabilities and equity | $6,430 | $6,607 |
CONDENSED_CONSOLIDATED_AND_COM3
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (UNAUDITED) (PARENTHETICAL) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $31 | $32 |
Accumulated depreciation | $1,155 | $1,145 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred Stock, Par or Stated Value Per Share | $0.01 | $0.01 |
Common Stock, Shares Authorized | 6,000,000,000 | 6,000,000,000 |
Common Stock, Shares, Issued | 501,454,917 | 501,342,267 |
Common stock, shares outstanding | 500,367,604 | 501,327,524 |
Preferred Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Treasury Stock, Shares | 1,087,313 | 14,743 |
Preferred Stock, Shares Issued | 0 | 0 |
CONDENSED_CONSOLIDATED_AND_COM4
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (UNAUDITED) CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (UNAUDITED) (USD $) | Total | Common Stock | Share repurchase program | share-based compensation | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Equity Attributable to Noncontrolling Interests | ||
In Millions, unless otherwise specified | ||||||||||
Beginning balance at Dec. 31, 2013 | $962 | $5 | $878 | $276 | ($219) | $22 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income | 155 | 155 | 0 | |||||||
Other comprehensive loss | -8 | -8 | ||||||||
Share-based compensation awards | [1] | 5 | 5 | |||||||
Defined contribution plans transactions | 21 | 0 | 21 | 0 | 0 | 0 | ||||
Pension plan transfer from Pfizer Inc. | 0 | 0 | 2 | 0 | -2 | 0 | ||||
Employee benefit plan contribution from Pfizer Inc. | [2] | 0 | ||||||||
Dividends declared | -36 | -36 | ||||||||
Treasury Stock, Value, Acquired, Cost Method | -0.2 | |||||||||
Treasury stock, ending balance at Mar. 30, 2014 | 0 | |||||||||
Ending balance at Mar. 30, 2014 | 1,099 | 5 | [3] | 906 | 395 | -229 | 22 | |||
Treasury stock, beginning balance at Dec. 31, 2014 | 0 | |||||||||
Beginning balance at Dec. 31, 2014 | 1,337 | 5 | [3] | 958 | 709 | -361 | 26 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net income | 165 | 165 | 0 | |||||||
Other comprehensive loss | -117 | -118 | 1 | |||||||
Share-based compensation awards | [1] | 8 | 10 | |||||||
Employee benefit plan contribution from Pfizer Inc. | 1 | -1 | ||||||||
Dividends declared | -42 | -42 | ||||||||
Treasury Stock, Value, Acquired, Cost Method | -47 | -2 | ||||||||
Treasury stock acquired | -47 | |||||||||
Treasury stock, ending balance at Mar. 29, 2015 | -49 | |||||||||
Ending balance at Mar. 29, 2015 | $1,305 | $5 | [3] | $969 | $832 | ($479) | $27 | |||
[1] | (c)B Reflects company matching and profit-sharing contributions funded through the issuance of shares of Zoetis Inc. common stock. For additional information, see Note 14. Stockholders' Equity. | |||||||||
[2] | 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. See Note 12. Benefit Plans. | |||||||||
[3] | As of MarchB 29, 2015, and MarchB 30, 2014, there were 500,367,604 and 500,738,620 outstanding shares of common stock, respectively, and 1,087,313 and 6,763 shares of treasury stock, respectively. Treasury stock is recognized at the cost to reacquire the shares. |
CONDENSED_CONSOLIDATED_AND_COM5
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (UNAUDITED) (PARENTHETICAL) (USD $) | 3 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Mar. 30, 2014 | Mar. 29, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Stockholders' Equity [Abstract] | ||||
Treasury Stock, Value, Acquired, Cost Method | $0.20 | |||
Common Stock, Shares, Outstanding | 500,738,620 | 500,367,604 | 501,327,524 | |
Treasury Stock, Shares | 6,763 | 1,087,313 | 14,743 | 0 |
CONDENSED_CONSOLIDATED_AND_COM6
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Operating Activities | ||||
Net income before allocation to noncontrolling interests | $165 | $155 | ||
Adjustments to reconcile net income before noncontrolling interests to net cash provided by/(used in) operating activities: | ||||
Depreciation and amortization expense | 48 | [1] | 50 | [1] |
Share-based compensation expense | 10 | 5 | ||
Asset write-offs and asset impairments | 1 | 0 | ||
Deferred taxes | -3 | 2 | ||
Employee benefit plan contribution from Pfizer Inc. | 1 | 0 | ||
Other non-cash adjustments | 3 | 3 | ||
Other changes in assets and liabilities, net of acquisitions and divestitures | -165 | -238 | ||
Net cash provided by/(used in) operating activities | 60 | -23 | ||
Investing Activities | ||||
Purchases of property, plant and equipment | -45 | -45 | ||
Asset acquisition(a) | -230 | 0 | ||
Net proceeds from sales of assets | 1 | 0 | ||
Net cash used in investing activities | -274 | -45 | ||
Financing Activities | ||||
Increase/(decrease) in short-term borrowings, net | -5 | 1 | ||
Stock-based compensation-related proceeds and excess tax benefits | 1 | 0 | ||
Purchases of treasury stock | -48 | 0 | ||
Cash dividends paid | -42 | -36 | ||
Net cash used in financing activities | -94 | -35 | ||
Effect of exchange-rate changes on cash and cash equivalents | -15 | -1 | ||
Net decrease in cash and cash equivalents | -323 | -104 | ||
Cash and cash equivalents at beginning of period | 882 | 610 | ||
Cash and cash equivalents at end of period | 559 | 506 | ||
Cash paid during the period for: | ||||
Income taxes | 52 | 13 | ||
Interest, net of capitalized interest | 58 | 59 | ||
Non-cash transactions: | ||||
Purchases of property, plant and equipment | 10 | 0 | ||
Contingent purchase price consideration | 22 | 0 | ||
Dividends declared, not paid | $42 | $36 | ||
[1] | 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. |
Organization
Organization | 3 Months Ended |
Mar. 29, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization |
Zoetis Inc. (including its subsidiaries, collectively, Zoetis, the company, we, us or our) is a global leader in the discovery, development, manufacture and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. We organize and operate our business in four geographic regions: the United States (U.S.); Europe/Africa/Middle East (EuAfME); Canada/Latin America (CLAR); and Asia/Pacific (APAC). | |
We directly market our products in approximately 70 countries across North America, Europe, Africa, Asia, Australia and South America, and our products are sold in more than 120 countries, including developed markets and emerging markets. Our revenue is mostly generated in the U.S. and EuAfME. We have a diversified business, marketing products across eight core species: cattle, swine, poultry, sheep and fish (collectively, livestock) and dogs, cats and horses (collectively, companion animals); and within five major product categories: anti-infectives, vaccines, parasiticides, medicated feed additives and other pharmaceuticals. |
The_Separation_and_Transaction
The Separation and Transactions and Agreements with Pfizer | 3 Months Ended |
Mar. 29, 2015 | |
Separation Activities and Initial Public Offering [Abstract] | |
The Separation and Transactions and Agreements with Pfizer | The Separation and Transactions and Agreements with Pfizer |
Pfizer Inc. (Pfizer) formed Zoetis to acquire, own and operate the animal health business of Pfizer. On June 24, 2013, Pfizer completed an exchange offer (the Exchange Offer) resulting in the full separation of Zoetis from Pfizer and the disposal of Pfizer's entire ownership and voting interest in Zoetis. | |
In the first quarter of 2013, through a series of steps (collectively, the Separation), Pfizer transferred to us its subsidiaries holding substantially all of the assets and liabilities of its animal health business. After the Separation, an initial public offering (IPO) of our common stock was completed. Pfizer retained the net proceeds from the IPO. | |
Zoetis had related party transactions with Pfizer through the completion of the Exchange Offer. As of the completion of the Exchange Offer, Pfizer is no longer a related party. In connection with the IPO, we entered into certain agreements that provide a framework for an ongoing relationship with Pfizer. For additional information regarding activities while Pfizer was a related party, as well as our ongoing agreements with Pfizer, see Note 19. Transactions and Agreements with Pfizer in our 2014 Annual Report on Form 10-K. | |
At March 29, 2015, and December 31, 2014, $22 million and $24 million, respectively, was included in Accounts receivable as receivable from Pfizer, and $40 million and $42 million, respectively, was included in Accounts payable as payable to Pfizer. |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 29, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements were prepared following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (U.S. GAAP) can be condensed or omitted. Balance sheet amounts and operating results for subsidiaries operating outside the United States are as of and for the three-month periods ended February 22, 2015, and February 23, 2014. | |
Revenue, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be representative of those for the full year. | |
We are responsible for the unaudited condensed consolidated financial statements included in this Form 10-Q. The condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of our financial position and operating results. The information included in this interim report should be read in conjunction with the financial statements and accompanying notes included in our 2014 Annual Report on Form 10-K. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended |
Mar. 29, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies |
New Accounting Standards | |
In April 2015, the Financial Accounting Standards Board (FASB) issued an accounting standards update that requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts, rather than as a deferred charge (i.e., an asset). The provisions of the new standard are effective beginning January 1, 2016, for annual and interim reporting periods. The guidance requires all prior period balance sheets to be adjusted retrospectively and early adoption is permitted. As of March 29, 2015, we had approximately $18 million of debt issuance costs recorded within Other noncurrent assets. We are currently assessing whether or not to early adopt this guidance. | |
In February 2015, the FASB issued an accounting standards update that provides revised guidance on whether to consolidate certain legal entities, such as limited partnerships, limited liability corporations and securitization structures. The provisions of the new standard are effective beginning January 1, 2016, for annual and interim reporting periods. Early adoption is permitted. We are currently assessing the potential impact that the adoption of this guidance will have on our consolidated financial statements, as well as whether or not to early adopt this guidance. | |
In May 2014, the FASB issued an accounting standards update that outlines a new, single comprehensive model for companies to use in accounting for revenue arising from contracts with customers. This update supersedes most current revenue recognition guidance under U.S. GAAP. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance includes a five-step model for determining how, when and how much revenue should be recognized. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The provisions of the new standard are effective beginning January 1, 2017, for annual and interim reporting periods. Early adoption is not permitted. The new standard allows for either full retrospective or modified retrospective transition upon adoption. We continue to assess the transition method we will elect for adoption as well as the potential impact that adopting this new guidance will have on our consolidated financial statements. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 29, 2015 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions |
Acquisition of Abbott Animal Health | |
On February 10, 2015, we completed the purchase of certain assets of Abbott Animal Health (AAH), a subsidiary of Abbott Laboratories (Abbott). AAH is a companion animal health business focused on the veterinary surgical suite. The purchase expands our companion animal product portfolio to include veterinarian solutions for anesthesia, pain management, and the diagnosis of diabetes. | |
The $255 million purchase price included cash of $230 million and an additional contingent payment of $25 million which is due to Abbott within one year of the acquisition date, subject to certain deductions in the event of sales disruptions due to supply issues. The range of undiscounted amounts that Zoetis could pay pursuant to this contingent consideration arrangement is between zero and $25 million, with an acquisition date fair value of $22 million. The fair value of the contingent consideration recognized as of the acquisition date was determined using a probability weighted discounted cash flow analysis that considered significant estimates and assumptions not available in the market (Level 3 inputs). | |
The transaction was accounted for as a business combination, with the net assets acquired measured at their respective acquisition date fair values. Preliminary amounts recorded include $14 million of inventory, $8 million of in-process research and development (IPR&D) associated with oncology and osteoarthritis projects, $4 million of trade names related to diabetes and pain management products, $11 million of developed technology assets associated with pain management and surgical products, $15 million of other intangible assets including a favorable supply agreement and product exclusivity rights and property, plant and equipment of less than $1 million. Trade names and developed technology assets will be amortized over 15 years while other intangible assets acquired have a weighted average useful life of 5 years. | |
Goodwill of $200 million, representing the excess of consideration transferred over the fair value of assets acquired, was allocated across our reportable segments and is predominantly attributable to synergies expected to be realized through the integration of AAH operations into the existing Zoetis business. The goodwill recorded is expected to be deductible for tax purposes. | |
All amounts recorded are subject to final valuation, however any difference between such amounts and the final fair value determination for net assets acquired is not expected to be material to our condensed consolidated financial statements. | |
Acquisition-related costs of the transaction were expensed as incurred and are not material to our condensed consolidated statements of income. AAH revenue and earnings occurring subsequent to the acquisition date have been included in our quarterly financial results but are not material to the condensed consolidated statements of income. |
Restructuring_Charges_and_Othe
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives | 3 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives | Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives | ||||||||||||
In connection with our cost-reduction/productivity initiatives, we typically incur costs and charges associated with site closings and other facility rationalization actions, workforce reductions and the expansion of shared services, including the development of global systems. In connection with our acquisition activity, we typically incur costs and charges associated with executing the transactions, integrating the acquired operations, which may include expenditures for consulting and the integration of systems and processes, product transfers and restructuring the consolidated company, which may include charges related to employees, assets and activities that will not continue in the consolidated company. All operating functions can be impacted by these actions, including sales and marketing, manufacturing and research and development (R&D), as well as functions such as business technology, shared services and corporate operations. | |||||||||||||
In the first quarter of 2014, we recorded restructuring charges of $2 million related to employee severance costs in EuAfME as a result of initiatives to reduce costs and better align our organizational structure. | |||||||||||||
The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives follow: | |||||||||||||
Three Months Ended | |||||||||||||
March 29, | March 30, | ||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||
Restructuring charges and certain acquisition-related costs: | |||||||||||||
Integration costs(a) | $ | 1 | $ | 2 | |||||||||
Restructuring charges(b): | — | 1 | |||||||||||
Total Restructuring charges and certain acquisition-related costs | $ | 1 | $ | 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, as well as product transfer costs. For the first quarter of 2015, integration costs primarily relate to the purchase of certain assets of Abbott Animal Health. | ||||||||||||
(b) | The restructuring charges for the three months ended March 30, 2014, include employee severance costs in EuAfME ($2 million), a reversal of a previously established reserve as a result of a change in estimate of severance costs ($2 million benefit), and accelerated depreciation related to the exiting of a research facility ($1 million). | ||||||||||||
For the three months ended March 30, 2014, the restructuring charges are associated with the following: EuAfME ($2 million) and Manufacturing/research/corporate ($1 million benefit). | |||||||||||||
The components of and changes in our restructuring accruals follow: | |||||||||||||
Employee | |||||||||||||
Termination | Exit | ||||||||||||
(MILLIONS OF DOLLARS) | Costs | Costs | Accrual | ||||||||||
Balance, December 31, 2014(a) | $ | 18 | $ | 1 | $ | 19 | |||||||
Provision | — | — | — | ||||||||||
Utilization and other(b) | (8 | ) | — | (8 | ) | ||||||||
Balance, March 29, 2015(a) | $ | 10 | $ | 1 | $ | 11 | |||||||
(a) | At March 29, 2015, and December 31, 2014, included in Other current liabilities ($6 million and $13 million, respectively) and Other noncurrent liabilities ($5 million and $6 million, respectively). | ||||||||||||
(b) | Includes adjustments for foreign currency translation. |
Other_IncomeDeductions_Net
Other (Income)/Deductions - Net | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Other Income and Expenses [Abstract] | |||||||||
Other (Income)/Deductions - Net | Other (Income)/Deductions—Net | ||||||||
The components of Other (income)/deductions—net follow: | |||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Royalty-related income | $ | (7 | ) | $ | (8 | ) | |||
Certain legal and other matters, net(a) | — | (2 | ) | ||||||
Foreign currency loss(b) | 8 | 9 | |||||||
Other, net(c) | (1 | ) | 2 | ||||||
Other (income)/deductions—net | $ | — | $ | 1 | |||||
(a) | For the three months ended March 30, 2014, represents an insurance recovery of litigation-related charges. | ||||||||
(b) | For the three months ended March 29, 2015, primarily driven by costs related to hedging and exposures to certain emerging market currencies. For the three months ended March 30, 2014, primarily driven by losses related to the depreciation of the Argentine peso in the first quarter of 2014. | ||||||||
(c) | For the three months ended March 30, 2014, represents a pension plan settlement charge related to the sale of a manufacturing plant, partially offset by interest income and other miscellaneous income. |
Income_Taxes
Income Taxes | 3 Months Ended | |
Mar. 29, 2015 | ||
Income Tax Disclosure [Abstract] | ||
Income Taxes | Income Taxes | |
A. | Taxes on Income | |
The effective tax rate was 28.3% for the first quarter of 2015, compared with 31.7% for the first quarter of 2014. The lower effective tax rate for the first quarter of 2015 compared with the first quarter of 2014 was primarily attributable to a $9 million discrete tax benefit recorded in the first quarter of 2015 related to a revaluation of deferred taxes as a result of a change in tax rates, an $8 million discrete tax expense during the first quarter of 2014 related to a prior period intercompany inventory adjustment, and changes in the jurisdictional mix of earnings, which includes the impact of the location of earnings as well as repatriation costs. | ||
B. | Deferred Taxes | |
As of March 29, 2015, the total net deferred income tax liability of $121 million is included in Current deferred tax assets ($87 million), Noncurrent deferred tax assets ($57 million), Other current liabilities ($9 million) and Noncurrent deferred tax liabilities ($256 million). | ||
As of December 31, 2014, the total net deferred income tax liability of $125 million is included in Current deferred tax assets ($109 million), Noncurrent deferred tax assets ($54 million), Other current liabilities ($11 million) and Noncurrent deferred tax liabilities ($277 million). | ||
C. | Tax Contingencies | |
As of March 29, 2015, the tax liabilities associated with uncertain tax positions of $54 million (exclusive of interest and penalties related to uncertain tax positions of $8 million) are included in Noncurrent deferred tax assets ($6 million) and Other taxes payable ($48 million). | ||
As of December 31, 2014, the tax liabilities associated with uncertain tax positions of $54 million (exclusive of interest and penalties related to uncertain tax positions of $8 million) are included in Noncurrent deferred tax assets ($6 million) and Other taxes payable ($48 million). | ||
Our tax liabilities for uncertain tax positions relate primarily to issues common among multinational corporations. Any settlements or statute of limitations expirations could result in a significant decrease in our uncertain tax positions. Substantially all of these unrecognized tax benefits, if recognized, would impact our effective income tax rate. We do not expect that within the next twelve months any of our uncertain tax positions could significantly decrease as a result of settlements with taxing authorities or the expiration of the statutes of limitations. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but our estimates of uncertain tax positions and potential tax benefits may not be representative of actual outcomes, and any variation from such estimates could materially affect our financial statements in the period of settlement or when the statutes of limitations expire, as we treat these events as discrete items in the period of resolution. Finalizing audits with the relevant taxing authorities can include formal administrative and legal proceedings, and, as a result, it is difficult to estimate the timing and range of possible changes related to our uncertain tax positions, and such changes could be significant. |
Financial_Instruments
Financial Instruments | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||||||
Financial Instruments [Abstract] | |||||||||||||||||||||||||||||
Financial Instruments | Financial Instruments | ||||||||||||||||||||||||||||
A. | Debt | ||||||||||||||||||||||||||||
Credit Facilities | |||||||||||||||||||||||||||||
In December 2012, we entered into a revolving credit agreement with a syndicate of banks providing for a five-year $1.0 billion senior unsecured revolving credit facility (the credit facility), which became effective in February 2013 upon the completion of the IPO and expires in December 2017. Subject to certain conditions, we have the right to increase the credit facility to up to $1.5 billion. The credit facility contains a financial covenant requiring us to not exceed a maximum total leverage ratio (the ratio of consolidated net debt as of the end of the period to consolidated Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) for such period) of 3.50:1 for fiscal year 2015 and 3.00:1 thereafter. The credit facility also contains a financial covenant requiring that we maintain a minimum interest coverage ratio (the ratio of EBITDA at the end of the period to interest expense for such period) of 3.50:1. In addition, the credit facility contains other customary covenants. We were in compliance with all financial covenants as of March 29, 2015, and December 31, 2014. There were no amounts drawn under the credit facility as of March 29, 2015, or December 31, 2014. | |||||||||||||||||||||||||||||
We have additional lines of credit and other credit arrangements with a group of banks and other financial intermediaries for general corporate purposes. We maintain cash and cash equivalent balances in excess of our outstanding short-term borrowings. As of March 29, 2015, we had access to $68 million of lines of credit which expire at various times through 2017. Short-term borrowings outstanding related to these facilities were $2 million and $7 million as of March 29, 2015, and December 31, 2014, respectively. Long-term borrowings outstanding related to these facilities were $2 million and $3 million as of March 29, 2015, and December 31, 2014, respectively. | |||||||||||||||||||||||||||||
Commercial Paper Program | |||||||||||||||||||||||||||||
In February 2013, we entered into a commercial paper program with a capacity of up to $1.0 billion. As of March 29, 2015, and December 31, 2014, there was no commercial paper issued under this program. | |||||||||||||||||||||||||||||
Short-Term Borrowings | |||||||||||||||||||||||||||||
There were short-term borrowings related to credit facilities of $2 million and $7 million as of March 29, 2015, and December 31, 2014, respectively (see Credit Facilities). The weighted-average interest rate on the short-term borrowings outstanding related to credit facilities was 9.7% and 7.8% for the periods ended March 29, 2015, and December 31, 2014, respectively. | |||||||||||||||||||||||||||||
Senior Notes Offering and Other Long-Term Debt | |||||||||||||||||||||||||||||
On January 28, 2013, we issued $3.65 billion aggregate principal amount of our senior notes (the senior notes offering) in a private placement, with an original issue discount of $10 million. The senior notes are comprised of $400 million aggregate principal amount of our 1.150% senior notes due 2016, $750 million aggregate principal amount of our 1.875% senior notes due 2018, $1.35 billion aggregate principal amount of our 3.250% senior notes due 2023 and $1.15 billion aggregate principal amount of our 4.700% senior notes due 2043. | |||||||||||||||||||||||||||||
The current portion of long-term debt was $400 million as of March 29, 2015, with a weighted-average interest rate of 1.150%. There was no current portion of long-term debt as of December 31, 2014. | |||||||||||||||||||||||||||||
The senior notes are governed by an indenture and supplemental indenture (collectively, the indenture) between us and Deutsche Bank Trust Company Americas, as trustee. The indenture contains certain covenants, including limitations on our and certain of our subsidiaries' ability to incur liens or engage in sale-leaseback transactions. The indenture also contains restrictions on our ability to consolidate, merge or sell substantially all of our assets. In addition, the indenture contains other customary terms, including certain events of default, upon the occurrence of which the senior notes may be declared immediately due and payable. | |||||||||||||||||||||||||||||
Pursuant to the indenture, we are able to redeem the senior notes, in whole or in part, at any time by paying a “make whole” premium, plus accrued and unpaid interest to, but excluding, the date of redemption. Pursuant to our tax matters agreement with Pfizer, we will not be permitted to redeem the 2023 notes pursuant to this optional redemption provision, except under limited circumstances. Upon the occurrence of a change of control of us and a downgrade of the senior notes below an investment grade rating by each of Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, we are, in certain circumstances, required to make an offer to repurchase all of the outstanding senior notes at a price equal to 101% of the aggregate principal amount of the senior notes together with accrued and unpaid interest to, but excluding, the date of repurchase. | |||||||||||||||||||||||||||||
The components of our long-term debt follow: | |||||||||||||||||||||||||||||
March 29, | December 31, | ||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||||||
Lines of credit, due 2016-2018 | $ | 2 | $ | 3 | |||||||||||||||||||||||||
1.150% Senior Notes due 2016 | 400 | 400 | |||||||||||||||||||||||||||
1.875% Senior Notes due 2018 | 750 | 750 | |||||||||||||||||||||||||||
3.250% Senior Notes due 2023 | 1,350 | 1,350 | |||||||||||||||||||||||||||
4.700% Senior Notes due 2043 | 1,150 | 1,150 | |||||||||||||||||||||||||||
3,652 | 3,653 | ||||||||||||||||||||||||||||
Unamortized debt discount | (9 | ) | (10 | ) | |||||||||||||||||||||||||
Less current portion of long-term debt | (400 | ) | — | ||||||||||||||||||||||||||
Long-term debt | $ | 3,243 | $ | 3,643 | |||||||||||||||||||||||||
The fair value of our long-term debt, including the current portion of long-term debt, was $3,703 million and $3,690 million as of March 29, 2015, and December 31, 2014, respectively, and has been determined using a third-party matrix-pricing model that uses significant inputs derived from, or corroborated by, observable market data and Zoetis’s credit rating (Level 2 inputs). | |||||||||||||||||||||||||||||
The principal amount of long-term debt outstanding, including the current portion of long-term debt, as of March 29, 2015, matures in the following years: | |||||||||||||||||||||||||||||
After | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 | Total | ||||||||||||||||||||||
Maturities | $ | 401 | $ | — | $ | 751 | $ | — | $ | — | $ | 2,500 | $ | 3,652 | |||||||||||||||
Interest Expense | |||||||||||||||||||||||||||||
Interest expense, net of capitalized interest, was $28 million and $29 million for the three months ended March 29, 2015, and March 30, 2014, respectively. Capitalized interest was $1 million for both the three months ended March 29, 2015, and March 30, 2014. | |||||||||||||||||||||||||||||
B. | Derivative Financial Instruments | ||||||||||||||||||||||||||||
Foreign Exchange Risk | |||||||||||||||||||||||||||||
A significant portion of our revenue, earnings and net investment in foreign affiliates is exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk, in part, through operational means, including managing same-currency revenue in relation to same-currency costs and same-currency assets in relation to same-currency liabilities. Depending on market conditions, foreign exchange risk is also managed through the use of derivative financial instruments. These financial instruments serve to protect net income against the impact of the translation into U.S. dollars of certain foreign exchange-denominated transactions. The aggregate notional amount of foreign exchange derivative financial instruments offsetting foreign currency exposures was $1.4 billion and $1.1 billion, as of March 29, 2015, and December 31, 2014, respectively. The derivative financial instruments primarily offset exposures in the euro, U.K. pound, and Japanese Yen. The vast majority of the foreign exchange derivative financial instruments mature within 60 days and all mature within 180 days. | |||||||||||||||||||||||||||||
All derivative contracts used to manage foreign currency risk are measured at fair value and are reported as assets or liabilities on the condensed consolidated balance sheet. The company has not designated the foreign currency forward-exchange contracts as hedging instruments. We recognize the gains and losses on forward-exchange contracts that are used to offset the same foreign currency assets or liabilities immediately into earnings along with the earnings impact of the items they generally offset. These contracts essentially take the opposite currency position of that reflected in the month-end balance sheet to counterbalance the effect of any currency movement. | |||||||||||||||||||||||||||||
Fair Value of Derivative Instruments | |||||||||||||||||||||||||||||
The location and fair values of derivative instruments not designated as hedging instruments are as follows: | |||||||||||||||||||||||||||||
Fair Value of Derivatives | |||||||||||||||||||||||||||||
March 29, | December 31, | ||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | Balance Sheet Location | 2015 | 2014 | ||||||||||||||||||||||||||
Foreign currency forward-exchange contracts | Other current assets | $ | 16 | $ | 9 | ||||||||||||||||||||||||
Foreign currency forward-exchange contracts | Other current liabilities | (6 | ) | (4 | ) | ||||||||||||||||||||||||
Total foreign currency forward-exchange contracts | $ | 10 | $ | 5 | |||||||||||||||||||||||||
We use a market approach in valuing financial instruments on a recurring basis. Our derivative financial instruments are measured at fair value on a recurring basis using Level 2 inputs in the calculation of fair value. | |||||||||||||||||||||||||||||
The net gains incurred on foreign currency forward-exchange contracts not designated as hedging instruments were $7 million and $12 million for the three months ended March 29, 2015, and March 30, 2014, respectively, and are recorded in Other (income)/deductions—net. These amounts were substantially offset in Other (income)/deductions—net by the effect of changing exchange rates on the underlying foreign currency exposures. |
Inventories
Inventories | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Inventories | Inventories | ||||||||
The components of inventory follow: | |||||||||
March 29, | December 31, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Finished goods | $ | 715 | $ | 688 | |||||
Work-in-process | 354 | 340 | |||||||
Raw materials and supplies | 277 | 261 | |||||||
Inventories | $ | 1,346 | $ | 1,289 | |||||
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 3 Months Ended | ||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | ||||||||||||||||||||||||
A. | Goodwill | ||||||||||||||||||||||||
The components of, and changes in, the carrying amount of goodwill follow: | |||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | U.S. | EuAfME | CLAR | APAC | Total | ||||||||||||||||||||
Balance, December 31, 2014 | $ | 501 | $ | 153 | $ | 161 | $ | 161 | $ | 976 | |||||||||||||||
Additions(a) | 162 | 26 | 5 | 7 | 200 | ||||||||||||||||||||
Other(b) | — | (5 | ) | (1 | ) | (1 | ) | (7 | ) | ||||||||||||||||
Balance, March 29, 2015 | $ | 663 | $ | 174 | $ | 165 | $ | 167 | $ | 1,169 | |||||||||||||||
(a) | Reflects the allocation across reportable segments of goodwill associated with the acquisition of certain assets of Abbott Animal Health (amounts recorded are preliminary and subject to final valuation). For additional information, see Note 5. Acquisitions. | ||||||||||||||||||||||||
(b) | Reflects adjustments for foreign currency translation. | ||||||||||||||||||||||||
The gross goodwill balance was $1,705 million and $1,512 million as of March 29, 2015, and December 31, 2014, respectively. Accumulated goodwill impairment losses (generated entirely in fiscal 2002) were $536 million as of March 29, 2015, and December 31, 2014. | |||||||||||||||||||||||||
B. | Other Intangible Assets | ||||||||||||||||||||||||
The components of identifiable intangible assets follow: | |||||||||||||||||||||||||
As of March 29, 2015 | As of December 31, 2014 | ||||||||||||||||||||||||
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) | $ | 735 | $ | (264 | ) | $ | 471 | $ | 744 | $ | (259 | ) | $ | 485 | |||||||||||
Brands | 216 | (114 | ) | 102 | 216 | (111 | ) | 105 | |||||||||||||||||
Trademarks and trade names(a) | 63 | (41 | ) | 22 | 60 | (41 | ) | 19 | |||||||||||||||||
Other(a) | 133 | (116 | ) | 17 | 119 | (116 | ) | 3 | |||||||||||||||||
Total finite-lived intangible assets | 1,147 | (535 | ) | 612 | 1,139 | (527 | ) | 612 | |||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Brands | 38 | — | 38 | 38 | — | 38 | |||||||||||||||||||
Trademarks and trade names | 67 | — | 67 | 67 | — | 67 | |||||||||||||||||||
In-process research and development(a) | 10 | — | 10 | 2 | — | 2 | |||||||||||||||||||
Product rights | 8 | — | 8 | 8 | — | 8 | |||||||||||||||||||
Total indefinite-lived intangible assets | 123 | — | 123 | 115 | — | 115 | |||||||||||||||||||
Identifiable intangible assets | $ | 1,270 | $ | (535 | ) | $ | 735 | $ | 1,254 | $ | (527 | ) | $ | 727 | |||||||||||
(a) Includes the acquisition of intangible assets associated with the purchase of certain assets of Abbott Animal Health in the first quarter of 2015 (amounts recorded are preliminary and subject to final valuation), as well as the impact of foreign exchange. For additional information, see Note 5. Acquisitions. | |||||||||||||||||||||||||
C. | Amortization | ||||||||||||||||||||||||
Amortization expense related to 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 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 $15 million for both the three months ended March 29, 2015, and March 30, 2014. |
Benefit_Plans
Benefit Plans | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||
Benefit Plans | Benefit Plans | ||||||||
Prior to the Separation from Pfizer, employees who met certain eligibility requirements participated in various defined benefit pension plans and postretirement plans administered and sponsored by Pfizer. Effective December 31, 2012, our employees ceased to participate in the Pfizer U.S. qualified defined benefit and U.S. retiree medical plans, and liabilities associated with our employees under these plans were retained by Pfizer. Pfizer is continuing to credit certain employees' service with Zoetis generally through December 31, 2017 (or termination of employment from Zoetis, if earlier) for certain early retirement benefits with respect to Pfizer's U.S. defined benefit pension and retiree medical plans. Pension and postretirement benefit expense associated with the extended service for certain employees in the U.S. plans totaled approximately $2 million in each three-month period ended March 29, 2015, and March 30, 2014, respectively. | |||||||||
As part of the Separation (see Note 2. The Separation and Transactions and Agreements with Pfizer), certain separation adjustments were made to transfer the assets and liabilities of certain international defined benefit pension plans from Pfizer to Zoetis. During the first quarter of 2014, our pension plan in Japan was transferred to us from Pfizer. The net pension obligation (approximately $2 million) and the related accumulated other comprehensive loss (approximately $2 million, net of tax) associated with this plan were recorded. During the remainder of 2014, our pension plans in Australia, Belgium and Switzerland were transferred to us. Prior to the Separation and transfer, these benefit plans were accounted for as multi-employer plans. There were no transfers during the first quarter of 2015. As of March 29, 2015, there existed a net liability of $1 million for the expected transfer of the Philippines pension plan which is expected to occur in 2015. | |||||||||
The following table provides the net periodic benefit cost associated with dedicated pension plans (including those transferred to us): | |||||||||
Three months ended, | |||||||||
(MILLIONS OF DOLLARS) | 29-Mar-15 | 30-Mar-14 | |||||||
Service cost | $ | 2 | $ | 1 | |||||
Interest cost | 1 | 1 | |||||||
Expected return on plan assets | — | — | |||||||
Amortization of net actuarial loss | — | — | |||||||
Settlement loss(a) | — | 4 | |||||||
Net periodic benefit cost | $ | 3 | $ | 6 | |||||
(a) | Includes the first quarter 2014 settlement charge of approximately $4 million ($3 million, net of tax) associated with the 2012 sale of our Netherlands manufacturing facility. | ||||||||
For the three months ended March 29, 2015, and March 30, 2014, the company contributed $2 million and $2 million, respectively, to the dedicated international pension plans. We expect to contribute a total of approximately $7 million to these plans in 2015. | |||||||||
Pension expense associated with international benefit plans accounted for as multi-employer plans was approximately $1 million for the three months ended March 30, 2014. Contributions to these plans were approximately $1 million for the three months ended March 30, 2014. There were no plans accounted for as multi-employer plans in 2015. |
Sharebased_Payments
Share-based Payments | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||
Share-based Payments | Share-Based Payments | ||||||||
The company may grant a variety of share-based payments under the Zoetis 2013 Equity and Incentive Plan (Equity Plan) to employees and non-employee directors. The principal types of share-based awards available under the Equity Plan may include, but are not limited to, stock options, restricted stock and restricted stock units (RSUs), deferred stock unit awards (DSUs), performance share unit awards (PSUs) and other equity-based or cash-based awards. | |||||||||
The components of share-based compensation expense follow: | |||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Stock options / stock appreciation rights | $ | 6 | $ | 3 | |||||
RSUs / DSUs | 4 | 2 | |||||||
PSUs(a) | — | — | |||||||
Share-based compensation expense—total | $ | 10 | $ | 5 | |||||
(a) Share-based compensation expense related to PSUs was $0.3 million for the three months ended March 29, 2015. | |||||||||
During the three months ended March 29, 2015, the company granted 856,105 stock options with a weighted-average exercise price of $45.92 per stock option and a weighted-average fair value of $11.72 per option. The fair-value based method for valuing each Zoetis stock option grant on the grant date uses the Black-Scholes-Merton option-pricing model, which incorporates a number of valuation assumptions. The expected volatility assumption required for the Black-Scholes-Merton model for the 2015 grant was calculated using a 2-year historical volatility of the Zoetis stock price and weighting it equally against the implied volatility. Prior to 2015, the company had used an implied volatility. The selection of the blended historical and implied volatility approach was based on our assessment that this calculation of expected volatility is more representative of future stock price trends. The weighted-average fair value was estimated based on the following assumptions: risk-free interest rate of 1.78%; expected dividend yield of 0.72%; expected stock price volatility of 24.04%; and expected term of 6.5 years. The values determined through this fair-value based method generally are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate. | |||||||||
During the three months ended March 29, 2015, the company granted 701,281 RSUs with a weighted-average grant date fair value of $46.06 per RSU. RSUs are accounted for using a fair-value-based method that utilizes the closing price of Zoetis common stock on the date of grant. In general, RSUs vest after three years of continuous service from the grant date and the values are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate. | |||||||||
During the three months ended March 29, 2015, the company granted 157,130 PSUs with a weighted-average grant date fair value of $63.14 per PSU. PSUs are accounted for using a Monte Carlo simulation model. The units underlying the PSUs will be earned and vested over a three-year performance period, based upon total shareholder return of the company in comparison to the total shareholder return of a select benchmark group of companies (Relative TSR). The weighted-average fair value was estimated based on volatility assumptions of Zoetis common stock and an average of peer companies, which were 21.8% and 23.5%, respectively. Depending on the company’s Relative TSR performance at the end of the performance period, the recipient may earn up to 200% of the target number of units. Vested units are settled in shares of the company’s common stock. PSU values are amortized on a straight-line basis over the vesting term into Cost of sales, Selling, general and administrative expenses, or Research and development expenses, as appropriate. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Equity [Abstract] | |||||||||||||
Stockholders' Equity | Stockholders' Equity | ||||||||||||
Zoetis is authorized to issue 6,000,000,000 shares of common stock and 1,000,000,000 shares of preferred stock. | |||||||||||||
Changes in common shares and treasury stock were as follows: | |||||||||||||
(MILLIONS OF DOLLARS AND SHARES) | Common Shares Issued | Treasury Stock(a) | Cost of Treasury Stock | ||||||||||
Balance, December 31, 2013 | 500.008 | — | $ | — | |||||||||
Stock-based compensation(b) | 0.033 | 0.007 | 0.2 | ||||||||||
Defined contribution plan | 0.704 | — | — | ||||||||||
Balance, March 30, 2014 | 500.745 | 0.007 | $ | 0.2 | |||||||||
Balance, December 31, 2014 | 501.342 | 0.015 | $ | 0.5 | |||||||||
Stock-based compensation(b) | 0.113 | 0.02 | 0.9 | ||||||||||
Share repurchase program(c) | — | 1.053 | 47.4 | ||||||||||
Balance, March 29, 2015 | 501.455 | 1.087 | $ | 48.8 | |||||||||
(a) | Shares may not add due to rounding. | ||||||||||||
(a) | Treasury shares associated with stock-based compensation are reacquired from employees to satisfy tax withholding requirements on the vesting of restricted shares from equity-based awards. For additional information regarding share-based compensation, see Note 13. Share-Based Payments. | ||||||||||||
(b) | In November 2014, the company's Board of Directors authorized a $500 million share repurchase program. Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs. As of March 29, 2015, there was approximately $453 million remaining under this authorization. | ||||||||||||
Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, follow: | |||||||||||||
Currency Translation | |||||||||||||
Adjustment | Benefit Plans | Accumulated Other | |||||||||||
Net Unrealized | Actuarial | Comprehensive | |||||||||||
(MILLIONS OF DOLLARS) | Gains/(Losses) | Gains/(Losses) | Loss | ||||||||||
Balance, December 31, 2014 | $ | (336 | ) | $ | (25 | ) | $ | (361 | ) | ||||
Other comprehensive income (loss), net of tax | (119 | ) | 1 | (118 | ) | ||||||||
Balance, March 29, 2015 | $ | (455 | ) | $ | (24 | ) | $ | (479 | ) |
Earnings_per_Share
Earnings per Share | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Earnings per Share | Earnings per Share | ||||||||
The following table presents the calculation of basic and diluted earnings per share: | |||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA) | 2015 | 2014 | |||||||
Numerator | |||||||||
Net income before allocation to noncontrolling interests | $ | 165 | $ | 155 | |||||
Less: net income attributable to noncontrolling interests | — | — | |||||||
Net income attributable to Zoetis Inc. | $ | 165 | $ | 155 | |||||
Denominator | |||||||||
Weighted-average common shares outstanding | 501.146 | 500.231 | |||||||
Common stock equivalents: stock options, RSUs, PSUs and DSUs | 2.078 | 0.471 | |||||||
Weighted-average common and potential dilutive shares outstanding | 503.224 | 500.702 | |||||||
Earnings per share attributable to Zoetis Inc. stockholders—basic | $ | 0.33 | $ | 0.31 | |||||
Earnings per share attributable to Zoetis Inc. stockholders—diluted | $ | 0.33 | $ | 0.31 | |||||
There were approximately 1 million and 5 million stock options outstanding as of March 29, 2015, and March 30, 2014, respectively, and approximately 1 million RSUs outstanding as of March 29, 2015, under the company’s Equity Plan that were excluded from the computation of diluted earnings per share, as the effect would have been antidilutive. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended | |
Mar. 29, 2015 | ||
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Commitments and Contingencies | |
We and certain of our subsidiaries are subject to numerous contingencies arising in the ordinary course of business. For a discussion of our tax contingencies, see Note 8. Income Taxes. | ||
A. | Legal Proceedings | |
Our non-tax contingencies include, among others, the following: | ||
• | Product liability and other product-related litigation, which can include injury, consumer, off-label promotion, antitrust and breach of contract claims. | |
• | Commercial and other matters, which can include product-pricing claims and environmental claims and proceedings. | |
• | Patent litigation, which typically involves challenges to the coverage and/or validity of our patents or those of third parties on various products or processes. | |
• | Government investigations, which can involve regulation by national, state and local government agencies in the United States and in other countries. | |
Certain of these contingencies could result in losses, including damages, fines and/or civil penalties, and/or criminal charges, which could be substantial. | ||
We believe that we have strong defenses in these types of matters, but litigation is inherently unpredictable and excessive verdicts do occur. We do not believe that any of these matters will have a material adverse effect on our financial position. However, we could incur judgments, enter into settlements or revise our expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on our results of operations or cash flows in the period in which the amounts are paid. | ||
We have accrued for losses that are both probable and reasonably estimable. Substantially all of these contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex. Consequently, we are unable to estimate the range of reasonably possible loss in excess of amounts accrued. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. | ||
Amounts recorded for legal and environmental contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. | ||
The principal matters to which we are a party are discussed below. In determining whether a pending matter is significant for financial reporting and disclosure purposes, we consider both quantitative and qualitative factors in order to assess materiality, such as, among other things, the amount of damages and the nature of any other relief sought in the proceeding, if such damages and other relief are specified; our view of the merits of the claims and of the strength of our defenses; whether the action purports to be a class action and our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; any experience that we or, to our knowledge, other companies have had in similar proceedings; whether disclosure of the action would be important to a reader of our financial statements, including whether disclosure might change a reader’s judgment about our financial statements in light of all of the information about the company that is available to the reader; the potential impact of the proceeding on our reputation; and the extent of public interest in the matter. In addition, with respect to patent matters, we consider, among other things, the financial significance of the product protected by the patent. | ||
PregSure® | ||
We have received in total approximately 240 claims in Europe and New Zealand seeking damages related to calves claimed to have died of Bovine Neonatal Pancytopenia (BNP) on farms where PregSure BVD, a vaccine against Bovine Virus Diarrhea (BVD), was used. BNP is a rare syndrome that first emerged in cattle in Europe in 2006. Studies of BNP suggest a potential association between the administration of PregSure and the development of BNP, although no causal connection has been established. The cause of BNP is not known. | ||
In 2010, we voluntarily stopped sales of PregSure BVD in Europe, and recalled the product at wholesalers while investigations into possible causes of BNP continued. In 2011, after incidences of BNP were reported in New Zealand, we voluntarily withdrew the marketing authorization for PregSure throughout the world. | ||
We have settled more than half of these claims for amounts that are not material individually or in the aggregate. Investigations into possible causes of BNP continue and these settlements may not be representative of any future claims resolutions. | ||
Ulianopolis, Brazil | ||
In February 2012, the Municipality of Ulianopolis (State of Para, Brazil) filed a complaint against Fort Dodge Saúde Animal Ltda. (FDSAL) and five other large companies alleging that waste sent to a local waste incineration facility for destruction, but that was not ultimately destroyed as the facility lost its operating permit, caused environmental impacts requiring cleanup. | ||
The Municipality is seeking recovery of cleanup costs purportedly related to FDSAL's share of all waste accumulated at the incineration facility awaiting destruction, and compensatory damages to be allocated among the six defendants. We believe we have strong arguments against the claim, including defense strategies against any claim of joint and several liability. | ||
At the request of the Municipal prosecutor, in April 2012, the lawsuit was suspended for one year. Since that time, the prosecutor has initiated investigations into the Municipality's actions in the matter as well as the efforts undertaken by the six defendants to remove and dispose of their individual waste from the incineration facility. On October 3, 2014, the Municipal prosecutor announced that the investigation remained ongoing and outlined the terms of a proposed Term of Reference (a document that establishes the minimum elements to be addressed in the preparation of an Environmental Impact Assessment), under which the companies would be liable to withdraw the waste and remediate the area. On March 5, 2015, we presented our response to the prosecutor’s proposed Term of Reference, arguing that the proposed terms were overly general in nature, and expressing our interest in discussing alternatives to address the matter. In response, the prosecutor suggested engaging a technical consultant to conduct an environmental diagnostic of the contaminated area. We have until May 29, 2015, to evaluate the engagement of an environmental diagnostic. | ||
Other Matters | ||
The European Commission published a decision on alleged competition law infringements by several human health pharmaceutical companies on June 19, 2013. One of the involved legal entities is Zoetis Products LLC, formerly having the name Alpharma Inc. Zoetis Products LLC's involvement is solely related to its human health activities prior to Pfizer's acquisition of King/Alpharma. Zoetis paid a fine in the amount of Euro 11 million (approximately $14 million) and was reimbursed by Pfizer in accordance with the Global Separation Agreement between Pfizer and Zoetis, which provides that Pfizer is obligated to indemnify Zoetis for any liabilities arising out of claims not related to its animal health assets. We filed an appeal of the decision on September 6, 2013. | ||
In July 2014, we reached a commercial settlement with several large poultry customers in Mexico associated with specific lots of a Zoetis poultry vaccine. Although there have been no quality or efficacy issues with the manufacturing of this vaccine, certain shipments from several lots in Mexico may have experienced an issue in storage with a third party in Mexico that could have impacted their efficacy. We issued a recall of these lots in July 2014 and the product is currently unavailable in Mexico. We recorded a $13 million charge in Other (income)/deductions—net in the second quarter of 2014, and we do not expect any significant additional charges related to this issue. In the third quarter of 2014, we were notified of an insurance recovery of $1 million and have recorded this in Other (income)/deductions—net. | ||
B. | Guarantees and Indemnifications | |
In the ordinary course of business and in connection with the sale of assets and businesses, we indemnify our counterparties against certain liabilities that may arise in connection with the transaction or related to activities prior to the transaction. These indemnifications typically pertain to environmental, tax, employee and/or product-related matters and patent-infringement claims. If the indemnified party were to make a successful claim pursuant to the terms of the indemnification, we would be required to reimburse the loss. These indemnifications are generally subject to threshold amounts, specified claim periods and other restrictions and limitations. Historically, we have not paid significant amounts under these provisions and, as of March 29, 2015, recorded amounts for the estimated fair value of these indemnifications were not significant. |
Segment_and_Other_Revenue_Info
Segment and Other Revenue Information | 3 Months Ended | ||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||
Segment and Other Revenue Information | Segment and Other Revenue Information | ||||||||||||||||||||||||
A. | Segment Information | ||||||||||||||||||||||||
The animal health medicines and vaccines industry is characterized by meaningful differences in customer needs across different regions. As a result of these differences, among other things, we manage our operations through four geographic regions. Each operating segment has responsibility for its commercial activities. Within each of these regional operating segments, we offer a diversified product portfolio, including vaccines, parasiticides, anti-infectives, medicated feed additives and other pharmaceuticals, for both livestock and companion animal customers. | |||||||||||||||||||||||||
Operating Segments | |||||||||||||||||||||||||
• | The U.S. | ||||||||||||||||||||||||
• | EuAfME—Includes, among others, the United Kingdom, Germany, France, Italy, Spain, Northern Europe and Central Europe as well as Russia, Turkey and South Africa. | ||||||||||||||||||||||||
• | CLAR––Includes Canada, Brazil, Mexico, Central America and other South American countries. | ||||||||||||||||||||||||
• | APAC––Includes Australia, Japan, New Zealand, South Korea, India, China/Hong Kong, Northeast Asia, Southeast Asia and South Asia. | ||||||||||||||||||||||||
Our chief operating decision maker uses the revenue and earnings of the four operating segments, among other factors, for performance evaluation and resource allocation. | |||||||||||||||||||||||||
Other Costs and Business Activities | |||||||||||||||||||||||||
Certain costs are not allocated to our operating segment results, such as costs associated with the following: | |||||||||||||||||||||||||
• | Other business activities includes our Client Supply Services (CSS) contract manufacturing results, as well as expenses associated with our dedicated veterinary medicine research and development organization, research alliances, U.S. regulatory affairs and other operations focused on the development of our products. Other R&D-related costs associated with non-U.S. market and regulatory activities are generally included in the respective regional segment. | ||||||||||||||||||||||||
• | Corporate, which is responsible for platform functions such as business technology, facilities, legal, finance, human resources, business development, public affairs and procurement, among others. These costs also include compensation costs and other miscellaneous operating expenses not charged to our operating segments, as well as interest income and expense. | ||||||||||||||||||||||||
• | Certain transactions and events such as (i) Purchase accounting adjustments, where we incur expenses associated with the amortization of fair value adjustments to inventory, intangible assets and property, plant and equipment; (ii) Acquisition-related activities, where we incur costs for restructuring and integration; and (iii) Certain significant items, which includes non-acquisition-related restructuring charges, certain asset impairment charges, stand-up costs and costs associated with cost reduction/productivity initiatives. | ||||||||||||||||||||||||
• | Other unallocated includes (i) certain overhead expenses associated with our global manufacturing operations not charged to our operating segments; (ii) certain costs associated with business technology and finance that specifically support our global manufacturing operations; and (iii) certain supply chain and global logistics costs. | ||||||||||||||||||||||||
Segment Assets | |||||||||||||||||||||||||
We manage our assets on a total company basis, not by operating segment. Therefore, our chief operating decision maker does not regularly review any asset information by operating segment and, accordingly, we do not report asset information by operating segment. Total assets were approximately $6.4 billion and $6.6 billion at March 29, 2015, and December 31, 2014, respectively. | |||||||||||||||||||||||||
Selected Statement of Income Information | |||||||||||||||||||||||||
Depreciation and | |||||||||||||||||||||||||
Revenue(a) | Earnings(b) | Amortization(c) | |||||||||||||||||||||||
March 29, | March 30, | March 29, | March 30, | March 29, | March 30, | ||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Three months ended | |||||||||||||||||||||||||
U.S. | $ | 521 | $ | 479 | $ | 315 | $ | 278 | $ | 6 | $ | 8 | |||||||||||||
EuAfME | 237 | 270 | 102 | 112 | 4 | 5 | |||||||||||||||||||
CLAR | 173 | 168 | 66 | 64 | 3 | 3 | |||||||||||||||||||
APAC | 161 | 169 | 62 | 66 | 4 | 5 | |||||||||||||||||||
Total operating segments | 1,092 | 1,086 | 545 | 520 | 17 | 21 | |||||||||||||||||||
Other business activities(d) | 10 | 11 | (67 | ) | (72 | ) | 7 | 7 | |||||||||||||||||
Reconciling Items: | |||||||||||||||||||||||||
Corporate(e) | — | — | (133 | ) | (125 | ) | 9 | 6 | |||||||||||||||||
Purchase accounting adjustments(f) | — | — | (13 | ) | (12 | ) | 13 | 12 | |||||||||||||||||
Acquisition-related costs(g) | — | — | (1 | ) | (2 | ) | — | — | |||||||||||||||||
Certain significant items(h) | — | — | (41 | ) | (36 | ) | 1 | 2 | |||||||||||||||||
Other unallocated(i) | — | — | (60 | ) | (46 | ) | 1 | 2 | |||||||||||||||||
$ | 1,102 | $ | 1,097 | $ | 230 | $ | 227 | $ | 48 | $ | 50 | ||||||||||||||
(a) | Revenue denominated in euros was $135 million and $168 million for the three months ended March 29, 2015, and March 30, 2014, respectively. | ||||||||||||||||||||||||
(b) | Defined as income before provision for taxes on income. | ||||||||||||||||||||||||
(c) | 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. | ||||||||||||||||||||||||
(d) | Other business activities reflects the R&D costs managed by our Research and Development organization, as well as our contract manufacturing business. | ||||||||||||||||||||||||
(e) | Corporate includes, among other things, administration expenses, interest expense, certain compensation and other costs not charged to our operating segments. | ||||||||||||||||||||||||
(f) | Purchase accounting adjustments includes certain charges related to intangible assets and property, plant and equipment not charged to our operating segments. | ||||||||||||||||||||||||
(g) | Acquisition-related costs can include costs associated with acquiring, integrating and restructuring acquired businesses, such as allocated transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring. For additional information, see Note 6. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives. | ||||||||||||||||||||||||
(h) | 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, certain legal and commercial settlements and the impact of divestiture-related gains and losses. | ||||||||||||||||||||||||
• | For the three months ended March 29, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $23 million; (ii) consulting fees related to our operational efficiency initiative of $15 million; and (iii) charges due to unusual investor-related activities of $3 million. Stand-up costs include 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. | ||||||||||||||||||||||||
• | For the three months ended March 30, 2014, Certain significant items primarily includes: (i) Zoetis stand-up costs of $33 million; (ii) restructuring charges of $2 million related to employee severance costs in EuAfME, offset by a $2 million benefit related to a reversal of a previously established reserve as a result of a change in estimate of severance costs; (iii) additional depreciation associated with asset restructuring of $1 million; (iv) a pension plan settlement charge related to the divestiture of a manufacturing plant of $4 million; and (v) an insurance recovery of litigation-related charges of $2 million income. | ||||||||||||||||||||||||
(i) | Includes overhead expenses associated with our manufacturing operations. | ||||||||||||||||||||||||
B. | Other Revenue Information | ||||||||||||||||||||||||
Revenue by Species | |||||||||||||||||||||||||
Significant species revenue are as follows: | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
March 29, | March 30, | ||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||
Livestock: | |||||||||||||||||||||||||
Cattle | $ | 397 | $ | 391 | |||||||||||||||||||||
Swine | 170 | 160 | |||||||||||||||||||||||
Poultry | 129 | 135 | |||||||||||||||||||||||
Other | 19 | 20 | |||||||||||||||||||||||
715 | 706 | ||||||||||||||||||||||||
Companion Animal: | |||||||||||||||||||||||||
Horses | 40 | 43 | |||||||||||||||||||||||
Dogs and Cats | 337 | 337 | |||||||||||||||||||||||
377 | 380 | ||||||||||||||||||||||||
Contract Manufacturing | $ | 10 | $ | 11 | |||||||||||||||||||||
Total revenue | $ | 1,102 | $ | 1,097 | |||||||||||||||||||||
Revenue by Major Product Category | |||||||||||||||||||||||||
Significant revenue by major product category are as follows: | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
March 29, | March 30, | ||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||
Anti-infectives | $ | 312 | $ | 322 | |||||||||||||||||||||
Vaccines | 271 | 274 | |||||||||||||||||||||||
Parasiticides | 153 | 151 | |||||||||||||||||||||||
Medicated feed additives | 121 | 104 | |||||||||||||||||||||||
Other pharmaceuticals | 187 | 191 | |||||||||||||||||||||||
Other non-pharmaceuticals | 48 | 44 | |||||||||||||||||||||||
Contract manufacturing | 10 | 11 | |||||||||||||||||||||||
Total revenue | $ | 1,102 | $ | 1,097 | |||||||||||||||||||||
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 29, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On May 5, 2015, we announced a comprehensive operational efficiency program. The program’s actions are focused on reducing complexity in our product portfolios through the elimination of approximately 5,000 product SKUs, changing our selling approach in certain markets and reducing our presence in certain countries, as well as planning to sell or exit ten manufacturing sites over the long term. We also plan to optimize our resource allocation and efficiency by reducing resources associated with non-customer facing commercial activities and operating more efficiently as a result of less internal complexity and more standardization of processes. | |
As part of this initiative, we expect to reduce certain positions through divestitures, normal attrition and involuntary terminations by approximately 2,000 to 2,500, subject to consultations with works councils and unions in certain countries, primarily over the next 12 to 18 months. We expect these actions to result in approximately $400 million to $500 million in pre-tax charges. We also expect to incur additional charges, primarily non-cash, associated with exiting the manufacturing sites and are currently evaluating whether we will divest or close those facilities and will have charges associated with accelerated depreciation, asset impairments and contract terminations. | |
Additionally, we are consolidating our current regional structure from four regions to two regions. As a result, we are evaluating our segment reporting and will likely recast our current segment reporting in the second quarter of 2015. |
Restructuring_Charges_and_Othe1
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives (Tables) | 3 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||
Schedule of Costs Associated with Cost-Reduction/Productivity Initiatives and Acquisition Activity | The components of costs incurred in connection with restructuring initiatives, acquisitions and cost-reduction/productivity initiatives follow: | ||||||||||||
Three Months Ended | |||||||||||||
March 29, | March 30, | ||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||
Restructuring charges and certain acquisition-related costs: | |||||||||||||
Integration costs(a) | $ | 1 | $ | 2 | |||||||||
Restructuring charges(b): | — | 1 | |||||||||||
Total Restructuring charges and certain acquisition-related costs | $ | 1 | $ | 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, as well as product transfer costs. For the first quarter of 2015, integration costs primarily relate to the purchase of certain assets of Abbott Animal Health. | ||||||||||||
(b) | The restructuring charges for the three months ended March 30, 2014, include employee severance costs in EuAfME ($2 million), a reversal of a previously established reserve as a result of a change in estimate of severance costs ($2 million benefit), and accelerated depreciation related to the exiting of a research facility ($1 million). | ||||||||||||
For the three months ended March 30, 2014, the restructuring charges are associated with the following: EuAfME ($2 million) and Manufacturing/research/corporate ($1 million benefit). | |||||||||||||
Schedule of Restructuring and Related Costs | The components of and changes in our restructuring accruals follow: | ||||||||||||
Employee | |||||||||||||
Termination | Exit | ||||||||||||
(MILLIONS OF DOLLARS) | Costs | Costs | Accrual | ||||||||||
Balance, December 31, 2014(a) | $ | 18 | $ | 1 | $ | 19 | |||||||
Provision | — | — | — | ||||||||||
Utilization and other(b) | (8 | ) | — | (8 | ) | ||||||||
Balance, March 29, 2015(a) | $ | 10 | $ | 1 | $ | 11 | |||||||
(a) | At March 29, 2015, and December 31, 2014, included in Other current liabilities ($6 million and $13 million, respectively) and Other noncurrent liabilities ($5 million and $6 million, respectively). | ||||||||||||
(b) | Includes adjustments for foreign currency translation. |
Other_IncomeDeductions_Net_Tab
Other (Income)/Deductions - Net (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Other Income and Expenses [Abstract] | |||||||||
Components of Other (Income)/DeductionsbNet | The components of Other (income)/deductions—net follow: | ||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Royalty-related income | $ | (7 | ) | $ | (8 | ) | |||
Certain legal and other matters, net(a) | — | (2 | ) | ||||||
Foreign currency loss(b) | 8 | 9 | |||||||
Other, net(c) | (1 | ) | 2 | ||||||
Other (income)/deductions—net | $ | — | $ | 1 | |||||
(a) | For the three months ended March 30, 2014, represents an insurance recovery of litigation-related charges. | ||||||||
(b) | For the three months ended March 29, 2015, primarily driven by costs related to hedging and exposures to certain emerging market currencies. For the three months ended March 30, 2014, primarily driven by losses related to the depreciation of the Argentine peso in the first quarter of 2014. | ||||||||
(c) | For the three months ended March 30, 2014, represents a pension plan settlement charge related to the sale of a manufacturing plant, partially offset by interest income and other miscellaneous income. |
Financial_Instruments_Tables
Financial Instruments (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||||||
Financial Instruments [Abstract] | |||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | The components of our long-term debt follow: | ||||||||||||||||||||||||||||
March 29, | December 31, | ||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||||||
Lines of credit, due 2016-2018 | $ | 2 | $ | 3 | |||||||||||||||||||||||||
1.150% Senior Notes due 2016 | 400 | 400 | |||||||||||||||||||||||||||
1.875% Senior Notes due 2018 | 750 | 750 | |||||||||||||||||||||||||||
3.250% Senior Notes due 2023 | 1,350 | 1,350 | |||||||||||||||||||||||||||
4.700% Senior Notes due 2043 | 1,150 | 1,150 | |||||||||||||||||||||||||||
3,652 | 3,653 | ||||||||||||||||||||||||||||
Unamortized debt discount | (9 | ) | (10 | ) | |||||||||||||||||||||||||
Less current portion of long-term debt | (400 | ) | — | ||||||||||||||||||||||||||
Long-term debt | $ | 3,243 | $ | 3,643 | |||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | The principal amount of long-term debt outstanding, including the current portion of long-term debt, as of March 29, 2015, matures in the following years: | ||||||||||||||||||||||||||||
After | |||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2016 | 2017 | 2018 | 2019 | 2020 | 2020 | Total | ||||||||||||||||||||||
Maturities | $ | 401 | $ | — | $ | 751 | $ | — | $ | — | $ | 2,500 | $ | 3,652 | |||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The location and fair values of derivative instruments not designated as hedging instruments are as follows: | ||||||||||||||||||||||||||||
Fair Value of Derivatives | |||||||||||||||||||||||||||||
March 29, | December 31, | ||||||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | Balance Sheet Location | 2015 | 2014 | ||||||||||||||||||||||||||
Foreign currency forward-exchange contracts | Other current assets | $ | 16 | $ | 9 | ||||||||||||||||||||||||
Foreign currency forward-exchange contracts | Other current liabilities | (6 | ) | (4 | ) | ||||||||||||||||||||||||
Total foreign currency forward-exchange contracts | $ | 10 | $ | 5 | |||||||||||||||||||||||||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Inventory Disclosure [Abstract] | |||||||||
Components of Inventory | The components of inventory follow: | ||||||||
March 29, | December 31, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Finished goods | $ | 715 | $ | 688 | |||||
Work-in-process | 354 | 340 | |||||||
Raw materials and supplies | 277 | 261 | |||||||
Inventories | $ | 1,346 | $ | 1,289 | |||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||
Changes in the Carrying Amount of Goodwill | The components of, and changes in, the carrying amount of goodwill follow: | ||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | U.S. | EuAfME | CLAR | APAC | Total | ||||||||||||||||||||
Balance, December 31, 2014 | $ | 501 | $ | 153 | $ | 161 | $ | 161 | $ | 976 | |||||||||||||||
Additions(a) | 162 | 26 | 5 | 7 | 200 | ||||||||||||||||||||
Other(b) | — | (5 | ) | (1 | ) | (1 | ) | (7 | ) | ||||||||||||||||
Balance, March 29, 2015 | $ | 663 | $ | 174 | $ | 165 | $ | 167 | $ | 1,169 | |||||||||||||||
(a) | Reflects the allocation across reportable segments of goodwill associated with the acquisition of certain assets of Abbott Animal Health (amounts recorded are preliminary and subject to final valuation). For additional information, see Note 5. Acquisitions. | ||||||||||||||||||||||||
(b) | Reflects adjustments for foreign currency translation. | ||||||||||||||||||||||||
Components of Identifiable Intangible Assets | The components of identifiable intangible assets follow: | ||||||||||||||||||||||||
As of March 29, 2015 | As of December 31, 2014 | ||||||||||||||||||||||||
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) | $ | 735 | $ | (264 | ) | $ | 471 | $ | 744 | $ | (259 | ) | $ | 485 | |||||||||||
Brands | 216 | (114 | ) | 102 | 216 | (111 | ) | 105 | |||||||||||||||||
Trademarks and trade names(a) | 63 | (41 | ) | 22 | 60 | (41 | ) | 19 | |||||||||||||||||
Other(a) | 133 | (116 | ) | 17 | 119 | (116 | ) | 3 | |||||||||||||||||
Total finite-lived intangible assets | 1,147 | (535 | ) | 612 | 1,139 | (527 | ) | 612 | |||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Brands | 38 | — | 38 | 38 | — | 38 | |||||||||||||||||||
Trademarks and trade names | 67 | — | 67 | 67 | — | 67 | |||||||||||||||||||
In-process research and development(a) | 10 | — | 10 | 2 | — | 2 | |||||||||||||||||||
Product rights | 8 | — | 8 | 8 | — | 8 | |||||||||||||||||||
Total indefinite-lived intangible assets | 123 | — | 123 | 115 | — | 115 | |||||||||||||||||||
Identifiable intangible assets | $ | 1,270 | $ | (535 | ) | $ | 735 | $ | 1,254 | $ | (527 | ) | $ | 727 | |||||||||||
(a) Includes the acquisition of intangible assets associated with the purchase of certain assets of Abbott Animal Health in the first quarter of 2015 (amounts recorded are preliminary and subject to final valuation), as well as the impact of foreign exchange. For additional information, see Note 5. Acquisitions. |
Benefit_Plans_Tables
Benefit Plans (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||
Schedule of Net Benefit Costs | The following table provides the net periodic benefit cost associated with dedicated pension plans (including those transferred to us): | ||||||||
Three months ended, | |||||||||
(MILLIONS OF DOLLARS) | 29-Mar-15 | 30-Mar-14 | |||||||
Service cost | $ | 2 | $ | 1 | |||||
Interest cost | 1 | 1 | |||||||
Expected return on plan assets | — | — | |||||||
Amortization of net actuarial loss | — | — | |||||||
Settlement loss(a) | — | 4 | |||||||
Net periodic benefit cost | $ | 3 | $ | 6 | |||||
(a) | Includes the first quarter 2014 settlement charge of approximately $4 million ($3 million, net of tax) associated with the 2012 sale of our Netherlands manufacturing facility. |
Sharebased_Payments_Tables
Share-based Payments (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||
Components of Share-based Compensation Expense | The components of share-based compensation expense follow: | ||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||
Stock options / stock appreciation rights | $ | 6 | $ | 3 | |||||
RSUs / DSUs | 4 | 2 | |||||||
PSUs(a) | — | — | |||||||
Share-based compensation expense—total | $ | 10 | $ | 5 | |||||
(a) Share-based compensation expense related to PSUs was $0.3 million for the three months ended March 29, 2015. |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||||
Mar. 29, 2015 | |||||||||||||
Equity [Abstract] | |||||||||||||
Changes in Common Shares and Treasury Stock | Changes in common shares and treasury stock were as follows: | ||||||||||||
(MILLIONS OF DOLLARS AND SHARES) | Common Shares Issued | Treasury Stock(a) | Cost of Treasury Stock | ||||||||||
Balance, December 31, 2013 | 500.008 | — | $ | — | |||||||||
Stock-based compensation(b) | 0.033 | 0.007 | 0.2 | ||||||||||
Defined contribution plan | 0.704 | — | — | ||||||||||
Balance, March 30, 2014 | 500.745 | 0.007 | $ | 0.2 | |||||||||
Balance, December 31, 2014 | 501.342 | 0.015 | $ | 0.5 | |||||||||
Stock-based compensation(b) | 0.113 | 0.02 | 0.9 | ||||||||||
Share repurchase program(c) | — | 1.053 | 47.4 | ||||||||||
Balance, March 29, 2015 | 501.455 | 1.087 | $ | 48.8 | |||||||||
(a) | Shares may not add due to rounding. | ||||||||||||
(a) | Treasury shares associated with stock-based compensation are reacquired from employees to satisfy tax withholding requirements on the vesting of restricted shares from equity-based awards. For additional information regarding share-based compensation, see Note 13. Share-Based Payments. | ||||||||||||
(b) | In November 2014, the company's Board of Directors authorized a $500 million share repurchase program. Purchases of Zoetis shares may be made at the discretion of management, depending on market conditions and business needs. As of March 29, 2015, there was approximately $453 million remaining under this authorization. | ||||||||||||
Changes, Net of Tax, in Accumulated Other Comprehensive Loss | Changes, net of tax, in accumulated other comprehensive loss, excluding noncontrolling interest, follow: | ||||||||||||
Currency Translation | |||||||||||||
Adjustment | Benefit Plans | Accumulated Other | |||||||||||
Net Unrealized | Actuarial | Comprehensive | |||||||||||
(MILLIONS OF DOLLARS) | Gains/(Losses) | Gains/(Losses) | Loss | ||||||||||
Balance, December 31, 2014 | $ | (336 | ) | $ | (25 | ) | $ | (361 | ) | ||||
Other comprehensive income (loss), net of tax | (119 | ) | 1 | (118 | ) | ||||||||
Balance, March 29, 2015 | $ | (455 | ) | $ | (24 | ) | $ | (479 | ) |
Earnings_per_Share_Tables
Earnings per Share (Tables) | 3 Months Ended | ||||||||
Mar. 29, 2015 | |||||||||
Earnings Per Share [Abstract] | |||||||||
Basic and Diluted Earnings Per Share | The following table presents the calculation of basic and diluted earnings per share: | ||||||||
Three Months Ended | |||||||||
March 29, | March 30, | ||||||||
(MILLIONS OF DOLLARS AND SHARES, EXCEPT PER SHARE DATA) | 2015 | 2014 | |||||||
Numerator | |||||||||
Net income before allocation to noncontrolling interests | $ | 165 | $ | 155 | |||||
Less: net income attributable to noncontrolling interests | — | — | |||||||
Net income attributable to Zoetis Inc. | $ | 165 | $ | 155 | |||||
Denominator | |||||||||
Weighted-average common shares outstanding | 501.146 | 500.231 | |||||||
Common stock equivalents: stock options, RSUs, PSUs and DSUs | 2.078 | 0.471 | |||||||
Weighted-average common and potential dilutive shares outstanding | 503.224 | 500.702 | |||||||
Earnings per share attributable to Zoetis Inc. stockholders—basic | $ | 0.33 | $ | 0.31 | |||||
Earnings per share attributable to Zoetis Inc. stockholders—diluted | $ | 0.33 | $ | 0.31 | |||||
Segment_and_Other_Revenue_Info1
Segment and Other Revenue Information (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 29, 2015 | |||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||
Schedule of Selected Income Statement Information by Segment | |||||||||||||||||||||||||
Selected Statement of Income Information | |||||||||||||||||||||||||
Depreciation and | |||||||||||||||||||||||||
Revenue(a) | Earnings(b) | Amortization(c) | |||||||||||||||||||||||
March 29, | March 30, | March 29, | March 30, | March 29, | March 30, | ||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||
Three months ended | |||||||||||||||||||||||||
U.S. | $ | 521 | $ | 479 | $ | 315 | $ | 278 | $ | 6 | $ | 8 | |||||||||||||
EuAfME | 237 | 270 | 102 | 112 | 4 | 5 | |||||||||||||||||||
CLAR | 173 | 168 | 66 | 64 | 3 | 3 | |||||||||||||||||||
APAC | 161 | 169 | 62 | 66 | 4 | 5 | |||||||||||||||||||
Total operating segments | 1,092 | 1,086 | 545 | 520 | 17 | 21 | |||||||||||||||||||
Other business activities(d) | 10 | 11 | (67 | ) | (72 | ) | 7 | 7 | |||||||||||||||||
Reconciling Items: | |||||||||||||||||||||||||
Corporate(e) | — | — | (133 | ) | (125 | ) | 9 | 6 | |||||||||||||||||
Purchase accounting adjustments(f) | — | — | (13 | ) | (12 | ) | 13 | 12 | |||||||||||||||||
Acquisition-related costs(g) | — | — | (1 | ) | (2 | ) | — | — | |||||||||||||||||
Certain significant items(h) | — | — | (41 | ) | (36 | ) | 1 | 2 | |||||||||||||||||
Other unallocated(i) | — | — | (60 | ) | (46 | ) | 1 | 2 | |||||||||||||||||
$ | 1,102 | $ | 1,097 | $ | 230 | $ | 227 | $ | 48 | $ | 50 | ||||||||||||||
(a) | Revenue denominated in euros was $135 million and $168 million for the three months ended March 29, 2015, and March 30, 2014, respectively. | ||||||||||||||||||||||||
(b) | Defined as income before provision for taxes on income. | ||||||||||||||||||||||||
(c) | 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. | ||||||||||||||||||||||||
(d) | Other business activities reflects the R&D costs managed by our Research and Development organization, as well as our contract manufacturing business. | ||||||||||||||||||||||||
(e) | Corporate includes, among other things, administration expenses, interest expense, certain compensation and other costs not charged to our operating segments. | ||||||||||||||||||||||||
(f) | Purchase accounting adjustments includes certain charges related to intangible assets and property, plant and equipment not charged to our operating segments. | ||||||||||||||||||||||||
(g) | Acquisition-related costs can include costs associated with acquiring, integrating and restructuring acquired businesses, such as allocated transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring. For additional information, see Note 6. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives. | ||||||||||||||||||||||||
(h) | 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, certain legal and commercial settlements and the impact of divestiture-related gains and losses. | ||||||||||||||||||||||||
• | For the three months ended March 29, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $23 million; (ii) consulting fees related to our operational efficiency initiative of $15 million; and (iii) charges due to unusual investor-related activities of $3 million. Stand-up costs include 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. | ||||||||||||||||||||||||
• | For the three months ended March 30, 2014, Certain significant items primarily includes: (i) Zoetis stand-up costs of $33 million; (ii) restructuring charges of $2 million related to employee severance costs in EuAfME, offset by a $2 million benefit related to a reversal of a previously established reserve as a result of a change in estimate of severance costs; (iii) additional depreciation associated with asset restructuring of $1 million; (iv) a pension plan settlement charge related to the divestiture of a manufacturing plant of $4 million; and (v) an insurance recovery of litigation-related charges of $2 million income. | ||||||||||||||||||||||||
(i) | Includes overhead expenses associated with our manufacturing operations. | ||||||||||||||||||||||||
Schedule of Significant Product Revenues | Revenue by Species | ||||||||||||||||||||||||
Significant species revenue are as follows: | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
March 29, | March 30, | ||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||
Livestock: | |||||||||||||||||||||||||
Cattle | $ | 397 | $ | 391 | |||||||||||||||||||||
Swine | 170 | 160 | |||||||||||||||||||||||
Poultry | 129 | 135 | |||||||||||||||||||||||
Other | 19 | 20 | |||||||||||||||||||||||
715 | 706 | ||||||||||||||||||||||||
Companion Animal: | |||||||||||||||||||||||||
Horses | 40 | 43 | |||||||||||||||||||||||
Dogs and Cats | 337 | 337 | |||||||||||||||||||||||
377 | 380 | ||||||||||||||||||||||||
Contract Manufacturing | $ | 10 | $ | 11 | |||||||||||||||||||||
Total revenue | $ | 1,102 | $ | 1,097 | |||||||||||||||||||||
Revenue by Major Product Category | |||||||||||||||||||||||||
Significant revenue by major product category are as follows: | |||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||
March 29, | March 30, | ||||||||||||||||||||||||
(MILLIONS OF DOLLARS) | 2015 | 2014 | |||||||||||||||||||||||
Anti-infectives | $ | 312 | $ | 322 | |||||||||||||||||||||
Vaccines | 271 | 274 | |||||||||||||||||||||||
Parasiticides | 153 | 151 | |||||||||||||||||||||||
Medicated feed additives | 121 | 104 | |||||||||||||||||||||||
Other pharmaceuticals | 187 | 191 | |||||||||||||||||||||||
Other non-pharmaceuticals | 48 | 44 | |||||||||||||||||||||||
Contract manufacturing | 10 | 11 | |||||||||||||||||||||||
Total revenue | $ | 1,102 | $ | 1,097 | |||||||||||||||||||||
Organization_Details
Organization (Details) | Mar. 29, 2015 |
product_categories | |
species | |
region | |
countries | |
Product Information [Line Items] | |
Number of regional segments | 4 |
Number of countries in which entity markets products | 70 |
Number of core animal species | 8 |
Number of Major Product Categories | 5 |
Product [Member] | |
Product Information [Line Items] | |
Number of countries in which entity markets products | 120 |
The_Separation_and_Transaction1
The Separation and Transactions and Agreements with Pfizer (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Schedule of Separation Adjustments [Line Items] | ||
Accounts Receivable, Net, Current | $905 | $980 |
Accounts Payable, Current | 256 | 290 |
Pfizer [Member] | ||
Schedule of Separation Adjustments [Line Items] | ||
Accounts Receivable, Net, Current | 22 | 24 |
Accounts Payable, Current | $40 | $42 |
Significant_Accounting_Policie1
Significant Accounting Policies (Details) (USD $) | Mar. 29, 2015 |
In Millions, unless otherwise specified | |
Accounting Policies [Abstract] | |
Unamortized Debt Issuance Expense | $18 |
Acquisitions_Details
Acquisitions (Details) (USD $) | 0 Months Ended | 3 Months Ended | |
Feb. 10, 2015 | Mar. 29, 2015 | Mar. 30, 2014 | |
Business Acquisition [Line Items] | |||
Business Combination, Consideration Transferred | $255,000,000 | ||
Payments to Acquire Businesses, Gross | 230,000,000 | ||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 25,000,000 | ||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, Low | 0 | ||
Business Combination, Contingent Consideration, Liability | 22,000,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory | 14,000,000 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 1,000,000 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | ||
Goodwill, Acquired During Period | 200,000,000 | 200,000,000 | |
In Process Research and Development [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets | 8,000,000 | ||
Trade Names [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 4,000,000 | ||
Developed Technology Rights [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | 11,000,000 | ||
Other Intangible Assets [Member] | |||
Business Acquisition [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles | $15,000,000 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years |
Restructuring_Charges_and_Othe2
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Components of Costs Incurred (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (benefit) | $0 | |||
Accelerated depreciation | 0 | [1] | 1 | [1] |
Total Restructuring charges and certain acquisition-related costs | 1 | 3 | ||
Manufacturing, Research, Corporate [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (benefit) | -1 | |||
Direct Cost [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Integration costs(a) | 1 | [2] | 2 | [2] |
Employee Severance [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (benefit) | 0 | |||
Employee Severance [Member] | United States (U.S.) [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (benefit) | 2 | 2 | ||
Employee Severance [Member] | Europe, Africa, and Middle East (EuAfME) [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges (benefit) | ($2) | |||
[1] | The restructuring charges for the three months ended March 30, 2014, include employee severance costs in EuAfME ($2 million), a reversal of a previously established reserve as a result of a change in estimate of severance costs ($2 million benefit), and accelerated depreciation related to the exiting of a research facility ($1 million). For the three months ended MarchB 30, 2014, the restructuring charges are associated with the following: EuAfME ($2 million) and Manufacturing/research/corporate ($1 million benefit). | |||
[2] | 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, as well as product transfer costs. For the first quarter of 2015, integration costs primarily relate to the purchase of certain assets of Abbott Animal Health. |
Restructuring_Charges_and_Othe3
Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives - Direct Restructuring Charges (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 | |
Restructuring Cost and Reserve | ||||
Balance, December 31, 2014(a) | $19 | [1] | ||
Provision | 0 | |||
Utilization and other(b) | -8 | [2] | ||
Balance, March 29, 2015(a) | 11 | [1] | ||
Employee Termination Costs [Member] | ||||
Restructuring Cost and Reserve | ||||
Balance, December 31, 2014(a) | 18 | [1] | ||
Provision | 0 | |||
Utilization and other(b) | -8 | [2] | ||
Balance, March 29, 2015(a) | 10 | [1] | ||
Exit Costs [Member] | ||||
Restructuring Cost and Reserve | ||||
Balance, December 31, 2014(a) | 1 | [1] | ||
Provision | 0 | |||
Utilization and other(b) | 0 | [2] | ||
Balance, March 29, 2015(a) | 1 | [1] | ||
Other Current Liabilities [Member] | ||||
Restructuring Cost and Reserve | ||||
Restructuring Reserve, Current | 6 | 13 | ||
Other Noncurrent Liabilities [Member] | ||||
Restructuring Cost and Reserve | ||||
Restructuring Reserve, Noncurrent | 5 | 6 | ||
Manufacturing, Research, Corporate [Member] | ||||
Restructuring Cost and Reserve | ||||
Provision | 1 | |||
Europe, Africa, and Middle East (EuAfME) [Member] | Employee Termination Costs [Member] | ||||
Restructuring Cost and Reserve | ||||
Provision | $2 | |||
[1] | At MarchB 29, 2015, and DecemberB 31, 2014, included in Other current liabilities ($6 million and $13 million, respectively) and Other noncurrent liabilities ($5 million and $6 million, respectively) | |||
[2] | Includes adjustments for foreign currency translation. |
Other_IncomeDeductions_Net_Det
Other (Income)/Deductions - Net (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Other Income and Expenses [Abstract] | ||||
Royalty-related income | ($7) | ($8) | ||
Certain legal and other matters, net(a) | 0 | [1] | -2 | [1] |
Foreign currency loss(b) | 8 | 9 | ||
Other, net(c) | -1 | [2] | 2 | [2] |
Other (income)/deductionsbnet | $0 | $1 | ||
[1] | (c)B For the three months ended March 30, 2014, represents a pension plan settlement charge related to the sale of a manufacturing plant, partially offset by interest income and other miscellaneous income. | |||
[2] | (b)B For the three months ended MarchB 29, 2015, primarily driven by costs related to hedging and exposures to certain emerging market currencies. For the three months ended March 30, 2014, primarily driven by losses related to the depreciation of the Argentine peso in the first quarter of 2014. |
Income_Taxes_Taxes_on_Income_D
Income Taxes - Taxes on Income (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Income Tax Disclosure [Abstract] | ||
Effective tax rate for income from continuing operations | 28.30% | 31.70% |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $9 | $8 |
Income_Taxes_Deferred_Taxes_De
Income Taxes - Deferred Taxes (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Income Tax Disclosure [Abstract] | ||
Net deferred income tax liability | $121 | $125 |
Current deferred tax assets | 87 | 109 |
Noncurrent deferred tax assets | 57 | 54 |
Other current deferred liabilities | 9 | 11 |
Noncurrent deferred tax liabilities | $256 | $277 |
Income_Taxes_Tax_Contingencies
Income Taxes - Tax Contingencies (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Income Tax Contingency [Line Items] | ||
Unrecognized tax benefits | $54 | $54 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 8 | 8 |
Noncurrent Deferred Tax Assets [Member] | ||
Income Tax Contingency [Line Items] | ||
Unrecognized tax benefits | 6 | 6 |
Other Taxes Payable [Member] | ||
Income Tax Contingency [Line Items] | ||
Unrecognized tax benefits | $48 | $48 |
Financial_Instruments_Credit_F
Financial Instruments - Credit Facilities (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2012 | Mar. 29, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Line of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $68,000,000 | |||
Line of Credit Facility, Amount Outstanding | 0 | 0 | ||
Short-term Bank Loans and Notes Payable | 2,000,000 | 7,000,000 | ||
Long-term Line of Credit | 2,000,000 | 3,000,000 | ||
Revolving credit facility, minimum interest coverage ratio | 3.5 | |||
Revolving Credit Facility [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Revolving credit facility, term | 5 years | |||
Revolving credit facility, current borrowing capacity | 1,000,000,000 | |||
Revolving credit facility, covenant compliance ratio, 2014 | 3.95 | |||
Revolving credit facility, covenant compliance ratio, 2015 | 3.5 | |||
Revolving credit facility, covenant compliance ratio, 2016 and thereafter | 3 | |||
Line of credit facility, maximum borrowing capacity | 1,500,000,000 |
Financial_Instruments_Commerci
Financial Instruments - Commercial Paper Program (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 | Feb. 28, 2013 |
Short-term Debt [Line Items] | |||
Commercial Paper | $0 | $0 | |
Commercial Paper [Member] | |||
Short-term Debt [Line Items] | |||
Capacity of commercial paper program | $1,000,000,000 |
Financial_Instruments_ShortTer
Financial Instruments - Short-Term Borrowings (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Financial Instruments [Abstract] | ||
Short-term Bank Loans and Notes Payable | $2 | $7 |
Short-term debt, weighted-average effective interest rate | 9.70% | 7.80% |
Financial_Instruments_Senior_N
Financial Instruments - Senior Notes Offering and Other Long-Term Debt (Details) (USD $) | Mar. 29, 2015 | Jan. 28, 2013 |
In Millions, unless otherwise specified | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | $3,652 | |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | 3,650 | |
Debt, unamortized discount | 10 | |
Debt, purchase price percent due to downgrade of investment grade | 101.00% | |
Senior Notes [Member] | Senior Notes 1.150% due 2016 [Member] | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | 400 | 400 |
Debt, stated interest rate | 1.15% | |
Senior Notes [Member] | Senior Notes 1.875% due 2018 [Member] | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | 750 | 750 |
Debt, stated interest rate | 1.88% | |
Senior Notes [Member] | Senior Notes 3.250% due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | 1,350 | 1,350 |
Debt, stated interest rate | 3.25% | |
Senior Notes [Member] | Senior Notes 4.700% due 2043 [Member] | ||
Debt Instrument [Line Items] | ||
Debt, principal amount | $1,150 | $1,150 |
Debt, stated interest rate | 4.70% |
Financial_Instruments_Schedule
Financial Instruments - Schedule of Long-term Debt (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 | Jan. 28, 2013 |
In Millions, unless otherwise specified | |||
Debt Instrument [Line Items] | |||
Long-term Line of Credit, Noncurrent | $2 | $3 | |
Total long-term debt | 3,652 | ||
Unamortized debt discount | -9 | ||
Less current portion of long-term debt | -400 | 0 | |
Long-term debt | 3,243 | 3,643 | |
Senior Notes [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 3,650 | ||
Senior Notes [Member] | Senior Notes 1.150% due 2016 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 400 | 400 | |
Senior Notes [Member] | Senior Notes 1.875% due 2018 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 750 | 750 | |
Senior Notes [Member] | Senior Notes 3.250% due 2023 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 1,350 | 1,350 | |
Senior Notes [Member] | Senior Notes 4.700% due 2043 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 1,150 | 1,150 | |
Prior to Initial Public Offering [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 3,653 | ||
Unamortized debt discount | -10 | ||
Long-term debt | 3,643 | ||
Prior to Initial Public Offering [Member] | Senior Notes [Member] | Senior Notes 1.150% due 2016 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 400 | ||
Prior to Initial Public Offering [Member] | Senior Notes [Member] | Senior Notes 1.875% due 2018 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 750 | ||
Prior to Initial Public Offering [Member] | Senior Notes [Member] | Senior Notes 3.250% due 2023 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | 1,350 | ||
Prior to Initial Public Offering [Member] | Senior Notes [Member] | Senior Notes 4.700% due 2043 [Member] | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $1,150 |
Financial_Instruments_Fair_Val
Financial Instruments - Fair Value of Debt (Details) (Fair Value, Inputs, Level 2 [Member], USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Fair value, debt instrument | $3,703 | |
Allocated Long-term Debt [Member] | ||
Debt Instrument [Line Items] | ||
Fair value, debt instrument | $3,690 |
Financial_Instruments_Longterm
Financial Instruments - Long-term Debt Maturity (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Financial Instruments [Abstract] | ||
2014 | $401 | |
2015 | 0 | |
2016 | 751 | |
2017 | 0 | |
2018 | 0 | |
After 2018 | 2,500 | |
Total long-term debt | 3,652 | |
Interest expense, net of capitalized interest | 28 | 29 |
Interest Costs Capitalized | $1 | $1 |
Financial_Instruments_Foreign_
Financial Instruments - Foreign Exchange Risk (Details) (Foreign Exchange Contract [Member], USD $) | 3 Months Ended | |
In Billions, unless otherwise specified | Mar. 29, 2015 | Dec. 31, 2014 |
Foreign Exchange Contract [Member] | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | 1.4 | $1.10 |
Majority [Member] | Foreign Exchange Contract [Member] | ||
Derivative [Line Items] | ||
Derivative, Term of Contract | 60 days | |
Maximum [Member] | Foreign Exchange Contract [Member] | ||
Derivative [Line Items] | ||
Derivative, Term of Contract | 180 days |
Financial_Instruments_Fair_Val1
Financial Instruments - Fair Value of Derivative Instruments (Details) (Foreign Exchange Forward [Member], USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 |
Derivatives, Fair Value [Line Items] | |||
Gain (loss) on derivative contracts not designated as hedging instruments | $7 | $12 | |
Not Designated as Hedging Instrument [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Total foreign currency forward-exchange contracts | 10 | 5 | |
Not Designated as Hedging Instrument [Member] | Other Current Assets [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Foreign currency forward-exchange contracts | 16 | 9 | |
Not Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Foreign currency forward-exchange contracts | ($6) | ($4) |
Inventories_Details
Inventories (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Finished goods | $715 | $688 |
Work-in-process | 354 | 340 |
Raw materials and supplies | 277 | 261 |
Inventories | $1,346 | $1,289 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets - Goodwill (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 | |
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | $200 | $200 | ||
Goodwill, Gross | 1,705 | 1,512 | ||
Goodwill [Roll Forward] | ||||
Balance, December 31, 2014 | 976 | |||
Other(b) | -7 | |||
Balance, March 29, 2015 | 1,169 | |||
United States (U.S.) [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 162 | |||
Goodwill [Roll Forward] | ||||
Balance, December 31, 2014 | 501 | |||
Other(b) | 0 | [1] | ||
Balance, March 29, 2015 | 663 | |||
Europe, Africa, and Middle East (EuAfME) [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 26 | |||
Goodwill [Roll Forward] | ||||
Balance, December 31, 2014 | 153 | |||
Other(b) | -5 | [1] | ||
Balance, March 29, 2015 | 174 | |||
Canada and Latin America (CLAR) [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 5 | |||
Goodwill [Roll Forward] | ||||
Balance, December 31, 2014 | 161 | |||
Other(b) | -1 | [1] | ||
Balance, March 29, 2015 | 165 | |||
Asia Pacific (APAC) [Member] | ||||
Goodwill [Line Items] | ||||
Goodwill, Acquired During Period | 7 | |||
Goodwill [Roll Forward] | ||||
Balance, December 31, 2014 | 161 | |||
Other(b) | -1 | [1] | ||
Balance, March 29, 2015 | $167 | |||
[1] | (a)B Reflects the allocation across reportable segments of goodwill associated with the acquisition of certain assets of Abbott Animal Health (amounts recorded are preliminary and subject to final valuation). |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets - Other Intangible Assets (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 |
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Amortization of Intangible Assets | $15 | $15 | |
Finite-lived intangible assets, Gross Carrying Amount | 1,147 | 1,139 | |
Finite-lived intangible assets, Accumulated Amortization | -535 | -527 | |
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization | 612 | 612 | |
Total indefinite-lived intangible assets | 123 | 115 | |
Intangible Assets, Gross Carrying Amount | 1,270 | 1,254 | |
Identifiable Intangible Assets, Less Accumulated Amortization | 735 | 727 | |
Brands [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Total indefinite-lived intangible assets | 38 | 38 | |
Trademarks and Trade Names [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Total indefinite-lived intangible assets | 67 | 67 | |
In Process Research and Development [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Total indefinite-lived intangible assets | 10 | 2 | |
ProductRights [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Total indefinite-lived intangible assets | 8 | 8 | |
Developed Technology Rights [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, Gross Carrying Amount | 735 | 744 | |
Finite-lived intangible assets, Accumulated Amortization | -264 | -259 | |
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization | 471 | 485 | |
Brands [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, Gross Carrying Amount | 216 | 216 | |
Finite-lived intangible assets, Accumulated Amortization | -114 | -111 | |
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization | 102 | 105 | |
Trademarks and Trade Names [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, Gross Carrying Amount | 63 | 60 | |
Finite-lived intangible assets, Accumulated Amortization | -41 | -41 | |
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization | 22 | 19 | |
Other Intangible Assets [Member] | |||
Finite Lived and Indefinite Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, Gross Carrying Amount | 133 | 119 | |
Finite-lived intangible assets, Accumulated Amortization | -116 | -116 | |
Finite-lived intangible assets, Identifiable Intangible Assets, Less Accumulated Amortization | $17 | $3 |
Goodwill_and_Other_Intangible_4
Goodwill and Other Intangible Assets - Narrative (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Gross goodwill | $1,705 | $1,512 | |
Accumulated goodwill impairment losses | 536 | 536 | |
Amortization of Intangible Assets | $15 | $15 |
Benefit_Plans_Details
Benefit Plans (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Service Cost | $2 | $1 |
Contributions to benefit plans | 2 | 2 |
Expected future contributions to benefit plans | 7 | |
Defined Benefit Plan, Interest Cost | 1 | 1 |
Defined Benefit Plan, Expected Return on Plan Assets | 0 | 0 |
Defined Benefit Plan, Amortization of Gains (Losses) | 0 | 0 |
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | 0 | 4 |
Defined Benefit Plan, Net Periodic Benefit Cost | 3 | 6 |
Multi-employer Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Pension and postretirement benefit expense | 1 | |
Contributions to benefit plans | 1 | |
U.S. Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Pension and postretirement benefit expense | 2 | 2 |
JAPAN | Pfizer [Member] | Supplemental Saving Plan [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Supplemental savings plan liability transferred from Pfizer | 2 | |
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax | 2 | |
PHILIPPINES | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Estimated net obligation | 1 | |
NETHERLANDS | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | -4 | |
Defined benefit plan settlement loss after tax | $3 |
Sharebased_Payments_Narrative_
Share-based Payments - Narrative (Details) (USD $) | 3 Months Ended |
Mar. 29, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 856,105 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $45.92 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $11.72 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.78% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.72% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 24.04% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 6 years 6 months |
Restricted Stock Units (RSUs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | 701,281 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $46.06 |
Award vesting period | 3 years |
Performance Shares [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | 157,130 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | $63.14 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 21.80% |
PeerCompanies [Member] | Performance Shares [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 23.50% |
Sharebased_Payments_Components
Share-based Payments - Components of share-based compensation expense (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expensebtotal | $10 | $5 |
Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expensebdirect | 6 | 3 |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expensebdirect | 4 | 2 |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expensebdirect | $0 | $0 |
Stockholders_Equity_Shares_Det
Stockholders' Equity - Shares (Details) (USD $) | 3 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Class of Stock [Line Items] | ||||
Common Stock, Shares, Issued | 501,454,917 | 500,745,000 | 501,342,267 | 500,008,000 |
Treasury Stock, Shares | 1,087,313 | 6,763 | 14,743 | 0 |
Treasury Stock, Carrying Basis | $48.80 | $0.20 | $0.50 | $0 |
Common Stock, Shares Authorized | 6,000,000,000 | 6,000,000,000 | ||
Preferred Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 | ||
Stock Repurchase Program, Authorized Amount | 500 | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | 453 | |||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 113,000 | 33,000 | ||
Treasury Stock, Shares, Acquired | 7,000 | |||
Treasury Stock, Value, Acquired, Cost Method | 0.2 | |||
Stock Issued During Period, Shares, Employee Benefit Plan | 704,000 | |||
Stock Compensation Plan [Member] | ||||
Class of Stock [Line Items] | ||||
Treasury Stock, Shares, Acquired | 20,000 | |||
Treasury Stock, Value, Acquired, Cost Method | 0.9 | |||
Share Repurchase Program [Domain] | ||||
Class of Stock [Line Items] | ||||
Treasury Stock, Shares, Acquired | 1,053,000 | |||
Treasury Stock, Value, Acquired, Cost Method | $47.40 |
Stockholders_Equity_Changes_in
Stockholders' Equity - Changes in Accumulated Other Comprehensive Loss (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance, December 31, 2014 | ($361) | |
Other comprehensive income (loss), net of tax | -117 | -8 |
Balance, March 29, 2015 | -479 | |
Currency Translation Adjustment Net Unrealized Gain/(Losses) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance, December 31, 2014 | -336 | |
Other comprehensive income (loss), net of tax | -119 | |
Balance, March 29, 2015 | -455 | |
Benefit Plans Actuarial Gains/(Losses) [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance, December 31, 2014 | -25 | |
Other comprehensive income (loss), net of tax | 1 | |
Balance, March 29, 2015 | -24 | |
Accumulated Other Comp. Income/(Loss) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balance, December 31, 2014 | -361 | |
Other comprehensive income (loss), net of tax | -118 | -8 |
Balance, March 29, 2015 | ($479) |
Earnings_per_Share_Details
Earnings per Share (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 |
Numerator | ||
Net income before allocation to noncontrolling interests | $165 | $155 |
Less: net income attributable to noncontrolling interests | 0 | 0 |
Net income attributable to Zoetis Inc. | $165 | $155 |
Denominator | ||
Weighted-average common shares outstanding | 501,146,000 | 500,231,000 |
Common stock equivalents: stock options, RSUs, PSUs and DSUs | 2,078,000 | 471,000 |
Weighted-average common and potential dilutive shares outstanding | 503,224,000 | 500,702,000 |
Earnings per share attributable to Zoetis stockholdersbbasic (in dollars per share) | $0.33 | $0.31 |
Earnings per share attributable to Zoetis stockholdersbdiluted (in dollars per share) | $0.33 | $0.31 |
Stock Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,000,000 | 5,000,000 |
Restricted Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,000,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) | 12 Months Ended | 12 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Sep. 29, 2013 | Sep. 29, 2013 | Mar. 29, 2015 | Feb. 29, 2012 | Dec. 31, 2014 |
USD ($) | USD ($) | EUR (€) | PregSure [Member] | Ulianopolis, Brazil [Member] | MEXICO | |
claims | defendant | USD ($) | ||||
Loss Contingencies [Line Items] | ||||||
Number of claims seeking damages | 240 | 6 | ||||
Number of additional defendants | 5 | |||||
Loss Contingency Accrual, Period Increase (Decrease) | $14 | € 11 | ||||
Litigation Settlement, Expense | 13 | |||||
Insurance Recoveries | $1 |
Segment_and_Other_Revenue_Info2
Segment and Other Revenue Information - Segment Information (Details) | 3 Months Ended |
Mar. 29, 2015 | |
segment | |
Segment Reporting Information [Line Items] | |
Number of Operating Segments | 4 |
Segment_and_Other_Revenue_Info3
Segment and Other Revenue Information - Segment Assets (Details) (USD $) | Mar. 29, 2015 | Dec. 31, 2014 |
In Millions, unless otherwise specified | ||
Segment Reporting [Abstract] | ||
Assets | $6,430 | $6,607 |
Segment_and_Other_Revenue_Info4
Segment and Other Revenue Information - Statement of Income (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Segment Reporting Information [Line Items] | ||||
Revenue | $1,102 | [1] | $1,097 | [1] |
Earnings | 230 | [2] | 227 | [2] |
Depreciation and Amortization | 48 | [3] | 50 | [3] |
Reportable Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,092 | [1] | 1,086 | [1] |
Earnings | 545 | [2] | 520 | [2] |
Depreciation and Amortization | 17 | [3] | 21 | [3] |
Other business activities [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 10 | [1],[4] | 11 | [1],[4] |
Earnings | -67 | [2],[4] | -72 | [2],[4] |
Depreciation and Amortization | 7 | [3],[4] | 7 | [3],[4] |
Corporate [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Earnings | -133 | [2],[5] | -125 | [2],[5] |
Depreciation and Amortization | 9 | [3],[5] | 6 | [3],[5] |
Purchase accounting adjustments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Earnings | -13 | [2],[6] | -12 | [2],[6] |
Depreciation and Amortization | 13 | [3],[6] | 12 | [3],[6] |
Acquisition-related costs [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Earnings | -1 | [2],[7] | -2 | [2],[7] |
Depreciation and Amortization | 0 | [3],[7] | 0 | [3],[7] |
Certain Significant Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Earnings | -41 | [2],[8] | -36 | [2],[8] |
Depreciation and Amortization | 1 | [3],[8] | 2 | [3],[8] |
Other unallocated [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Earnings | -60 | [2],[9] | -46 | [2],[9] |
Depreciation and Amortization | 1 | [3],[9] | 2 | [3],[9] |
United States (U.S.) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 521 | [1] | 479 | [1] |
Earnings | 315 | [2] | 278 | [2] |
Depreciation and Amortization | 6 | [3] | 8 | [3] |
Europe, Africa, and Middle East (EuAfME) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 237 | [1] | 270 | [1] |
Earnings | 102 | [2] | 112 | [2] |
Depreciation and Amortization | 4 | [3] | 5 | [3] |
Canada and Latin America (CLAR) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 173 | [1] | 168 | [1] |
Earnings | 66 | [2] | 64 | [2] |
Depreciation and Amortization | 3 | [3] | 3 | [3] |
Asia Pacific (APAC) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 161 | [1] | 169 | [1] |
Earnings | 62 | [2] | 66 | [2] |
Depreciation and Amortization | $4 | [3] | $5 | [3] |
[1] | Revenue denominated in euros was $135 million and $168 million for the three months ended MarchB 29, 2015, and MarchB 30, 2014, respectively. | |||
[2] | Defined as income before provision for taxes on income. | |||
[3] | 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. | |||
[4] | Other business activities reflects the R&D costs managed by our Research and Development organization, as well as our contract manufacturing business. | |||
[5] | Corporate includes, among other things, administration expenses, interest expense, certain compensation and other costs not charged to our operating segments. | |||
[6] | Purchase accounting adjustments includes certain charges related to intangible assets and property, plant and equipment not charged to our operating segments. | |||
[7] | Acquisition-related costs can include costs associated with acquiring, integrating and restructuring acquired businesses, such as allocated transaction costs, integration costs, restructuring charges and additional depreciation associated with asset restructuring. For additional information, see Note 6. Restructuring Charges and Other Costs Associated with Acquisitions and Cost-Reduction/Productivity Initiatives. | |||
[8] | 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, certain legal and commercial settlements and the impact of divestiture-related gains and losses. b"For the three months ended MarchB 29, 2015, Certain significant items primarily includes: (i) Zoetis stand-up costs of $23 million; (ii) consulting fees related to our operational efficiency initiative of $15 million; and (iii) charges due to unusual investor-related activities of $3 million. Stand-up costs include 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.b"For the three months ended MarchB 30, 2014, Certain significant items primarily includes: (i) Zoetis stand-up costs of $33 million; (ii) restructuring charges of $2 million related to employee severance costs in EuAfME, offset by a $2 million benefit related to a reversal of a previously established reserve as a result of a change in estimate of severance costs; (iii) additional depreciation associated with asset restructuring of $1 million; (iv) a pension plan settlement charge related to the divestiture of a manufacturing plant of $4 million; and (v) an insurance recovery of litigation-related charges of $2 million income. | |||
[9] | Includes overhead expenses associated with our manufacturing operations |
Segment_and_Other_Revenue_Info5
Segment and Other Revenue Information - Statement of Income Narrative (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Segment Reporting Information [Line Items] | ||||
Operational Efficiency Consulting Charges | $15 | |||
Investor Related Costs | 3 | |||
Restructuring charges | 0 | |||
Accelerated depreciation | 0 | [1] | 1 | [1] |
Dedicated Pension Plans, Settlement Charge for Contract Termination | 4 | |||
Certain legal and other matters, net(a) | 0 | [2] | -2 | [2] |
Certain Significant Items [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Stand-up costs | 23 | 33 | ||
Euro Member Countries, Euro | ||||
Segment Reporting Information [Line Items] | ||||
Revenues denominated in Euros | 135 | 168 | ||
Employee Severance [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring charges | 0 | |||
Employee Severance [Member] | Europe, Africa, and Middle East (EuAfME) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring charges | -2 | |||
Employee Severance [Member] | UNITED STATES | ||||
Segment Reporting Information [Line Items] | ||||
Restructuring charges | $2 | $2 | ||
[1] | The restructuring charges for the three months ended March 30, 2014, include employee severance costs in EuAfME ($2 million), a reversal of a previously established reserve as a result of a change in estimate of severance costs ($2 million benefit), and accelerated depreciation related to the exiting of a research facility ($1 million). For the three months ended MarchB 30, 2014, the restructuring charges are associated with the following: EuAfME ($2 million) and Manufacturing/research/corporate ($1 million benefit). | |||
[2] | (c)B For the three months ended March 30, 2014, represents a pension plan settlement charge related to the sale of a manufacturing plant, partially offset by interest income and other miscellaneous income. |
Segment_and_Other_Revenue_Info6
Segment and Other Revenue Information - Revenue by Species (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Revenue from External Customer [Line Items] | ||||
Revenue | $1,102 | [1] | $1,097 | [1] |
Livestock [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 715 | 706 | ||
Cattle [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 397 | 391 | ||
Swine [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 170 | 160 | ||
Poultry [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 129 | 135 | ||
Other (Fish and Sheep) [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 19 | 20 | ||
Companion Animal [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 377 | 380 | ||
Horses [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 40 | 43 | ||
Dogs and Cats [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 337 | 337 | ||
Other Non Pharmaceuticals [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 48 | 44 | ||
Contract Manufacturing [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | $10 | $11 | ||
[1] | Revenue denominated in euros was $135 million and $168 million for the three months ended MarchB 29, 2015, and MarchB 30, 2014, respectively. |
Segment_and_Other_Revenue_Info7
Segment and Other Revenue Information - Revenue by Major Product Category (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 29, 2015 | Mar. 30, 2014 | ||
Revenue from External Customer [Line Items] | ||||
Revenue | $1,102 | [1] | $1,097 | [1] |
Anti-infectives [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 312 | 322 | ||
Vaccines [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 271 | 274 | ||
Parasiticides [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 153 | 151 | ||
Medicated feed additives [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 121 | 104 | ||
Other pharmaceuticals [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 187 | 191 | ||
Other Non Pharmaceuticals [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | 48 | 44 | ||
Contract Manufacturing [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Revenue | $10 | $11 | ||
[1] | Revenue denominated in euros was $135 million and $168 million for the three months ended MarchB 29, 2015, and MarchB 30, 2014, respectively. |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | Mar. 29, 2015 | 5-May-15 |
In Millions, unless otherwise specified | product_categories | |
Subsequent Event [Line Items] | ||
Number of Major Product Categories | 5 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Number of Major Product Categories | 5,000 | |
Minimum [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Restructuring, Number of Terminated Positions Expected | 2,000 | |
Restructuring and Related Cost, Expected Cost | 400 | |
Maximum [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Restructuring, Number of Terminated Positions Expected | 2,500 | |
Restructuring and Related Cost, Expected Cost | 500 |