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 March 31, 1994
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 March 31, 1994: 193,141,604
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
(Dollars in millions, except per share figures)
1994 1993
Sales. . . . . . . . . . . . . . . . . . . $ 1,161.6 $ 1,089.6
Costs and expenses:
Cost of sales . . . . . . . . . . . . 247.3 234.2
Selling, general
and administrative. . . . . . . . . 443.4 427.8
Research and development. . . . . . . 142.0 132.9
Other, net. . . . . . . . . . . . . . (4.2) 2.6
828.5 797.5
Income before income taxes . . . . . . . . 333.1 292.1
Income taxes. . . . . . . . . . . . . 79.9 68.6
Income before cumulative effect of
accounting change . . . . . . . . . . 253.2 223.5
Cumulative effect of accounting change . . - (94.2)
Net income . . . . . . . . . . . . . . . . $ 253.2 $ 129.3
Earnings per common share before
cumulative effect of accounting
change. . . . . . . . . . . . . . . . $ 1.31 $ 1.13
Cumulative effect of accounting change . . - (.48)
Earnings per common share. . . . . . . . . $ 1.31 $ .65
Dividends per common share . . . . . . . . $ .45 $ .39
See notes to consolidated financial statements.
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions, except per share figures)
<CAPTION>
March 31, December 31,
1994 1993
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . $ 110.6 $ 222.2
Short-term investments. . . . . . . . . . 116.2 207.2
Accounts receivable, net. . . . . . . . . 791.0 687.1
Inventories . . . . . . . . . . . . . . . 428.8 404.6
Prepaid expenses, deferred income
taxes and other current assets . . . . . 389.1 379.4
Total current assets. . . . . . . . . 1,835.7 1,900.5
Property, plant and equipment . . . . . . 2,881.9 2,838.9
Less accumulated depreciation . . . . . . 893.5 871.2
Property, net . . . . . . . . . . . . 1,988.4 1,967.7
Intangible assets, net. . . . . . . . . . 174.8 182.5
Other assets. . . . . . . . . . . . . . . 271.3 266.2
$4,270.2 $4,316.9
Liabilities and Shareholders' Equity
Accounts payable. . . . . . . . . . . . . $ 228.7 $ 249.0
Short-term borrowings and current
portion of long-term debt. . . . . . . . 911.8 1,076.0
Other accrued liabilities . . . . . . . . 787.0 807.4
Total current liabilities . . . . . . 1,927.5 2,132.4
Long-term debt. . . . . . . . . . . . . . 181.5 182.3
Other long-term liabilities . . . . . . . 427.3 420.3
Shareholders' Equity:
Preferred shares - $1 par value
each; issued - none. . . . . . . . . . . - -
Common shares - $1 par value each;
issued - 251,482,691 shares . . . . . . 251.5 251.5
Paid-in capital . . . . . . . . . . . . . 86.0 80.9
Retained earnings . . . . . . . . . . . . 3,601.6 3,435.6
Foreign currency translation
adjustment and other . . . . . . . . . . (103.8) (116.2)
Total . . . . . . . . . . . . . . . . 3,835.3 3,651.8
Less treasury shares, at cost - 1994,
58,341,087 shares; 1993, 57,927,994
shares . . . . . . . . . . . . . . . . . 2,101.4 2,069.9
Total shareholders' equity. . . . . . 1,733.9 1,581.9
$4,270.2 $4,316.9
<FN>
See notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
(Dollars in millions)
<CAPTION>
1994 1993
<S> <C> <C>
Operating Activities:
Net income. . . . . . . . . . . . . . . . $ 253.2 $ 129.3
Depreciation and amortization . . . . . . 38.3 33.1
Working capital changes - source (use):
Accounts receivable. . . . . . . . . . . (90.2) (1.1)
Inventories. . . . . . . . . . . . . . . (11.7) (12.2)
Other current assets . . . . . . . . . . 1.5 (26.1)
Accounts payable and other accrued
liabilities . . . . . . . . . . . . . . (47.2) 1.9
Other, net. . . . . . . . . . . . . . . . (1.7) (25.7)
Net cash provided by operating
activities . . . . . . . . . . . . . . . 142.2 99.2
Investing Activities:
Reduction of investments. . . . . . . . . 193.2 1.4
Purchases of investments. . . . . . . . . (104.8) (.8)
Capital expenditures. . . . . . . . . . . (59.2) (84.8)
Other, net. . . . . . . . . . . . . . . . .2 (.9)
Net cash provided by (used for) investing
activities. . 29.4 (85.1)
Financing Activities:
Net change in short-term borrowings . . . (168.2) 108.8
Dividends paid to common shareholders . . (87.1) (77.8)
Common shares repurchased . . . . . . . . (31.1) (275.7)
Proceeds from other equity transactions . 3.4 3.3
Other, net. . . . . . . . . . . . . . . . - (17.9)
Net cash used for financing activities. . (283.0) (259.3)
Effect of Exchange Rates on Cash and
Cash Equivalents. . . . . . . . . . . . . (.2) (.5)
Net Decrease in Cash and
Cash Equivalents. . . . . . . . . . . . . (111.6) (245.7)
Cash and Cash Equivalents, Beginning
of Period . . . . . . . . . . . . . . . . 222.2 406.3
Cash and Cash Equivalents, End of Period . $ 110.6 $ 160.6
<FN>
See notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
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 1993
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.
Investment Securities
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 (SFAS No. 115),
"Accounting for Certain Investments in Debt and Equity
Securities". SFAS No. 115 requires that all investments subject
to its provisions, except those that will be held to maturity, be
carried at fair value. All of the Company's investment
securities are available for sale, and, accordingly, are carried
at fair value. There was no effect on income as a result of
adopting SFAS No. 115.
The fair value of investment securities subject to the provisions
of SFAS No. 115, excluding cash equivalents, totaled $199.9 at
March 31, 1994. This includes $116.2 in short-term investments
and $79.8 of securities held in trust for employee benefit
purposes. Substantially all investments in debt securities
mature within one year. Unrealized gains and losses at March 31,
1994, and realized gains and losses during the quarter ended
March 31, 1994, based on the specific identification method, were
not material.
Inventories
Inventories consisted of:
March 31, December 31,
1994 1993
Finished products . . . . . . . $ 149.8 $ 168.3
Goods in process. . . . . . . . 96.9 95.5
Raw materials and supplies. . . 182.1 140.8
Total inventories . . . . . . $ 428.8 $ 404.6
<PAGE>
Sales
Sales for the three months ended March 31, 1994 and 1993 were as
follows:
1994 1993
Pharmaceutical products . . . . $ 951.7 $ 869.0
Health care products. . . . . . 209.9 220.6
Consolidated sales. . . . . . $1,161.6 $1,089.6
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 three months ended March 31, 1994 and 1993 were
193,489,000 and 198,032,000 respectively.
Interest Income and Interest Expense
Interest income for the three months ended March 31, 1994 and
1993 was $3.9 and $5.8, respectively. Interest expense for the
three months ended March 31, 1994 and 1993 was $10.6 and $7.8,
respectively. Interest income and expense are included in other,
net.
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 March 31, 1994, were not
material. Management believes that it is remote that costs
materially in excess of the amounts accrued for these matters
will be incurred.
<PAGE>
Item 2. Managements' Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - three months ended March 31, 1994
compared with the corresponding period in 1993.
Consolidated sales for the first quarter increased $72.0 million
or 7 percent compared with the same period in 1993. Excluding
the effect of foreign currency exchange rate changes,
consolidated sales advanced 8 percent.
In the United States, many of the Company's pharmaceutical
products are subject to competitive pricing as managed care
groups, institutions and the government seek price discounts.
The Clinton health care reform proposal includes several measures
that, if enacted, will have an impact on operations of the
Company. These measures include, but are not limited to, the
requirement of all health plans to offer prescription drug
coverage, the extension of Medicare coverage to include
outpatient drugs, and rebates on Medicare sales.
In most international markets, the Company operates in an
environment of government-mandated cost containment programs.
Sales in Japan have declined in 1994 due to lower sales of INTRON
A, the Company's alpha-2 interferon anticancer and antiviral
agent. Management expects total 1994 sales of INTRON A to
decline in Japan as a result of the recently announced
government-mandated price reduction and a significant drop in the
alpha interferon market. In addition, operations in several
European countries have been impacted by the implementation of
various cost-containment programs and across-the-board price
reductions.
Because the Company is unable to predict the final form and
timing of various domestic and international governmental health
care reform proposals, their effect on future operations and cash
flows cannot be reasonably estimated.
Sales
Domestic prescription pharmaceutical sales increased 15 percent
for the 1994 first quarter. Sales of respiratory products rose
30 percent reflecting incremental sales of CLARITIN, a once-daily
nonsedating antihistamine, following Food and Drug Administration
(FDA) approval in April 1993. Sales growth was also recorded for
the PROVENTIL line of asthma products due to higher prescription
levels for the inhaler formulation. In January 1994, the FDA
issued bioequivalence standards for generic albuterol metered
dose inhalers. Generic entries into the market are not expected
until late 1994 or early 1995. The introduction of such generic
competition will negatively affect sales and profitability of
PROVENTIL. Respiratory growth was moderated by lower sales of
THEO-DUR, a sustained-action theophylline, reflecting increased
generic competition.
U.S. sales of cardiovascular products advanced 7 percent due to
the timing of promotional programs for NITRO-DUR transdermal
nitroglycerin patches and gains for K-DUR potassium supplements.
Sales of dermatological products decreased 19 percent, primarily
reflecting the timing of wholesaler purchases of LOTRISONE, an
antifungal/anti-inflammatory cream.
Domestic sales of the Wesley-Jessen vision care business rose 39
percent in the first quarter due to promotional programs for
colored lenses and the introduction of FRESHLOOK disposable
contact lenses. Animal health product sales increased 20 percent
reflecting incremental sales of OTOMAX, a treatment for canine
ear infections.
International pharmaceutical sales grew 7 percent in the first
quarter after excluding the impact of foreign currency exchange
fluctuations. Sales of respiratory products increased 6 percent,
led by growth for CLARITIN in Latin America. Dermatological
products advanced 12 percent due to gains for topical steroids.
Foreign market sales of anti-infective and anticancer products
were down 9 percent due to the decline of INTRON A in Japan.
This shortfall was moderated by higher sales of CEDAX, a third-
generation cephalosporin, and EULEXIN, a therapy for advanced
prostate cancer.
Health care product sales decreased 5 percent in the first
quarter reflecting lower sales of female health and allergy/cold
products due to the intensely competitive nature of these
categories. These shortfalls were tempered by higher sales of
the upgraded and repackaged DR. SCHOLL'S corn/callus/bunion line,
and new line extensions for LOTRIMIN AF.
Income before income taxes increased 14 percent in the first
quarter, and represented 28.7 percent of sales compared with 26.8
percent in 1993.
Cost of sales as a percentage of sales declined to 21.3 percent
in the first quarter from 21.5 percent last year, reflecting a
favorable sales mix of higher margin ethical pharmaceutical
products, mainly CLARITIN, and continuing cost containment
programs.
Selling, general and administrative expenses represented 38.2
percent of sales for the first three months of 1994 compared with
39.3 percent in 1993. The improved ratio occurred as selling and
promotional spending slowed in international markets.
Research and development spending increased 7 percent for the
first quarter and represented 12.2 percent of sales in both the
1994 and 1993 periods. It is anticipated that total research and
development expenses will approximate $630 million in 1994.
The effective tax rate was 24.0 percent for the first quarter of
1994, compared with 23.5 percent in 1993.
The Omnibus Budget Reconciliation Act of 1993 (The "Act")
increases the U.S. corporate tax rate from 34 percent to 35
percent, restricts deductibility of certain operating expenses,
reduces the tax benefit generated from operations in Puerto Rico
and, in certain circumstances, taxes a portion of undistributed
earnings of foreign subsidiaries. Management estimates that the
primary impact on the Company is the reduction in the benefit
arising from its operations in Puerto Rico. This reduction in
benefit is to be phased-in over a five-year period.
The impact of the Act on the 1994 effective tax rate was less
than the Company had originally anticipated. However, management
does estimate the Act will unfavorably impact the effective tax
rate an additional 1.5 to 2.0 percentage points by 1996.
Accounting Change
During the first quarter of 1993, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions". In
connection with this adoption, the Company fully funded its
initial accumulated benefit obligation. The cumulative effect of
adopting SFAS No. 106 was a one-time, after-tax charge of $94.2
million, or $.48 per common share.
Earnings per common share before the accounting change increased
16 percent in the first quarter to $1.31 from $1.13 in 1993.
Excluding the impact of changes in foreign currency exchange
rate, earnings per common share before the accounting change
would have risen approximately 19 percent in the first quarter.
Liquidity and financial resources - three months ended March 31,
1994.
During the first three months of 1994, total cash and
investments, which includes principally cash and cash equivalents
and short- term investments, declined $203.3 million and total
debt decreased $165.0 million. These changes increased the
Company's net debt position (debt less cash and investments) to
$862.6 million from $824.3 million at year-end 1993. The
unfavorable change in the net debt position does not reflect an
unusual occurrence as heavy seasonal sales in the first quarter
are normal. Cash provided from operations amounted to $142.2
million for the first three months of 1994. However, spending of
$87.1 million for shareholder dividends, $59.2 million for
capital expenditures and $31.1 million for common share
repurchases caused the net debt position to increase.
In February 1993, the Board of Directors authorized the purchase
of $500 million of the Company's shares. As of March 31, 1994,
this program was approximately 84 percent complete.
The Company's liquidity and financial resources continue to be
sufficient to meet its operating needs.<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in more than sixty antitrust lawsuits
filed in state and federal courts in several states, including
California, Georgia, Illinois, Louisiana, Minnesota, New York,
Pennsylvania, South Carolina and Texas. More than fifty of these
are class action lawsuits. These actions were commenced in the
second half of 1993 and in 1994 by independent and chain
pharmacies against the Company and other pharmaceutical
manufacturers, and in some instances, wholesalers and mail order
pharmacies, alleging (1) conspiracy to restrain trade by jointly
refusing to sell pharmaceuticals at discounted prices to
plaintiffs, and/or (2) price discrimination. The federal cases
have all been consolidated in the United States District Court
for the Northern District of Illinois for pre-trial and possibly
trial purposes. Plaintiffs seek treble damages in an unspecified
amount and an injunction against the allegedly unlawful conduct.
The Company has not conspired to restrain trade and believes that
its pricing practices have been and are in compliance with the
law. The Company will defend itself vigorously against the
claims in all these actions. While it is not feasible to predict
or determine the outcome of these actions, management believes
that such actions should not result in any liability which would
have a material adverse effect on the Company's consolidated
financial position or results of operations.
Item 4. Submission of Matter to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on April 26,
1994.
(b) Not applicable.
(c) The designation of Deloitte & Touche to audit the books and
accounts of the Company for the year ending December 31,
1994 was ratified by a vote of shares, as follows:
FOR AGAINST ABSTAIN
173,233,080 424,435 522,106
All of the nominees for director were elected for a three
year term by a vote of shares, as follows:
FOR WITHHELD
David C. Garfield 172,927,613 1,252,008
Robert P. Luciano 172,941,539 1,238,082
H. Barclay Morley 172,919,080 1,260,541
<PAGE>
Approval of Executive Incentive Bonus Program including
Performance Goals, by a vote of shares, as follows:
FOR AGAINST ABSTAIN
161,480,059 9,134,788 3,564,744
(d) None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit 10 - The Company's Executive Incentive Plan (as
amended) filed with this document.
Exhibit 11 - Computation of Earnings Per Common Share
filed with this document
b) Reports on Form 8-K:
No report has been filed during the three months ended March
31, 1994.
<PAGE>
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 May 4, 1994 /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
Exhibit 10
SCHERING-PLOUGH CORPORATION
EXECUTIVE INCENTIVE PLAN
As amended to January 25, 1994
Article I -- Definitions
The following words and phrases, as used herein, have the
following meaning unless a different meaning is plainly required by
the context:
"Affiliated Company" - any corporation, partnership, or
other legal entity controlled
directly or indirectly by the
Company.
"Board" - the Board of Directors of the
Company.
"Committee" - the Executive Compensation and
Organization Committee appointed by
the Board.
"Company" - Schering-Plough Corporation, a New
Jersey corporation.
"Company Stock" - the Common Shares, par value $l per
share, of the Company.
"Company Stock Unit
Account" - an account established to record
the aggregate of all Company Stock
Units credited to the account of
Participants under the Plan, or any
predecessor Executive Incentive
Plan.
<PAGE>
"Former Participant" - a person no longer in the employ of
the Company who is entitled to
receive a distribution under the
Plan or any predecessor Executive
Incentive Plan.
"Fund A" - a fund deemed to be invested in the
Merrill Lynch one- to ten-year
Treasury Index.
"Fund B" - a fund deemed to be invested in the
Standard and Poors 500 Index.
"Fund C" - a fund deemed to be invested in
thirty-day United States Treasury
Bills.
"Participant" - any employee of the Company who is
designated by the Committee to
participate in the Plan.
"Plan" - this Plan, either in its present
form or as hereafter amended.
"Terminated Participant" - any employee who has been removed
from further participation in the
Plan or any predecessor Executive
Incentive Plan by action of the
Committee.
Article II -- Purposes
The purposes of the Plan are to: (a) improve Company and
individual performance through financial incentives which provide
rewards to executives and managers whose activities most
significantly affect Company profitability; (b) support the
Company's planning efforts and encourage cooperation and group
effort toward the attainment of Company goals; (c) help attract and
retain outstanding executives and managers.
Article III -- Awards
1. The Committee shall, prior to or during the first quarter
of each calendar year, establish criteria for determining the
incentive awards for such calendar year for Participants in the
Plan. In establishing the criteria, the Committee may, in its
discretion, consider the following: (a) the number of
Participants; (b) projected Company and industry performance; and
(c) such other factors it may deem appropriate, including
conditions in the general economy and in the industry.
2. As soon as practicable after the close of each calendar
year, the Committee shall determine the actual incentive awards to
be made to the Participants, provided, however, that prior to the
close of such calendar year, the Committee may estimate the actual
incentive award to be made to all or certain of the Participants
and may authorize the immediate distribution of all or any portion
thereof to such Participants, and provided further, however, that
during any such calendar year the Committee may, in its discretion,
determine incentive awards for the portion of the year preceding
such determination and may authorize the immediate distribution of
such awards to all or certain of the Participants.
In determining such awards the Committee may consider, inter
alia, the following: (a) the salary of each Participant; (b) the
level of executive or managerial responsibility; and (c) the
performance of each Participant.
3. Upon the retirement, disability or death of a
Participant, or upon a transfer to an Affiliated Company of a
Participant who is no longer to participate in the Plan, the
Committee may, in its discretion, make an award to such Participant
or his beneficiary or estate for the calendar year in which such
retirement, disability, death or transfer takes place, which award
shall be based on the portion of the year preceding the date of
such retirement, disability, death or transfer. The expression
"disability" as used herein shall mean total and permanent
disability and shall be evidenced by the certification of a medical
examiner acceptable to the Committee, to the effect that the
Participant, as a result of mental or physical disability, is
prevented from engaging in any occupation or employment for wage or
profit and that such disability will probably continue for the
remainder of the Participant's life.
4. Unless the Committee shall have authorized the
distribution to a Participant of an estimated or partial award
during the calendar year, no award shall be made to any Participant
with respect to any calendar year during which his employment is
terminated for any reason other than retirement, disability or
death.
5. For purposes of the Plan, employment by an Affiliated
Company shall be deemed to be employment by the Company.
Article IV -- Distribution
1. Except as described below, distributions of estimated,
partial, or actual awards shall be made to Participants as soon as
practicable following the determination thereof by the Committee
and in any event on or about March 1st of the year following the
calendar year for which an award is made (the "Distribution Date").
2. In lieu of the normal method of distribution described
above, a Participant may, prior to the commencement of any year, or
with respect to a new Participant prior to his date of commencement
of participation, elect to have all or any part of the award for
such year deferred until the earliest of his retirement,
disability, death, or other termination of employment (herein
called "the deferral period"). Such election may include an
election as to the number of annual installments, in multiples of
five but not exceeding thirty, over which such award shall be paid.
If no installments are specified, the election shall be deemed an
election to receive the deferred award in a lump sum. Lump sum
payments and the first of any installment payments shall be made on
the 90th day after the termination of the deferral period or, at
the Participant's election, made at the time of the election to
defer an award, on the April 1st of the calendar year following the
year of the termination of such deferral period. The amount of a
deferred award shall be expressed and credited to each Participant
in terms of compensation units (herein called "Units") which shall,
in accordance with the election of the Participant, consist of Fund
A Units, Fund B Units, Fund C Units, or Company Stock Units, or any
combination thereof. A Participant may elect a separate deferral
period and separate payment schedules with respect to Fund A Units,
Fund B Units, Fund C Units or Company Stock Units. The cash
equivalent of all deferred awards designated as Fund A Units, Fund
B Units, and Fund C Units shall be credited respectively to the
Fund A Account, the Fund B Account, and the Fund C Account. The
aggregate deferred awards designated as Company Stock Units shall
be credited to the Company Stock Unit Account.
The foregoing elections shall be irrevocable.
3. The Company shall establish a separate deferred account
for each Participant representing his participation in Fund A, Fund
B, Fund C, or the Company Stock Unit Account. As of each
Distribution Date, the Company shall credit to each such deferred
account of each Participant a number of Units and fractional Units
equal to the number of Units and fractional Units determined by
dividing the amount of such Participant's deferred award by the
Unit Value of Fund A, Fund B, Fund C or one share of Company Stock,
whichever is applicable.
The Unit Value of Fund A, Fund B, and Fund C shall be
determined as of any valuation date by dividing the fair market
value of each of such Funds at such date by the number of Units
then outstanding to the credit of all Participants, Former
Participants or Terminated Participants, respectively, with respect
to each such Fund, excluding amounts to be credited as of such
date. The Unit Value of one share of Company Stock for various
purposes hereunder shall be the closing price of one share of
Company Stock on the New York Stock Exchange on the day in
question; or if there were no sales on that day, then the closing
price on such Exchange on the nearest preceding day on which there
were sales.
4. When dividends are paid from time to time with respect to
Company Stock, the Company shall calculate the amount which would
have been payable in cash or property on the total Company Stock
Units in all deferred accounts on each dividend payment date as if
each Company Stock Unit represented one issued and outstanding
share of Company Stock. The number of Company Stock Units equal to
the aggregate amount of such dividends (based on the Unit Value of
one share of Company Stock on the payment date with respect to such
dividend) shall be credited to the Company Stock Unit Account, and
each deferred account representing a participation in the Company
Stock Unit Account shall be credited with its pro rata share of
such number of Company Stock Units. In the event of any capital
stock adjustment to Company Stock, the Company Stock Unit Account
and each such deferred account shall be correspondingly adjusted as
of the date of such capital stock adjustment.
5. Upon expiration of any deferral period, an amount of cash
equal to the Unit Value of Units credited to a Participant's,
Terminated Participant's, or Former Participant's deferred accounts
shall be payable either in a lump sum or in the number of annual
installments payable as specified by a Participant in his election
under paragraph 2 of this Article. Any lump sum payment shall be
valued as of the end of the most recent calendar month prior to the
payment date. The amount of each installment payment shall be
determined by dividing the aggregate Unit Value of the Units
credited to the Participant's, Terminated Participant's or Former
Participant's deferred accounts valued as of the end of the most
recent calendar month prior to the payment date by the remaining
number of unpaid installments; provided, however, that the
Committee may, in its absolute discretion, approve any other method
of determining the amount of each installment payment in order to
achieve approximately equal installment payments over the
installment period. The Committee may, in its sole discretion,
where a Participant, Terminated Participant or Former Participant
has terminated his employment and where it finds such action
necessary to avoid severe financial hardship to a Participant,
Terminated Participant or Former Participant or their respective
beneficiaries, direct at any time that payment of any installment
or lump sum be accelerated or that any remaining installments due
to a Participant, Terminated Participant or Former Participant or
their respective beneficiaries or estates shall be paid in a lump
sum. A severe financial hardship must result from the illness of
or an unexpected accident or casualty to the Participant,
Terminated Participant or Former Participant or a member of his or
her family or to his or her property, or due to other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant, Terminated
Participant or Former Participant. A severe financial hardship
shall not exist to the extent the loss or expense is covered by
insurance or can be met by the sale of other liquid assets of the
Participant, Terminated Participant or Former Participant.
Unforeseeable hardship shall not include the college expenses of a
child or the costs of purchasing a residence. The amount of any
distribution hereunder shall not exceed the amount needed to meet
the severe financial hardship. Any benefits payable under the Plan
shall be equitably reduced to reflect any payments made from any
trust established by the Corporation to meet its obligations under
this Plan.
6. Designations of beneficiaries shall be made in writing
filed with the Company in such form and in such manner as the
Company may from time to time prescribe. Beneficiaries may be
changed by a Participant, Terminated Participant or Former
Participant in the same manner at any time prior to death, and may
thereafter be designated or changed by a surviving beneficiary
eligible to receive any payment unless a successor beneficiary to
such surviving beneficiary has been designated by the Participant,
Terminated Participant, Former Participant or prior beneficiary.
If a Participant, Terminated Participant, Former Participant or
beneficiary eligible to receive any payment dies without a
surviving beneficiary having been designated, or with his estate or
a trust designated as the beneficiary, his interest under the Plan
shall be distributed to the legal representative of his estate, or
to the trustee of any such trust, in a lump sum on the 90th day
after his death.
7. A Participant, Former Participant, or Terminated
Participant who has a balance in any of the deferred accounts may
elect to have his interest in such accounts reallocated among the
deferred accounts as follows:
(i) the election shall be in writing and shall be
delivered to the Corporation on or before the 20th
calendar day of the month in which the reallocation is to
be effective;
(ii) the reallocation shall be effected as of the last
business day of the month designated, or as soon
thereafter as practicable;
(iii) a reallocation may only be made once during any
calendar year by a Participant, Former Participant, or
Terminated Participant; and
(iv) in no event may a Participant, Former Participant,
or Terminated Participant subject to Section 16 of the
Securities Exchange Act of 1934 reallocate any balance
from the Company Stock Unit Account to any other deferred
account.
Article V -- Committee Powers and Responsibilities
The Committee, in its sole discretion, shall designate
all Participants in the Plan, and may at any time remove any
Participant from further participation in the Plan. The Committee
shall have the exclusive power and authority, except as provided
herein, to interpret and administer the Plan. The Committee shall
act by a majority of the members present at a meeting at which a
quorum is present or by a majority of its members in writing
without a meeting, and such action shall constitute the action of
the Committee. The action of the Committee shall be final and
binding upon the Company and all interested parties.
Article VI -- Amendment or Termination
The Plan may be amended or terminated at any time by
action of the Board. In the event of termination, no awards shall
be made thereafter, except for a year preceding the year in which
termination occurs and provided that no such amendment or
termination shall affect any right or obligation with respect to
any award theretofore made, or the rights of a Participant,
Terminated Participant, Former Participant or beneficiary to
receive amounts credited to his deferred account.
Article VII -- Miscellaneous
1. Neither the establishment of the Plan nor
participation therein shall confer upon any person any right to be
continued as an employee of the Company or an Affiliated Company,
and the Company reserves the right to discharge any employee
whenever in its sole judgment the interest of the Company or an
Affiliated Company so requires.
2. All expenses of administering the Plan shall be paid
by the Company.
3. No benefit under the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge or subject to attachment,
garnishment, or other legal process.
4. The Plan shall be construed, administered and
enforced according to the laws of the State of New Jersey.
3296-1
Exhibit 11
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(Dollars in millions, except per share figures)
<CAPTION>
Three Months Ended
March 31,
1994 1993
<S> <C> <C>
Net Income Applicable to Common Shares. . . . . . $ 253.2 $ 129.3
Earnings per Common Share, As Reported:
Average Number of Common Shares
Outstanding (in thousands). . . . . . . . . . . 193,489 198,032
Earnings per Common Share. . . . . . . . . . . . $ 1.31 $ .65
Earnings per Common Share, Assuming
Full Dilution: (a)
Average Number of Common Shares
Outstanding (in thousands) . . . . . . . . . . 193,489 198,032
Shares Contingently Issuable for
Stock Incentive Plans (in thousands) . . . . . 2,170 2,911
Average Number of Common Shares and
Common Share Equivalents Outstanding
(in thousands) . . . . . . . . . . . . . . . . 195,659 200,943
Earnings per Common Share, Assuming
Full Dilution. . . . . . . . . . . . . . . . . $ 1.29 $ .64
<FN>
(a) This calculation is submitted in accordance with the regulations
of the Securities and Exchange Commission although not required
by APB Opinion No. 15 because it results in dilution of less
than 3%.
</TABLE>
<PAGE>
