Strong Financial Performance Driven By Strength and Diversity on Many
Fronts; Productivity Transformation Taking Hold
KENILWORTH, N.J., Oct. 21 /PRNewswire-FirstCall/ -- Schering-Plough
Corporation (NYSE: SGP) today reported financial results for the third
quarter of 2008.
"Our performance this quarter again demonstrates the strength of our
long-term strategies and our ability to execute on them," said Fred Hassan,
chairman and CEO. "Despite a tough environment and challenges to the U.S.
cholesterol joint venture products, we delivered strong sales and earnings
while investing in R&D and paying down debt. Thanks to the new strength and
diversity we have built on many fronts, we have continued to grow our top
line, grow our pipeline, reduce costs and invest wisely."
Hassan added, "Now with almost one year of experience, we are seeing
that the acquisition of Organon BioSciences (OBS) is resulting in a
powerful combination. This integration is creating new product strength,
new geographic strength, new strength with our customers and new R&D
strength - including a late-stage pipeline that is now one of the strongest
in our industry."
For the 2008 third quarter, Schering-Plough reported net income
available to common shareholders of $551 million or 34 cents per common
share on a GAAP basis. Earnings per common share for the 2008 third quarter
would have been 39 cents on a reconciled basis, which excludes purchase
accounting adjustments, special and acquisition-related items, a $160
million pre-tax gain on previously announced divestitures of certain animal
health products and $19 million of income from the termination of a
respiratory joint venture with Merck. For the 2007 third quarter,
Schering-Plough reported net income available to common shareholders of
$713 million or 45 cents per common share on a GAAP basis and 28 cents per
common share on a reconciled basis.
GAAP net sales for the 2008 third quarter totaled $4.6 billion, up 63
percent as compared to the third quarter of 2007. Sales for the quarter
benefited from the inclusion of net sales of products from OBS 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 third quarter, down 15 percent, with lower U.S. sales partly offset by
growth in international markets. 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 third quarter would have been $5.1 billion.
Commenting on third quarter results, Hassan said, "While the U.S.
market remained difficult, we continued to take advantage of our growing
international presence and opportunities." Approximately 70 percent of
Schering-Plough's 2008 third quarter GAAP net sales were generated outside
the United States. "Our concerted effort over the last five years to invest
in newer markets - such as Brazil, China, Russia and countries in Central
and Eastern Europe - is paying off," Hassan added, "with dynamic sales in
these markets contributing to the overall growth rate of our company." The
company noted that sales in these newer markets contributed about 12
percent of the company's overall net sales, more than double the percentage
contributed by those markets in 2005.
"Importantly, our company continued to generate good cash flow in the
third quarter, paid off additional debt and still increased cash balances,"
Hassan noted.
As a result of actions during the last five years, Hassan said that the
company is now "particularly well positioned" for the following reasons:
-- Broad diversification in geographic markets and businesses, with the
consumer and animal health segments together generating about 23 percent
of GAAP net sales;
-- Relatively long period of expected market exclusivity for key
prescription products, affording protection well into the next decade;
-- Robust research pipeline, with 10 projects in Phase III;
-- Near-term opportunities, including the biologic golimumab, filed in the
EU; sugammadex, now being launched as BRIDION in EU countries; and
asenapine, under U.S. regulatory review; and
-- Sound financial management, with rigorous cost controls in place to
reduce costs and improve efficiencies and productivity.
The Productivity Transformation Program (PTP), announced in April 2008,
is expected to realize savings of $1.5 billion 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 making steady
progress toward achieving these savings targets.
Third Quarter 2008 Results
For the 2008 third quarter, Schering-Plough reported net income
available to common shareholders of $551 million or 34 cents per common
share on a GAAP basis. Earnings per common share for the 2008 third quarter
would have been 39 cents on net income of $639 million on a reconciled
basis, which excludes purchase accounting adjustments, special and
acquisition-related items, a $160 million pre-tax gain from the previously
announced divestitures of certain animal health products and $19 million of
income from the termination of a respiratory joint venture with Merck. For
the 2007 third quarter, Schering-Plough reported net income available to
common shareholders of $713 million or 45 cents per common share on a GAAP
basis and 28 cents per common share on a reconciled basis, which excludes
acquisition-related items and an upfront R&D payment.
GAAP net sales for the 2008 third quarter totaled $4.6 billion,
including $1.4 billion in sales of products from the OBS acquisition.
Excluding sales from products from OBS, net sales of Schering-Plough's
stand-alone business reflected an estimated favorable impact of 6 percent
from foreign exchange during the quarter.
Global cholesterol joint venture net sales, which include VYTORIN and
ZETIA, totaled $1.1 billion, a decrease of 15 percent when compared to the
third 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 third quarter would have been $5.1 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 $434 million in the 2008 third
quarter, as compared to $506 million in the third quarter of 2007. Included
in third quarter 2008 GAAP equity income is $19 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 third quarter totaled $3.5
billion. Included in the third quarter of 2008 are $896 million in net
sales of products from Organon, the OBS human health business acquired in
2007.
Sales of REMICADE increased 32 percent to $564 million in the third
quarter of 2008 benefiting from continued market growth, expanded
penetration and the favorable impact of 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.
Sales of TEMODAR, a treatment for certain types of brain tumors, grew
27 percent to $273 million, with higher sales in all geographic regions.
Global sales of NASONEX, an inhaled nasal corticosteroid for allergies,
rose 6 percent to $258 million versus the 2007 period, due to increased
sales in international markets, partially offset by a decline in U.S.
sales.
Sales of PEGINTRON for hepatitis C increased 6 percent to $235 million
in the 2008 third quarter, primarily due to favorable foreign exchange.
In the women's health franchise, sales for FOLLISTIM/PUREGON, a
fertility treatment, for the third quarter of 2008 were $142 million. Sales
of NUVARING, a contraceptive product, in the 2008 third quarter were $118
million. These women's health products were obtained as part of the OBS
acquisition.
Global sales of CLARINEX, a nonsedating antihistamine, in the third
quarter of 2008 were $176 million, an increase of 3 percent as compared to
the third quarter of 2007.
International sales of prescription CLARITIN were $87 million in the
third quarter of 2008, a 5 percent increase compared to sales of $83
million in the third quarter of 2007 due primarily to foreign exchange.
Animal Health sales totaled $759 million in the 2008 third quarter.
Included in the third quarter of 2008 were net sales of $503 million
related to products from the acquired OBS animal health business. Animal
Health sales benefited from growth in all geographic regions. In Europe,
the company recently launched a vaccine for bluetongue disease (Bovilis
BTV8), which has seen increasing market penetration. The company has also
had a successful recent launch of NORVAX Compact PD, a patented fish
vaccine. Animal Health sales also benefited from foreign exchange.
Consumer Health Care sales were $278 million in the 2008 third quarter,
up 2 percent versus the 2007 period. The increase was mainly due to higher
sales of OTC MIRALAX, launched in February 2007, partially offset by lower
sales of OTC CLARITIN and other over-the-counter (OTC) products.
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 62.0 percent for the
2008 third quarter as compared to 67.1 percent in the 2007 period. The
gross margin percentage excluding purchase accounting adjustments was 66.9
percent in the third quarter of 2008.
SG&A expenses were $1.7 billion in the third quarter of 2008 versus
$1.3 billion in the prior-year period. SG&A in the third quarter of 2008
increased primarily due to the impact of the inclusion of SG&A expenses
from OBS and foreign exchange, partially offset by PTP savings.
Research and development spending for the 2008 third quarter increased
to $893 million compared to $669 million in the third quarter of 2007.
Included in R&D spending in the third quarter of 2007 was $20 million
related to an upfront payment made for a licensing transaction. 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
global R&D pipeline.
Recent Developments
The company also offered the following summary of recent significant
developments that have previously been announced, including:
-- Gained European Commission (EC) approval of BRIDION (sugammadex)
injection, the first and only selective relaxant binding agent and the
first major pharmaceutical advance in the field of anesthesia in two
decades. (Announced July 29)
-- Received a "not-approvable" letter from the U.S. Food and Drug
Administration for sugammadex. (Announced August 1)
-- Reported top-line results from a planned interim analysis of a Phase II
study of boceprevir, an investigational oral hepatitis C protease
inhibitor. (Announced August 4)
-- Announced expansion of the company's presence in China and
establishment of Shanghai Schering-Plough Pharmaceutical Co. Ltd., as a
wholly owned operation based in Shanghai through the acquisition of
shares of former joint venture partners. (Announced August 12)
-- Began the European launch of BRIDION injection. (Announced September
10)
-- Closed a transaction with Pfizer Animal Health to divest to Pfizer
certain animal health products from selected franchises in the European
Economic Area as requested by the EC as part of clearing
Schering-Plough's acquisition of OBS. (Announced September 10)
-- Ranked No. 5 in the Top 20 list of Science magazine's annual online
Top Employer Survey. (Reported October 10)
-- Announced the transition of leadership of its Animal Health unit from
Ruurd Stolp, D.V.M., Ph.D., to Raul E. Kohan, who was previously Deputy
Head of the Animal Health unit. (Announced October 17)
Third Quarter 2008 Conference Call and Webcast
Schering-Plough will conduct a conference call today at 8 a.m. (EDT) to
review the 2008 third quarter results. To listen live to the call, dial
1-877-565-9664 or 1-706-634-5003 and enter conference ID # 64088992. A
replay of the call will be available beginning later on Oct. 21 through 5
p.m. on Oct. 28. To listen to the replay, dial 1-800-642-1687 or
1-706-645-9291 and enter the conference ID # 64088992. 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 Oct. 21 through 5
p.m. on Nov. 21.
DISCLOSURE NOTICE: The information in this press release, the comments
of Schering-Plough officers during the earnings teleconference/webcast on
Oct. 21, 2008, beginning at 8 a.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 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. 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 Third quarter ended September 30 (unaudited):
(Amounts in millions, except per share figures)
Third Quarter Nine Months
2008 2007 2008 2007
---- ---- ---- ----
Net sales 1/ $4,576 $2,812 $14,154 $8,965
Cost of sales 2/ 1,737 925 5,782 2,838
Selling, General and
administrative 1,660 1,262 5,208 3,833
Research and
development 3/ 893 669 2,679 2,071
Other expense/(income),
net 4/ (39) (390) 189 (451)
Special and acquisition-
related charges 5/. 101 20 218 32
Equity income 6/ (434) (506) (1,444) (1,483)
----- ----- ------- -------
Income before income
taxes 658 832 1,522 2,125
Income tax expense 69 82 207 272
-- -- --- ---
Net Income $589 $750 $1,315 $1,853
==== ==== ====== ======
Preferred stock
dividends 38 37 113 80
-- -- --- --
Net income available
to common
shareholders $551 $713 $1,202 $1,773
==== ==== ====== ======
Diluted Earnings per
common share
$0.34 $0.45 $0.74 $1.15
===== ===== ===== =====
Average shares outstanding
- diluted 1,636 1,622 1,635 1,596
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 nine months ended September 30, 2008,
include sales of $1.4 billion and $4.2 billion, respectively, from Organon
BioSciences (OBS) which was acquired on November 19, 2007.
2/ Cost of sales for the three and nine months ended September 30, 2008
include purchase accounting adjustments of $221 million and $1.3 billion,
respectively, related to the acquisition of OBS.
3/ Research and development for the three and nine months ended September
30, 2007 include $20 million and $176 million, respectively, related to
upfront R&D payments.
4/ Included in other expense/(income), net for the three and nine months
ended September 30, 2008 were $160 million related to the previously
announced divestiture of certain animal health products. Included in other
expense/(income), net for the three and nine months ended September 30,
2007 were mark-to-market gains of $314 million and $282 million,
respectively, related to Euro-denominated currency options 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 nine months ended September 30, 2008
these charges were $101 million ($93 million for severance costs and $8
million for integration-related costs) and $218 million, respectively.
Special and acquisition-related charges for the three and nine months
ended September 30, 2007 were $20 million and $32 million, respectively.
6/ Equity income for the three and nine months ended September 30, 2008
include $19 million and $83 million, respectively, 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 items 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 September 30, 2008
(unaudited)
-------------------------------------------------------
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
-------------------------------------------------------
Net sales $4,576 $- $- $- $4,576
Cost of sales 1,737 (221) - - 1,516
Selling, general
and administrative 1,660 (1) - - 1,659
Research and
development 893 (3) - - 890
Other expense/
(income), net (39) - - 160 121
Special and
acquisition-related
charges 101 - (101) - -
Equity income (434) - - 19 (415)
----- ---- ---- ---- -----
Income before
income taxes 658 225 101 (179) 805
Income tax
expense/(benefit) 69 (54) (16) 11 128
-- ---- ---- -- ---
Net income $589 $171 $85 $(168) $677
---- ---- --- ------ ----
Preferred stock
dividends 38 - - - 38
-- --- --- --- --
Net income
available to
common
shareholders $551 $171 $85 $(168) $639
==== ==== === ====== ====
Diluted earnings
per common share $0.34 $0.39
===== =====
Average shares
outstanding-
diluted 1,636 1,636
(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 September 30, 2007
(unaudited)
-------------------------------------------------------
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
-------------------------------------------------------
Net sales $2,812 $- $- $- $2,812
Cost of sales 925 - - - 925
Selling, general and
administrative 1,262 - - - 1,262
Research and
development 669 - - (20) 649
Other expense/
(income), net (390) - 314 - (76)
Special and
acquisition-related
charges 20 - (20) - -
Equity income (506) - - - (506)
----- ---- ---- ---- -----
Income before
Income taxes 832 - (294) 20 558
Income tax expense 82 - - - 82
-- ---- ---- ---- --
Net income $750 $- $(294) $20 $476
---- ---- ------ --- ----
Preferred stock
dividends 37 - - - 37
-- ---- ---- ---- --
Net income available
to common
shareholders $713 $- $(294) $20 $439
==== ==== ====== === ====
Diluted earnings per
common share $0.45 $0.28
===== =====
Average shares
outstanding-
diluted 1,622 1,622
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
(2) Diluted earnings per common share for the three month period ended
September 30, 2007 is calculated using a numerator of $731 million, which
is the arithmetic sum of net income available to common shareholders of
$713 million plus dividends of $18 million related to the 2004 preferred
stock which are dilutive, and a denominator of 1,622 which represents the
average diluted shares outstanding for the third quarter of 2007. The
2004 preferred stock was dilutive under accounting rules. The 2007
preferred stock was not dilutive for the three months ended September 30,
2007.
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)
Nine months ended September 30, 2008
(unaudited)
-------------------------------------------------------
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
-------------------------------------------------------
Net sales $14,154 $- $- $- $14,154
Cost of sales 5,782 (1,264) - - 4,518
Selling, general and
administrative 5,208 (3) - - 5,205
Research and
development 2,679 (7) - - 2,672
Other expense/
(income), net 189 - - 177 366
Special and
acquisition-related
charges 218 - (218) - -
Equity income (1,444) - - 83 (1,361)
------- ---- ---- -- -------
Income before
income taxes 1,522 1,274 218 (260) 2,754
Income tax
expense/(benefit) 207 (192) (25) 16 408
--- ----- ---- -- ---
Net income $1,315 $1,082 $193 $(244) $2,346
------ ------ ---- ------ ------
Preferred stock
dividends 113 - - - 113
--- ---- ---- ---- ---
Net income available
to common
shareholders $1,202 $1,082 $193 $(244) $2,233
====== ====== ==== ====== ======
Diluted earnings
per common
share $0.74 $1.37
===== =====
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)
Nine months ended September 30, 2007
(unaudited)
-------------------------------------------------------
Special and
Purchase Acquisition- Other As
As Accounting Related Specified Reconciled
Reported Adjustments Items Items (1)
-------------------------------------------------------Net sales $8,965 $- $- $- $8,965
Cost of sales 2,838 - - - 2,838
Selling, general and
administrative 3,833 - - - 3,833
Research and
development 2,071 - - (176) 1,895
Other expense/
(income), net (451) - 282 - (169)
Special and
acquisition-related
charges 32 - (32) - -
Equity income (1,483) - - - (1,483)
------- ---- ---- ---- -------
Income before
income taxes 2,125 - 250 176 2,051
Income tax
expense/(benefit) 272 - - - 272
--- ---- ---- ---- ---
Net income $1,853 $- $(250) $176 $1,779
------ ---- ------ ---- ------
Preferred stock
dividends 80 - - - 80
-- ---- ---- ---- --
Net income available
To common
shareholders $1,773 $- $(250) $176 $1,699
====== ===== ====== ==== ======
Diluted earnings
per common
share $1.15 $1.10
===== =====
Average shares
outstanding-
diluted 1,596 1,596
(1) "As Reconciled" to exclude purchase accounting adjustments, special
and acquisition-related items and other specified items.
(2) Diluted earnings per common share for the nine month period ended
September 30, 2007 is calculated using a numerator of $1.834 billion,
which is the arithmetic sum of net income available to common shareholders
of $1.773 billion plus dividends of $61 million related to the 2004
preferred stock, and a denominator of 1,596 which represents the average
diluted shares outstanding for the nine months ended September 30, 2007.
The 2004 preferred stock was dilutive under accounting rules. The 2007
preferred stock was not dilutive for the nine months ended September 30,
2007.
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:
Third Quarter Nine Months
(unaudited) (unaudited)
---------------- --------------
2008 2007 2008 2007
---- ---- ---- ----
Purchase accounting
adjustments:
-------------------
Amortization of
intangibles in
connection with the
acquisition of
Organon
BioSciences (a) $136 $- $407 $-
Depreciation related
to the fair value
adjustment of fixed
assets related to the
acquisition of Organon
BioSciences (b) 11 - 27 -
Charge related to the
fair value adjustment
to inventory related
to the acquisition of
Organon BioSciences (a) 78 - 840 -
-- ---- --- ----
Total Purchase accounting
adjustments, pre-tax 225 - 1,274 -
Income tax benefit 54 - 192 -
-- ---- --- ----
Total purchase accounting
adjustments $171 $- $1,082 $-
---- ---- ------ ----
Special And acquisition-
related items:
------------------------
Special and
integration-related
activities (e) $101 $20 $218 $32
Acquisition-related gains
on currency-related and
interest-related items (d) - (314) - (282)
---- ----- ---- -----
Total special and
acquisition-related items,
pre-tax 101 (294) 218 (250)
Income tax benefit 16 - 25 -
-- ---- -- ----
Total Special and
acquisition-related items $85 $(294) $193 $(250)
--- ------ ---- ------
Other specified items:
----------------------
Gain on sale of
previously announced
divestiture of
certain Animal Health
products (d) $(160) $- $(160) $-
Income from
respiratory JV
termination (f) (19) - (83) -
Gain on sale of
manufacturing plant (d) - - (17) -
Upfront R&D
payments (c) - 20 - 176
---- -- ---- ---
Total other specified
items, pre-tax (179) 20 (260) 176
Income tax expense 11 - 16 -
-- ---- -- ----
Total other specified items $(168) $20 $(244) $176
------ --- ------ ----
Total purchase accounting
adjustments, special and
acquisition-related items
and other specified items $88 $(274) $1,031 $(74)
=== ====== ====== =====
(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 September 30 (unaudited):
GAAP Net Sales by Key Product
(Dollars in millions) Third Quarter Nine Months
--------------------- -------------------
2008 2007 % 2008 2007 %
---- ---- - ---- ---- -
HUMAN PRESCRIPTION
PHARMACEUTICALS a/ $3,539 $2,291 54% $10,798 $7,209 50%
REMICADE 564 426 32% 1,627 1,193 36%
TEMODAR 273 215 27% 760 627 21%
NASONEX 258 242 6% 876 821 7%
PEGINTRON 235 221 6% 689 672 3%
CLARINEX / AERIUS 176 171 3% 630 625 1%
FOLLISTIM/PUREGON c/ 142 - - 450 - -
NUVARING c/ 118 - - 330 - -
CLARITIN RX 87 83 5% 326 297 10%
INTEGRILIN 84 78 7% 236 241 (2%)
CAELYX 80 64 24% 232 191 22%
ZEMURON c/ 72 - - 202 - -
AVELOX 65 78 (17%) 274 269 2%
REBETOL 63 60 5% 193 206 (6%)
SUBUTEX / SUBOXONE 63 55 15% 178 163 10%
REMERON c/ 61 - - 190 - -
INTRON A 61 61 - 177 176 1%
CERAZETTE c/ 49 - - 142 - -
LIVIAL c/ 48 - - 143 - -
ELOCON 45 40 12% 137 119 15%
ASMANEX 40 36 12% 131 121 9%
NOXAFIL 40 24 62% 111 60 85%
PROVENTIL / ALBUTEROL
CFC 38 52 (26%) 127 166 (23%)
MERCILON c/ 38 - - 128 - -
IMPLANON c/ 37 - - 119 - -
MARVELON c/ 37 - - 114 - -
FORADIL 25 25 - 76 77 (2%)
Other Pharmaceuticals 740 360 106% 2,200 1,185 86%
ANIMAL HEALTH b/ 759 248 206% 2,299 744 209%
CONSUMER HEALTH CARE 278 273 2% 1,057 1,012 4%
OTC 160 162 (1%) 550 521 6%
OTC CLARITIN 92 104 (11%) 350 368 (5%)
MiraLAX 31 16 90% 85 30 N/M
Other OTC 37 42 (11%) 115 123 (7%)
Foot Care 96 92 5% 286 272 5%
Sun Care 22 19 11% 221 219 1%
-- -- --- ---
CONSOLIDATED GAAP NET
SALES $4,576 $2,812 63% $14,154 $8,965 58%
====== ====== ======= ======
a/ Human Prescription Pharmaceuticals Net sales for the three and nine
months ended September 30, 2008 include net sales of $896 million and $2.7
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 nine months ended September
30, 2008 include net sales of $503 million and $1.5 billion, 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.
(Dollars in millions) Three months ended September 30,
(unaudited)
--------------------------------
2008 2007 %
--------------------------------
Net sales, as reported a/ $4,576 $2,812 63%
50 percent of cholesterol joint
venture net sales b/ 545 639 (15%)
Adjusted net sales b/ $5,121 $3,451 48%
(Dollars in millions) Nine months ended September 30,
(unaudited)
--------------------------------
2008 2007 %
--------------------------------
Net sales, as reported a/ $14,154 $8,965 58%
50 percent of cholesterol joint
venture net sales b/ 1,719 1,838 (6%)
Adjusted net sales b/ $15,873 $10,803 47%
a/ Net sales for the three and nine months ended September 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 September 30, 2008 and 2007 were $1.1 billion and $1.3 billion,
respectively. Total Net sales of the cholesterol joint venture for the
nine months ended September 30, 2008 and 2007 were $3.4 billion and $3.7
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
CONTACT:
Media, Steve Galpin, Jr., +1-908-298-7415, or
Investors, Janet Barth or Joseph Romanelli, +1-908-298-7436
|
