Company Records Strong Performance in 2007 and Notes Achievements over
4-year Period, Progressing with Integration of Organon BioSciences,
Preparing for Challenges of 2008
KENILWORTH, N.J., Feb. 12 /PRNewswire-FirstCall/ -- Schering-Plough
Corporation (NYSE: SGP) today reported financial results for the 2007
fourth quarter and full year, and commented on its ongoing integration of
Organon BioSciences N.V. (OBS), which was acquired in November 2007 and
includes the Organon human health business and Intervet animal health
business.
"Schering-Plough delivered another strong performance in both the
fourth quarter and full year of 2007," said Fred Hassan, chairman and CEO.
"We continued the remarkable transformation that began in 2003. On track
with our Action Agenda, we grew the top line, built greater diversity in
our business portfolio, improved our financial strength and cash flows, and
established R&D as an engine for future growth. Our acquisition of Organon
BioSciences was a substantial strategic achievement. Today, we are a much
stronger and more diverse company than ever before, and we are better
positioned to deal with the new challenges confronting us in 2008."
For the 2007 fourth quarter on a GAAP basis, due to purchase accounting
adjustments, Schering-Plough reported a net loss available to common
shareholders of $3.4 billion or $2.08 per common share. Earnings per common
share for the 2007 fourth quarter would have been 27 cents, excluding
purchase accounting adjustments and acquisition-related items for the OBS
acquisition (closed Nov. 19, 2007) and other specified items (see table
below on page 13). For the 2006 fourth quarter, Schering-Plough reported
net income of $182 million or 12 cents per common share on a GAAP basis and
17 cents per common share when excluding other specified items.
GAAP net sales for the 2007 fourth quarter totaled $3.7 billion as
compared to $2.7 billion in the fourth quarter of 2006. Adjusted net sales
(GAAP net sales plus an assumed 50 percent of global cholesterol joint
venture net sales - see table below on page 19 and hereinafter referred to
as "adjusted sales") would have totaled $4.4 billion. Schering-Plough does
not record sales of its cholesterol joint venture with Merck & Co., Inc.
(Merck), as the venture is accounted for under the equity method.
The 2007 full year was significant for many important achievements:
-- Completing the acquisition of Organon BioSciences N.V. for
approximately 11 billion euro, thus adding new categories - women's
health and anesthesia/psychiatry - and making Schering-Plough one of
the world's leading animal health companies;
-- Growing cholesterol franchise sales to $5.2 billion in 2007, with U.S.
sales up 26 percent and international sales up 70 percent;
-- Growing sales by double digits in each major customer segment -
Prescription Pharmaceuticals, Consumer Health Care and Animal Health;
-- Gaining strength in global markets, with sales in international markets
representing more than 60 percent of total GAAP net sales;
-- Continuing to expand the company's businesses with new products and
indications while extending its presence in fast-growing emerging
markets, such as China, Brazil and Russia;
-- Strengthening the research pipeline with new compounds and by advancing
development to Phase III of such agents as a thrombin receptor
antagonist (TRA) for atherothrombosis and vicriviroc for HIV; both are
among the company's four compounds designated "fast track" by the U.S.
Food and Drug Administration (FDA); and
-- Filing regulatory submissions for important new agents and indications,
which now include sugammadex and asenapine from Organon.
"Schering-Plough now has four full years of accomplishments since we
began this transformation," said Hassan. "In that time, we also brought a
new culture to the company - focused on meeting the needs of our customers
and patients, and founded on a commitment to quality, compliance and
business integrity."
Hassan continued: "As we begin 2008, new challenges have emerged,
especially the initial reaction to the ENHANCE trial. We and our joint
venture partner Merck acted with integrity and good faith with respect to
that trial. We stand behind VYTORIN and ZETIA, behind the validity of the
science, and behind our commitment to doing what's right for patients and
physicians."
The company noted that the pharmaceutical industry continues to be
subject to ever-more critical scrutiny, where events can be
mischaracterized and drive amplified reactions. The company believes that
new scientific data are best presented and discussed at appropriate
scientific and medical forums.
Medical experts and health advisory groups have long recognized high
LDL cholesterol as a significant cardiovascular risk factor and recommended
increasingly aggressive treatment of high cholesterol for certain patients.
While it is too early to tell the impact of the ENHANCE trial results on
the cholesterol business, lowering LDL cholesterol, along with healthy diet
and lifestyle changes, remains the cornerstone of lipid treatment for
patients at risk for heart disease. Clinical studies have demonstrated that
VYTORIN lowered patients' LDL cholesterol more than rosuvastatin,
atorvastatin and simvastatin at the doses studied and was able to get more
patients to their goal.
OBS Integration
The company reviewed progress in the integration of OBS since the
transaction closed in November 2007.
"The strategic soundness of this combination is clear, and the benefits
are becoming increasingly evident," said Hassan. "We broaden our human
therapeutic product lines to reach important new customers and patients,
strengthen our R&D pipeline and capabilities, and gain greater balance and
diversification with a world-class animal health business." He noted that
the integration of OBS is progressing well. An over-arching integration
plan is in place, and the company is on track to deliver on it.
The company reiterated that it is still targeting the same accretion
and synergy targets as stated when the OBS acquisition was announced March
12, 2007: that the OBS transaction is anticipated to be accretive to
Schering- Plough's stand-alone earnings per share by about 10 cents in the
first full year, excluding purchase-accounting adjustments and
acquisition-related costs; and annual synergies of $500 million are
expected to be achieved by three years from the date of closing.
Fourth Quarter 2007 Results
For the 2007 fourth quarter, due to purchase accounting adjustments,
Schering-Plough reported a net loss available to common shareholders of
$3.4 billion or $2.08 per common share on a GAAP basis. Earnings per common
share for the 2007 fourth quarter would have been 27 cents, excluding
purchase accounting adjustments and acquisition-related items for the OBS
acquisition and other specified items. For the 2006 fourth quarter,
Schering-Plough reported net income available to common shareholders of
$182 million or 12 cents per common share on a GAAP basis and 17 cents per
common share excluding other specified items.
GAAP net sales for the 2007 fourth quarter totaled $3.7 billion, up 41
percent, as compared to the fourth quarter of 2006. Sales for the quarter
included $626 million of OBS net sales related to the period subsequent to
the acquisition closing date. In addition, the sales growth, on a GAAP
basis, reflects a 7 percent favorable impact from foreign exchange.
Global cholesterol joint venture net sales, which include VYTORIN and
ZETIA, totaled $1.4 billion in the 2007 fourth quarter. Schering-Plough
does not record sales of its cholesterol joint venture with Merck as the
venture is accounted for under the equity method. Including an adjustment
of an assumed 50 percent of the global cholesterol joint venture net sales,
Schering- Plough's adjusted sales for the 2007 fourth quarter would have
been $4.4 billion.
Overall, Schering-Plough shares in approximately 50 percent of the
profits of the joint venture with Merck, although there are different
profit-sharing arrangements for the cholesterol products in countries
around the world. Schering-Plough records its share of the income from
operations in "Equity income," which totaled $566 million in the 2007
fourth quarter, an increase of 40 percent versus $403 million in the fourth
quarter of 2006. Schering-Plough noted that it incurs substantial costs
such as selling, general and administrative costs that are not reflected in
"Equity income" and are borne by its overall cost structure.
There is a separate co-marketing agreement with Bayer for ZETIA in
Japan, where the product was launched in June 2007.
Sales of Global Pharmaceuticals for the 2007 fourth quarter totaled
$3.0 billion. Included in the fourth quarter of 2007 are $409 million of
net sales related to Organon, the OBS human health business.
Sales of REMICADE increased 35 percent to $455 million in the fourth
quarter of 2007 due to continued market growth and expanded use across
indications. REMICADE is a treatment for inflammatory diseases that
Schering- Plough markets in countries outside the United States (except in
Japan and certain other Asian markets) for rheumatoid arthritis, early
rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, plaque
psoriasis, Crohn's disease, pediatric Crohn's disease and ulcerative
colitis.
Global sales of NASONEX, an inhaled nasal corticosteroid for allergies,
rose 7 percent to $271 million versus the 2006 period, due to increased
sales in international markets, partially offset by a decline in sales in
the United States.
Sales of PEGINTRON for hepatitis C increased 15 percent to $239 million
in the 2007 fourth quarter due to higher sales in Latin America and
emerging markets across Europe, and tempered by lower sales in Japan and
the United States.
Sales of TEMODAR, a treatment for certain types of brain tumors, grew
23 percent to $234 million due to increased sales across geographic
regions, including Japan, where the product was launched in September 2006.
Sales of OBS human pharmaceutical products for the period Nov. 19
through Dec. 31, 2007, include $57 million for FOLLISTIM, a fertility
treatment, and $45 million for NUVARING, a contraceptive product.
Global sales of CLARINEX, a nonsedating antihistamine, in the fourth
quarter of 2007 were $174 million, up 6 percent as compared to sales of
$164 million in the fourth quarter of 2006. Higher sales of CLARINEX in
international markets were partially offset by lower sales in the United
States. International sales of prescription CLARITIN were $93 million in
the fourth quarter of 2007, a 19 percent increase compared to sales of $78
million in the fourth quarter of 2006.
Sales of the antibiotic AVELOX were up 12 percent to $115 million as a
result of increased market share. The growth rate for AVELOX in the 2007
fourth quarter was affected by lower demand as a result of a mild U.S.
respiratory infection season.
Consumer Health Care sales were $254 million in the 2007 fourth
quarter, up 24 percent versus the 2006 period. The increase was primarily
due to sales of MIRALAX, which was launched in February 2007 as the first
Rx-to-OTC switch in the laxative category in more than 30 years, and higher
sales of OTC CLARITIN.
Animal Health sales totaled $507 million in the 2007 fourth quarter.
Sales for the quarter included $217 million related to Intervet, the OBS
animal health business. Sales benefited from the inclusion of OBS sales and
solid growth in all geographic areas, led by the cattle and companion
animal product lines, coupled with a positive impact from foreign currency
exchange rates. With the Intervet business, there was also significant
growth in sales of vaccine products in the fourth quarter. On a combined
basis, the animal health business is one of the leading companies in the
vaccine segment.
Schering-Plough does not record sales of its cholesterol joint venture
and incurs substantial costs such as selling, general and administrative
costs that are not reflected in "Equity income" and are borne by the
overall cost structure of Schering-Plough. As a result, Schering-Plough's
gross margin and ratios of selling, general and administrative (SG&A)
expenses and R&D expenses as a percentage of sales do not reflect the
benefit of the impact of the cholesterol joint venture's operating results.
Schering-Plough's gross margin on a GAAP basis was unfavorably affected
by purchase accounting adjustments and as a result was 57.9 percent for the
2007 fourth quarter as compared to 65.5 percent in the 2006 period. The
gross margin percentage excluding purchase accounting adjustments and other
specified items decreased to 66.7 percent for the fourth quarter of 2007 as
compared to 67.2 percent for the fourth quarter of 2006.
SG&A expenses were $1.6 billion in the fourth quarter of 2007 versus
$1.3 billion in the prior-year period. SG&A in the fourth quarter of 2007
increased primarily due to the impact of the inclusion of SG&A expenses
from OBS and increased promotional spending.
Research and development spending for the 2007 fourth quarter increased
to $855 million compared to $631 million in the fourth quarter of 2006. The
increase in R&D expenses was due to the inclusion of OBS expenses, higher
spending for clinical trials and related activities, and investments to
build greater breadth and capacity to support Schering-Plough's expanding
R&D pipeline.
Acquired in-process research and development, a charge related to the
purchase accounting of the OBS acquisition, totaled $3.8 billion for the
fourth quarter of 2007.
Full-Year 2007 Results
For the full-year 2007, Schering-Plough reported a net loss available
to common shareholders of $1.6 billion or $1.04 per common share on a GAAP
basis due to purchase accounting adjustments. Earnings per common share
would have been $1.37, excluding purchase accounting adjustments,
acquisition-related items and other specified items (see table below on
page 15). For the full- year 2006, Schering-Plough reported net income of
$1.1 billion or 71 cents per common share on a GAAP basis and 87 cents per
common share excluding other specified items.
Schering-Plough reported full-year 2007 GAAP net sales of $12.7
billion, a 20 percent increase, compared to $10.6 billion in 2006.
Full-year 2007 net sales included $626 million of OBS net sales related to
the period subsequent to the acquisition. In addition, the sales growth
reflects a 4 percent favorable impact from foreign exchange.
Schering-Plough's adjusted sales for 2007 totaled $15.2 billion, an
increase of $2.7 billion as compared to $12.5 billion on an adjusted basis
in 2006.
On a GAAP basis, Schering-Plough's gross margin was 65.3 percent in
2007 as compared to 65.1 percent in 2006. The gross margin percentage
excluding purchase accounting adjustments and other specified items
increased to 67.9 percent in 2007 as compared to 66.5 percent in 2006, due
primarily to realized cost savings in 2007 from manufacturing streamlining
activities during 2006.
Selling, general and administrative expenses were $5.5 billion for the
2007 full year. Research and development spending for 2007 totaled $2.9
billion. Full-year 2007 results include results of operations for OBS for
the period subsequent to the acquisition. Acquired in-process research and
development, a charge related to the purchase accounting of the OBS
acquisition, totaled $3.8 billion for 2007. Equity income in 2007 totaled
$2.0 billion, an increase of 40 percent compared to 2006.
Recent Developments
The company also offered the following summary of recent significant
developments that have previously been announced, including:
-- Reported on results from two Phase II studies in patients with vascular
disease showing that TRA, a novel oral thrombin receptor antagonist,
does not increase the rate of major or minor bleeding in patients with
acute coronary syndrome or prior ischemic stroke when added to standard
antiplatelet therapy. (Announced Oct. 22, 2007)
-- Reported long-term follow-up results with the European Organization for
the Research and Treatment of Cancer Phase III trial that showed the
combination of TEMODAR (temozolomide) Capsules and radiation therapy
significantly prolonged survival in patients with glioblastoma
multiforme. (Announced Oct. 30, 2007)
-- Reported that the U.S. District Court for the District of Massachusetts
found no liability for Warrick Pharmaceuticals, the company's generic
subsidiary, in a class action lawsuit regarding average wholesale
prices for prescription products. (Announced Nov. 5, 2007)
-- Gained European Commission approval of PEGINTRON (peginterferon alfa-
2b) and REBETOL (ribavirin) combination therapy for retreating adult
patients with chronic hepatitis C whose prior treatment did not result
in a sustained response. (Announced Nov. 15, 2007)
-- Completed the acquisition of Organon BioSciences N.V. (Announced Nov.
19, 2007)
-- Merck/Schering-Plough Pharmaceuticals announced that an independent
panel of clinical and biostatistics experts had been convened to offer
advice about the prospective analysis of the ENHANCE trial. (Announced
Nov. 19, 2007)
-- Reported on new study results that demonstrated that asenapine was more
effective than placebo and well tolerated in treating patients with
acute schizophrenia. (Announced Dec. 17, 2007)
-- Announced with Centocor, Inc., revision of a 1998 distribution
agreement regarding the development, commercialization and distribution
of both REMICADE (infliximab) and golimumab. (Announced Dec. 21, 2007)
-- Received priority review status from FDA for the company's New Drug
Application for sugammadex, an agent specifically designed to reverse
the effects of certain muscle relaxants used in surgery. Also announced
filing of an NDA with the Japanese Ministry of Health, Labor and
Welfare. (Announced Jan. 2, 2008, and Jan. 17, 2008, respectively)
-- Merck/Schering-Plough Pharmaceuticals announced the primary endpoint
and other results of the ENHANCE trial. Merck/Schering-Plough has
submitted an abstract on the ENHANCE trial for presentation at the
American College of Cardiology meeting, which will be held in March
2008. (Announced Jan. 14, 2008)
-- Reported top-line results of the IDEAL study, showing that sustained
virologic response was similar for the two leading combination
therapies for hepatitis C, and that fewer patients treated with both
PEGINTRON regimens relapsed after the end of treatment compared to
those receiving Pegasys and Copegus. (Announced Jan. 14, 2008)
-- Announced that Schering-Plough Chairman/CEO Fred Hassan intends to make
an open market purchase of $2 million of Schering-Plough Common Shares
with personal funds. (Announced Jan. 18, 2008)
-- With Merck, issued a release strongly objecting to mischaracterizations
of the ENHANCE trial. (Announced Jan. 25, 2008)
-- Announced FDA acceptance for review of the Peg-IFN (peginterferon alfa-
2b) supplemental Biologics License Application, granted Priority Review
status for the adjuvant treatment of patients with Stage III melanoma.
(Announced Jan. 31, 2008)
-- Reported that the antifungal agent NOXAFIL (posaconazole) Oral
Suspension had received an A-1 recommendation (highest rating) for the
prevention of invasive Aspergillus infections in certain high-risk
patients in the latest Treatment of Aspergillosis Clinical Practice
Guidelines of the Infectious Diseases Society of America. (Announced
Jan. 31, 2008)
-- Gained FDA approval of ASMANEX TWISTHALER (mometasone furoate
inhalation powder) for the maintenance treatment of asthma as a
preventive therapy in patients 4 to 11 years of age. (Announced Feb.
4, 2008)
-- Announced final results of a Phase II clinical study showing that
vicriviroc, an investigational CCR5 antagonist, demonstrated potent and
sustained viral suppression through 48 weeks of therapy in treatment-
experienced HIV-infected patients, when administered once-daily as a
single tablet in combination with an optimized ritonavir-boosted
protease inhibitor-containing antiretroviral regimen. (Announced Feb.
6, 2008)
Fourth Quarter 2007 Conference Call and Webcast
Schering-Plough will conduct a conference call today at 8 a.m. (EST) to
review the 2007 fourth quarter and full-year results. To listen live to the
call, dial 1-877-565-9664 or 1-706-634-5003 and enter conference ID
#26183610. A replay of the call will be available beginning later today
through 5 p.m. on March 11. To listen to the replay, dial 1-800-642-1687 or
1-706-645-9291 and enter the conference ID #26183610. A live audio webcast
of the conference call also will be available by going to the Investor
Relations section of the Schering-Plough corporate Web site,
http://www.schering-plough.com, and clicking on the "Presentations/Webcasts" link.
A replay of the webcast will be available starting on Feb. 12 through 5
p.m. on March 11.
DISCLOSURE NOTICE: The information in this press release, the comments
of Schering-Plough officers during the earnings teleconference/webcast on
Feb. 12, 2008, beginning at 8 a.m. (EST), and other written reports and
oral statements made from time to time by the company may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements do not relate
strictly to historical or current facts and are based on current
expectations or forecasts of future events. You can identify these
forward-looking statements by their use of words such as "anticipate,"
"believe," "could," "estimate," "expect," "forecast," "project," "intend,"
"plan," "potential," "will," and other similar words and terms. In
particular, forward-looking statements include statements relating to the
company's plans; its strategies; its progress under the Action Agenda and
anticipated timing regarding future performance of the Action Agenda;
business prospects; anticipated growth; timing and conditions of regulatory
approvals and expected synergies related to the Organon BioSciences
acquisition; prospective products or product approvals; trends in
performance; anticipated timing of clinical trials and its impact on R&D
spending; anticipated exclusivity periods; actions to enhance clinical,
R&D, manufacturing and post-marketing systems; and the potential of certain
products including VYTORIN and ZETIA and trending in the cholesterol
market. Actual results may vary materially from the company's
forward-looking statements, and there are no guarantees about the
performance of Schering- Plough stock or Schering-Plough's business.
Schering-Plough does not assume the obligation to update any
forward-looking statement. A number of risks and uncertainties could cause
results to differ materially from forward-looking statements, including,
among other uncertainties, market viability of the company's (and the
cholesterol joint venture's) marketed and pipeline products; market forces;
economic factors such as interest rate and exchange rate fluctuations; the
outcome of contingencies such as litigation and investigations including
litigation and investigations relating to the ENHANCE clinical trial;
product availability; patent and other intellectual property protection;
current and future branded, generic or over-the-counter competition; the
regulatory process (including product approvals, labeling and
post-marketing actions); scientific developments relating to marketed
products or pipeline projects; and media and societal reaction to such
developments. For further details of these and other risks and
uncertainties that may impact forward-looking statements, see
Schering-Plough's Securities and Exchange Commission filings, including
Item 8.01 of the company's 8-K filed today.
Schering-Plough is an innovation-driven, science-centered global health
care company. Through its own biopharmaceutical research and collaborations
with partners, Schering-Plough creates therapies that help save and improve
lives around the world. The company applies its research-and-development
platform to human prescription and consumer products as well as to animal
health products. In November 2007, Schering-Plough acquired Organon
BioSciences, with its Organon human health and Intervet animal health
businesses, marking a pivotal step in the company's ongoing transformation.
Schering-Plough's vision is to "Earn Trust, Every Day" with the doctors,
patients, customers and other stakeholders served by its approximately
50,000 people around the world. The company is based in Kenilworth, N.J.,
and its Web site is http://www.schering-plough.com.
SCHERING-PLOUGH CORPORATION
U.S. GAAP report for the fourth quarter ended December 31 (unaudited):
(Amounts in millions, except per share figures)
Fourth Quarter Full Year
2007 2006 2007 2006
Net sales 1/ $3,724 $2,650 $12,690 $10,594
Cost of sales 2/ 1,566 915 4,405 3,697
Selling, general
and administrative 1,634 1,250 5,468 4,718
Research and
development 3/ 855 631 2,926 2,188
Acquired in-process
research and
development 4/ 3,754 - 3,754 -
Other income, net 5/ (231) (46) (683) (135)
Special and acquisition
related charges 6/ 52 12 84 102
Equity income (566) (403) (2,049) (1,459)
(Loss)/income before
income taxes (3,340) 291 (1,215) 1,483
Income tax (benefit)/
expense (14) 87 258 362
Net (loss)/income
before cumulative
effect of a change
in accounting
principle $(3,326) $204 $(1,473) $ 1,121
Cumulative effect
of a change in
accounting principle,
net of tax 7/ - - - (22)
Net (loss)/income $(3,326) $204 $(1,473) $ 1,143
Preferred stock
dividends 38 22 118 86
Net (loss)/
income available
to common
shareholders $(3,364) $182 $(1,591) $ 1,057
Diluted earnings
per common share:
(Loss)/earnings
available to
common shareholders
before cumulative
effect of a change
in accounting
principle $(2.08) $0.12 $(1.04) $0.69
Cumulative effect
of a change in
accounting
principle,
net of tax 7/ - - - 0.02
Diluted (loss)/
earnings per
common share $(2.08) $0.12 $(1.04) $0.71
Average common
shares outstanding
- diluted 1,621 1,497 1,536 1,491
The company incurs substantial costs related to the cholesterol joint
venture, such as selling, general and administrative costs, that are not
reflected in the "Equity income" and are borne by the overall cost
structure of Schering-Plough.
1/ Net sales for the three and twelve months ended December 31, 2007,
both include $626 million of Organon BioSciences (OBS) net sales for
the period November 19, 2007 to December 31, 2007.
2/ Cost of sales for the three and twelve months ended December 31, 2007
both include purchase accounting adjustments of $326 million related
to the acquisition of OBS. Cost of sales for the three and twelve
months ended December 31, 2006 include $45 million and $146 million,
respectively, related to the manufacturing changes announced June 1,
2006.
3/ Research and development for the three and twelve months ended
December 31, 2007 include $21 million and $197 million related to
upfront R&D payments. Research and development for the three and
twelve months ended December 31, 2006 both include $15 million related
to an upfront R&D payment.
4/ Acquired in-process research and development for the three and twelve
months ended December 31, 2007 both include a charge of $3.8 billion
in connection with the acquisition of OBS.
5/ Included in other income, net for the three months ended December 31,
2007 are $255 million of acquisition-related gains on currency-related
items. Included in other income, net for the twelve months ended
December 31, 2007 are $537 million of acquisition-related net gains on
currency-related and interest rate-related items.
6/ Special and acquisition related charges for the three and twelve
months ended December 31, 2007 reflect $52 million and $84 million,
respectively, related to the acquisition of OBS. Special and
acquisition related charges for the three and twelve months ended
December 31, 2006 are $12 million and $102 million, respectively,
reflecting charges related to the manufacturing changes announced June
1, 2006.
7/ In the first quarter of 2006, Schering-Plough adopted the provisions
of SFAS 123R. As a result of this adoption, Schering-Plough
recognized a non-recurring cumulative effect adjustment of $22 million
of income associated with Schering-Plough's liability-based
compensation plans.
SCHERING-PLOUGH CORPORATION
Reconciliation from Reported Net (Loss)/Income Available to Common
Shareholders and Reported Diluted (Loss)/Earnings Per Common Share to As
Reconciled Amounts for Net (Loss)/Income
Available to Common Shareholders and Diluted (Loss)/Earnings per Common
Share (unaudited)
(Amounts in Millions, except per share figures)
To supplement its consolidated financial statements presented in
accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP"), Schering-Plough is providing the
supplemental financial information below and on the following pages to
reflect "As Reconciled" amounts related to Net (loss)/income available to
common shareholders and diluted (loss)/earnings per common share. "As
Reconciled" amounts exclude the effects of purchase accounting adjustments,
acquisition related items and other specified charges or benefits.
"As Reconciled" amounts related to Net (loss)/income available to
common shareholders and diluted (loss)/earnings per common share are
non-U.S. GAAP measures used by management in evaluating the performance of
Schering-Plough's overall business. The effects of purchase accounting
adjustments, acquisition related items and other specified charges or
benefits have been excluded from net (loss)/income available to common
shareholders and diluted (loss)/earnings per common share as management of
Schering-Plough does not consider these charges to be indicative of
continuing operating results. Schering-Plough believes that these "As
Reconciled" performance measures contribute to a more complete
understanding by investors of the overall results of the company and
enhances investor understanding of items that impact the comparability of
results between fiscal periods. Net (loss)/income available to common
shareholders and diluted (loss)/earnings per common share, as reported, are
required to be presented under U.S. GAAP.
Three months ended December 31, 2007
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $3,724 $ - $ - $ - $3,724
Cost of sales 1,566 (326) - - 1,240
Selling, general
and administrative 1,634 - - - 1,634
Research and development 855 - - (21) 834
Acquired in-process
research and
development 3,754 (3,754) - - -
Other (income)/
expense, net (231) - 255 - 24
Special and acquisition
related charges 52 - (52) - -
Equity income (566) - - - (566)
(Loss)/income before
income taxes (3,340) 4,080 (203) 21 558
Income tax (benefit)/
expense (14) 89 2 1 78
Net (loss)/income
before cumulative
effect of a change
in accounting
principle $(3,326) $3,991 $(205) $20 $480
Cumulative effect
of a change in
accounting
principle, net
of tax - - - - -
Net (loss)/income $(3,326) $3,991 $(205) $20 $480
Preferred stock
dividends 38 - - - 38
Net (loss)/income
available to
common
shareholders $(3,364) $3,991 $(205) $20 $442
Diluted (loss)/
earnings per
common share:
(Loss)/earnings
available to
common
shareholders
before cumulative
effect of a change
in accounting
principle $ (2.08) $0.27
Cumulative effect
of a change in
accounting
principle, net
of tax - -
Diluted (loss)/
earnings per
common share $ (2.08) $0.27
Average common
shares outstanding
-diluted 1,621 1,648
SCHERING-PLOUGH CORPORATION
Reconciliation from Reported Net Income Available to Common
Shareholders and Reported Diluted Earnings Per Common Share to As
Reconciled Amounts for Net Income
Available to Common Shareholders and Diluted Earnings per Common Share
(unaudited)
(Amounts in Millions, except per share figures)
Three months ended December 31, 2006
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $2,650 $ - $ - $ - $2,650
Cost of sales 915 - - (45) 870
Selling, general
and administrative 1,250 - - - 1,250
Research and
development 631 - - (15) 616
Acquired in-process
research and
development - - - - -
Other income, net (46) - - - (46)
Special and
acquisition
related charges 12 - - (12) -
Equity income (403) - - - (403)
Income before
income taxes 291 - - 72 363
Income tax expense 87 - - - 87
Net income before
cumulative effect
of a change in
accounting principle $204 $ - $ - $72 $276
Cumulative effect of
a change in
accounting principle,
net of tax - - - - -
Net income $204 $ - $ - $72 $276
Preferred stock
dividends 22 - - - 22
Net income available
to common shareholders $182 $ - $ - $72 $254
Diluted earnings
per common share:
Earnings available to
common shareholders
before cumulative
effect of a change
in accounting
principle $ 0.12 $0.17
Cumulative effect of
a change in
accounting principle,
net of tax - -
Diluted earnings
per common share $ 0.12 $0.17
Average common
shares outstanding
-diluted 1,497 1,497
SCHERING-PLOUGH CORPORATION
Reconciliation from Reported Net (Loss)/Income Available to Common
Shareholders and Reported Diluted (Loss)/Earnings Per Common Share to As
Reconciled Amounts for Net (Loss)/Income
Available to Common Shareholders and Diluted (Loss)/Earnings per Common
Share (unaudited)
(Amounts in Millions, except per share figures)
Twelve months ended December 31, 2007
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $12,690 $ - $ - $ - $12,690
Cost of sales 4,405 (326) - - 4,079
Selling, general
and administrative 5,468 - - - 5,468
Research and
development 2,926 - - (197) 2,729
Acquired in-process
research and
development 3,754 (3,754) - - -
Other (income)/
expense, net (683) - 537 - (146)
Special and
acquisition
related charges 84 - (84) - -
Equity income (2,049) - - - (2,049)
(Loss)/income
before income taxes (1,215) 4,080 (453) 197 2,609
Income tax expense 258 89 2 1 350
Net (loss)/income
before cumulative
effect of a change
in accounting
principle $(1,473) $3,991 $(455) $196 $2,259
Cumulative effect
of a change in
accounting principle,
net of tax - - - - -
Net (loss)/income $(1,473) $3,991 $(455) $196 $2,259
Preferred stock
dividends 118 - - - 118
Net (loss)/income
available to
common
shareholders $(1,591) $3,991 $(455) $196 $2,141
Diluted (loss)/
earnings per
common share:
(Loss)/earnings
available to
common shareholders
before cumulative
effect of a change
in accounting
principle $ (1.04) $1.37
Cumulative effect
of a change in
accounting principle,
net of tax - -
Diluted (loss)/
earnings per
common share $ (1.04) $1.37
Average common
shares outstanding
-diluted 1,536 1,607
SCHERING-PLOUGH CORPORATION
Reconciliation from Reported Net Income Available to Common
Shareholders and Reported Diluted Earnings Per Common Share to As
Reconciled Amounts for Net Income
Available to Common Shareholders and Diluted Earnings per Common Share
(unaudited)
(Amounts in Millions, except per share figures)
Twelve months ended December 31, 2006
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $ 10,594 $ - $ - $ - $10,594
Cost of sales 3,697 - - (146)
3,551
Selling, general
and administrative 4,718 - - - 4,718
Research and
development 2,188 - - (15) 2,173
Acquired in-process
research and
development - - - - -
Other income, net (135) - - - (135)
Special and
acquisition
related charges 102 - - (102) -
Equity income (1,459) - - - (1,459)
Income before
income taxes 1,483 - - 263 1,746
Income tax expense 362 - - - 362
Net income before
cumulative effect
of a change in
accounting
principle $1,121 $ - $ - $263 $ 1,384
Cumulative effect
of a change in
accounting principle,
net of tax (22) - - 22 -
Net income $1,143 $ - $ - $241 $ 1,384
Preferred stock
dividends 86 - - - 86
Net income available
to common
shareholders $1,057 $ - $ - $241 $1,298
Diluted earnings
per common share:
Earnings available
to common shareholders
before cumulative
effect of a change
in accounting
principle $0.69 $0.87
Cumulative effect
of a change in
accounting principle,
net of tax 0.02 -
Diluted earnings
per common share $0.71 $0.87
Average common
shares outstanding
-diluted 1,491 1,491
SCHERING-PLOUGH CORPORATION
Reconciliation from Reported Net (Loss)/Income Available to Common
Shareholders and Reported Diluted (Loss)/Earnings Per Common Share to As
Reconciled Amounts for Net (Loss)/Income
Available to Common Shareholders and Diluted (Loss)/Earnings per Common
Share (unaudited)
"As Reconciled" amounts related to Net (loss)/income available to common
shareholders and diluted (loss)/earnings per common share reflect the
following adjustments:
(Amounts in Millions)
Fourth Quarter Twelve Months
2007 2006 2007 2006
Purchase accounting
adjustments:
Amortization of intangibles
in connection with the
acquisition of Organon
BioSciences (a) $65 $- $65 $-
Depreciation related to
the fair value adjustment
of fixed assets related
to the acquisition of
Organon BioSciences (a) 3 - 3 -
Charge related to the
fair value adjustment
to inventory related
to the acquisition of
Organon BioSciences (a) 258 - 258 -
Acquired IPR&D related
to the acquisition of
Organon BioSciences (b) 3,754 - 3,754 -
Total purchase accounting
adjustments, pre-tax 4,080 - 4,080 -
Income tax benefit 89 - 89 -
Total purchase
accounting
adjustments $ 3,991 $- $ 3,991 $-
Acquisition-related items:
Acquisition-related
(gains)/losses on
currency-related and
interest-related items (c) $ (255) $- $ (537) $-
Integration-related
activities (d) 52 - 84 -
Total acquisition-related
items, pre-tax (203) - (453) -
Income tax benefit 2 - 2 -
Total acquisition-
related items $ (205) $- $ (455) $-
Other specified items:
Manufacturing changes
announced June 1, 2006 (e) $- $57 $- $ 248
Upfront R&D payments (b) 21 15 197 15
Change in accounting
principle (f) - - - (22)
Total other specified
items, pre-tax 21 72 197 241
Income tax benefit 1 - 1 -
Total other
specified items $20 $72 $196 $241
Total purchase
accounting adjustments,
acquisition-related
items and other
specified items $ 3,806 $72 $3,732 $241
(a) Included in cost of sales
(b) Included in research and development
(c) Included in other (income)/expense, net
(d) Included in special and acquisition-related charges
(e) Included in cost of sales and special and acquisition-related charges
(f) Included in cumulative effect in change in accounting principle, net
SCHERING-PLOUGH CORPORATION
Report for the period ended December 31 (unaudited):
GAAP Net Sales by Key Product
(Dollars in millions) Fourth Quarter Full Year
2007 2006 % 2007 2006 %
GLOBAL
PHARMACEUTICALS a/ $2,963 $2,211 34% $10,173 $8,561 19%
REMICADE 455 337 35% 1,648 1,240 33%
NASONEX 271 253 7% 1,092 944 16%
PEGINTRON 239 208 15% 911 837 9%
TEMODAR 234 189 23% 861 703 22%
CLARINEX /
AERIUS 174 164 6% 799 722 11%
CLARITIN RX 93 78 19% 391 356 10%
AVELOX 115 103 12% 384 304 26%
INTEGRILIN 91 85 7% 332 329 1%
REBETOL 71 75 (6%) 277 311 (11%)
CAELYX 66 49 33% 257 206 25%
INTRON A 57 57 - 233 237 (2%)
SUBUTEX /
SUBOXONE 57 51 11% 220 203 8%
PROVENTIL /
ALBUTEROL CFC 41 55 (25%) 207 203 2%
ASMANEX 41 36 16% 162 103 57%
ELOCON 37 33 10% 156 141 11%
FORADIL 25 28 (11%) 102 94 8%
NOXAFIL 29 10 N/M 89 19 N/M
FOLLISTIM c/ 57 - N/M 57 - N/M
NUVARING c/ 45 - N/M 45 - N/M
REMERON c/ 33 - N/M 33 - N/M
ZEMURON c/ 25 - N/M 25 - N/M
LIVIAL c/ 24 - N/M 24 - N/M
CERAZETTE c/ 20 - N/M 20 - N/M
MARVELON c/ 20 - N/M 20 - N/M
MERCILON c/ 18 - N/M 18 - N/M
IMPLANON c/ 15 - N/M 15 - N/M
Other
Pharmaceuticals 610 400 53% 1,795 1,609 12%
CONSUMER HEALTH CARE 254 205 24% 1,266 1,123 13%
OTC 161 118 37% 682 558 22%
OTC CLARITIN 94 72 30% 462 390 18%
Foot Care 74 73 1% 345 343 1%
Sun Care 19 14 38% 239 222 8%
ANIMAL HEALTH b/ 507 234 117% 1,251 910 37%
CONSOLIDATED GAAP
NET SALES $3,724 $2,650 41% $12,690 $10,594 20%
a/ Global Pharmaceuticals net sales for both the three and twelve months
ended December 31, 2007, include $409 million from Organon, the human
health business of Organon BioSciences. Sales of Organon are reflected
as of the closing date of the acquisition on November 19, 2007 through
year-end.
b/ Animal Health net sales for both the three and twelve months ended
December 31, 2007, include $217 million from Intervet, the animal
health business of Organon BioSciences. Sales of Intervet are
reflected as of the closing date of the acquisition on November 19,
2007 through year-end.
c/ Products acquired in OBS acquisition reflect net sales for the period
from November 19, 2007 through year-end.
NOTE: Additional information about U.S. and international sales for
specific products is available by calling the company or visiting
the Investor Relations Web site at http://ir.schering-plough.com.
SCHERING-PLOUGH CORPORATION
Reconciliation of Non-U.S. GAAP Financial Measures
Adjusted net sales, defined as net sales plus an assumed 50 percent of
global cholesterol joint venture net sales.
Three months ended December 31
(Dollars in millions) (unaudited)
2007 2006 %
Net sales, as reported a/ $3,724 $2,650 41%
50 percent of cholesterol
joint venture net sales b/ 722 541 33%
Adjusted net sales b/ $4,446 $3,191 39%
Twelve months ended December 31
(Dollars in millions) (unaudited)
2007 2006 %
Net sales, as reported a/ $12,690 $10,594 20%
50 percent of cholesterol
joint venture net sales b/ 2,559 1,915 34%
Adjusted net sales $15,249 $12,509 22%
a/ Net sales for the three and twelve months ended December 31, 2007, both
include $626 million recorded as a result of the Organon BioSciences
acquisition on November 19, 2007 through year-end.
b/ Total net sales of the cholesterol joint venture for the three months
ended December 31, 2007 and 2006 were $1.4 billion and $1.1 billion,
respectively. Total net sales of the cholesterol joint venture for the
twelve months ended December 31, 2007 and 2006 were $5.1 billion and
$3.8 billion, respectively.
Schering-Plough net sales growth for the three and twelve months ended
December 31, 2007 reflects a favorable foreign exchange impact of 7% and
4%, respectively.
NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent
of global cholesterol joint venture net sales, is a non-U.S. GAAP
measure used by management in evaluating the performance of the
Schering-Plough's overall business. Schering-Plough believes that
this performance measure contributes to a more complete
understanding by investors of the overall results of the company.
Schering-Plough provides this information to supplement the
reader's understanding of the importance to the company of its
share of results from the operations of the cholesterol joint
venture. Net sales (excluding the cholesterol joint venture net
sales) is required to be presented under U.S. GAAP. The
cholesterol joint venture's net sales are included as a component
of income from operations in the calculation of Schering-Plough's
"Equity income." Net sales of the cholesterol joint venture do not
include net sales of cholesterol products in non-joint venture
territories.
SOURCE Schering-Plough Corporation
 back to top
Related links:
http://www.schering-plough.com
http://www.prnewswire.com/comp/777050.html /
CONTACT:
Media, Steve Galpin, Jr., +1-908-298-7415, or
Investors, Alex Kelly or Robyn Brown, +1-908-298-7436
|
