OBS Acquisition Contributes to First Quarter Performance; Company
Taking Actions to Address New Challenges
KENILWORTH, N.J., April 23, 2008 /PRNewswire-FirstCall/ –
Schering-Plough Corporation today reported financial results for
the first quarter of 2008, reviewed progress on its ongoing
integration of Organon BioSciences N.V. (OBS) (acquired in November
2007) and addressed recent events affecting the
Merck/Schering-Plough cholesterol franchise.
“The first full quarter since acquiring Organon BioSciences
shows that our long-standing strategy to diversify our company is
working,” said Fred Hassan, chairman and CEO. “The OBS acquisition
is already contributing to our results and adding long-term value.
Our geographic expansion strategy is broadening our base. Our
company is now much stronger to deal with new challenges, such as
those facing the Merck/Schering-Plough cholesterol business in the
United States.”
For the 2008 first quarter, Schering-Plough reported net income
available to common shareholders of $253 million or 15 cents per
common share on a GAAP basis. Earnings per common share for the
2008 first quarter would have been 53 cents on a reconciled basis,
which excludes purchase accounting adjustments and
acquisition-related items for the OBS acquisition and other
specified items. For the 2007 first quarter, Schering-Plough
reported net income available to common shareholders of $543
million or 36 cents per common share on a GAAP basis and 42 cents
per common share on a reconciled basis.
GAAP net sales for the 2008 first quarter totaled $4.7 billion,
up 56 percent, as compared to the first quarter of 2007. Sales for
the quarter benefited from the inclusion of OBS net sales as well
as a favorable impact from foreign exchange. Global cholesterol
joint venture net sales, which include VYTORIN and ZETIA, totaled
$1.2 billion in the 2008 first 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
first quarter would have been $5.3 billion.
Reviewing results of the recent quarter, Hassan said the company
recorded good growth from many of its leading prescription, animal
health and consumer products, with strong growth in international
markets partially offset by slower sales growth in the United
States. U.S. sales of VYTORIN and ZETIA, the cholesterol-lowering
medicines under the Merck/Schering-Plough joint venture, were down
slightly versus the 2007 first quarter while remaining strong in
international markets. trazodone. He also noted, “The tough cost-control
measures we put in place in 2007 contributed to our profit
performance in the recent quarter.”
Regarding the outlook for Schering-Plough, Hassan said, “We are
confident about our company’s future because of the transformations
we have driven in every area. Today, we have a strong line of
products protected by long periods of market exclusivity. We have
geographic and business diversity, with nearly 70 percent of our
GAAP net sales coming from outside the United States. We have a
rich late-stage pipeline. We have a resilient and tested work
force.” Added Hassan: “Our team overcame enormous challenges in
2003 and 2004. Those challenges were much bigger than the ones we
face today. We are determined to power through.”
Hassan observed that Schering-Plough has undergone a remarkable
transformation over the past five years. Adhering to a five-phase
Action Agenda, it has become a broad-based health care company with
growing strengths across its businesses, research capabilities and
geographic markets. The OBS acquisition has provided greater
diversity, new treatment areas, global leadership in animal health
and a deeper R&D pipeline.
“When we began this journey in 2003, Schering-Plough had five
new molecular entity projects or novel combination products in
Phase III clinical trials or in registration,” said Hassan. “Now,
we have more than doubled our number of compounds in Phase III or
registration. Our late-stage pipeline is one of the strongest in
our peer group.”
In early April, Schering-Plough launched a new Productivity
Transformation Program (PTP) to address the increasing pressures on
the pharmaceutical industry, especially new pressures in the United
States, and the confusion in the U.S. cholesterol management market
that is affecting ZETIA and VYTORIN. “We are taking decisive
actions to reduce and avoid costs and to accelerate our
productivity initiatives,” said Hassan. “We will continue to take
tough actions to sustain long-term, high performance.”
The company has targeted annual savings from PTP of $1.5
billion, which represents approximately 10 percent of the combined
company’s (Schering-Plough/OBS) full-year 2007 estimated cost base.
This target includes the previously announced OBS integration
synergy goal of $500 million and anticipates a 10 percent reduction
in the global work force, or about 5,500 jobs.
“We will be disciplined and rigorous in how we achieve these
savings,” said Hassan, “and we will execute this program with care
and prudence. Savings and productivity improvements will be
realized throughout our company and around the world. But we don’t
expect the same level of cost reduction to be applied across the
board. We will continue to focus on our basic strategy: Grow the
top line; grow the R&D pipeline; reduce costs while investing
wisely.”
OBS Integration
The company reviewed progress in the integration of OBS since
the transaction closed in November 2007.
“Since we announced our Action Agenda in 2003, we have been
steadily building a strong, high-performance company for the long
term,” said Hassan. “We are seeing that the acquisition of OBS was
a smart, pivotal move in our transformation journey.”
Integration of OBS continues to progress well, as evidenced by
the following highlights:
— In the human prescription and animal health areas, the executive teams
and organizational structures are in place and operating at all levels;
— Cost synergies are being realized;
— In R&D, an extensive review of the pipeline portfolio is ongoing.
First Quarter 2008 Results
For the 2008 first quarter, Schering-Plough reported net income
available to common shareholders of $253 million or 15 cents per
common share on a GAAP basis. Earnings per common share for the
2008 first quarter would have been 53 cents on net income of $862
million on a reconciled basis, which excludes purchase accounting
adjustments and acquisition-related items for the OBS acquisition
and other specified items. For the 2007 first quarter,
Schering-Plough reported net income available to common
shareholders of $543 million or 36 cents per common share on a GAAP
basis and 42 cents per common share on a reconciled basis.
GAAP net sales for the 2008 first quarter totaled $4.7 billion,
including $1.3 billion as a result of the OBS acquisition. The
overall sales increase of
56 percent includes the impact of the OBS net sales and a
favorable impact of 7 percent from foreign exchange on stand-alone
Schering-Plough sales.
Global cholesterol joint venture net sales, which include
VYTORIN and ZETIA, totaled $1.2 billion in the 2008 first 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 first quarter would have been $5.3
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 $517
million in the 2008 first quarter, an increase of 6 percent versus
$487 million in the first quarter of 2007. 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 first quarter
totaled $3.6 billion. Included in the first quarter of 2008 are
$861 million in net sales related to Organon, the OBS human health
business acquired in 2007.
Sales of REMICADE increased 36 percent to $507 million in the
first quarter of 2008 due to continued market growth and expanded
use. 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 8 percent to $307 million versus the 2007 period,
due to increased sales in international markets, partially offset
by a decline in sales in the United States.
Sales of TEMODAR, a treatment for certain types of brain tumors,
grew 20 percent to $236 million due to increased sales across all
geographic regions.
Sales of PEGINTRON for hepatitis C increased 4 percent to $225
million in the 2008 first quarter due to higher sales in Latin
America, emerging markets across Europe and a favorable impact from
foreign exchange, tempered by lower sales in Japan and the United
States.
Sales for FOLLISTIM/PUREGON, a fertility treatment, for the
first quarter of 2008 were $145 million. Sales for NUVARING, a
contraceptive product, in the 2008 first quarter were $96 million.
Both products were obtained as part of the OBS acquisition.
Global sales of CLARINEX, a nonsedating antihistamine, in the
first quarter of 2008 were $213 million, up 4 percent as compared
to sales of $204 million in the first quarter of 2007. Higher sales
of CLARINEX in international markets were partially offset by lower
sales in the United States.
International sales of prescription CLARITIN were $128 million
in the first quarter of 2008, a 14 percent increase compared to
sales of $112 million in the first quarter of 2007 as a result of
increased sales in Japan due to an early allergy season and
favorable foreign exchange.
Sales of the antibiotic AVELOX were up 24 percent to $142
million as a result of increased market share.
Animal Health sales totaled $723 million in the 2008 first
quarter. Included in the first quarter of 2008 were net sales of
$454 million related to Intervet, the OBS animal health business.
Sales benefited from solid growth in all geographic areas, coupled
with a positive impact from foreign currency exchange rates.
Consumer Health Care sales were $377 million in the 2008 first
quarter, up 9 percent versus the 2007 period. The increase was
primarily due to sales of MIRALAX, which was launched in February
2007 as the first Rx-to-OTC switch in the laxative category in more
than 30 years, as well as higher sales of OTC CLARITIN, which grew
despite the aggressive launch of a competing OTC cetirizine allergy
product.
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
54.1 percent for the 2008 first quarter as compared to 68.5 percent
in the 2007 period. The gross margin percentage excluding purchase
accounting adjustments was 68.9 percent in the first quarter of
2008.
SG&A expenses were $1.7 billion in the first quarter of 2008
versus $1.2 billion in the prior-year period. SG&A in the first
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 first quarter
increased to $880 million compared to $707 million in the first
quarter of 2007. Included in R&D spending in the first quarter
of 2007 was $96 million related to upfront payments 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:
— Entered into an expanded agreement with OraSure Technologies, Inc. to
include worldwide rights to develop and promote a rapid oral hepatitis
C virus (HCV) test. (Announced Feb. 11)
— Announced submission to the U.S. Food and Drug Administration (FDA) of
a New Drug Application for ZEGERID (omeprazole/sodium bicarbonate) as a
branded over-the-counter product to treat frequent heartburn.
(Announced March 11)
— The FDA’s Advisory Committee on Anesthetics and Life Support
unanimously recommended approval of sugammadex, which if approved would
be the first and only selective relaxant binding agent for use with
surgical anesthesia. (Announced March 11)
— Announced with Centocor, Inc. submission of a Marketing Authorization
Application to the European Medicines Agency requesting approval of
golimumab as a monthly subcutaneous treatment for adults with
rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis.
(Announced March 18)
— Announced the launch of two new sunscreen products with an SPF of 70,
the highest protection rating available to consumers in a continuous
spray. (Announced March 18)
— Gained FDA approval of label revisions for PEGINTRON (peginterferon
alfa-2b) and REBETOL (ribavirin, USP) combination therapy for chronic
hepatitis C, recommending weight-based dosing of REBETOL based on
patient body weight. (Announced March 27)
— The Merck/Schering-Plough joint venture announced results of the
ENHANCE ultrasound imaging trial. (Announced March 30)
— Announced a major new Productivity Transformation Program (PTP) to
reduce and avoid costs and increase productivity to generate a total of
$1.5 billion in targeted annual savings and synergies. (Announced
April 2)
— Announced adoption of a new governance requirement to strengthen the
alignment of executives with the interests of shareholders: a two-year
holding period for shares acquired by Executive Management Team members
upon the exercise of stock options. (Announced April 11)
— Announced initiation of a Phase II clinical study with vicriviroc, an
investigational CCR5 antagonist, for use in first-line therapy of adult
treatment-naive HIV-infected patients with R5-type virus only.
(Announced April 15)
First Quarter 2008 Conference Call and Webcast
Schering-Plough will conduct a conference call today at 8 a.m.
(EDT) to review the 2008 first quarter results. To listen live to
the call, dial 1-877- 565-9664 or 1-706-634-5003 and enter
conference ID #40651446. A replay of the call will be available
starting at approximately 11 a.m. on April 23 through 5 p.m. on May
22. To listen to the replay, dial 1-800-642-1687 or 1-706-645-9291
and enter the conference ID #40651446. 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,
www.schering-plough.com, and
clicking on the “Presentations/Webcasts” link. A replay of the
Webcast will be available starting on April 23 through 5 p.m. on
May 22.
DISCLOSURE NOTICE: The information in this press release, the
comments of Schering-Plough officers during the earnings
teleconference/webcast on April 23, 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; 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 2007 10-K/A.
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 www.schering-plough.com.
SCHERING-PLOUGH CORPORATION
U.S. GAAP report for the first quarter ended March 31 (unaudited):
(Amounts in millions, except per share figures)
First Quarter
2008 2007
Net sales 1/ $4,657 $2,975
Cost of sales 2/ 2,137 937
Selling, general and administrative 1,676 1,213
Research and development 3/ 880 707
Other expense/(income), net 95 (48)
Special and acquisition-related charges 4/ 23 1
Equity income (517) (487)
Income before income taxes 363 652
Income tax expense 72 87
Net income $291 $565
Preferred stock dividends 38 22
Net income available to common shareholders $253 $543
Diluted earnings per common share $0.15 $ 0.36
Average common shares outstanding - diluted 1,637 1,571
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 months ended March 31, 2008, include sales of
$1.3 billion from Organon BioSciences (OBS), which was acquired on
November 19, 2007.
2/ Cost of sales for the three months ended March 31, 2008 includes
purchase accounting adjustments of $688 million related to the
acquisition of OBS.
3/ Research and development for the three months ended March 31, 2007
includes $96 million related to upfront R&D payments.
4/ Special and acquisition-related charges for the three months ended
March 31, 2008 reflect $23 million related to the acquisition of OBS.
Special and acquisition-related charges for the three months ended
March 31, 2007 reflect $1 million related to the acquisition of OBS.
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, acquisition-related items and
other specified charges or benefits.
“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, acquisition-related items and
other specified charges or benefits 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 March 31, 2008
(unaudited)
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $4,657 $ - $ - $ - $4,657
Cost of sales 2,137 (688) - - 1,449
Selling, general
and administrative 1,676 (1) - - 1,675
Research and development 880 (2) - - 878
Other expense, net 95 - - 17 112
Special and acquisition-
related charges 23 - (23) - -
Equity income (517) - - - (517)
Income before income
taxes 363 691 23 (17) 1,060
Income tax expense 72 91 2 (5) 160
Net income $291 $600 $21 $(12) $900
Preferred stock
dividends 38 - - - 38
Net income available to
common shareholders $253 $600 $21 $(12) $862
Diluted earnings per
common share $0.15 $0.53
Average common shares
outstanding-diluted 1,637 1,637
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 March 31, 2007
(unaudited)
Purchase Acquisition- Other
As Accounting Related Specified As
Reported Adjustments Items Items Reconciled
Net sales $2,975 $ - $ - $ - $2,975
Cost of sales 937 - - - 937
Selling, general
and administrative 1,213 - - - 1,213
Research and development 707 - - (96) 611
Other income, net (48) - 3 - (45)
Special and acquisition-
related charges 1 - (1) - -
Equity income (487) - - - (487)
Income before income taxes 652 - (2) 96 746
Income tax expense 87 - - - 87
Net income $565 $ - $(2) $96 $659
Preferred stock dividends 22 - - - 22
Net income available to
common shareholders $543 $ - $(2) $96 $637
Diluted earnings per
common share $0.36 $0.42
Average common shares
outstanding-diluted 1,571 1,571
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:
First Quarter
(unaudited)
2008 2007
Purchase accounting adjustments:
Amortization of intangibles in connection
with the acquisition of Organon
BioSciences (a) $132 $-
Depreciation related to the fair value
adjustment of fixed assets related to the
acquisition of Organon BioSciences (b) 8 -
Charge related to the fair value adjustment
to inventory related to the acquisition of
Organon BioSciences (a) 551 -
Total purchase accounting adjustments,
pre-tax 691 -
Income tax benefit 91 -
Total purchase accounting adjustments $600 $ -
Acquisition-related items:
Acquisition-related gains on currency-related
items (d) $- $(3)
Integration-related activities (e) 23 1
Total acquisition-related items, pre-tax 23 (2)
Income tax benefit 2 -
Total acquisition-related items $21 $(2)
Other specified items:
(Gain) on sale of manufacturing plant (d) (17) -
Upfront R&D payments (c) - 96
Total other specified items, pre-tax (17) 96
Income tax expense (5) -
Total other specified items $(12) $96
Total purchase accounting adjustments,
acquisition-related items and other specified
items $609 $94
(a) Included in cost of sales
(b) Included in cost of sales, 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
SCHERING-PLOUGH CORPORATION
Report for the period ended March 31 (unaudited):
GAAP Net Sales by Key Product
(Dollars in millions) First Quarter
2008 2007 %
HUMAN PRESCRIPTION PHARMACEUTICALS a/ $3,557 $2,398 48%
REMICADE 507 373 36%
NASONEX 307 284 8%
TEMODAR 236 196 20%
PEGINTRON 225 217 4%
CLARINEX / AERIUS 213 204 4%
FOLLISTIM/PUREGON c/ 145 - N/M
AVELOX 142 115 24%
CLARITIN RX 128 112 14%
NUVARING c/ 96 - N/M
INTEGRILIN 74 84 (13%)
CAELYX 74 62 20%
REMERON c/ 68 - N/M
ZEMURON c/ 63 - N/M
REBETOL 59 71 (17%)
INTRON A 55 60 (8%)
SUBUTEX / SUBOXONE 54 56 (4%)
PROVENTIL / ALBUTEROL CFC 50 53 (5%)
ELOCON 45 36 23%
LIVIAL c/ 45 - N/M
CERAZETTE c/ 44 - N/M
MERCILON c/ 43 - N/M
ASMANEX 42 43 (1%)
IMPLANON c/ 38 - N/M
MARVELON c/ 37 - N/M
NOXAFIL 34 16 115%
FORADIL 25 26 (3%)
Other Pharmaceuticals 708 390 82%
ANIMAL HEALTH b/ 723 232 211%
CONSUMER HEALTH CARE 377 345 9%
OTC 209 177 18%
OTC CLARITIN 139 127 9%
Foot Care 85 78 9%
Sun Care 83 90 (7%)
CONSOLIDATED GAAP NET SALES $4,657 $2,975 56%
a/ Total Human Prescription Pharmaceuticals net sales for the three months
ended March 31, 2008 include net sales of $861 million from Organon,
the human health segment of Organon BioSciences (OBS), which was
acquired on November 19, 2007.
b/ Total Animal Health net sales for the three months ended March 31, 2008
include net sales of $454 million from Intervet, 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 March 31
(unaudited)
2008 2007 %
Net sales, as reported a/ $4,657 $2,975 56%
50 percent of cholesterol joint
venture net sales b/ 607 575 6%
Adjusted net sales b/ $5,264 $3,550 48%
a/ Net sales for the three months ended March 31, 2008 include sales from
Organon BioSciences (OBS), which was acquired on November 19, 2007.
b/ Total net sales of the cholesterol joint venture for both the three
months ended March 31, 2008 and 2007 were $1.2 billion.
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 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.
CONTACT: Media, Steve Galpin, Jr., 1-908-298-7415, or
Investors, AlexKelly, 1-908-298-7436, both of Schering-Plough
Corporation
Web site: http://www.schering-plough.com/
Company News On-Call: http://www.prnewswire.com/comp/777050.html
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