UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
Commission file number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer Identification No.)
Madison, N.J. 07940-1000 (201) 822-7000
(telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Common Shares Outstanding as of September 30, 1997: 732,150,623
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in millions, except per share figures)
Three Months Nine Months
Ended Ended
September 30 September 30
1997 1996 1997 1996
Sales . . . . . . . . . . . . . $1,709 $1,383 $4,997 $4,242
Costs and expenses:
Cost of sales. . . . . . . . . 326 257 945 807
Selling, general
and administrative. . . . . . 681 563 1,954 1,645
Research and development . . . 220 182 608 523
Other, net . . . . . . . . . . 15 (5) 32 28
1,242 997 3,539 3,003
Income before income taxes. . . 467 386 1,458 1,239
Income taxes. . . . . . . . . . 114 95 357 304
Net Income. . . . . . . . . . . $ 353 $ 291 $1,101 $ 935
Earnings per common share . . . $ .48 $ .39 $ 1.50 $ 1.27
Dividends per common share. . . $ .19 $ .165 $ .545 $ .475
<FN>
See notes to consolidated financial statements.
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions, except per share figures)
September 30, December 31,
1997 1996
Assets
Cash and cash equivalents . . . . . . . . $ 732 $ 535
Accounts receivable, net. . . . . . . . . 588 542
Inventories . . . . . . . . . . . . . . . 750 594
Prepaid expenses. . . . . . . . . . . . . 251 246
Deferred income taxes and other
current assets . . . . . . . . . . . . . 635 448
Total current assets. . . . . . . . . 2,956 2,365
Property, plant and equipment . . . . . . 3,628 3,362
Less accumulated depreciation . . . . . . 1,189 1,116
Property, net . . . . . . . . . . . . 2,439 2,246
Other assets. . . . . . . . . . . . . . . 1,053 787
$ 6,448 $ 5,398
Liabilities and Shareholders' Equity
Accounts payable. . . . . . . . . . . . . $ 667 $ 561
Short-term borrowings and current
portion of long-term debt. . . . . . . . 761 855
Other accrued liabilities . . . . . . . . 1,509 1,184
Total current liabilities . . . . . . 2,937 2,600
Long-term debt. . . . . . . . . . . . . . 64 46
Other long-term liabilities . . . . . . . 744 692
Shareholders' Equity:
Preferred shares - $1 par value
each; issued - none. . . . . . . . . . . - -
Common shares - $1 par value each; shares
issued: 1997 - 1,014,759,198
1996 - 507,368,360 . . . . . . . . . . . 1,015 507
Paid-in capital . . . . . . . . . . . . . 33 172
Retained earnings . . . . . . . . . . . . 5,472 5,081
Foreign currency translation
adjustment and other . . . . . . . . . . (201) (140)
Total . . . . . . . . . . . . . . . . 6,319 5,620
Less treasury shares, at cost -
1997, 282,608,575 shares;
1996, 142,001,799 shares . . . . . . . . 3,616 3,560
Total shareholders' equity. . . . . . 2,703 2,060
$ 6,448 $ 5,398
<FN>
See notes to consolidated financial statements.
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
(Dollars in millions)
1997 1996
Operating Activities:
Net Income. . . . . . . . . . . . . . . . $1,101 $ 935
Depreciation and amortization . . . . . . 157 127
Accounts receivable . . . . . . . . . . . 41 (17)
Inventories . . . . . . . . . . . . . . . (55) (84)
Prepaid expenses and other assets . . . . (179) (145)
Accounts payable and other liabilities . 297 214
Net cash provided by operating activities 1,362 1,030
Investing Activities:
Purchase of business, net of cash
acquired . . . . . . . . . . . . . . . . (351) -
Capital expenditures. . . . . . . . . . . (221) (208)
Proceeds from sales of investments. . . . 37 1
Purchases of investments. . . . . . . . . (98) (35)
Other, net. . . . . . . . . . . . . . . . (20) (2)
Net cash used for investing
activities . . . . . . . . . . . . . . . (653) (244)
Financing Activities:
Short-term borrowings, net. . . . . . . . (100) (180)
Repayment of long-term debt . . . . . . . (3) (140)
Common shares repurchased . . . . . . . . (56) (46)
Dividends paid to common shareholders . . (400) (350)
Other equity transactions, net. . . . . . 54 46
Net cash used for financing
activities . . . . . . . . . . . . . . . (505) (670)
Effect of exchange rates on cash and
cash equivalents. . . . . . . . . . . . . (7) -
Net increase in cash and cash equivalents . 197 116
Cash and cash equivalents, beginning
of period . . . . . . . . . . . . . . . . 535 321
Cash and cash equivalents, end of period . $ 732 $ 437
<FN>
See notes to consolidated financial statements.
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in millions, except per share figures)
Basis of Presentation
The unaudited financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission for reporting on Form 10-Q. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The
statements should be read in conjunction with the accounting policies
and notes to consolidated financial statements included in the
Company's 1996 Annual Report on Form 10-K.
In the opinion of management, the financial statements reflect all
adjustments necessary for a fair statement of the operations for the
interim periods presented.
Accounting Policies - Derivatives
The following disclosures reflect the additional accounting policy
disclosures required by the SEC's January 1997 release regarding
derivatives and financial instruments.
The Company does not enter into derivatives for speculation or trading
purposes.
The only derivatives currently used by the Company for hedging purposes
are foreign currency swap contracts initiated in the 1980's. These
contracts are designated as hedges of the Company's net investment in
Japan, and are deemed effective as a hedge when the related translation
gain or loss equals or exceeds the after tax gain or loss on the
contracts. If all or any portion of the contracts are not effective as
a hedge, the related gain or loss is recorded in income. Cash flows
upon settlement of these contracts are classified as investing
activities.
The Company has used interest rate swap contracts for international
cash management purposes. Interest rate swaps are recorded at market
value. Changes in market value during the period are recorded in
earnings. Annual net cash flows for payments and receipts under the
contracts are not material. The net asset or liability under each
interest rate swap is recorded in other current assets or other accrued
liabilities, as applicable.
Earnings Per Common Share
Earnings per common share is computed by dividing net income by the
weighted-average number of common shares outstanding. Shares issuable
through the exercise of stock options and warrants and under deferred
delivery agreements are not considered in the calculation, as they do
not have a material effect on the determination of earnings per common
share. The weighted-average number of shares used in the computation
of earnings per common share for the nine months ended September 30,
1997 and 1996 were 731,899,000 and 735,952,000, respectively.
On April 22, 1997, the Board of Directors of the Company authorized a
2-for-1 stock split, and voted to increase the number of authorized
common shares from 600 million to 1.2 billion. Distribution of the
split shares was made on June 3, 1997, to shareholders of record at the
close of business on May 2, 1997. The per share amounts included in
these consolidated financial statements reflect the stock split.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
per Share". The new standard revises certain methodology and
disclosure requirements for reporting earnings per common share. The
new standard will require the reporting of two earnings per share
figures on the face of income statements:
basic earnings per share and diluted earnings per share. SFAS No. 128
must be adopted in the fourth quarter of 1997 with earlier adoption
prohibited. Basic earnings per share, for the Company, is expected to
be the same as reported earnings per share. Diluted earnings per share
is expected to be substantially the same as fully diluted earnings per
share reported in an Exhibit to the Company's quarterly Form 10-Q's and
annual Form 10-K.
Share Purchase Rights
In June 1997, the Board of Directors of the Company approved the
redemption of the Company's outstanding Preferred Share Purchase Rights
at the redemption price of $.00125 per right, effective July 10, 1997.
The Board also declared a dividend distribution of one new Preferred
Share Purchase Right on each outstanding share of Schering-Plough
common stock to replace the rights being redeemed.
The 1997 rights will be exercisable only if a person or group acquires
20 percent or more of the Company's common stock or announces a tender
offer which, if completed, would result in ownership by a person or
group of 20 percent or more of the Company's common stock. Should a
person acquire 20 percent or more of the Company's outstanding common
stock through a merger or other business combination transaction, each
right will entitle its holder (other than such acquirer) to purchase
common shares of either Schering-Plough or the acquirer, as applicable,
having a market value of twice the exercise price of the right. The
exercise price is $200.00 for each right.
Following the acquisition by a person or group of beneficial ownership
of 20 percent or more but less than 50 percent of the Company's common
stock, the Board of Directors may call for the exchange of the rights
(other than rights owned by such acquirer), in whole or in part, for
the common stock at an exchange ratio of one for one, or one one-
hundredth of a share of the Junior Participating Preferred Stock per
right. Also, prior to the acquisition by a person or group of
beneficial ownership of 20 percent or more of the Company's common
stock, the rights are redeemable for 1 cent per right at the option of
the Board of Directors. The new rights will expire in July, 2007
unless earlier redeemed. The Board of Directors is also authorized to
reduce the 20 percent thresholds referred to above to not less than 10
percent.
Acquisition
On June 30, 1997 the Company acquired the worldwide animal health
business of Mallinckrodt Inc. for approximately $490, including the
assumption of debt and direct costs of the acquisition. The
acquisition was recorded under the purchase method of accounting. The
September 30, 1997 balance sheet reflects a preliminary allocation of
the purchase price pending the completion of fair value studies of
individual assets acquired. The results of operations of the purchased
animal health business have been included in the Company's statement of
consolidated income from the date of acquisition. Consolidated other
assets include net intangible assets totaling $472 and $297 at
September 30, 1997 and December 31, 1996, respectively; the increase is
primarily due to the acquisition of the worldwide animal health
business of Mallinckrodt Inc. Pro forma results of the Company,
assuming the acquisition had been made at the beginning of each period
presented, would not be materially different from the results reported.
Inventories
Inventories consisted of: September 30, December 31,
1997 1996
Finished products . . . . . . . $ 341 $ 297
Goods in process. . . . . . . . 199 173
Raw materials and supplies. . . 210 124
Total inventories . . . . . . $ 750 $ 594
Sales
Segment sales for the nine months ended September 30, 1997 and 1996
were as follows:
1997 1996
Pharmaceutical products . . . . $4,462 $3,749
Health care products. . . . . . 535 493
Consolidated sales. . . . . . $4,997 $4,242
Legal and Environmental Matters
The Company is involved in various claims and legal proceedings of a
nature considered normal to its business, including environmental
matters and product liability cases. The recorded liabilities for
these matters at September 30, 1997 were not material. Management
believes that, except for the matters discussed in the following
paragraph, it is remote that any material liability in excess of the
amounts accrued will be incurred.
The Company is a defendant in more than 160 antitrust actions commenced
in state and federal courts by independent retail pharmacies, chain
retail pharmacies and consumers. The plaintiffs allege price
discrimination and/or conspiracy between the Company and other
defendants to restrain trade by jointly refusing to sell prescription
drugs at discounted prices to the plaintiffs. One of the federal cases
is a class action on behalf of approximately two-thirds of all retail
pharmacies in the United States alleging a price-fixing conspiracy.
The Company has agreed to settle the federal class action for a total
of $22.1 payable over three years. The settlement provides, among
other things, that the Company shall not refuse to grant discounts on
brand-name prescription drugs to a retailer based solely on its status
as a retailer and that, to the extent a retailer can demonstrate its
ability to affect market share of a Company brand name prescription
drug in the same manner as a managed care organization with which the
retailer competes, it will be entitled to negotiate similar incentives
subject to the rights, obligations, exemptions and defenses of the
Robinson-Patman Act and other laws and regulations. The District Court
approved the settlement of the federal class action on June 21, 1996.
In early July 1996, the Seventh Circuit Court of Appeals agreed to
review before trial the District Court's denial of defendants' summary
judgment motion seeking dismissal of all claims by indirect purchasers
of pharmaceutical products in all remaining cases before the District
Court. In addition, the Seventh Circuit Court of Appeals agreed to hear
an appeal by the plaintiffs from the grant of summary judgment to the
wholesaler defendants. In June 1997, the Seventh Circuit Court of
Appeals dismissed an appeal by certain class members from the approval
by the settlement by the District Court and a motion for rehearing was
filed. In August 1997, the Seventh Circuit reversed the grant of
summary judgment to the wholesalers. The Seventh Circuit also reversed
the District Court's decision on the right of indirect purchasers of
pharmaceutical products to collect damages if they purchased from
distributors who were not, or who were not named as, co-conspirators.
However, because the Seventh Circuit reversed the grant of summary
judgment to the wholesalers, the Seventh Circuit's ruling on indirect
purchasers will have no immediate effect on those cases where
wholesalers have been named as defendants. Plaintiffs that did not
name wholesalers as defendants have recently asked the District Court
to permit them to amend their complaints to add the wholesalers as
defendants. In April 1997, certain of the plaintiffs in the federal
class action commenced another purported class action in Federal
District Court in Illinois against the Company and the other defendants
who settled the previous federal class action. The complaint alleges
that the defendants conspired not to implement the settlement
commitments following the settlement discussed above. The complaint
seeks solely injunctive relief and the plaintiffs have moved to have
the District Court set a date for a hearing on a request for a
preliminary injunction, which the District Court has denied. Four of
the state antitrust cases have been certified as class actions. Two
are class actions on behalf of certain retail pharmacies in California
and Wisconsin, and the other two are class actions in California and
the District of Columbia, on behalf of certain consumers of
prescription medicine. Class actions have not been certified in three
other state consumer actions. Plaintiffs in the state class actions
seek treble damages in an unspecified amount and an injunction against
the allegedly unlawful conduct. The Company believes that all the
antitrust actions are without merit and is defending itself vigorously
against all such claims.
New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." Both standards for the Company
are effective beginning in 1998. SFAS No. 130 will require the Company
to add the reporting of Comprehensive Income to its financial
statements. Under SFAS No. 131 the Company will continue to report
information for its pharmaceutical and health care businesses.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - three and nine months ended September 30, 1997
compared with the corresponding periods in 1996.
Sales
Consolidated sales for the third quarter advanced $326 million or 24
percent compared with the same period in 1996. For the nine months,
sales rose $755 million or 18 percent over 1996. Excluding the effect
of foreign currency exchange rate fluctuations, consolidated sales grew
27 percent in the quarter and 21 percent for the nine month period.
This performance reflects worldwide sales of the CLARITIN brand of
nonsedating antihistamines of $448 million and $1.3 billion for the
quarter and nine-month period, respectively, compared with $323 million
and $906 million for the corresponding periods in 1996.
Domestic prescription pharmaceutical sales increased 31 percent for the
1997 third quarter and 27 percent for the nine-month period. Sales of
allergy/respiratory products advanced 39 percent in the quarter and 31
percent for the nine-month period, due to continued strong growth of
the CLARITIN brand. Sales of VANCENASE allergy products increased in
the quarter and year-to-date due to market expansion. Sales of
VANCERIL asthma products advanced in both periods reflecting gains from
the first quarter launch of a new "Double Strength".
The domestic allergy/respiratory sales gain reflects an increase in
sales of PROVENTIL (albuterol) line of asthma products for the quarter
due primarily to trade buying patterns. PROVENTIL declined 18 percent
for the first nine months, due to increased generic competition. Sales
of the PROVENTIL line totaled $82 million for the quarter and $214
million for the nine months, with metered-dose inhalers contributing
over 60 percent. The PROVENTIL line has been subject to generic
competition, and in December 1995 generic metered-dose inhalers entered
the market. In response, the Company's generic pharmaceutical
marketing subsidiary, Warrick Pharmaceuticals, launched its generic
inhaler in December 1995. In December 1996, the Company began
marketing PROVENTIL HFA, a new metered-dose inhaler that uses an
advanced delivery system and a propellant free of ozone-damaging
chlorofluorocarbons. Competition from generic metered-dose inhalers
will, however, continue to negatively affect future sales and
profitability of the PROVENTIL (albuterol) line of asthma products.
U.S. sales of cardiovascular products rose 36 percent in the quarter
and 24 percent for the nine months, reflecting market share gains for
IMDUR, a once-daily oral nitrate for angina and K-Dur, a sustained-
release potassium supplement.
Domestic sales of anti-infective and anticancer products rose 26
percent in the quarter and 18 percent for the nine-month period,
primarily due to increased utilization of INTRON A, the Company's alpha
interferon anticancer and antiviral agent for malignant melanoma and
hepatitis C. The nine-month period, however, was negatively affected
by lower sales of EULEXIN, a prostate cancer treatment, due to branded
competition.
U.S. sales of dermatological products increased 13 percent for the
quarter and 9 percent for the nine months, primarily due to higher
sales of LOTRISONE, an antifungal/anti-inflammatory cream, and ELOCON,
a mid-potency topical corticosteroid.
International ethical pharmaceutical product sales increased 4 percent
for the third quarter and 5 percent for the nine-month period.
Excluding the impact of foreign currency exchange rate fluctuations,
sales would have risen 12 percent in both periods. Sales of
allergy/respiratory products advanced 21 percent for the quarter and 20
percent for the nine-month period, led by CLARITIN in most world
markets.
International dermatological product sales were flat in the quarter and
increased 4 percent for the nine-month period led by ELOCON and
LOTRISONE. Cardiovascular product sales grew 14 percent for the third
quarter and 11 percent for the nine months, led by higher sales of
NITRO-DUR.
International sales of anti-infective and anticancer products declined
1 percent in the third quarter and increased 2 percent for the nine
months. Both periods were negatively impacted by lower EULEXIN sales
due to generic and branded competition in Europe. Sales of INTRON A
increased 10 percent in the quarter and nine-month period.
International sales, in both periods, also benefited from higher sales
of LOSEC, an anti-ulcer treatment licensed from AB Astra.
Worldwide sales of animal health products rose in the quarter and for
the nine months, excluding foreign exchange rate fluctuations. On June
30, 1997, the Company completed the acquisition of the worldwide animal
health business of Mallinckrodt, Inc., which contributed sales of $78
million in the quarter. In addition, the three- and nine-month periods
benefited from higher sales of NUFLOR, a broad-spectrum, multi-species
antibiotic. Excluding Mallinckrodt revenues in the third quarter,
sales would have increased 14 percent in both the three- and nine-month
periods.
Sales of health care products increased 15 percent for the third
quarter and 9 percent for the first nine months of 1997. The higher
sales were largely due to gains in foot care products, benefiting from
the continued strength of DYNA STEP Inserts in the DR. SCHOLL'S foot
care line. Sales of sun care products rose for the nine-month period,
while sales of over-the-counter products declined for both periods.
Income before income taxes increased 21 percent for the quarter
compared with 1996, and represented 27.3 percent of sales versus 27.9
percent last year. For the nine months, income before taxes grew 18
percent over 1996, representing 29.2 percent of sales in 1997 and 1996.
Cost of sales as a percentage of sales increased to 19.1 percent in the
quarter from 18.6 percent in 1996, and for the first nine months, the
ratio declined to 18.9 percent from 19.0 percent in 1996. The increase
in the ratio for the quarter is primarily driven by sales mix. The
decline for the nine months is the result of a more favorable sales mix
of higher margin domestic pharmaceutical products.
Selling, general and administrative expenses represented 39.8 percent
of sales in the third quarter compared with 40.7 percent last year.
For the nine-month period, the ratio was 39.1 percent versus 38.8
percent in 1996. The increase in the ratio for the nine-month period
reflects higher selling and promotional related spending, primarily for
the CLARITIN brand and INTRON A.
Research and development spending rose 21 percent in the quarter,
representing 12.9 percent of sales compared with 13.2 percent a year
ago. For the nine-month period, spending grew 16 percent, and
represented 12.2 percent of sales versus 12.3 percent in 1996. The
higher spending reflects the Company's funding of both internal
research efforts and research collaborations with various partners to
develop innovative products and line extensions.
The effective tax rate was 24.5 percent in the three- and nine- month
periods of both 1997 and 1996.
Earnings per common share advanced 23 percent in the third quarter to
$.48 from $.39 in 1996. For the nine-month period, earnings per share
increased 18 percent to $1.50 from $1.27 last year. Excluding the
impact of fluctuations in foreign currency exchange rates, earnings per
common share would have risen approximately 28 percent in the quarter
and 20 percent for the nine months. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 128, "Earnings Per Share". For additional
information, see "Earnings Per Common Share" in the Notes to
Consolidated Financial Statements.
Additional Factors Influencing Operations
In the United States, many of the Company's pharmaceutical products are
subject to increasingly competitive pricing as managed care groups,
institutions, government agencies and other buying groups seek price
discounts. In most international markets, the Company operates in an
environment of government-mandated cost containment programs. Several
governments have placed restrictions on physician prescription levels
and patient reimbursements, emphasized greater use of generic drugs and
enacted across-the-board price cuts as methods of cost control.
Since the Company is unable to predict the final form and timing of any
future domestic and international governmental or other health care
initiatives, their effect on operations and cash flows cannot be
reasonably estimated.
The market for pharmaceutical products is competitive. The Company's
operations may be affected by technological advances of competitors,
patents granted to competitors, new products of competitors, and
generic competition as the Company's products mature. In addition,
patent positions can be highly uncertain and an adverse result in a
patent dispute can preclude commercialization of products or negatively
affect sales of existing products. The effect on operations of
competitive factors and patent disputes cannot be predicted.
Uncertainties inherent in government regulatory approval processes,
including among other things delays in approval of new products, may
also affect the Company's operations. The effect on operations of
regulatory approval processes cannot be predicted. For example, while
the Company is confident that CLARITIN will receive regulatory approval
in Japan, based on discussions in October 1997 with regulatory
authorities in Japan, the Company does not expect regulatory approval
of CLARITIN in Japan in 1997 and will not predict when regulatory
approval will be granted.
Liquidity and financial resources - nine months ended September 30,
1997
Cash generated from operations continues to be the Company's major
source of funds to finance working capital, additions to property,
shareholder dividends and common share repurchases. Cash and cash
equivalents increased by $197 million in the first nine months of 1997,
primarily due to cash provided by operating activities of $1.4 billion
which exceeded the net decrease in short-term borrowings of $100
million, the funding required for the acquisition of the animal health
business of Mallinckrodt Inc. of $351 million, shareholder dividends of
$400 million and capital expenditures of $221 million.
In September 1996, the Board of Directors authorized the repurchase of
$500 million of common shares. As of September 30, 1997 this program
was approximately 85 percent complete. In September 1997, the Board of
Directors authorized an additional $1 billion share repurchase program.
The new $1 billion program is expected to commence soon after the
current program is completed.
The Company's liquidity and financial resources continue to be
sufficient to meet its operating needs.
Cautionary Statements for Forward Looking Information
Management's discussion and analysis set forth above contains certain
forward looking statements, including statements regarding the
Company's financial position and results of operations. These forward
looking statements are based on current expectations. Certain factors
have been identified by the Company in Exhibit 99.1 of the Company's
December 31, 1996, Form 10-K filed with the Securities and Exchange
Commission, which could cause the Company's actual results to differ
materially from expected and historical results. Exhibit 99.1 from the
Form 10-K is incorporated by reference herein
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The fourth paragraph of Item 3, Legal Proceedings, of Part I of the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 (as updated in the Quarterly Reports on Form 10-Q for the
quarterly periods ended March 31, 1997 and June 30, 1997, respectively)
relating to certain antitrust actions is incorporated herein by
reference. In August 1997, the Seventh Circuit reversed the grant of
summary judgment to the wholesalers. The Seventh Circuit also reversed
the District Court's decision on the right of indirect purchasers of
pharmaceutical products to collect damages if they purchased from
distributors who were not, or who were not named as, co-conspirators.
However, because the Seventh Circuit reversed the grant of summary
judgment to the wholesalers, the Seventh Circuit's ruling on indirect
purchasers will have no immediate effect on those cases where
wholesalers have been named as defendants. Plaintiffs that did not
name wholesalers as defendants have recently asked the District Court
to permit them to amend their complaints to add the wholesalers as
defendants. The District Court has denied the plaintiff's motion for a
preliminary injunction hearing in the new purported class action
complaint that was filed in April 1997 and which sought injunctive
relief only.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - The following Exhibits are filed with this
document:
Exhibit
Number Description
10 - 1997 Stock Incentive Plan
11 - Computation of Earnings Per Common Share
27 - Financial Data Schedule
99 - Company Statements Relating to Forward
Looking Information
b) Reports on Form 8-K:
No report has been filed during the three months ended September
30, 1997.
SIGNATURE(S)
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Schering-Plough Corporation
(Registrant)
Date November 3, 1997 /s/Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
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