Broad-Based Performance and Robust Phase III Pipeline Validate Growth and
Diversification Strategy; OBS Acquisition Already Contributing to Results
KENILWORTH, N.J., July 21 /PRNewswire-FirstCall/ -- Schering-Plough
Corporation (NYSE: SGP) today reported financial results for the second
quarter of 2008.
"We are very pleased to see another quarter of strong performance and
broad-based growth for our company," said Fred Hassan, chairman and CEO.
"Through the Action Agenda we launched in 2003, we were determined to
diversify our company and to build a deep Phase III pipeline. Today, we are
succeeding on both fronts. Our Phase III pipeline is now the strongest in
our company's history, and the $16 billion acquisition of Organon
BioSciences in November 2007 has already met its accretion target for
2008." The company had estimated an accretion target of 10 cents per share
for the first full year of combined operations when the Organon BioSciences
(OBS) acquisition was announced in March 2007.
He noted that Schering-Plough's successful geographic diversification
strategy has resulted in strong sales growth -- and approximately 70
percent of sales in the 2008 second quarter -- being generated outside the
U.S. Adding business diversity are the Animal Health and Consumer Health
Care businesses, which in the quarter represented about 25 percent of sales
on a combined GAAP net sales basis. Said Hassan, "The combination of our
broad portfolio, robust R&D pipeline and geographic breadth positions us
well in this difficult environment."
For the 2008 second quarter, Schering-Plough reported net income
available to common shareholders of $398 million or 24 cents per common
share on a GAAP basis. Earnings per common share for the 2008 second
quarter would have been 45 cents on a reconciled basis, which excludes
purchase accounting adjustments, special and acquisition-related items, and
income from termination of a respiratory joint venture with Merck. For the
2007 second quarter, Schering-Plough reported net income available to
common shareholders of $517 million or 34 cents per common share on a GAAP
basis and 41 cents per common share on a reconciled basis.
GAAP net sales for the 2008 second quarter totaled $4.9 billion, up 55
percent as compared to the second quarter of 2007. Sales for the quarter
benefited from the inclusion of OBS net sales as well as a favorable impact
from foreign exchange. Net sales of the global cholesterol joint venture,
which include VYTORIN and ZETIA, totaled $1.1 billion in the 2008 second
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 2008
second quarter would have been $5.5 billion.
Regarding second quarter results, Hassan said, "While the overall U.S.
prescription market continues to get tougher, we achieved good sales growth
internationally, with strong results for REMICADE, NASONEX and TEMODAR."
Commenting on REMICADE, he said, "We were proud in 2006 to see this
life-changing medicine go past the $1 billion sales mark in our territories
-- and excited now to see it currently annualizing past the $2 billion
mark. As we look at the future of our company, we are counting on our
anti-inflammatory agents REMICADE and golimumab to be key assets and
contributors to our long-term performance."
On the cholesterol franchise, he said, "We remain confident in VYTORIN
and ZETIA and the ability of these medicines to help patients get to lower
LDL cholesterol goals." The company noted that VYTORIN has been shown to be
the most effective medicine for lowering LDL ("bad") cholesterol in
head-to-head clinical trials versus rosuvastatin, atorvastatin or
simvastatin alone, and to get more patients to goal at the usual starting
dose and across the dosing range.
Said Hassan: "As we go forward, we will continue taking decisive
actions to strengthen this company and pursue our basic strategy: grow the
top line, grow the pipeline, reduce costs and invest wisely." He expressed
confidence about the company's future, pointing to its robust Phase III
research pipeline and long exclusivity periods for key marketed products
that offer protection well into the next decade. He cited such Phase III
compounds as a thrombin receptor antagonist (TRA) for atherothrombosis;
boceprevir, a protease inhibitor for hepatitis C; and vicriviroc for HIV.
He also cited such nearer-term opportunities as:
-- Golimumab, a subcutaneous treatment for inflammatory diseases, filed
for once-monthly dosing for three arthritic indications in the EU;
-- Sugammadex, an exciting agent that may change the practice of
anesthesia, currently under regulatory review in the U.S. (unanimous
positive advisory committee recommendation received), EU (positive
opinion issued) and Japan; and
-- Asenapine, an agent under review by the U.S. Food and Drug
Administration (FDA) for treatment of schizophrenia and acute bipolar
disorder.
PRODUCTIVITY TRANSFORMATION PROGRAM (PTP)
Hassan reviewed progress with the Productivity Transformation Program
(PTP), which also incorporates the ongoing integration of OBS. PTP was
launched in April 2008.
"Thanks to the hard work of the people of the newly combined
Schering-Plough, we are successfully integrating the acquired OBS units
while continuing to advance our R&D pipeline and achieve impressive savings
via our PTP actions," said Hassan.
"PTP is more than just about cutting costs. Our aim is to streamline
operations, make optimal use of our resources, and retain the strength and
flexibility to capture and invest in new business and pipeline
opportunities."
PTP is expected to realize savings of about 10 percent or $1.5 billion
of the company's full-year 2007 cost base (including OBS) by the end of
2012, with $1.25 billion in savings targeted to be accomplished by 2010.
The $1.5 billion target includes $500 million of previously announced
integration synergy targets from the OBS acquisition. The company is on
track to achieve these savings targets.
Second Quarter 2008 Results
For the 2008 second quarter, Schering-Plough reported net income
available to common shareholders of $398 million or 24 cents per common
share on a GAAP basis. Earnings per common share for the 2008 second
quarter would have been 45 cents on net income of $731 million on a
reconciled basis, which excludes purchase accounting adjustments, special
and acquisition-related items, and $64 million of income from termination
of a respiratory joint venture with Merck. For the 2007 second quarter,
Schering-Plough reported net income available to common shareholders of
$517 million or 34 cents per common share on a GAAP basis and 41 cents per
common share on a reconciled basis.
GAAP net sales for the 2008 second quarter totaled $4.9 billion,
including $1.4 billion as a result of the OBS acquisition. The overall
sales increase includes the impact of the OBS net sales and an estimated
favorable impact of 7.6 percent from foreign exchange on stand-alone
Schering-Plough sales.
Global cholesterol joint venture net sales, which include VYTORIN and
ZETIA, totaled $1.1 billion, a decrease of 9 percent when compared to the
second quarter of 2007. 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 2008 second quarter would have been $5.5 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 $493 million in the 2008
second quarter, as compared to $490 million in the second quarter of 2007.
Included in second quarter 2008 GAAP equity income is $64 million of income
related to the termination of the respiratory joint venture.
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 2008 second quarter totaled
$3.7 billion. Included in the second quarter of 2008 are $921 million in
net sales related to Organon, the OBS human health business acquired in
2007.
Sales of REMICADE increased 41 percent to $557 million in the second
quarter of 2008 due to continued market growth, expanded use and a
favorable impact from foreign exchange. 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 6 percent to $311 million versus the 2007 period, due to increased
sales in international markets, partially offset by a decline in U.S.
sales.
Sales of TEMODAR, a treatment for certain types of brain tumors, grew
16 percent to $251 million due to increased demand in most geographic
regions.
Sales of PEGINTRON for hepatitis C decreased 2 percent to $229 million
in the 2008 second quarter.
Sales in the women's health franchise, including fertility and
contraception products, grew to exceed $500 million in the 2008 second
quarter. Franchise sales in the 2008 second quarter were led by
FOLLISTIM/PUREGON, a fertility treatment, with sales of $162 million, and
NUVARING, a contraceptive product, with sales of $116 million. Both
products were obtained as part of the OBS acquisition.
Global sales of CLARINEX, a nonsedating antihistamine, in the second
quarter of 2008 were $240 million, down 4 percent as compared to sales of
$250 million in the second quarter of 2007, primarily due to lower sales in
the U.S.
International sales of prescription CLARITIN were $111 million in the
second quarter of 2008, an 8 percent increase compared to sales of $102
million in the second quarter of 2007 due primarily to foreign exchange.
Sales of AVELOX, an antibiotic marketed in the U.S., were down 12
percent to $67 million primarily reflecting a weaker respiratory tract
infection season.
Animal Health sales totaled $818 million in the 2008 second quarter.
Included in the second quarter of 2008 were net sales of $526 million
related to products from the acquired OBS animal health business. Sales
benefited from solid growth in all geographic regions, including in Europe
where the company recently launched a vaccine for bluetongue disease
(Bovilis BTV8). Bluetongue disease is a devastating disease of cattle and
sheep caused by a virus which was first identified in Northern Europe in
2006. The newly combined animal health organization also achieved sales
growth in products for cattle and poultry. Animal Health sales also
benefited from foreign exchange.
Consumer Health Care sales were $401 million in the 2008 second
quarter, up 2 percent versus the 2007 period. The increase was mainly due
to higher sales of MIRALAX, launched in February 2007, partially offset by
lower sales of OTC CLARITIN, due to the timing of shipments, a less severe
allergy season and increased competition.
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 61.2 percent for the
2008 second quarter as compared to 69.3 percent in the 2007 period. The
gross margin percentage excluding purchase accounting adjustments was 68.4
percent in the second quarter of 2008.
SG&A expenses were $1.9 billion in the second quarter of 2008 versus
$1.4 billion in the prior-year period. SG&A in the second quarter of 2008
increased primarily due to the impact of the inclusion of SG&A expenses
from OBS and foreign exchange.
Research and development spending for the 2008 second quarter increased
to $906 million compared to $696 million in the second quarter of 2007.
Included in R&D spending in the second quarter of 2007 was $60 million
related to an upfront payment made for licensing transactions. 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.
Recent Developments
The company also offered the following summary of recent significant
developments that have previously been announced, including:
-- Announced the purchase by Chairman/CEO Fred Hassan of just over
$2 million of Schering-Plough common stock. (Announced April 24)
-- Schering-Plough/Merck Pharmaceuticals announced receipt of a
not-approvable letter from the U.S. FDA for a fixed combination of
loratadine and montelukast. (Announced April 25)
-- Reported results from an interim analysis of an ongoing Phase II study
of boceprevir, an investigational oral hepatitis C protease inhibitor,
at the European Association for the Study of the Liver (EASL).
(Announced April 26)
-- Presented final results of the IDEAL study, the first large,
randomized, clinical study comparing the leading therapies for chronic
hepatitis C, at EASL. (Announced April 26)
-- Launched bluetongue vaccine (Bovilis BTV8) in certain European
countries. (Announced April 30)
-- Presented an overview of asenapine clinical trials from the Olympia
program at the American Psychiatric Association. (Announced May 8)
-- Announced the initiation of two large Phase III studies of boceprevir
in patients chronically infected with genotype 1 HCV. (Announced May
21)
-- Gained positive opinion of sugammadex by the Committee for Medicinal
Products for Human Use of the European Medicines Agency. (Announced
June 2)
-- Presented data showing that sugammadex reversed moderate rocuronium-
and vecuronium-induced muscle relaxation considerably faster than the
current standard of care at the European Society of Anesthesiology
meeting. (Announced June 2)
-- Schering-Plough/Merck Pharmaceuticals announced termination of its
respiratory joint venture. (Announced June 27)
-- Closed transaction with Virbac to divest certain animal health
products. (Announced July 2)
-- Announced that corifollitropin alfa, an experimental, sustained
follicle stimulant, met its primary endpoints in the Phase III ENGAGE
trial. (Announced July 8)
-- Announced publication in The Lancet of Phase III trial results of long-
term treatment of stage III melanoma with pegylated interferon alfa-2b.
(Announced July 11)
-- Received marketing approval in Japan for NASONEX Nasal Spray for the
treatment of allergic rhinitis in adult patients. (Announced July 17)
Second Quarter 2008 Conference Call and Webcast
Schering-Plough will conduct a conference call today at 4:45 p.m. (EDT)
to review the 2008 second quarter results. To listen live to the call, dial
1-877-565-9664 or 1-706-634-5003 and enter conference ID #50992673. A
replay of the call will be available beginning later on July 21 through 5
p.m. on July 28. To listen to the replay, dial 1-800-642-1687 or
1-706-645-9291 and enter the conference ID #50992673. 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 July 21 through 5
p.m. on Aug. 20.
DISCLOSURE NOTICE: The information in this press release, the comments
of Schering-Plough officers during the earnings teleconference/webcast on
July 21, 2008, beginning at 4:45 p.m. (EDT), 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 level of savings
achieved from the Productivity Transformation Program, including the
ongoing integration of OBS; 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 products and trending in therapeutic markets, including 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 1A, "Risk Factors" in the company's first quarter 2008 10-Q.
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. Schering-Plough's vision is to "Earn Trust, Every Day"
with the doctors, patients, customers and other stakeholders served by its
colleagues 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 second quarter ended June 30 (unaudited):
(Amounts in millions, except per share figures)
Second Quarter Six Months
2008 2007 2008 2007
Net sales 1/ $4,921 $3,178 $9,577 $6,153
Cost of sales 2/ 1,908 977 4,044 1,913
Selling, general and administrative 1,870 1,358 3,547 2,572
Research and development 3/ 906 696 1,786 1,403
Other expense/(income), net 4/ 134 (16) 229 (62)
Special and acquisition-related
charges 5/ 94 11 117 12
Equity income 6/ (493) (490) (1,010) (978)
Income before income taxes 502 642 864 1,293
Income tax expense 66 103 138 190
Net income $436 $539 $726 $1,103
Preferred stock dividends 38 22 75 43
Net income available to common
shareholders $398 $517 $651 $1,060
Diluted earnings per common share $0.24 $0.34 $0.40 $0.70
Average shares outstanding - diluted 1,632 1,587 1,635 1,579
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 six months ended June 30, 2008, include
sales of $1.4 billion and $2.8 billion, respectively, from Organon
BioSciences (OBS) which was acquired on November 19, 2007.
2/ Cost of sales for the three and six months ended June 30, 2008
include purchase accounting adjustments of $354 million and $1.0 billion,
respectively, related to the acquisition of OBS.
3/ Research and development for the three and six months ended June 30,
2007 include $60 million and $156 million, respectively, related to upfront
R&D payments.
4/ Included in other expense/(income), net for the three and six months
ended June 30, 2007 were mark-to-market losses of $35 million and $31
million, respectively, related to a Euro denominated currency option
related to the acquisition of OBS.
5/ Special and acquisition-related charges relate to the Productivity
Transformation Program (PTP) which also incorporates the ongoing
integration of OBS. For the three and six months ended June 30, 2008 these
charges were $94 million ($77 million for severance costs and $17 million
for integration- related costs) and $117 million, respectively. Special and
acquisition- related charges for the three and six months ended June 30,
2007 was $11 million and $12 million, respectively.
6/ Included in Equity income is $64 million of income related to the
termination of a respiratory joint venture with Merck.
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
(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 income available to common
shareholders and Diluted earnings per common share. "As Reconciled" amounts
exclude the effects of purchase accounting adjustments, special and
acquisition-related items and other specified items.
"As Reconciled" amounts related to Net income available to common
shareholders and Diluted 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, special and acquisition-related items and other specified
items have been excluded from Net income available to common shareholders
and Diluted 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 income
available to common shareholders and Diluted earnings per common share, as
reported, are required to be presented under U.S. GAAP.
Three months ended June 30, 2008
(unaudited)
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
Net sales $4,921 $ - $ - $ - $4,921
Cost of sales 1,908 (354) - - 1,554
Selling,
general and
administrative 1,870 (1) - - 1,869
Research and
development 906 (2) - - 904
Other expense/
(income), net 134 - - - 134
Special and
acquisition-
related charges 94 - (94) - -
Equity income (493) - - 64 (429)
Income before
income taxes 502 357 94 (64) 889
Income tax
expense/(benefit) 66 (47) (7) - 120
Net income $436 $310 $87 $(64) $769
Preferred stock
dividends 38 - - - 38
Net income
available to
common
shareholders $398 $310 $87 $(64) $731
Diluted earnings
per common share $0.24 $0.45
Average shares
outstanding-
diluted 1,632 1,632
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
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
(Amounts in Millions, except per share figures)
Three months ended June 30, 2007
(unaudited)
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
Net sales $3,178 $ - $ - $ - $3,178
Cost of sales 977 - - - 977
Selling, general
and administrative 1,358 - - - 1,358
Research and
development 696 - - (60) 636
Other expense/
(income), net (16) - (35) - (51)
Special and
acquisition-
related charges 11 - (11) - -
Equity income (490) - - - (490)
Income before
income taxes 642 - 46 60 748
Income tax expense 103 - - - 103
Net income $539 $ - $46 $60 $645
Preferred stock
dividends 22 - - - 22
Net income available
to common
shareholders $517 $ - $46 $60 $623
Diluted earnings
per common share $0.34 $0.41
Average shares
outstanding-diluted 1,587 1,587
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
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
(Amounts in Millions, except per share figures)
Six months ended June 30, 2008
(unaudited)
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
Net sales $9,577 $ - $ - $ - $9,577
Cost of sales 4,044 (1,042) - - 3,002
Selling, general
and administrative 3,547 (2) - - 3,545
Research and
development 1,786 (4) - - 1,782
Other expense/
(income), net 229 - - 17 246
Special and
acquisition-
related charges 117 - (117) - -
Equity income (1,010) - - 64 (946)
Income before
income taxes 864 1,048 117 (81) 1,948
Income tax
expense/(benefit) 138 (138) (9) 5 280
Net income $726 $910 $108 $(76) $1,668
Preferred stock
dividends 75 - - - 75
Net income available
to common
shareholders $651 $910 $108 $(76) $1,593
Diluted earnings
per common share $0.40 $0.97
Average shares
outstanding-
diluted 1,635 1,635
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
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
(Amounts in Millions, except per share figures)
Six months ended June 30, 2007
(unaudited)
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
Net sales $6,153 $ - $ - $ - $6,153
Cost of sales 1,913 - - -
1,913
Selling, general
and administrative 2,572 - - - 2,572
Research and
development 1,403 - - (156) 1,247
Other expense/
(income), net (62) - (31) - (93)
Special and
acquisition-
related charges 12 - (12) - -
Equity income (978) - - - (978)
Income before
income taxes 1,293 - 43 156 1,492
Income tax
expense/(benefit) 190 - - - 190
Net income $1,103 $ - $43 $156 $1,302
Preferred stock
dividends 43 - - - 43
Net income available
to common
shareholders $1,060 $ - $43 $156 $1,259
Diluted earnings
per common share $0.70 $0.82
Average shares
outstanding-
diluted 1,579 1,579
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
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
(Amounts in Millions)
"As Reconciled" amounts related to Net income available to common
shareholders and Diluted earnings per common share reflect the following
adjustments:
Second Quarter Six Months
(unaudited) (unaudited)
2008 2007 2008 2007
Purchase accounting adjustments:
Amortization of intangibles in
connection with the acquisition
of Organon BioSciences (a) $138 $- $270 $-
Depreciation related to the fair
value adjustment of fixed assets
related to the acquisition of
Organon BioSciences (b) 8 - 16 -
Charge related to the fair value
adjustment to inventory related
to the acquisition of
Organon BioSciences (a) 211 - 762 -
Total purchase accounting
adjustments, pre-tax 357 - 1,048 -
Income tax benefit 47 - 138 -
Total purchase accounting adjustments $310 $ - $910 $ -
Special and acquisition-related items:
Special and integration-related
activities (e) $94 11 $117 $12
Acquisition-related gains on
currency-related items (d) - $35 - 31
Total special and acquisition-
related items, pre-tax 94 46 117 43
Income tax benefit 7 - 9 -
Total special and acquisition-related
items $87 $46 $108 $43
Other specified items:
Income from respiratory JV
termination (f) $(64) $- $(64) $-
(Gain) on sale of manufacturing
plant (d) - - (17) -
Upfront R&D payments (c) - 60 - 156
Total other specified items, pre-tax (64) 60 (81) 156
Income tax expense - - (5) -
Total other specified items $(64) $60 $(76) $156
Total purchase accounting
adjustments, special and
acquisition-related items and
other specified items $333 $106 $942 $199
(a) Included in Cost of sales
(b) Included in Cost of sales, Selling, general and administrative and
Research and development
(c) Included in Research and development
(d) Included in Other expense/(income), net
(e) Included in Special and acquisition-related charges
(f) Included in Equity income
SCHERING-PLOUGH CORPORATION
Report for the period ended June 30 (unaudited):
GAAP Net Sales by Key Product
(Dollars in millions)
Second Quarter Six Months
2008 2007 % 2008 2007 %
HUMAN PRESCRIPTION
PHARMACEUTICALS a/ $3,702 $2,520 47% $7,259 $4,918 48%
REMICADE 557 394 41% 1,064 767 39%
NASONEX 311 295 6% 618 579 7%
TEMODAR 251 216 16% 487 412 18%
CLARINEX / AERIUS 240 250 (4%) 454 455 -
PEGINTRON 229 234 (2%) 454 451 1%
FOLLISTIM/PUREGON c/ 162 - - 308 - -
NUVARING c/ 116 - - 212 - -
CLARITIN RX 111 102 8% 239 214 11%
INTEGRILIN 78 78 - 152 163 (7%)
CAELYX 78 65 20% 152 127 20%
REBETOL 70 74 (5%) 130 146 (11%)
ZEMURON c/ 67 - - 130 - -
AVELOX 67 75 (12%) 209 191 10%
SUBUTEX / SUBOXONE 62 52 18% 115 108 7%
REMERON c/ 61 - - 129 - -
INTRON A 61 55 10% 116 115 1%
LIVIAL c/ 50 - - 95 - -
CERAZETTE c/ 49 - - 93 - -
ASMANEX 48 42 16% 91 85 7%
MERCILON c/ 47 - - 90 - -
ELOCON 47 43 10% 92 79 16%
IMPLANON c/ 44 - - 82 - -
MARVELON c/ 40 - - 77 - -
PROVENTIL / ALBUTEROL CFC 38 61 (37%) 89 114 (22%)
NOXAFIL 38 20 91% 72 36 101%
FORADIL 25 26 (1%) 51 52 (2%)
Other Pharmaceuticals 755 438 72% 1,458 824 77%
ANIMAL HEALTH b/ 818 264 210% 1,540 496 211%
CONSUMER HEALTH CARE 401 394 2% 778 739 5%
OTC 181 182 (1%) 389 359 8%
OTC CLARITIN 120 137 (12%) 258 264 (2%)
MiraLAX 28 6 N/M 54 14 N/M
Other OTC 33 39 (16%) 77 81 (5%)
Foot Care 105 102 3% 190 180 5%
Sun Care 115 110 5% 199 200 (1%)
CONSOLIDATED GAAP
NET SALES $4,921 $3,178 55% $9,577 $6,153 56%
a/ Human Prescription Pharmaceuticals Net sales for the three and six
months ended June 30, 2008 include net sales of $921 million and $1.8
billion, respectively, from the human health segment of Organon BioSciences
(OBS), which was acquired on November 19, 2007.
b/ Animal Health Net sales for the three and six months ended June 30,
2008 include net sales of $526 million and $980 million, respectively, from
the animal health segment of OBS, which was acquired on November 19, 2007.
c/ Products acquired in OBS acquisition on November 19, 2007.
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 June 30,
(Dollars in millions) (unaudited)
2008 2007 %
Net sales, as reported a/ $4,921 $3,178 55%
50 percent of cholesterol joint venture
net sales b/ 566 624 (9%)
Adjusted net sales b/ $5,487 $3,802 44%
Six months ended June 30,
(Dollars in millions) (unaudited)
2008 2007 %
Net sales, as reported a/ $9,577 $6,153 56%
50 percent of cholesterol joint venture
net sales b/ 1,174 1,199 (2%)
Adjusted net sales b/ $10,751 $7,352 46%
a/ Net sales for the three and six months ended June 30, 2008 include
sales from Organon BioSciences (OBS) which was acquired on November 19,
2007.
b/ Total Net sales of the cholesterol joint venture for the three
months ended June 30, 2008 and 2007 were $1.1 billion and $1.2 billion,
respectively. Total Net sales of the cholesterol joint venture for the six
months ended June 30, 2008 and 2007 were $2.3 billion and $2.4 billion,
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://ir.schering-plough.com
http://www.prnewswire.com/comp/777050.html /
CONTACT:
Media Contact, Steve Galpin, Jr.,
+1-908-298-7415, or Investor Contacts, Alex Kelly, Janet M.
Barth, or Joe Romanelli, +1-908-298-7436, all of Schering-Plough
Corporation
|
