SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE,
SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 2-84723
THE SCHERING-PLOUGH PUERTO RICO EMPLOYEES' RETIREMENT SAVINGS
PLAN
Schering-Plough Corporation
One Giralda Farms
P.O. Box 1000
Madison, New Jersey 07940
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 1998 and 1997 4
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 5
Notes to Financial Statements 6 - 11
SUPPLEMENTAL SCHEDULES: SCHEDULE
Schedule of Assets Held for Investment Purposes
December 31, 1998 I
Schedule of Transactions in Excess of 5%
of Plan Assets for the Year Ended December 31, 1998 II
EXHIBITS:
Exhibit I - Independent Auditors' Consent
Supplemental schedules not included herein are omitted due to the
absence of conditions under which they are required.
2
INDEPENDENT AUDITORS' REPORT
The Schering-Plough Puerto Rico Employees' Retirement Savings
Plan:
We have audited the accompanying statements of net assets
available for benefits of The Schering-Plough Puerto Rico
Employees' Retirement Savings Plan (the "Plan") as of
December 31, 1998 and 1997, and the related statement of changes
in net assets available for benefits for the year ended December
31, 1998. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the
Plan as of December 31, 1998 and 1997, and the changes in net
assets available for benefits for the year ended December 31,
1998, in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of Assets Held for Investment Purposes and
Transactions in Excess of 5% of Plan Assets are presented for the
purpose of additional analysis and are not a required part of the
basic financial statements, but are supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These schedules are the responsibility of
the Plan's management. Such schedules have been subjected to the
auditing procedures applied in our audit of the basic 1998
financial statements and, in our opinion, are fairly stated in
all material respects when considered in relation to the basic
financial statements taken as a whole.
_________________________________________
/s/ Deloitte & Touche LLP
San Juan, Puerto Rico
May 11, 1999
3
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
1998 1997
Vanguard 500 Index Fund $ 7,214,850 $ 5,228,436
Vanguard Windsor Fund 2,300,156 2,610,599
Vanguard Treasury Money Market Fund 1,317,590 1,296,315
Vanguard Short-Term Corporate Fund 432,973 364,238
Vanguard Wellington Fund 124,889 97,393
Vanguard International Growth Fund 106,880 69,267
Vanguard Explorer Fund 50,842 52,893
Total Vanguard Registered Investment
Company Assets 11,548,180 9,719,141
Schering-Plough Stock Fund 5,815,884 2,448,942
Loan Fund 1,416,221 1,173,039
NET ASSETS AVAILABLE FOR BENEFITS $18,780,285 $13,341,122
See notes to financial statements.
4
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Interest and dividends $ 561,223
Net appreciation in fair value
of investments 3,424,279
Total 3,985,502
Participant contributions 1,812,009
Other receipts - rollovers and
transfers in 52,025
Total additions 5,849,536
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefit payments 410,333
Other deductions 40
Total deductions 410,373
NET INCREASE 5,439,163
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 13,341,122
End of year $18,780,285
See notes to financial statements.
5
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
The Schering-Plough Puerto Rico Employees' Retirement Savings
Plan (the "Plan") is a defined contribution plan established
effective April 1, 1990. The Plan is intended to encourage
retirement savings by eligible employees of Schering-Plough
Products, Inc. (the "Sponsor") and any of its affiliated
companies that adopts the Plan. Vanguard Fiduciary Trust
Company ("VFTC"), the trustee, is a trust company
incorporated under Chapter 10 of the Pennsylvania Banking
Code, and a wholly-owned subsidiary of The Vanguard Group,
Inc. ("Vanguard").
All Puerto Rico employees of Schering-Plough Products, Inc.
and Schering-Plough del Caribe, Inc. are eligible to
participate in the Plan on the date of employment. There
were 1,047 and 944 participants in the Plan at December 31,
1998 and 1997, respectively. The participants may elect to
have their salary deferral contributions allocated to any of
the investment funds available under this Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounts of the Plan have been prepared on an accrual
basis in accordance with generally accepted accounting
principles.
The financial statements were prepared in accordance with the
financial reporting requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA") as permitted by the
Securities and Exchange Commission.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of
registered investment companies are valued at quoted market
prices which represent the net asset value of shares held by
the Plan at year end.
6
The Schering-Plough Stock Fund is valued using the unit
accounting method whereby a participant's account value is
expressed in units of participation rather than number of
shares of Schering-Plough common stock. At December 31, 1998
and 1997, there were 5,850 and 4,369 units of participation
in the Schering-Plough Stock Fund, respectively. The net
asset value per unit was $994.25 and $560.51 at December 31,
1998 and 1997, respectively. The closing stock prices of
Schering-Plough Corporation at December 31, 1998 and December
31, 1997 were $55 1/4 and $31 1/16, respectively; the closing
price on May 11, 1999 was $48 9/16.
Purchases and sales of securities are recorded on a trade-
date basis. Interest income is recorded on the accrual
basis. Dividends are recorded on the ex-dividend date, and
reinvested in Schering-Plough common stock units.
Payment of Benefits
Benefit payments are recorded when paid.
3. PLAN DESCRIPTION
The following is a description of the Plan for general
information purposes. Participants should refer to the Plan
document for more complete information.
Salary Deferral Contributions
The Plan is designed to permit eligible employees to elect to
have a portion of their salary contributed to the Plan on
their behalf ("salary deferral contributions"). Under the
provisions of the Plan, salary deferral contributions can
range from 1% to 10% of the employee's earnings, in
increments of 1%, subject to certain limitations. Salary
deferral contributions and any earnings accrued thereon are
fully and immediately vested to the participant.
Participant Accounts
Each participant's account is credited with the participant's
contribution and allocations of Plan earnings. Allocations
are based on participant earnings or account balances, as
defined. Participants have a nonforfeitable right to their
contributions plus actual earnings thereon which vest fully
and immediately.
7
Investment Options
Upon enrollment in the Plan, a participant may direct their
contributions into any of the following Vanguard investment
options:
500 Index Fund - Designed to provide returns which correspond
to the performance of Standard & Poor's 500 Composite Stock
Price Index.
Windsor Fund - Primarily equity securities with the objective
of providing long-term capital growth.
Treasury Money Market Fund - Exclusively U.S. Treasury
securities with maturities of 13 months or less with the
objective of providing current income based on current market
interest rates, with preservation of principal and liquidity.
Short-Term Corporate Fund - A diversified portfolio primarily
consisting of short-term corporate bonds.
Wellington Fund - Primarily equity and fixed income
securities with the objective of providing current income and
capital appreciation.
International Growth Fund - A non-U.S. equity portfolio,
primarily investing in securities of issuers within Europe,
Asia and the Far East.
Explorer Fund - Primarily equity securities of smaller
companies with the objective of providing above average
capital appreciation but with a potentially higher level of
risk.
Schering-Plough Stock Fund
Participants may contribute to a maximum investment election
of 50% of the Salary Deferral Contribution into this fund.
8
Loan Fund
The Plan allows participants to borrow against their fund
accounts up to a maximum of the lesser of one half of their
account or $50,000. These loans, which are secured by the
participants' individual fund accounts, bear a fixed rate of
interest as determined to be reasonable by The Schering-
Plough Puerto Rico Employees' Retirement Savings Plan
Committee, and are repayable over periods not exceeding five
years, except loans relating to a principal residence which
are repayable over a period not to exceed 20 years.
Payment of Benefits
On termination of service due to death, disability or
retirement, a participant may elect to receive either a lump-
sum amount or annual installments not to exceed the life
expectancy of the participant or the life expectancy of the
beneficiary. For termination of service due to other
reasons, a participant may receive the value of the account
as a lump sum distribution. Distribution of all or a portion
of a participant's account, prior to termination of
employment, may be granted by the Company in the case of
financial hardship. Effective January 1, 1998, active
participants may elect to withdraw all or a portion of their
accounts at any time after age 70.
4. PLAN TERMINATION
Although it has not expressed any intent to do so, the
Sponsor has the right to terminate the Plan subject to
provisions of ERISA.
5. TAX STATUS
In March 1992, the Plan received a favorable determination
letter issued by the Puerto Rico Department of Treasury as to
the Plan's qualified status under Sections 165(a) and (e) of
the Puerto Rico Income Tax Act of 1954, as amended. As long
as the Plan is qualified under Puerto Rico income tax laws
and regulations, participants will not be taxed on salary-
deferred contributions or on investment earnings on such
contributions at the time such contributions and investment
earnings are received by the trustee under the Plan, but will
be subject to tax thereon at such time as they receive
distributions from the Plan.
9
6. ADMINISTRATION OF PLAN ASSETS
Contributions are held and managed by the trustee, VFTC,
which invests cash received, interest and dividend income and
makes distributions to the participants. The trustee also
administers the collection of interest and principal on the
participant loans.
Certain administrative functions are performed by officers or
employees of the Sponsor. No such officer or employee
receives compensation from the Plan.
All plan administration expenses are borne by the Sponsor.
10
7. FUND INFORMATION
Investment income, contributions and benefit payments are as follows
for the year ended December 31, 1998:
Vanguard
Vanguard Vanguard Schering-
Vanguard Vanguard Treasury Short- Van- Inter- Vanguard Plough
Term guard national
500 Index Windsor Money Corp- Well- Growth Explorer Stock Loan
orate ington
Fund Fund Market Fund Fund Fund Fund Fund Fund Total
Fund
Investment
Income:
Interest and
Dividends $ 107,624 $202,140 $ 62,841 23,551 $ 13,663 $ 2,129 $ 444 40,521 $ 108,310 $ 561,223
Net
Appreciation
(depreciation)
in fair value
of investments 1,448,455 (193,125) - 757 83 11,020 1,225 2,155,864 - 3,424,279
Total
Investment
Income $1,556,079 $ 9,015 $ 62,841 $24,308 $ 13,746 $ 13,149 $ 1,669 $2,196,385 $ 108,310 $3,985,502
Participant
Contributions $ 630,184 $373,755 $ 127,721 $53,689 $ 36,361 $ 31,002 $ 18,478 $ 540,819 $ - $1,812,009
Other receipts
- - Rollovers
and Transfers
In $ 10,405 $ 10,405 $ 10,405 $10,405 $ 10,405 $ - $ - $ - $ - $ 52,025
Benefit
Payments $ 180,947 $ 67,438 $ 46,029 $14,169 $ 5,896 $ 3,051 $ 752 $ 40,145 $ 51,906 $ 410,333
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN SCHEDULE I
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
Identity Shares/ Current
of issue Participants Units Cost Value
Vanguard 500 Index
Fund* 841 63,316 $4,073,846 $7,214,850(1)
Vanguard Windsor
Fund* 522 147,730 2,395,616 2,300,156(1)
Vanguard Treasury
Money Market
Fund* 363 1,317,590 1,317,590 1,317,590(1)
Vanguard Short-Term
Corporate Fund* 170 39,942 430,294 432,973
Vanguard
Wellington Fund* 84 4,255 122,752 124,889
Vanguard
International
Growth Fund* 61 5,694 99,738 106,880
Vanguard Explorer
Fund* 53 897 48,737 50,842
Schering-Plough
Stock Fund 672 5,850(2) 2,911,705 5,815,884(1)
Outstanding loan
balance - various
loans; 7% to 10%,
due in one to five
years 368 1,416,221 1,416,221(1)
Total Assets Held for Investment Purposes $12,816,499 $18,780,285
*Registered Investment Company.
(1) Indicates investment represents five percent or more of the net
assets available for benefits.
(2) Represents Schering-Plough Stock Fund units.
THE SCHERING-PLOUGH PUERTO RICO
EMPLOYEES' RETIREMENT SAVINGS PLAN SCHEDULE II
ITEM 27d - SCHEDULE OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
YEAR ENDED DECEMBER 31, 1998
Identity Cost of Number of Proceeds Number Net Gain
of Issue Purchases Purchases * From Sales of Sales * (Loss)
Vanguard
500 Index Fund $1,446,301 98 $908,103 96 $ 75,734
Vanguard Windsor
Fund 779,904 53 896,828 108 (9,329)
Vanguard Treasury
Money Market Fund 594,364 88 573,089 86 -
Schering-Plough
Stock Fund 1,673,631 127 463,147 57 102,531
* Represents the number of days a trade occurred in 1998.
EXHIBIT I
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 2-83963, No. 33-19013, No. 33-50606 and No. 333-
30331 on Form S-8, Registration Statement No. 333-853 on Form S-
3, Post-Effective Amendment No. 1 to Registration Statement No.
2-84723 on Form S-8, Post-Effective Amendment No. 1 to
Registration No. 2-80012 on Form S-3, Post-Effective Amendment
No. 1 to Registration Statement No. 2-77740 on Form S-3 and
Registration Statements No. 333-12909 and No. 333-30355 on Form
S-3 of our report dated May 11, 1999 appearing in this Annual
Report on Form 11-K of The Schering-Plough Puerto Rico Employees'
Retirement Savings Plan for the year ended December 31, 1998.
__________________________________________
/s/ Deloitte & Touche LLP
San Juan, Puerto Rico
June 24, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the Plan)
have duly caused this Annual Report to be signed on its behalf by
the undersigned hereunto duly authorized.
The Schering-Plough Puerto Rico Employees' Retirement Savings
Plan
Date: June 17, 1999 By: /s/ Vincent Sweeney
Name: Vincent Sweeney
Title: Plan Administrator
- -