SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K Annual Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995 Commission file
number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer
Madison, New Jersey 07940-1000 Identification No.)
(201) 822-7000 (telephone number)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Shares, $1 par value New York Stock
Exchange
Preferred Share Purchase Rights* New York Stock
Exchange
*At the time of filing, the Rights were not traded separately from
the Common Shares.
Indicate by check mark whether the registrant 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 has been
subject to such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. X
Common shares outstanding as of January 31, 1996: 364,253,452
Aggregate market value of common shares at January 31, 1996 held by
non-affiliates based on closing price: $19.7 billion.
Documents incorporated Part of Form 10-K
by reference incorporated into
Schering-Plough Corporation 1995
Annual Report to Shareholders Parts I, II and IV
Schering-Plough Corporation Proxy
Statement for the annual meeting of
shareholders on April 23, 1996 Part III <PAGE>
Part I
Item 1. Business
General
The terms "Schering-Plough" and the "Company," as used herein,
refer to Schering-Plough Corporation and its subsidiaries, except
as otherwise indicated by the context. Schering-Plough
Corporation is a holding company which was incorporated in 1970.
Subsidiaries of Schering-Plough Corporation are engaged in the
discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide. Products
include prescription drugs, animal health, over-the-counter
(OTC), foot care and sun care products.
Business Segment and Other Financial Information
The "Business Segment Data" as set forth in the Notes to
Consolidated Financial Statements in the Company's 1995 Annual
Report to Shareholders is incorporated herein by reference. The
company sold its contact lens business in 1995 and has reported
the business as a discontinued operation.
Sales by major product groups for continuing operations for each
of the three years in the period ended December 31, 1995 were as
follows (dollars in millions):
1995 1994 1993
Respiratory $1,834 $1,465 $1,185
Anti-infective and Anticancer 1,031 939 1,032
Dermatologicals 515 488 443
Cardiovasculars 408 333 316
Other Pharmaceuticals 493 489 399
OTC 250 264 312
Foot Care 240 248 240
Animal Health 190 167 154
Sun Care 127 129 131
Other Health Care Products 16 15 17
Consolidated Sales $5,104 $4,537 $4,229
Pharmaceutical Products
The Company's pharmaceutical operations include prescription
drugs and animal health products. Prescription products include:
CELESTAMINE, CLARITIN, CLARITIN-D, POLARAMINE, PROVENTIL, THEO-
DUR, TRINALIN, VANCENASE and VANCERIL, respiratory; CEDAX,
EULEXIN, GARAMYCIN, INTRON A, ISEPACIN and NETROMYCIN, anti-
infective and anticancer; DIPROLENE, DIPROSONE, ELOCON,
LOTRISONE, QUADRIDERM and VALISONE, dermatologicals; IMDUR,
K-DUR, NITRO-DUR and NORMODYNE, cardiovasculars; CELESTONE,
DIPROSPAN, LOSEC, NOIN, and PALACOS, other pharmaceuticals.
Animal health biological and pharmaceutical products include
antibiotics, vaccines, anti-arthritics, steroids and
nutritionals. Major animal health products are: GENTOCIN and
NUFLOR, antibiotics; BANAMINE, an anti-arthritic; OTOMAX, a
steroid ointment and OPTIMMUNE, an ophthalmic ointment.
Pharmaceutical products also include pharmaceutical chemical
substances sold in bulk to third parties for production of their
own products.
Prescription drugs are introduced and made known to physicians,
pharmacists, hospitals and managed care organizations by trained
professional service representatives, and are sold to hospitals,
managed care organizations and wholesale and retail druggists.
Pharmaceutical products are also promoted through journal
advertising, direct mail advertising, consumer advertising and by
distributing samples to physicians. Animal health products are
promoted and sold by a separate sales force to veterinarians,
distributors and animal producers.
The Company's subsidiaries own (or have licensed rights under) a
number of patents and patent applications, both in the United
States and abroad. In the aggregate, patents and patent
applications are believed to be of material importance to the
operations of the pharmaceutical segment. In December 1989, the
U.S. patent covering PROVENTIL, an asthma product, expired. The
PROVENTIL formulations of tablets, syrup and solution have been
subject to generic competition. The Company, through its Warrick
Pharmaceuticals subsidiary, currently markets these generic
formulations of albuterol, as well as other generic
pharmaceuticals.
In December 1995, the U.S. Food and Drug Administration (the
"FDA") granted marketing clearance to a generic albuterol
metered-dose inhaler (MDI). In response to the approval of a
generic albuterol MDI, the Company's Warrick subsidiary
introduced its own generic albuterol inhaler. The approval of a
generic albuterol MDI will negatively affect future sales and
profitability for the Company's PROVENTIL inhaler franchise.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and
is expected to be available to the Company in sufficient
quantities to meet operating requirements.
Worldwide, the Company's pharmaceutical products are sold under
trademarks. Trademarks are considered in the aggregate to be of
material importance to the pharmaceutical business and are
protected by registration or common law in the United States and
most other markets where the products are sold or likely to be
sold.
Seasonal patterns do not have a pronounced effect on the combined
activities of this industry segment.
There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.
The pharmaceutical industry is highly competitive and includes
other large companies with substantial resources for research,
product development and promotion. There are numerous domestic
and international competitors in this industry. Some of the
principal competitive techniques used by the Company for its
pharmaceutical products include research and development of new
and improved products, high product quality, varied dosage forms
and strengths, disease management programs, and educational
services for the medical community.
Health Care Products
The product categories in the health care segment are OTC
medicines, foot care and sun care products primarily sold in the
United States. Products include: AFRIN and DURATION nasal
decongestants; CHLOR-TRIMETON antihistamine; CORICIDIN and
DRIXORAL cold and decongestant products; CORRECTOL laxative;
CLEAR AWAY and DUO wart removers; DI-GEL antacid; GYNE-LOTRIMIN
for vaginal yeast infections; DR. SCHOLL'S foot care products;
LOTRIMIN AF and TINACTIN antifungals; COPPERTONE, SHADE,
SOLARCAINE and TROPICAL BLEND sun care products; A & D ointment;
and PAAS egg coloring and holiday products. Business in this
segment is conducted through wholesale and retail drug, food
chain and variety outlets, and is promoted directly to the
consumer through television, radio, print and other advertising
media.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and
is expected to be available to the Company in sufficient
quantities to meet operating requirements.
Trademarks for the major products included in this segment are
registered in the United States and most overseas countries where
these products are marketed. Trademarks are considered to be
very important to the operations of this segment.
Principally due to the seasonal sales of sun care products,
operating profits in this segment are relatively higher in the
first half of the year.
There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.
The health care products' industry is highly competitive and
includes other large companies with substantial resources for
product development and promotion. There are several dozen
significant competitors in this industry. The Company believes
that in the United States it has a leading position in the foot
care and sun care industries, with its DR. SCHOLL'S lines of foot
pads, cushions, wart removal and other treatments and its brands
of sun care products. In addition, the Company's brands are
among the leaders in nasal sprays, laxatives and antifungals sold
OTC. The principal competitive techniques used by the Company in
this industry segment include switching prescription products to
OTC medicines, the development and introduction of new and
improved products, and product promotion methods to gain and
retain consumer acceptance.
Foreign Operations
Foreign activities are carried out primarily through wholly-owned
subsidiaries wherever market potential is adequate and circum-
stances permit. In addition, the Company is represented in some
markets through joint ventures, licensees or other distribution
arrangements. There are approximately 11,200 employees outside
the United States.
Foreign operations are subject to certain risks which are
inherent in conducting business overseas. These risks include
possible nationalization, expropriation, importation limitations
and other restrictive governmental actions. Also, fluctuations
in foreign currency exchange rates can impact the Company's
consolidated financial results. For additional information on
foreign operations, see "Management's Discussion and Analysis of
Operations and Financial Condition" and "Business Segment Data"
in the Company's 1995 Annual Report to Shareholders which is
incorporated herein by reference.
Operations in Puerto Rico
The Company has operations in Puerto Rico that manufacture
products for distribution to both domestic and foreign markets.
These businesses operate under tax-relief and other incentives
granted by the government of Puerto Rico that expire at various
dates through 2018.
The Company has also been exempt from U.S. tax on certain income
derived from its operations in Puerto Rico. The Omnibus Budget
Reconciliation Act of 1993 will phase down this exemption over
five years to 40 percent of the pre-amendment level.
Under present U.S. tax laws, accumulated funds generated from
operations in Puerto Rico can be remitted tax-free to the parent
company. Under Puerto Rico tax laws, remittance of these funds,
with the exception of certain amounts qualifying for tax free
distribution, will result in a tollgate tax of from 5 percent to
10 percent based upon prescribed dividend and investment
restrictions.
Research and Development
The Company's research activities are primarily aimed at
discovering and developing new and enhanced pharmaceutical
products of medical and commercial significance. Company
sponsored research and development expenditures were $656.9
million, $610.1 million and $567.3 million in 1995, 1994, and
1993, respectively. Research expenditures represented
approximately 13 percent of consolidated sales in each of the
three years.
The Company's pharmaceutical research activities are concentrated
in the therapeutic areas of allergic and inflammatory disorders,
infectious and cardiovascular diseases, oncology and central
nervous system disorders. The Company also has substantial
efforts directed toward biotechnology, gene therapy and
immunology. Research activities include expenditures for both
internal research efforts and research collaborations with
various partners.
While several pharmaceutical compounds are in varying stages of
development, it cannot be predicted when or if products will
become available for commercial sale.
Government Regulation
Most products manufactured or sold by the Company are subject to
varying degrees of governmental regulation in the countries in
which operations are conducted. In the United States, the drug
industry has long been subject to regulation by various federal,
state and local agencies, primarily as to product safety,
efficacy, advertising and labeling. Compliance with the broad
regulatory powers of the FDA requires significant amounts of
Company time, testing and documentation, and corresponding costs
to obtain clearance of new drugs. Similar product regulations
also apply in many international markets.
In the United States, many of the Company's pharmaceutical
products are subject to increasingly competitive pricing as
managed care groups, institutions and governments 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 Company has and will continue to comply with the government
regulations of the countries in which operations are conducted.
Environment
To date, compliance with federal, state and local environmental
protection laws has not had a materially adverse effect on the
Company. The Company has made and will continue to make
necessary expenditures for environmental protection. Worldwide
capital expenditures during 1995 included approximately $16.6
million for environmental control purposes. It is anticipated
that continued compliance with such environmental regulations
will not significantly affect the Company's financial statements
or its competitive position. For additional information on
environmental matters, see "Legal and Environmental Matters" in
the Notes to the Consolidated Financial Statements in the
Company's 1995 Annual Report to Shareholders which is
incorporated herein by reference.
Employees
There were approximately 20,100 people employed by the Company at
December 31, 1995.
Item 2. Properties
The Company's corporate headquarters is located in Madison, New
Jersey. Principal manufacturing facilities are located in
Kenilworth, New Jersey, Miami, Florida, the Commonwealth of
Puerto Rico, Argentina, Australia, Belgium, Canada, Colombia,
France, Ireland, Italy, Japan, Mexico and Spain (pharmaceutical
products); Cleveland and Memphis, Tennessee (health care
products). Other manufacturing facilities are located in Omaha,
Nebraska. In addition, a manufacturing facility for
pharmaceutical products is currently under construction in
Singapore. This facility is scheduled for completion by 1997.
The Company's principal research facilities are located in
Kenilworth and Union, New Jersey and Palo Alto, California (DNAX
Research Institute).
The major portion of properties are owned by the Company. These
properties are well maintained, adequately insured and in good
operating condition. The Company's manufacturing facilities have
capacities considered appropriate to meet the Company's needs.
Item 3. Legal Proceedings
Schering Corporation and White Laboratories, Inc., which are
Company subsidiaries, are defendants in more than 95 lawsuits
arising out of the use of synthetic estrogens by the mothers of
the plaintiffs. In many of these lawsuits, one being an alleged
class action, a substantial number of other drug companies are
also defendants. The female plaintiffs claim various injuries,
including cancerous or precancerous lesions of the vagina and
cervix and a multiplicity of pregnancy problems. A number of
suits involve infants with birth defects born to daughters whose
mothers took the drug. The total amount claimed against all
defendants in all the suits amounts to more than $2 billion.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of the amounts accrued will
be incurred.
The Company is a party to, or otherwise involved in,
environmental clean-ups or proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund, or under equivalent state laws. These
proceedings seek to require the owners or operators of facilities
that treated, stored or disposed of hazardous substances and
transporters and generators of such substances to clean-up
contaminated facilities or reimburse the government or private
parties for their clean-up costs. The Company is alleged to be a
potentially responsible party ("PRP") as an alleged generator of
hazardous substances found at certain facilities. In each
proceeding, the government or private litigants allege that any
one PRP, including the Company, is jointly and severally liable
for clean-up costs. Although joint and several liability is
alleged, a company's share of clean-up costs is frequently
determined on the basis of the type and quantity of hazardous
substances sent to a facility by the generator. However, this
allocation process varies greatly from facility to facility and
can take years to complete. The Company's potential share of
clean-up costs also depends on how many other PRP's are involved
in the proceedings, insurance coverage, available indemnity
contracts and contribution rights against other PRP's or parties.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of amounts accrued will be
incurred.
In 1994, a judgment in the amount of $63.6 million, including
$57.5 million in punitive damages, was entered against the
Company in state court in Portland, Oregon in connection with a
product liability lawsuit involving THEO-DUR. An appeal from the
judgment has been taken. While the success of the appeal cannot
be predicted with certainty, the Company will vigorously pursue
its case through the appellate courts. The Company currently has
insurance coverage for amounts in excess of a $3 million self-
insured retention.
The Company is a defendant in more than 150 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, pending in the United
States District Court for the Northern District of Illinois, 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, subject to court approval, to
settle the federal class action for a total of $22.1 million
payable over three years. In the event that the court does not
approve the settlement, the class action is likely to go to trial
in mid-1996. Two of the state cases, which were commenced in the
San Francisco County Superior Court in 1995, have been certified
as class actions in California. One is a class action on behalf
of certain retail pharmacies, and the other is a class action on
behalf of certain consumers of prescription medicine. A third
state case, which was commenced in the Circuit Court of Clark
County, Alabama in 1996, has been conditionally certified as a
class action in Alabama on behalf of certain consumers of
prescription medicine. Another of the actions, which was
commenced in June 1994 by a group of nine chain food stores,
including The Great Atlantic and Pacific Tea Company, Inc.
("A&P"), against three mail order pharmacies and 16 drug
manufacturers, is pending in the United States District Court for
the Northern District of Illinois. Mr. James Wood, a director of
the Company, is an executive officer of A&P. Mr. Wood does not
participate in any review or deliberations by the Board of
Directors relating to this action. Plaintiffs in all cases seek
treble damages and/or penalties in an unspecified amount and an
injunction against the allegedly unlawful conduct. The Company
believes that all these actions are without merit and is
defending itself vigorously against all such claims.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
<PAGE>
Executive Officers of the Registrant
The following information regarding executive officers is included
herein in accordance with Part III, Item 10.
Officers are elected to serve for one year and until their successors
shall have been duly elected.
Name and Current Position Business Experience Age
Robert P. Luciano Present position 1996; Chairman 62
Chairman of the Board and Chief Executive Officer
1986-1995
Richard J. Kogan Present position 1996; 54
President and President and Chief
Chief Executive Officer Operating Officer 1986-1995
Hugh A. D'Andrade Present position 1996; 57
Vice Chairman and Executive Vice President
Chief Administrative Officer Administration 1984-1995
Raul E. Cesan Present position 1994; 48
Executive Vice President President Schering
and President Laboratories 1992-1994;
Schering-Plough President Schering-Plough
Pharmaceuticals International 1988-1992
Donald R. Conklin Present position 1994; 59
Executive Vice President Executive Vice President
and President and President
Schering-Plough Schering-Plough
HealthCare Products Pharmaceuticals 1989-1994
Joseph C. Connors Present position 1996; 47
Executive Vice President Senior Vice President and
and General Counsel General Counsel 1992-1995;
Vice President and General
Counsel 1991; Staff Vice
President and Deputy General
Counsel 1987-1991
Jack L. Wyszomierski Present position 1996; 40
Executive Vice President Vice President and Treasurer
and Chief Financial Officer 1991-1995
Geraldine U. Foster Present position 1994; 53
Senior Vice President Vice President - Investor
Investor Relations and Relations 1988-1994
Corporate Communications
Name and Current Position Business Experience Age
Daniel A. Nichols Present position 1991; Vice 55
Senior Vice President President Taxes 1983-1991
Taxes
Gordon C. O'Brien Present position 1988 55
Senior Vice President
Human Resources
Thomas H. Kelly Present position 1991 46
Vice President and
Controller
Robert S. Lyons Present position 1991 55
Vice President
Corporate Information
Services
E. Kevin Moore Present position 1996; 43
Vice President and Staff Vice President and
Treasurer Assistant Treasurer 1993-1995;
Treasurer-Europe, The Dun and
Bradstreet Corporation 1990-1993
John E. Nine Present position 1996; 59
Vice President President - Technical Operations
and President, Schering Schering Laboratories 1990-1995
Technical Operations
William J. Silbey Present position 1996; 36
Staff Vice President, Corporate Counsel 1993-1995;
Secretary and Associate Partner - Stearns, Weaver, Miller,
General Counsel Weissler, Alhadeff & Sitterson,
P.A. 1992-1993, Associate 1991
<PAGE>
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Common Share Dividends and Market Data as set forth in the
Company's 1995 Annual Report to Shareholders are incorporated
herein by reference.
Item 6. Selected Financial Data
The Six-Year Selected Financial & Statistical Data as set forth
in the Company's 1995 Annual Report to Shareholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and Analysis of Operations and Financial
Condition as set forth in the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheets as of December 31, 1995 and 1994,
and the related Statements of Consolidated Income, Consolidated
Retained Earnings and Consolidated Cash Flows for each of the
three years in the period ended December 31, 1995, Notes to
Consolidated Financial Statements, the Independent Auditors'
Report of Deloitte & Touche LLP dated February 14, 1996 and
Quarterly Results of Operations, as set forth in the Company's
1995 Annual Report to Shareholders, are incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors and nominees for directors
as set forth in the Company's Proxy Statement for the annual
meeting of shareholders on April 23, 1996 is incorporated herein
by reference.
Information required as to executive officers is included in Part
I of this filing under the caption "Executive Officers of the
Registrant."
Item 11. Executive Compensation
Executive compensation information as set forth in the Company's
Proxy Statement for the annual meeting of shareholders on April
23, 1996 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information concerning security ownership of certain beneficial
owners and management as set forth in the Company's Proxy
Statement for the annual meeting of shareholders on April 23,
1996 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related
transactions as set forth in the Company's Proxy Statement for
the annual meeting of shareholders on April 23, 1996 is
incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements and
independent auditors' report, included in the Company's
1995 Annual Report to Shareholders, are incorporated
herein by reference.
Statements of Consolidated Income for the
Years Ended December 31, 1995, 1994 and 1993
Statements of Consolidated Retained Earnings for
the Years Ended December 31, 1995, 1994 and 1993
Statements of Consolidated Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993
Consolidated Balance Sheets at December 31, 1995 and
1994
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. Financial Statement Schedules
Page in
Form 10-K
Independent Auditors' Report . . . . . . . . . . . . 19
Schedule II - Valuation and Qualifying Accounts. . . 20
Schedules not included have been omitted because they are not
applicable or not required or because the required information
is set forth in the financial statements or the notes thereto.
Columns omitted from schedules filed have been omitted because
the information is not applicable.
Financial statements of fifty percent or less owned companies
accounted for by the equity method have been omitted because,
considered individually or in the aggregate, they do not
constitute a significant subsidiary.
(a) 3. Exhibits
Exhibit
Number Description
3(a) A complete copy of the Certificate of Incorporation
as amended and currently in effect. Incorporated by
reference to Exhibit 3 (i) to the Company's
Quarterly Report for the period ended June 30, 1995
on Form 10-Q, File No. 1-6571.
3(b) A complete copy of the By-Laws as amended and
currently in effect. Incorporated by reference to
Exhibit 4(2) to the Company's Registration Statement
on Form S-3, File No. 333-853.
4(a) Rights Agreement between the Company and The Bank of
New York dated July 25, 1989. Incorporated by
reference to Exhibit 4 to the Company's Quarterly
Report for the period ended June 30, 1989 on
Form 10-Q, File No. 1-6571.
4(b) Indenture dated as of November 1, 1982 between the
Company and The Chase Manhattan Bank, N.A. as
Trustee. Incorporated by reference to Exhibit 4(a)
to the Company's Registration Statement on Form S-3,
File No. 2-80012.
4(c) Supplemental Indenture No. 1 dated as of November 1,
1991 to Indenture dated as of November 1, 1982.
Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 8-K dated November 20,
1991, File No. 1-6571.
Exhibit
Number Description
4(d) LYNX Equity Unit Agreement. Incorporated by
reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.
4(e) LYNX Equity Unit Guarantee Agreement. Incorporated
by reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.
4(f) Form of Participation Rights Agreement between The
Company and The Chase Manhattan Bank (National
Association), as Trustee. Incorporated by reference
to Exhibit 4.6 to the Company's Registration
Statement on Form S-4, Amendment No. 1, File
No. 33-65107.
10(a) The Company's Executive Incentive Plan (as amended)
and Trust related thereto*. Plan incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended March 31, 1994 on
Form 10-Q; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.
10(b) The Company's 1983 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(c) to the Company's Annual Report for 1988 on
Form 10-K, File No. 1-6571.
10(c) The Company's 1987 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1990 on
Form 10-K, File No. 1-6571.
10(d) The Company's 1992 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1992 on
Form 10-K, File No. 1-6571; amendment of
December 11, 1995 filed with this document.
10(e)(i) Employment agreement between the Company and Robert
P. Luciano (as amended).* Incorporated by reference
to Exhibit 10(e) (i) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(a) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by ref-
erence to Exhibit 10(e)(i) to the Company's Annual
Report for 1994 on Form 10-K, File No. 1-6571.
<PAGE>
Exhibit
Number Description
10(e)(ii) Employment agreement between the Company and Richard
J. Kogan (as amended)*. Incorporated by reference to
Exhibit 10(e)(ii) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(b) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by
reference to Exhibit 10(e)(ii) to the Company's
Annual Report for 1994 on Form 10-K; third amendment
incorporated by reference to Exhibit 10(a) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.
10(e)(iii) Employment agreement between the Company and Hugh A.
D'Andrade (as amended)*. Incorporated by
reference to Exhibit 10(c) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; first amendment incorporated by
reference to Exhibit 10(e)(iii) to the Company's
Annual Report for 1994 on Form 10-K, File No. 1-6571;
second amendment filed with this document.
10(e)(iv) Form of employment agreement between the Company and
its executive officers effective upon a change of
control*. Incorporated by reference to Exhibit
10(e)(iv) to the Company's Annual Report for 1994 on
Form 10-K, File No. 1-6571.
10(f) Directors Deferred Compensation Plan and Trust
related thereto*. Plan incorporated by reference to
Exhibit 10(f) to the Company's Annual Report for
1991 on Form 10-K; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.
10(g) Pension Plan for Directors and Trust related
thereto*. Plan incorporated by reference to Exhibit
10(g) to the Company's Annual Report for 1987 on
Form 10-K; Trust Agreement incorporated by reference
to Exhibit 10(g) to the Company's Annual Report for
1988 on Form 10-K; amendment to Trust Agreement
incorporated by reference to Exhibit 10(g) to the
Company's Annual Report for 1993 on Form 10-K, File
No. 1-6571.
<PAGE>
Exhibit
Number Description
10(h) Supplemental Executive Retirement Plan and Trust
related thereto*. Plan incorporated by reference
to Exhibit 10(h) to the Company's Annual Report for
1987 on Form 10-K; amendments to Plan incorporated
by reference to Exhibit 10(h) to the Company's
Annual Report for 1994 on Form 10-K; Trust
Agreement incorporated by reference to Exhibit 10(g)
to the Company's Annual Report for 1988 on Form
10-K; amendment to Trust Agreement incorporated by
reference to Exhibit 10(g) to the Company's Annual
Report for 1993 on Form 10-K, File No. 1-6571.
10(i) Directors' Stock Award Plan*. Incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended September 30, 1994 on
Form 10-Q, File No. 1-6571.
10(j) The Company's Deferred Compensation Plan*. Plan
incorporated by reference to Exhibit 10(b) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 The Financial Section of the Company's 1995 Annual
Report to Shareholders. With the exception of those
portions of said Annual Report which are
specifically incorporated by reference in this Form
10-K, such report shall not be deemed filed as part
of this Form 10-K.
21 Subsidiaries of the registrant.
23 Consents of experts and counsel.
24 Power of attorney.
27 Financial Data Schedule.
99 Forward-looking statements by the Company.
All other exhibits are not applicable. Copies of above exhibits
will be furnished upon request.
* Compensatory plan, contract or arrangement.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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 February 28, 1996 By /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
By * By *
Robert P. Luciano H. Barclay Morley
Chairman and Director Director
By * By *
Richard J. Kogan Carl E. Mundy, Jr.
President and Chief Executive Director
Officer and Director
By * By *
Jack L. Wyszomierski Richard de J. Osborne
Executive Vice President and Director
Chief Financial Officer
By * By *
Thomas H. Kelly Patricia F. Russo
Vice President and Controller Director
and Principal Accounting Officer
By * By *
Hans W. Becherer William A. Schreyer
Director Director
By * By *
Hugh A. D'Andrade Robert F. W. van Oordt
Director Director
By * By *
David C. Garfield R. J. Ventres
Director Director
By * By *
Regina E. Herzlinger James Wood
Director Director
*By /s/ Thomas H. Kelly Date February 28, 1996
Thomas H. Kelly
Attorney-in-fact
<PAGE>
INDEPENDENT AUDITORS' REPORT
Schering-Plough Corporation:
We have audited the consolidated balance sheets of Schering-Plough
Corporation and subsidiaries as of December 31, 1995 and 1994 and
the related statements of consolidated income, retained earnings and
cash flows for each of the three years in the period ended December
31, 1995, and have issued our report thereon dated February 14,
1996; such financial statements and report are included in your 1995
Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement
schedule of Schering-Plough Corporation and subsidiaries, listed in
Item 14. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express our
opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 14, 1996
<PAGE>
SCHEDULE II
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(Dollars in millions)
<CAPTION>
Valuation and qualifying accounts deducted from assets to which they
apply:
Allowances for accounts receivable:
RESERVE RESERVE RESERVE
FOR DOUBTFUL FOR CASH FOR CLAIMS
ACCOUNTS DISCOUNTS AND OTHER TOTAL
<S> <C> <C> <C> <C>
1995
Balance at beginning of year $ 44.0 $ 7.9 $ 5.6 $ 57.5
Additions:
Charged to costs and expenses 14.9 74.3 12.1 101.3
Translation adjustment .3 (.1) - .2
Deductions from reserves (9.6) (74.0) (6.3) (89.9)
Balance at end of year $ 49.6 $ 8.1 $ 11.4 $ 69.1
1994
Balance at beginning of year $ 30.5 $ 7.9 $ 6.5 $ 44.9
Additions:
Charged to costs and expenses 17.1 62.4 3.2 82.7
Translation adjustment .6 (.1) .1 .6
Deductions from reserves (4.2) (62.3) (4.2) (70.7)
Balance at end of year $ 44.0 $ 7.9 $ 5.6 $ 57.5
1993
Balance at beginning of year $ 32.5 $ 9.0 $ 1.8 $ 43.3
Additions:
Charged to costs and expenses 5.1 54.3 16.1 75.5
Translation adjustment (1.1) (.1) - (1.2)
Deductions from reserves (6.0) (55.3) (11.4) (72.7)
Balance at end of year $ 30.5 $ 7.9 $ 6.5 $ 44.9
</TABLE>
Exhibit 10 (e) (iii)
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT to the Employment Agreement by
and between SCHERING-PLOUGH CORPORATION, a New Jersey
corporation (the "Company"), and HUGH A. D'ANDRADE (the
"Employee") dated as of June 28, 1994, as amended as of March
1, 1995 (as so amended, the "Employment Agreement"), made and
entered into as of this 11th day of December, 1995.
WHEREAS, the Company and the Employee wish to amend
the Employment Agreement as set forth below;
NOW, THEREFORE, IN CONSIDERATION of the mutual
promises, covenants and agreements set forth below, it is
hereby agreed as follows:
1. Section 1 of the Employment Agreement is hereby
amended to read in its entirety as follows:
The Company agrees to employ the Employee and the
Employee agrees to remain in the employ of the
Company, in accordance with the terms and provisions
of this Agreement, for the period beginning on
January 1, 1996, and ending as of the close of
business on December 31, 2000 (the "Employment
Period"); provided, however, that the Employment
Period shall be extended for an additional five-year
period commencing on the Effective Date (as defined
in Section 11(d) below) and ending on the fifth
anniversary of the Effective Date; and provided
further that unless on or before the December 1
immediately preceding each December 31 on which the
Employment Period would otherwise end, either party
delivers to the other party a written notice of its
election to terminate such employment on such
December 31, the Employment Period shall be extended
for additional one-year periods commencing on the
January 1 immediately succeeding such December 31
and ending on the following December 31; and
provided further that, if not previously terminated,
the Employment Period shall terminate on November
30, 2003.
2. The first sentence of Section 2(a) is hereby
amended to read in its entirety as follows:
During the Employment Period, the Employee shall be
employed as Vice Chairman of the Board and Chief
Administrative Officer of the Company, reporting to
the Chief Executive Officer of the Company, and with
the duties and powers held by him as of January 1,
1996 and such other duties consistent therewith as
the Chief Executive Officer may assign him from time
to time.
3. The second sentence of Section 11(a) is hereby
amended by striking the words "Executive Vice President" and
by substituting the words "Vice Chairman of the Board and
Chief Administrative Officer."
4. The definition of "Change of Control" contained
in Section 11(c) of the Employment Agreement shall be amended
by adding the following proviso at the end of clause (i) of
subparagraph (i) thereof:
and provided, further, that if any Person's
beneficial ownership of the Outstanding Company
Voting Stock or Outstanding Company Voting
Securities reaches or exceeds 20% as a result of a
transaction described in clause (A) or (B) of the
foregoing proviso, and such Person subsequently
acquires beneficial ownership of additional common
stock or voting securities of the Company, such
subsequent acquisition shall be treated as an
acquisition that causes such Person to own 20% or
more of the Outstanding Company Voting Stock or
Outstanding Company Voting Securities;
5. This Second Amendment shall become effective as
of January 1, 1996.
6. Except as provided above, the Employment
Agreement shall continue in effect without alteration as in
effect on the date hereof. The Employment Agreement, as
amended by this Second Amendment, constitutes the entire
agreement of the parties and supersedes all prior agreements
and understandings with respect to the subject matter hereof
and thereof.
IN WITNESS WHEREOF, the Employee and, pursuant to
due authorization from its Board of Directors, the Company
have caused this Agreement to be executed as of the day and
year first above written.
Hugh A. D'Andrade
SCHERING-PLOUGH CORPORATION
Robert P. Luciano
Chairman of the Board
21083-1
Exhibit 10 (d)
SCHERING-PLOUGH CORPORATION
Amendments to
1992 Stock Incentive Plan
The 1992 Stock Incentive Plan is hereby amended as follows:
1. Paragraph 6(j) is hereby amended in its entirety to
read as follows:
(j) No option whose grant is intended to be exempt
from Section 16(b) under the Securities Exchange Act of
1934, as amended, pursuant to Rule 16b-3 and the other rules
and regulations promulgated thereunder shall be transferable
other than as permitted by Section 16(b), Rule 16b-3 and
such other rules and regulations and, except as permitted
under Paragraph 6(k), no option granted pursuant to this
Plan may be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the
laws of descent and distribution and, during the lifetime of
the optionee, may be exercised only by such optionee. The
optionee may designate in writing a beneficiary of the
option in the event of his death.
2. Paragraph 6(k) is hereby redesignated as Paragraph
6(1), and the following new Paragraph 6(k) is hereby added:
(k) The Committee may grant options that are
transferable, or amend outstanding options to make them
transferable, by the optionee (any such option so granted or
amended a "Transferable Option") to one or more members of
the optionee's immediate family, to a partnership of which
the only partners are members of the optionee's immediate
family, or to a trust established by the optionee for the
benefit of one or more members of the optionee's immediate
family, which grant, or as a result of such amendment, such
option, is not intended to be exempt from Section 16(b)
under the Securities Exchange Act of 1934 pursuant to Rule
16b-3 thereunder. For this purpose the term "immediate
family" means the optionee's spouse, children and
grandchildren. Consideration may not be paid for the
transfer of a Transferable Option. A transferee described
in this Paragraph 6(k) shall be subject to all terms and
conditions applicable to the Transferable Option prior to
its transfer. The stock option agreement with respect to a
Transferable Option shall set forth its transfer
restrictions, such stock option agreement shall be approved
by the Committee, and only options granted pursuant to a
stock option agreement expressly permitting transfer
pursuant to this Paragraph 6(k) shall be so transferable.
21153-1
Exhibit 11
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE 1/
(In millions, except per share figures)
<CAPTION>
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Earnings per Common Share, As Reported:
Income from continuing operations
before cumulative effect of
accounting change . . . . . . . . . . . $1,053.0 $ 926.2 $ 815.6
Discontinued operations. . . . . . . . . (166.4) (4.2) 9.4
Cumulative effect of accounting change . - - (94.2)
Net Income Applicable
to Common Shares . . . . . . . . . . . $ 886.6 $ 922.0 $ 730.8
Average Number of Common Shares
Outstanding. . . . . . . . . . . . . . 369.7 382.5 390.2
Earnings Per Common Share:
Income from continuing operations
before cumulative effect of
accounting change . . . . . . . . . . . $ 2.85 $ 2.42 $ 2.09
Discontinued operations. . . . . . . . . (.45) (.01) .02
Cumulative effect of accounting change . - - (.24)
Net Income per Common Share. . . . . . . $ 2.40 $ 2.41 $ 1.87
Earnings per Common Share,
Assuming Full Dilution: (a)
Average Number of Common Shares
Outstanding . . . . . . . . . . . . 369.7 382.5 390.2
Shares Contingently Issuable for
Stock Incentive Plans and Warrant
Agreements. . . . . . . . . . . . . 6.1 4.1 4.4
Average Number of Common Shares
and Common Share Equivalents
Outstanding . . . . . . . . . . . . 375.8 386.6 394.6
Net Income Per Common Share
Assuming Full Dilution . . . . . . $ 2.36 $ 2.38 $ 1.85
<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%.
1/ Amounts for 1994 and 1993 have been restated for the effect of discontinued operations
and a 2-for-1 stock split.
</TABLE>
<TABLE>
Exhibit 12
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES \1
(Dollars in millions)
<CAPTION>
Year Ended December 31,
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Income Before Income Taxes from
Continuing Operations . . . . . . $1,394.7 $1,226.7 $1,073.1 $962.8 $847.6 $768.1
Add : Fixed Charges
Interest Expense . . . . . . . . . 57.6 56.2 48.2 55.4 65.3 82.4
1/3 Rentals. . . . . . . . . . . . 10.5 8.7 8.0 7.7 7.0 6.9
Capitalized Interest . . . . . . . 11.4 11.4 12.7 15.8 11.8 6.3
Total Fixed Charges. . . . . . . 79.5 76.3 68.9 78.9 84.1 95.6
Less: Capitalized Interest . . . . . 11.4 11.4 12.7 15.8 11.8 6.3
Add : Amortization of
Capitalized Interest. . . . . . . . 4.8 4.1 3.5 4.1 4.0 3.8
Earnings Before Income Taxes and
Fixed Charges (other than
Capitalized Interest) . . . . . . . $1,467.6 $1,295.7 $1,132.8 $1,030.0 $ 923.9 $861.2
Ratio of Earnings to Fixed Charges . 18.5 17.0 16.4 13.1 11.0 9.0
\1 Restated for the effect of discontinued operations.
"Earnings" consist of income before income taxes and fixed charges (other than capitalized
interest). "Fixed charges" consist of interest expense, capitalized interest and one-third of
rentals which Schering-Plough believes to be a reasonable estimate of an interest factor on
leases.
</TABLE>
Exhibit 13
Financial section of the Company's 1995 Annual Report to Shareholders.
<PAGE>
Management's Discussion and Analysis of Operations and Financial
Condition
In June 1995, the Company completed the sale of its worldwide
contact lens business. The discussion of operations that follows
excludes the Company's contact lens business, which has been
treated as a discontinued operation for all periods presented. For
additional information, see "Discontinued Operations" in the Notes
to Consolidated Financial Statements on page 24.
Sales
Consolidated sales in 1995 totaled $5.10 billion, an increase of 13
percent over 1994, reflecting volume growth of 10 percent and
favorable foreign exchange rate fluctuations of 3 percent. This
performance was primarily due to significant sales gains for the
CLARITIN brand of nonsedating antihistamines that includes
CLARITIN-D, a combination product with a decongestant, launched
domestically in November 1994. Worldwide CLARITIN brand sales
totaled $789 million in 1995, compared with $505 million in 1994.
Consolidated 1994 sales of $4.54 billion advanced 7 percent over
1993, reflecting volume growth of 5 percent and price increases of
2 percent. The CLARITIN brand had dramatic sales growth, but sales
of INTRON A, the Company's alpha interferon anticancer and
antiviral agent, declined.
Worldwide 1995 pharmaceutical sales of $4.47 billion rose 15
percent over 1994, reflecting volume growth of 12 percent and
favorable foreign exchange rate fluctuations of 3 percent.
Worldwide sales of pharmaceutical products in 1994 increased 10
percent over 1993, due to volume growth of 7 percent, price
increases of 2 percent and favorable foreign exchange rate
fluctuations of 1 percent.
Domestic prescription pharmaceutical product sales grew 20 percent
in 1995. Sales of respiratory products increased 29 percent, due
to continued strong growth of the CLARITIN brand, the VANCENASE
line of allergy products and the VANCERIL line of asthma products.
The respiratory sales gain also reflected continued strong sales of
the PROVENTIL (albuterol) line of asthma products, due to an
increase in prescription levels for the metered-dose inhaler. Sales
of the PROVENTIL line totaled $422 million in 1995, and the
metered-dose inhaler contributed approximately 70 percent of this
amount. The PROVENTIL formulations of solution, syrup and tablets
have been subject to generic competition. In 1994, the Food and
Drug Administration (FDA) issued bioequivalence standards for
generic albuterol metered-dose inhalers, and subsequently in
December 1995 a generic inhaler was approved. In response, the
Company's generic pharmaceutical marketing subsidiary, Warrick
Pharmaceuticals, introduced a generic inhaler in December 1995.
Competition from generic metered-dose inhalers will negatively
affect future PROVENTIL sales and profitability. Respiratory sales
growth was moderated in 1995 by lower sales of THEO-DUR, a
sustained-action theophylline, due to increased generic
competition.
Domestic sales of anti-infective and anticancer products rose 18
percent compared with 1994, due to gains for EULEXIN, a therapy for
advanced prostate cancer, and INTRON A. In December 1995,
marketing approval was received from the FDA for CEDAX, a third-
generation cephalosporin antibiotic, which was launched in the
first quarter of 1996. Sales of cardiovascular products advanced
23 percent, reflecting significant market share increases for
IMDUR, an oral nitrate for angina, and K-DUR potassium supplement.
Dermatological product sales declined 3 percent, due to lower sales
of LOTRISONE, an antifungal/anti-inflammatory cream.
Domestic prescription pharmaceutical sales in 1994 advanced 20
percent over 1993, led by gains in respiratory products, reflecting
strong growth of the CLARITIN brand and advances for the VANCENASE
and VANCERIL product lines. Sales of anti-infective and
anticancer, dermatological and cardiovascular products also grew.
In 1995, sales of international ethical pharmaceutical products
increased 11 percent. Excluding the impact of foreign exchange
rate fluctuations, sales would have risen approximately 5 percent.
International sales of respiratory products advanced 11 percent
over 1994, led by growth for CLARITIN in Europe and higher allergy
product sales in Japan. Sales of cardiovascular products rose 17
percent, reflecting higher sales of NITRO-DUR transdermal
nitroglycerin patches. Dermatological product sales increased 7
percent, largely due to strong gains for topical steroids in
Europe.
International sales of anti-infective and anticancer products grew
2 percent in 1995, due to gains for EULEXIN and CEDAX. Countering
these gains were lower sales of INTRON A in Japan, as various
actions by the Japanese health authorities to control health care
costs resulted in a continued decline in the interferon market.
Sales of INTRON A in Japan decreased to $94 million in 1995 from
$141 million in 1994 and $307 million in 1993. INTRON A sales in
all other international markets, however, grew 13 percent to $235
million, with notable increases occurring in most major European
markets. Also contributing to the overall international sales
growth in 1995 were continued gains for LOSEC, an anti-ulcer
treatment licensed from AB Astra.
In 1994, international ethical pharmaceutical sales, excluding
foreign exchange, increased 1 percent over 1993, reflecting gains
for respiratory, dermatological and cardiovascular products. These
increases were offset by lower sales of anti-infective and
anticancer products, which were driven by a substantial decline in
INTRON A sales in Japan.
Worldwide sales of animal health products increased 11 percent in
1995, excluding favorable foreign exchange rate fluctuations of 3
percent. Contributing to the growth were the international launch
of NUFLOR, a broad-spectrum, multi-species antibiotic, and the U.
S. and international launches of OPTIMMUNE, an ophthalmic ointment.
Sales of animal health products in 1994 increased 8 percent over
1993. Changes in exchange rates did not affect the sales
comparison.
Sales of health care products in 1995 decreased 4 percent compared
with 1994, as price increases of 2 percent were more than offset by
volume declines of 6 percent. Over-the-counter (OTC) product sales
declined 5 percent, largely due to increasingly competitive markets
for vaginal antifungal products. Foot care and sun care sales
declined moderately from 1994 levels.
In 1994, health care product sales decreased 6 percent as volume
declines of 9 percent were partially offset by price increases of
3 percent. The sales decline largely reflected lower sales of OTC
products, primarily female health and allergy/cold products,
moderated by higher foot care product sales.
Income Before Income Taxes
Income before income taxes totaled $1.39 billion in 1995, an
increase of 14 percent over 1994. In 1994, income before income
taxes of $1.23 billion grew 14 percent over the $1.07 billion in
1993.
<TABLE>
Summary of Costs and Expenses:
(Dollars in millions)
<CAPTION>
% Increase
1995 1994 1993 1995/94 1994/93
<S> <C> <C> <C> <C> <C>
Cost of sales . . . . . . $1,004.8 $ 906.8 $ 862.4 11 % 5 %
% of sales . . . . . . . 19.7 % 20.0 % 20.4 %
Selling, general and
administrative . . . . . $1,990.4 $1,755.5 $1,698.5 13 % 3 %
% of sales . . . . . . . 39.0 % 38.7 % 40.2 %
Research and development. $ 656.9 $ 610.1 $ 567.3 8 % 8 %
% of sales . . . . . . . 12.9 % 13.4 % 13.4 %
________________________________________________________________________________________
</TABLE>
Cost of sales as a percentage of sales has followed a downward
trend over the past three years. The improvement reflects a
favorable sales mix of higher margin pharmaceutical products and
continuing cost containment efforts throughout the world.
Selling, general and administrative expenses in 1995 increased as
a percentage of sales compared with 1994, resulting from increased
promotional and selling-related spending for the CLARITIN brand and
INTRON A in domestic and international markets. The 1994 decline
as a percent of sales from 1993 reflects lower promotional spending
for CLARITIN following the 1993 domestic launch, and reduced
spending for female health products.
Research and development expenses increased $46.8 million, or 8
percent, representing 12.9 percent of sales in 1995 and 13.4
percent of sales in 1994 and 1993. The higher spending reflects
the Company's funding of both internal research efforts and
research collaborations with various partners to develop a steady
flow of innovative products and line extensions.
Income Taxes
The Company's effective tax rate was 24.5 percent in 1995 and 1994,
and 24.0 percent in 1993. The effective tax rate for each period
was lower than the U.S. statutory income tax rate, principally due
to tax incentives in jurisdictions where the Company's primary
manufacturing facilities are located. For additional information,
see "Income Taxes" in the Notes to Consolidated Financial
Statements on page 31.
Income From Continuing Operations
Income in 1995 increased 14 percent to $1.05 billion. Income in
1994 increased 14 percent over 1993. Differences in year-to-year
exchange rates increased comparative income growth in 1995, but
reduced it in 1994. After eliminating these exchange differences,
income would have risen approximately 12 percent in 1995 and 15
percent in 1994.
Accounting Change
In 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." For additional information, see
"Other Post-retirement Benefits" in the Notes to Consolidated
Financial Statements on page 29.
Earnings Per Common Share
During the second quarter of 1995, the Board of Directors approved
a 2-for-1 stock split. All per share amounts, shares outstanding
and shares repurchased have been adjusted for the stock split.
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Earnings per common share from
continuing operations $ 2.85 $ 2.42 $ 2.09
Discontinued operations - income
(loss) from operations (.03) (.01) .02
Discontinued operations - loss on
disposal (.42) - -
Accounting change - - (.24)
Earnings per common share $ 2.40 $ 2.41 $ 1.87
Average shares outstanding
(in millions) 369.7 382.5 390.2
</TABLE>
Earnings per common share from continuing operations rose 18
percent in 1995 and 16 percent in 1994. Earnings per common share
increased at a faster rate than income, due to the Company's share
repurchase programs. Fluctuations in year-to-year exchange rates
increased comparative growth in earnings per common share in 1995,
but reduced it in 1994. Excluding the impact of these exchange
rate differences, earnings per common share from continuing
operations would have increased approximately 16 percent in 1995
and 17 percent in 1994.
Over the past three years, the Board of Directors has authorized
several share repurchase programs. Under these programs,
approximately 9.9 million common shares were purchased in 1995,
17.2 million common shares in 1994 and 14.0 million common shares
in 1993. At year end, the most recent $500 million program was 96
percent complete.
Environmental Matters
The Company has obligations for environmental clean-up under
various state, local and federal laws, including the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund. Environmental expenditures have not had and,
based on information currently available, are not anticipated to
have a material impact on the Company's financial statements. For
additional information, see "Legal and Environmental Matters" in
the Notes to Consolidated Financial Statements on page 32.
Foreign Exchange and Inflation
Sales outside of the United States represented 45 percent of
worldwide sales in 1995 and 46 percent in 1994. Fluctuating
foreign exchange rates have affected sales and earnings, as
previously discussed. Sales and earnings growth in 1996 will be
negatively affected if the U.S. dollar strengthens. The Company
continues to implement selective hedging strategies to mitigate the
possible adverse effects of future exchange rate changes. For
additional information on these strategies, see "Financial
Instruments" in the Notes to Consolidated Financial Statements on
page 24. Inflation has had a minimal impact on operations in recent
years.
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 and governments 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.
Liquidity and Financial Resources
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 provided by operating activities totaled $1,383.3 million in
1995, $1,270.1 million in 1994 and $923.6 million in 1993. The
1993 amount was reduced by $147.0 million for the funding of the
Company's accumulated post-retirement benefit obligation.
Capital expenditures amounted to $293.8 million in 1995, $268.2
million in 1994 and $339.9 million in 1993. It is anticipated that
expenditures will approximate $340 million in 1996 and include the
construction of a bulk chemical plant in Singapore, and a
manufacturing facility in Mexico. Commitments for 1996 capital
expenditures totaled $129.8 million at December 31, 1995.
Common shares repurchased in 1995 totaled 9.9 million shares at a
cost of $493.8 million. In 1994, 17.2 million shares were
repurchased for $599.4 million, and 14.0 million shares were
repurchased in 1993 at a cost of $418.3 million.
Dividend payments of $416.4 million were made in 1995, compared
with $379.4 million in 1994 and $339.6 million in 1993.
Dividends per common share were $1.125 in 1995, up from $.99 in
1994 and $.87 in 1993.
Short-term borrowings totaled $841.3 million at year-end 1995,
$782.3 million in 1994 and $1,076.0 million in 1993. A
reclassification of $100 million for current maturities of long-
term debt increased short-term borrowings in 1995. The decline in
1994 primarily reflects cash generated from domestic operations and
the sale of investments.
The Company's ratio of debt to total capital decreased to 36
percent in 1995 from 38 percent in 1994, resulting from a decrease
in total debt and an increase in shareholders' equity. The
Company's liquidity and financial resources continue to be
sufficient to meet its operating needs. As of December 31, 1995,
the Company had $822.6 million in unused lines of credit, of which
$510.0 million was in support of commercial paper borrowings. The
Company had A-1+ and P-1 ratings for its commercial paper, and AA
and Aa3 general bond ratings from Standard & Poor's and Moody's,
respectively, as of December 31, 1995.
Securities Litigation Reform Act
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Except for the historical information contained
herein, the matters discussed in this Annual Report are forward-
looking statements that involve risk and uncertainties, including
but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets,
products, services and prices, and other factors discussed in the
Company's filings with the Securities and Exchange Commission.
<PAGE>
Schering-Plough Corporation and Subsidiaries
<TABLE>
Statements of Consolidated Income
(Dollars in millions, except per share figures)
<CAPTION>
For The Years Ended December 31, 1995 1994 1993
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . $5,104.4 $4,536.6 $4,229.1
Costs and Expenses:
Cost of sales . . . . . . . . . . . . . . . . 1,004.8 906.8 862.4
Selling, general and administrative . . . . . 1,990.4 1,755.5 1,698.5
Research and development. . . . . . . . . . . 656.9 610.1 567.3
Other expense, net. . . . . . . . . . . . . . 57.6 37.5 27.8
Total costs and expenses . . . . . . . . . . 3,709.7 3,309.9 3,156.0
Income before Income Taxes. . . . . . . . . . . 1,394.7 1,226.7 1,073.1
Income taxes. . . . . . . . . . . . . . . . . 341.7 300.5 257.5
Income from continuing operations before
cumulative effect of accounting change . . . . 1,053.0 926.2 815.6
Discontinued operations:
Income (loss) from operations . . . . . . . . (10.2) (4.2) 9.4
Loss on disposal . . . . . . . . . . . . . . . (156.2) - -
___________________________________________________________________________________
Income before cumulative effect of
accounting change . . . . . . . . . . . . . . 886.6 922.0 825.0
Cumulative effect of accounting change . . . . - - (94.2)
___________________________________________________________________________________
Net Income. . . . . . . . . . . . . . . . . . . $ 886.6 $ 922.0 $ 730.8
Earnings per common share:
Continuing operations. . . . . . . . . . . . . $ 2.85 $ 2.42 $ 2.09
Discontinued operations:
Income (loss) from operations . . . . . . . . (.03) (.01) .02
Loss on disposal. . . . . . . . . . . . . . . (.42) - -
Cumulative effect of accounting change . . . . - - (.24)
___________________________________________________________________________________
Earnings Per Common Share . . . . . . . . . . . $ 2.40 $ 2.41 $ 1.87
Statements of Consolidated Retained Earnings
(Dollars in millions, except per share figures)
For The Years Ended December 31, 1995 1994 1993
Retained Earnings, Beginning of Year. . . . . . $3,978.2 $3,435.6 $3,044.4
Net income. . . . . . . . . . . . . . . . . . 886.6 922.0 730.8
Cash dividends on common shares (per share:
1995, $1.125; 1994, $.99; and 1993, $.87). . (416.4) (379.4) (339.6)
Effect of 2-for-1 stock split . . . . . . . . (106.6) - -
___________________________________________________________________________________
Retained Earnings, End of Year. . . . . . . . . $4,341.8 $3,978.2 $3,435.6
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
Schering-Plough Corporation and Subsidiaries
<TABLE>
Statements of Consolidated Cash Flows
(Dollars in millions)
<CAPTION>
For The Years Ended December 31, 1995 1994 1993
<S> <C> <C> <C>
Operating Activities:
Income from continuing operations after the
cumulative effect of accounting change. . . . . . . $1,053.0 $ 926.2 $ 721.4
Depreciation and amortization. . . . . . . . . . . . 157.1 144.6 130.9
Working capital changes - source (use):
Accounts receivable . . . . . . . . . . . . . . . 11.3 75.2 47.8
Inventories . . . . . . . . . . . . . . . . . . . (63.7) (34.1) (22.3)
Other current assets. . . . . . . . . . . . . . . (64.1) (109.9) (45.1)
Accounts payable, income taxes and accrued
liabilities. . . . . . . . . . . . . . . . . . . 283.3 161.6 100.4
Other, net . . . . . . . . . . . . . . . . . . . . . 6.4 106.5 (9.5)
Net cash provided by operating activities. . . . . . 1,383.3 1,270.1 923.6
Investing Activities:
Capital expenditures . . . . . . . . . . . . . . . . (293.8) (268.2) (339.9)
Reduction of investments . . . . . . . . . . . . . . 45.3 181.0 192.7
Purchases of investments . . . . . . . . . . . . . . (93.2) (37.1) (287.1)
Other, net . . . . . . . . . . . . . . . . . . . . . (1.8) (8.3) -
Net cash used for investing activities (343.5) (132.6) (434.3)
Financing Activities:
Common shares repurchased. . . . . . . . . . . . . . (493.8) (599.4) (418.3)
Cash dividends paid to common shareholders . . . . . (416.4) (379.4) (339.6)
Net change in short-term borrowings. . . . . . . . . (46.0) (292.1) 120.9
Net change in long-term debt . . . . . . . . . . . . 1.3 3.7 (.6)
Proceeds from other equity transactions. . . . . . . 44.4 33.1 33.7
Other, net . . . . . . . . . . . . . . . . . . . . . - - (62.4)
Net cash used for financing activities . . . . . . . (910.5) (1,234.1) (666.3)
Effect of Exchange Rates on Cash and Cash Equivalents. (3.2) (4.2) (1.4)
Net Cash Flow from Continuing Operations . . . . . . . 126.1 (100.8) (178.4)
Discontinued operations. . . . . . . . . . . . . . . . 79.7 (5.8) (5.7)
Net Increase (Decrease) in Cash and Cash Equivalents . 205.8 (106.6) (184.1)
Cash and Cash Equivalents, Beginning of Year . . . . . 115.6 222.2 406.3
Cash and Cash Equivalents, End of Year . . . . . . . . $ 321.4 $ 115.6 $ 222.2
See Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
Schering-Plough Corporation and Subsidiaries
<TABLE>
Consolidated Balance Sheets
(Dollars in millions, except per share figures)
<CAPTION>
At December 31, 1995 1994
<S> <C> <C>
ASSETS
__________________________________________________________________________
Current Assets:
Cash and cash equivalents. . . . . . . . . . . $ 321.4 $ 115.6
Short-term investments . . . . . . . . . . . . .4 45.0
Accounts receivable, less allowances:
1995, $69.1; 1994, $57.5 . . . . . . . . . . 569.3 627.9
Inventories. . . . . . . . . . . . . . . . . . 502.0 466.3
Prepaid expenses, deferred income taxes
and other current assets. . . . . . . . . . . 563.2 484.3
Total current assets . . . . . . . . . . . . . 1,956.3 1,739.1
Property, at cost:
Land . . . . . . . . . . . . . . . . . . . . . 41.4 46.1
Buildings and improvements . . . . . . . . . . 1,528.2 1,450.4
Equipment. . . . . . . . . . . . . . . . . . . 1,250.8 1,283.7
Construction in progress . . . . . . . . . . . 315.6 269.5
Total. . . . . . . . . . . . . . . . . . . . . 3,136.0 3,049.7
Less accumulated depreciation. . . . . . . . . 1,037.1 967.4
Property, net. . . . . . . . . . . . . . . . . 2,098.9 2,082.3
Other Assets. . . . . . . . . . . . . . . . . . . . 609.4 504.3
$4,664.6 $4,325.7
<PAGE>
1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
___________________________________________________________________________
Current Liabilities:
Accounts payable . . . . . . . . . . . . . . . $ 374.2 $ 285.2
Short-term borrowings and current portion of
long-term debt . . . . . . . . . . . . . . . 841.3 782.3
U.S., foreign and state income taxes . . . . . 384.2 397.7
Accrued compensation . . . . . . . . . . . . . 205.1 170.5
Other accrued liabilities. . . . . . . . . . . 557.3 393.1
Total current liabilities. . . . . . . . . . . 2,362.1 2,028.8
Long-Term Liabilities:
Long-term debt . . . . . . . . . . . . . . . . 87.1 185.8
Deferred income taxes. . . . . . . . . . . . . 255.1 246.1
Other long-term liabilities. . . . . . . . . . 337.4 290.6
Total long-term liabilities. . . . . . . . . . 679.6 722.5
Shareholders' Equity:
Preferred shares - authorized 50,000,000,
$1 par value; issued-none . . . . . . - -
Common shares - authorized shares - 1995,
600,000,000; 1994, 300,000,000, $1
par value; shares issued - 1995,
502,965,382; 1994, 251,482,691. . . . . . . . 503.0 251.5
Paid-in capital. . . . . . . . . . . . . . . . 49.5 133.3
Retained earnings. . . . . . . . . . . . . . . 4,341.8 3,978.2
Foreign currency translation adjustment and
other . . . . . . . . . . . . . . . . . . . . (103.9) (117.0)
Total. . . . . . . . . . . . . . . . . . . . . 4,790.4 4,246.0
Less treasury shares, at cost - 1995,
138,796,653 shares; 1994, 65,468,430 shares . 3,167.5 2,671.6
Total shareholders' equity . . . . . . . . . . 1,622.9 1,574.4
$4,664.6 $4,325.7
See Notes to Consolidated Financial Statements.
</TABLE>
Notes to Consolidated Financial Statements
(Dollars in millions, except per share figures)
Accounting Policies
Principles of Consolidation
The consolidated financial statements include Schering-Plough
Corporation and its subsidiaries. Intercompany balances and
transactions are eliminated. Certain prior year amounts have
been reclassified to conform to the current year presentation.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and use assumptions that affect certain reported
amounts and disclosures; actual amounts may differ.
Cash and Cash Equivalents
Cash and cash equivalents include operating cash and highly
liquid investments, generally with maturities of three months or
less.
Investments
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." Short-term
investments are generally held to maturity. Other investments,
included in other non-current assets, consist primarily of debt
and equity securities held in non-qualified trusts to fund
benefit obligations. For purposes of SFAS No. 115, all of the
Company's investment securities are classified as available for
sale and, accordingly, are carried at fair value. Unrealized
gains and losses are included in shareholders' equity until
realized. There was no effect on income upon adoption of SFAS
No. 115.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined by using the last-in, first-out method for
substantially all domestic inventories. The cost of all other
inventories is determined by the first-in, first-out method.
Depreciation
Depreciation is provided over the estimated useful lives of the
properties, generally by use of the straight-line method.
Average useful lives are 50 years for buildings, 25 years for
building improvements and 12 years for equipment. Depreciation
expense was $142.7, $134.3 and $120.9 in 1995, 1994 and 1993,
respectively.
Intangible Assets
Intangible assets, included in other non-current assets,
principally include goodwill, patents, trademarks, licenses and
product rights. Intangible assets are recorded at cost and
amortized over their expected useful lives on the straight-line
method. Intangible assets are periodically reviewed to determine
recoverability by comparing their carrying values to expected
future cash flows.
Foreign Currency Translation
The net assets of most of the Company's foreign subsidiaries are
translated into U.S. dollars using current exchange rates. The
U.S. dollar effects that arise from translating the net assets of
these subsidiaries at changing rates are recorded in the foreign
currency translation adjustment account in shareholders' equity.
For the remaining foreign subsidiaries, non-monetary assets and
liabilities are translated using historical rates, while monetary
assets and liabilities are translated at current rates, with the
U.S. dollar effects of rate changes included in income.
Exchange gains and losses arising from hedging foreign net
investments and from translating intercompany balances of a long-
term investment nature are recorded in the foreign currency
translation adjustment account. Other exchange gains and losses
are included in income.
Net foreign exchange losses included in income were $4.0, $6.0
and $12.8 in 1995, 1994 and 1993, respectively.
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 are either not dilutive or do not have a
material effect on the determination of earnings per common
share.
On April 4, 1995, the Board of Directors of the Company
authorized a 2-for-1 stock split. The number of shares and the
per share amounts included in these consolidated financial
statements reflect the stock split.
Discontinued Operations
On June 28, 1995, the Company completed the sale of its worldwide
contact lens business. In connection therewith, the Company
recorded a loss on disposal of $156.2, net of a tax benefit of
$75.3, ($.42 per share). Proceeds from the sale were $47.5. The
contact lens business is reported as a discontinued operation for
all periods presented. The statements of consolidated income,
cash flows and related notes to consolidated financial statements
have been restated to conform to the discontinued operations
presentation.
Contact lens sales during 1995 through the date of disposition
were $46.2. Sales for the years ended December 31, 1994 and 1993
were $120.5 and $112.2, respectively. Income (loss) from
discontinued operations for the years ended December 31, 1995,
1994 and 1993 is net of tax benefits of $7.0, $9.3 and $4.1,
respectively.
Financial Instruments
The table below presents the carrying values and estimated fair
values for the Company's financial instruments, including
derivative financial instruments. Estimated fair values were
determined based on market prices, where available, or dealer
quotes.
<TABLE> December 31, 1995 December 31, 1994
<CAPTION> Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $321.4 $321.4 $115.6 $115.6
Short-term investments .4 .4 45.0 45.0
Other investments 142.2 142.2 83.0 83.0
Derivative Financial Instruments:
Foreign currency put options .2 - .7 .4
Forward exchange contracts - - 2.4 2.4
Liabilities:
Short-term borrowings 841.3 842.0 782.3 782.3
Long-term debt 87.1 88.9 185.8 189.2
Derivative Financial Instruments:
Interest rate swap contracts 1.5 1.5 19.4 19.4
Foreign currency swap contracts 64.5 81.3 68.8 100.8
</TABLE>
Credit and Market Risk
Most financial instruments expose the holder to credit risk for
non-performance and to market risk for changes in interest and
currency rates. The Company mitigates credit risk by dealing
only with financially sound counterparties. Accordingly, the
Company does not anticipate loss for non-performance. The Company
manages market risk primarily by investing in short-term, highly
liquid investments and, in the case of derivatives, by limiting
the use of derivatives to hedging activities or by limiting
potential exposure to amounts that are not material to results of
operations or cash flow. The Company does not enter into
derivative instruments to generate trading profits.
Investments
Short-term investments at December 31, 1994 consisted of
certificates of deposit and municipal obligations. Other
investments primarily consist of debt and equity securities held
in non-qualified trusts to fund benefit obligations. Gains and
losses during 1995 and 1994, based on the specific identification
method, were not material.
Derivatives
The Company has not used derivative financial instruments to
manage overall interest rate risk or overall exchange rate risk.
Further, the Company has not used derivative financial
instruments to speculate. The use of derivative financial
instruments has been limited to:
- Hedging selective foreign exchange exposures that arise
from international operations, and
- International cash management.
Hedging Selective Foreign Exchange Exposures
The profitability of the Company's foreign operations, as
measured in U.S. dollars, is subject to exchange rate risk. If
the U.S. dollar weakens, the profitability of foreign operations
benefits. However, if the U.S. dollar strengthens, the
profitability of foreign operations can be adversely affected.
Historically, the level of pre-tax operating profitability
subject to this kind of exchange risk has been as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Europe, Middle East and Africa $264.1 $235.5 $218.4
Latin America 104.5 101.8 77.2
Canada, Pacific Area and Asia 128.5 138.8 205.7
</TABLE>
To date, management has not deemed it cost-effective to engage in
a formula-based program of hedging the profitability of these
operations using derivative financial instruments. Some of the
reasons for this conclusion are:
- The Company operates in a large number of foreign countries;
the currencies of these countries generally do not move in
the same direction at the same time.
- Historically, the major groups of currencies in which the
Company operates generally have not experienced dramatic
changes on a year-to-year basis.
- The Company's foreign subsidiaries purchase significant
quantities of inventory payable in U.S. dollars. Managing
the level of inventory and related payables and the rate of
inventory turnover provides a level of protection against
adverse changes in exchange rates.
Anticipated Inventory Purchases
On a selective basis, put option contracts have been used to
hedge some of the anticipated inventory purchases of Company
subsidiaries.
Put option contracts provide the right to sell a fixed amount of
a specified currency at a fixed price during a specified period
or on a specified date. Realized gains on these contracts are
accounted for as a reduction in the cost of inventory.
Unrealized gains are not recognized for financial statement
purposes. Losses on foreign currency put options are limited to
the premiums paid. Premiums paid are recorded in other current
and non-current assets and amortized to other expense, net over
the life of the contract. Contracts outstanding at December 31,
1995, were not material. At December 31, 1994, yen option
contracts were outstanding, which provided the Company the right
to deliver 6.2 billion yen in exchange for $60.0 in 1995. Gains
and costs in both 1995 and 1994 were not material.
Financial Obligations
On a selective basis, the Company will enter into forward
exchange contracts to hedge near-term financial obligations
denominated in a foreign currency. At December 31, 1995, there
were no forward exchange contracts outstanding. At December 31,
1994, the Company's Mexican subsidiary held a forward contract
with a notional principal of $7.0 and a maturity date of January
24, 1995. Under the contract, on January 24, the subsidiary
received pesos equal to the difference between the spot rate and
the contract rate of 3.28 times the notional principal. The
market and net carrying value of this contract at December 31,
1994, was an asset of $2.4. Realized and unrealized gains and
losses are recorded as foreign exchange gains and losses and
offset the equivalent recorded loss or gain on the related
financial obligations.
Net Investment in Foreign Subsidiaries
In the early 1980s, the Company significantly changed its
operating structure in Japan. About the same time, the Company
decided to partially hedge its net investment in Japan. At
December 31, 1995, the net investment in the subsidiary was
approximately 20.1 billion yen.
Long-term foreign currency interest rate swap contracts have been
used to hedge this net investment. Under contracts outstanding
at December 31, 1995 and 1994, the Company will deliver 14.9
billion yen in exchange for $80.3 on various dates through 2005.
The net contract liability is in other long-term liabilities.
There have been no purchases, sales or maturities of these
foreign currency contracts during 1995 and 1994. In accordance
with SFAS No. 52, the foreign currency obligations under these
contracts are recorded using foreign exchange spot rates in
effect at year end. The Company estimates that a 50 basis point
reduction in interest rates would favorably affect the fair value
of these contracts by approximately $2.7 and a 1 percent stronger
dollar-to-yen exchange rate would favorably affect the estimated
fair value by approximately $1.4.
The investment in the Japanese subsidiary is the only net
investment that is hedged at year end using derivative financial
instruments.
International Cash Management
In 1991 and 1992, the Company utilized interest rate swaps as
part of its international cash management strategy. The Company
employed the strategy in 1991 using an interest rate swap
arrangement with a notional principal of $650 and in 1992 using
an interest rate swap arrangement with a notional principal of
$950.
The $650 arrangement initially provided for the payment and
receipt of interest based on two floating rates (LIBOR and
average federal funds rates), and the $950 arrangement initially
provided for the payment of interest based upon a floating rate
(LIBOR) and the receipt of interest based upon two-year U.S.
treasury rates. Both arrangements have 20-year terms.
From 1993 to 1995, the Company changed the original market risk
of these arrangements by entering into partially offsetting
contracts. At December 31, 1995, the $650 and $950 arrangements
provide for the payment of interest based upon LIBOR and the
receipt of interest based upon an annual election of various
floating rates. As a result, the Company remains subject to a
moderate degree of market risk through maturity of the swaps. At
December 31, 1995 and 1994, the market value of these
arrangements was a liability of $1.5 and $19.4, respectively. It
is estimated that a 50 basis point change in interest rate
structure could change the market value of these arrangements by
approximately $2.7.
The above interest rate swaps are accounted for on a mark-to-
market basis, and annual net cash flows for payments and receipts
under the contracts are not material.
Borrowings
Short-term borrowings consist of commercial paper issued in the
United States, bank loans and notes payable. Commercial paper
outstanding at December 31, 1995 and 1994 was $689.0 and $601.7,
respectively. Bank loans and notes payable at December 31, 1995
and 1994 totaled $52.1 and $178.2, respectively. The weighted-
average interest rate for short-term borrowings at
December 31, 1995 and 1994 was 6.1 percent and 6.4 percent,
respectively.
At December 31, 1995, unused domestic bank lines of credit, which
were considered as support for commercial paper borrowings, were
$510.0. These lines of credit do not require compensating
balances; however, a nominal commitment fee is paid for these
lines.
The Company's foreign subsidiaries had available $312.6 in unused
lines of credit from various financial institutions at December
31, 1995. Generally, these credit lines do not require
commitment fees or compensating balances and are cancelable at
the option of the Company or the financial institutions.
Long-term debt, including current maturities, at December 31
consisted of the following:
<TABLE>
<CAPTION> 1995 1994
<S> <C> <C>
Notes, 7.8%, due 1996 . . . . . . . . . . . . $100.0 $100.0
Industrial revenue bonds, 3.8%-12.0%,
due 2001-2013 . . . . . . . . . . . . . . . 80.0 80.0
Other . . . . . . . . . . . . . . . . . . . . 7.3 8.2
187.3 188.2
Current maturities. . . . . . . . . . . . . . (100.2) (2.4)
Total long-term debt. . . . . . . . . . . . . $ 87.1 $185.8
</TABLE>
During 1992, the Company purchased approximately $600.0 of U.S.
government securities and deposited them into an irrevocable
trust to complete an in-substance defeasance of the Company's
zero-coupon notes. The accumulated funds in the trust will be
used solely to satisfy the $828.6 maturity value of the zero-
coupon notes due December 2, 1996. Accordingly, the government
securities and the zero-coupon notes have been excluded from the
1995 and 1994 balance sheets.
The Company has a shelf registration statement on file with the
Securities and Exchange Commission covering the issuance of up to
$200.0 of debt securities. These securities may be offered from
time to time on terms to be determined at the time of sale. As
of December 31, 1995, no debt securities have been issued
pursuant to this registration.
Interest Income and Interest Expense
Interest income for 1995, 1994 and 1993 was $22.6, $17.2 and
$23.8, respectively.
Interest expense, net of amounts capitalized as part of the
construction cost of property, plant and equipment, for 1995,
1994 and 1993 was $57.6, $56.2 and $48.2, respectively.
Interest costs of $11.4, $11.4 and $12.7 in 1995, 1994 and 1993,
respectively, have been capitalized and included in the cost of
property, plant and equipment. Total cash payments for interest,
net of amounts capitalized, were $56.3, $54.9 and $49.4 in 1995,
1994 and 1993, respectively.
Interest income and interest expense are included in other
expense, net.
Stock Incentive Plans
Under the terms of the Company's 1992 Stock Incentive Plan, 18
million of the Company's common shares may be granted as stock
options or awarded as deferred stock units to officers and
certain employees of the Company through December 1997. Options
are granted at prices not less than the market value of the
common shares at grant dates, become exercisable not earlier than
six months and one day from the date of the grant, and expire not
later than 10 years after the date of the grant. Deferred stock
units are payable in an equivalent number of common shares; the
shares are distributable in a single installment or in up to five
equal annual installments commencing not earlier than six months
and one day from the date of the award.
The table below summarizes stock option activity over the past
two years under current and prior plans:
<TABLE>
<CAPTION> Number Option price
of shares (range per share)
<S> <C> <C>
Outstanding at January 1, 1994. . . . . 8,760,812 $ 4.40-$33.19
Granted . . . . . . . . . . . . . . 2,607,166 $29.82-$37.06
Exercised . . . . . . . . . . . . . (1,511,374) $ 4.40-$29.44
Canceled or expired . . . . . . . . (202,670)
Outstanding at December 31,1994 . . . . 9,653,934 $ 4.94-$37.06
Granted . . . . . . . . . . . . . . 1,911,920 $39.06-$59.25
Exercised . . . . . . . . . . . . . (1,743,223) $ 4.94-$34.13
Canceled or expired . . . . . . . . (99,854)
Outstanding at December 31, 1995. . . . 9,722,777 $ 8.00-$59.25
Exercisable at December 31, 1995. . . . 6,346,127
</TABLE>
As of December 31, 1995 and 1994, there were 1,576,032 and
1,542,920 deferred stock units outstanding, respectively, under
current and prior plans. There were 714,208 shares issued in
1995 and 1,014,772 shares issued in 1994. At December 31, 1995,
there were 10,248,918 common shares available for future options
or awards.
Retirement Plans
The Company and certain of its subsidiaries have defined benefit
pension plans covering eligible employees in the United States
and certain foreign countries. Benefits under these plans are
generally based upon the participants' average final earnings and
years of credited service, and take into account governmental
retirement benefits. The Company's funding policy is to
contribute actuarially determined amounts, after taking into
consideration the funded status of each plan and
regulatory limitations.
<TABLE>
The components of the net pension expense (income) for all
Company-sponsored plans were as follows:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost - benefits earned during
the year. . . . . . . . . . . . . . . $ 29.1 $ 32.2 $ 25.9
Interest cost on projected benefit
obligations . . . . . . . . . . . . . 47.0 42.0 40.3
Actual return on plan assets . . . . . (152.8) .5 (101.2)
Net amortization and deferral . . . . . 78.8 (68.4) 38.1
Net pension expense . . . . . . . . . . $ 2.1 $ 6.3 $ 3.1
</TABLE>
The year-to-year changes in the net amortization and deferral
component of pension expense are principally attributable to
differences between actual and expected returns on plan assets.
<TABLE>
The actuarial present value of benefit obligations and qualified
assets of the plans at December 31 were as follows:
<CAPTION>
Over-funded Under-funded
plans plans
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Projected benefit obligations:
Accumulated benefit obligations,
including vested benefits of
$571.4 in 1995 and $449.2 in 1994. . . $532.4 $426.4 $83.9 $ 73.0
Effect of future salary increases . . . 85.6 70.2 25.8 20.5
Total projected benefit obligations . . . 618.0 496.6 109.7 93.5
Plan assets at fair value,
primarily stocks and bonds. . . . . . . 822.4 688.7 17.3 13.7
Plan assets over (under) projected
benefit obligations . . . . . . . . . . 204.4 192.1 (92.4) (79.8)
Unrecognized net transition (asset)
liability . . . . . . . . . . . . . . . (77.4) (86.6) 6.1 6.6
Unrecognized prior service cost . . . . . 5.6 6.0 7.6 8.7
Unrecognized net (gain) loss. . . . . . . (9.8) (10.3) 20.9 15.3
Net pension asset (liability) . . . . . . $122.8 $101.2 $(57.8) $(49.2)
</TABLE>
In addition to the plan assets indicated above, at December 31,
1995 and 1994, securities of $64.5 and $45.7, respectively, were
held in non-qualified trusts designated to provide pension
benefits for certain plans presented as under-funded.
The discount rate used in determining the projected benefit
obligation for the Company's U.S. plans was 7.0 percent at
December 31, 1995, and 8.25 percent at December 31, 1994. The
weighted-average discount rate for the Company's non-U.S. plans
was 7.1 percent at December 31, 1995, and 7.4 percent at December
31, 1994. The weighted-average rate of increase in future
compensation levels for all plans was 4.2 percent at December 31,
1995 and 1994. The weighted-average expected long-term rate of
return on plan assets was approximately 10 percent for both
years.
The 1995 discount rate change increased the total projected
benefit obligation by approximately $80.0. The remaining
increase reflects 1995 service and interest costs.
The Company has a defined contribution profit-sharing plan
covering substantially all of its full-time domestic employees
who have completed one year of service. The annual contribution
is determined by a formula based on the Company's income,
shareholders' equity and participants' compensation. Profit-
sharing expense totaled $57.8, $56.4 and $54.8 in 1995, 1994 and
1993, respectively.
Other Post-retirement Benefits
The Company provides post-retirement health care and other
benefits to its eligible United States retirees and their
dependents. Eligibility for benefits depends upon age and years
of service. Retirees share in the cost of the health care
benefits.
Health care benefits for retirees in most countries other than
the United States are provided through local government-sponsored
plans. The direct cost of Company-sponsored, non-U.S. plans is
not significant. Accordingly, these plans are excluded from the
following disclosures.
Effective January 1, 1993, the Company adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." SFAS No. 106 requires the accrual of post-retirement
benefits during the years an employee provides service to the
Company. Previously, these costs were expensed on a pay-as-you-
go basis. As of January 1, 1993, the cumulative accrual of such
benefits totaled $147.0, $94.2 after-tax, or $.24 per share. The
Company elected to recognize this entire amount effective with
the adoption of SFAS No. 106.
<PAGE>
<TABLE>
The components of net post-retirement benefit expense (income)
were as follows:
<CAPTION> 1995 1994 1993
<S> <C> <C> <C>
Service cost - benefits earned during the year. . . $ 3.9 $ 5.7 $ 4.7
Interest cost on accumulated post-retirement
benefit obligation . . . . . . . . . . . . . . . . 10.7 10.3 12.1
Actual return on plan assets. . . . . . . . . . . . (35.4) 2.0 (15.9)
Net deferral. . . . . . . . . . . . . . . . . . . . 20.3 (15.5) 4.2
Post-retirement benefit expense (income). . . . . . $ (.5) $ 2.5 $ 5.1
</TABLE>
The year-to-year changes in the net deferral component of post-
retirement benefit expense (income) are principally attributable
to differences between actual and expected returns on plan assets.
<TABLE>
The accumulated post-retirement benefit obligation and funded
status at December 31, were as follows:
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated post-retirement benefit
obligation attributable to:
Retirees. . . . . . . . . . . . . . . . . . . . . $83.4 $ 67.6
Fully eligible active plan participants . . . . . 30.1 24.6
Other active plan participants. . . . . . . . . . 50.4 38.2
Accumulated post-retirement benefit obligation. . . . 163.9 130.4
Plan assets at fair value,
primarily stocks and bonds. . . . . . . . . . . . . 179.4 150.2
Plan assets in excess of accumulated post-retirement
benefit obligation. . . . . . . . . . . . . . . . . 15.5 19.8
Unrecognized net gain . . . . . . . . . . . . . . . . (23.1) (27.6)
Accrued post-retirement benefit liability . . . . . . $(7.6) $ (7.8)
</TABLE>
The assumed health care cost trend rates used for measurement
purposes were 9.8 percent for 1996, trending down to 5.0 percent
by 2003. The weighted-average discount rate used was 7.0 percent
at December 31, 1995, and 8.25 percent at December 31, 1994. The
weighted-average expected long-term rate of return on plan assets
was 9 percent at December 31, 1995 and 1994.
Earnings on plan assets that have been segregated for tax purposes
and funded through a Voluntary Employee Benefit Association (VEBA
trust) are subject to a tax rate of 39.6 percent. In January
1993, the Company fully funded its initial accumulated benefit
obligation. Future funding is at the discretion of the Company.
The 1995 discount rate change increased the accumulated benefit
obligation by approximately $20.0. The remaining increase
reflects 1995 service and interest costs.
At December 31, 1995, a 1 percent increase in the assumed health
care cost trend rate would increase the combined service and
interest cost by approximately 14 percent and the accumulated
post-retirement benefit obligation by approximately 13 percent.
Shareholders' Equity
On April 4, 1995, the Board of Directors voted to increase the
number of authorized shares from 300 million to 600 million and
approved a 2-for-1 stock split. Distribution of the split shares
was made on June 9, 1995.
The Company has Preferred Share Purchase Rights (the "Rights")
outstanding that are attached to, and presently only trade with,
the Company's common shares and are not exercisable. The Rights
will begin to trade separately from the common shares and become
exercisable upon the earlier of (i) 10 days following a public
announcement that a person or group has acquired beneficial
ownership of 20 percent or more of the Company's outstanding
common shares, or (ii) 10 business days following a person's or
group's commencement of, or announcement of, an intention to make
a tender or exchange offer, the consummation of which would result
in beneficial ownership of 20 percent or more of the Company's
common shares.
Upon becoming exercisable, each Right will entitle the holder to
purchase one four-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $1 per share, of the
Company at an exercise price of $62.50. In the event that the
Company is acquired pursuant to a merger, or 50 percent or more of
its consolidated assets or earning power are sold, each Right will
entitle its holder to purchase shares of the acquiring company
having a market value of twice the exercise price of the Right.
In the event that any person or group becomes the beneficial owner
of 20 percent or more of the common shares, each Right will
entitle its holder to purchase common shares of the Company having
a market value of twice the exercise price of the Right. The
Company may redeem the Rights at $.0025 per Right at any time
prior to the acquisition, by a person or group, of 20 percent or
more of the Company's outstanding common shares. The Rights will
expire on August 9, 1999, unless earlier redeemed.
<TABLE>
A summary of activity in common shares, paid-in capital and
treasury shares follows (number of shares in millions):
<CAPTION>
Common Paid-in Treasury Shares
Shares Capital Number Amount
<S> <C> <C> <C> <C>
Balance at January 1, 1993. . . $251.5 $47.5 52.0 $1,655.6
Shares issued under stock
incentive plans . . . . . . . - 41.8 (1.0) (4.0)
Warrant transactions . . . . . - (8.4) - -
Purchase of treasury shares. . - - 7.0 418.3
____________________________________________________________________
Balance at December 31, 1993. . 251.5 80.9 58.0 2,069.9
Shares issued under stock
incentive plans . . . . . . . - 52.4 (1.1) 2.3
Purchase of treasury shares. . - - 8.6 599.4
____________________________________________________________________
Balance at December 31, 1994. . 251.5 133.3 65.5 2,671.6
Effect of 2-for-1 stock split. 251.5 (145.0) 65.4 -
Shares issued under stock
incentive plans . . . . . . . - 61.2 (2.0) 2.1
Purchase of treasury shares. . - - 9.9 493.8
____________________________________________________________________
Balance at December 31, 1995. . $503.0 $ 49.5 138.8 $3,167.5
</TABLE>
At December 31, 1995, warrants to purchase 15.3 million common
shares are outstanding; 10.2 million warrants, exercisable
during November 1996, have a strike price of $45 per share and 5.1
million warrants, exercisable during the 90-day period ended
November 22, 1996, have a strike price of $48.67 per share.
<TABLE>
Inventories
<CAPTION>
Year-end inventories consisted of the following:
1995 1994
<S> <C> <C>
Finished products . . . . . . . . . . . . . . $213.2 $180.1
Goods in process. . . . . . . . . . . . . . . 179.4 193.8
Raw materials and supplies. . . . . . . . . . 109.4 92.4
Total inventories . . . . . . . . . . . . . . $502.0 $466.3
</TABLE>
Inventories valued on a last-in, first-out basis comprised
approximately 39 percent and 36 percent of total inventories at
December 31, 1995 and 1994, respectively. The estimated
replacement cost of total inventories at December 31, 1995 and
1994 was $549.7 and $520.1, respectively.
Income Taxes
<TABLE>
U.S. and foreign operations contributed to income before income
taxes as follows:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
United States. . . . . . . . . . . . . $ 916.7 $ 765.6 $ 587.8
Foreign. . . . . . . . . . . . . . . . 478.0 461.1 485.3
Total income before income taxes . . . $1,394.7 $1,226.7 $1,073.1
</TABLE>
<TABLE>
The components of income tax expense were as follows:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Current:
Federal. . . . . . . . . . . . . . . $262.1 $120.6 $117.4
Foreign. . . . . . . . . . . . . . . 93.7 119.2 121.7
State. . . . . . . . . . . . . . . . 29.3 19.6 6.9
Total current. . . . . . . . . . . . 385.1 259.4 246.0
Deferred:
Federal and state. . . . . . . . . . (23.1) 51.3 8.0
Foreign. . . . . . . . . . . . . . . (20.3) (10.2) 3.5
Total deferred . . . . . . . . . . . (43.4) 41.1 11.5
Total income tax expense . . . . . . . $341.7 $300.5 $257.5
</TABLE>
<TABLE>
The difference between the U.S. statutory tax rate and the
Company's effective tax rate was due to the following:
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
U.S. statutory tax rate. . . . . . . . . 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting
from:
Lower rates in other jurisdictions,
net . . . . . . . . . . . . . . . . . (10.7) (9.8) (11.2)
Research tax credit. . . . . . . . . . (.3) (.6) (.6)
All other, net . . . . . . . . . . . . .5 (.1) .8
Effective tax rate . . . . . . . . . . . 24.5% 24.5% 24.0%
</TABLE>
The lower rates in other jurisdictions are primarily attributable
to certain employment and capital investment actions taken by the
Company. As a result, income from manufacturing activities in
these jurisdictions is subject to lower tax rates for years
through 2018.
As of December 31, 1995 and 1994, the Company had total deferred
tax assets of $426.6 and $340.7, respectively, and deferred tax
liabilities of $379.5 and $370.3, respectively. Valuation
allowances are not significant. Significant deferred tax assets at
December 31, 1995 and 1994 were for operating costs not currently
deductible for tax purposes and totaled $302.7 and $245.6,
respectively. Significant deferred tax liabilities at December 31,
1995 and 1994 were for depreciation differences, $207.4 and
$193.2, respectively, and retirement plans, $41.0 and $34.0,
respectively. Other current assets include deferred income taxes
of $300.9 and $209.3 at December 31, 1995 and 1994, respectively.
Deferred taxes are not provided on undistributed earnings of
foreign subsidiaries (considered to be permanent investments),
which at December 31, 1995, approximated $1,820.6. Determining
the tax liability that would arise if these earnings were remitted
is not practicable.
As of December 31, 1995, the U.S. Internal Revenue Service has
completed its examination of the Company's tax returns for all
years through 1988 and there are no unresolved issues outstanding
for those years.
Total income tax payments during 1995, 1994 and 1993 were $318.9,
$173.1 and $183.1, respectively.
At December 31, 1995, the Company had capital loss carry-forwards
for tax purposes of $28.9 that expire in 2000.
Commitments
Total rent expense amounted to $31.4 in 1995, $26.1 in 1994 and
$24.1 in 1993. Future minimum rental commitments on non-
cancelable operating leases as of December 31, 1995, range from
$20.2 in 1996 to $4.9 in 2000, with aggregate minimum lease
obligations of $8.9 due thereafter.
The Company has commitments related to future capital expenditures
totaling $129.8 as of December 31, 1995.
Legal and Environmental Matters
The Company has responsibilities for environmental clean-up under
various state, local and federal laws, including the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund. At several Superfund sites (or equivalent
sites under state law), the Company is alleged to be a potentially
responsible party (PRP). The Company estimates its obligations
for clean-up costs for Superfund sites based on information
obtained from the federal Environmental Protection Agency, an
equivalent state agency and/or studies prepared by independent
engineers, and on the probable costs to be paid by other PRPs.
The Company records a liability for environmental assessments
and/or clean-up when it is probable a loss has been incurred.
The Company is also involved in various other claims and legal
proceedings of a nature considered normal to its business,
including product liability cases. The estimated costs the
Company expects to pay in these cases are accrued when the
liability is considered probable and the amount can reasonably be
estimated.
The recorded liabilities for the above matters at December 31,
1995 and 1994, and the related expenses incurred during the three
years ended December 31, 1995, were not material. Expected
insurance recoveries have not been considered in determining the
costs for environmental related liabilities. Management believes
that, except for the matter 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 150 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, subject to
court approval, to settle this federal class action for a total of
$22.1 payable over three years. In the event that the court does
not approve the settlement, the class action is likely to go to
trial in mid-1996. Three of the state cases have been certified
as class actions. One is a class action on behalf of certain
retail pharmacies in California, and the other two are class
actions in California and Alabama, respectively, on behalf of
certain consumers of prescription medicine. Plaintiffs in all
cases seek treble damages and/or penalties in an unspecified
amount and an injunction against the allegedly unlawful conduct.
The Company believes that all these actions are without merit and
is defending itself vigorously against all such claims.
Consistent with trends in the pharmaceutical industry, the Company
is self-insured for certain events.
Business Segment Data
Schering-Plough Corporation is a holding company whose
subsidiaries are engaged in the discovery, development, manufac-
turing and marketing of pharmaceutical and health care products
worldwide. Pharmaceutical products include prescription drugs and
animal health products. Health care products include over-the-
counter, foot care and sun care products sold primarily in the
United States.
<PAGE>
<TABLE>
<CAPTION>
Sales and Operating Profit by Industry Segment
Sales Profit
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Pharmaceutical products. . . $4,471.7 $3,880.2 $3,528.5 $1,380.6 $1,204.4 $1,049.8
Health care products . . . . 632.7 656.4 700.6 153.6 158.9 135.8
Total sales and operating
profit. . . . . . . . . . . 5,104.4 4,536.6 4,229.1 1,534.2 1,363.3 1,185.6
General corporate
revenue and expense . . . . (81.9) (80.4) (64.3)
Interest expense . . . . . . (57.6) (56.2) (48.2)
Consolidated sales
and pre-tax profit. . . . . $5,104.4 $4,536.6 $4,229.1 $1,394.7 $1,226.7 $1,073.1
</TABLE>
<TABLE>
<CAPTION>
Identifiable Assets, Capital Expenditures, Depreciation and Amortization by Industry
Segment
Capital
Assets Expenditures
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Pharmaceutical products. $3,608.7 $3,544.5 $3,276.1 $ 275.5 $243.8 $314.1
Health care products . . 373.2 395.2 408.7 17.4 21.5 24.2
Industry segment totals. 3,981.9 3,939.7 3,684.8 292.9 265.3 338.3
Corporate. . . . . . . . 682.7 386.0 632.1 .9 2.9 1.6
Consolidated assets,
capital expenditures,
depreciation and
amortization. . . . . . $4,664.6 $4,325.7 $4,316.9 $293.8 $268.2 $339.9
</TABLE>
<TABLE>
<CAPTION>
<PAGE>
Depreciation and
Amortization
1995 1994 1993
<S> <C> <C> <C>
Pharmaceutical products. $ 134.9 $ 121.2 $ 108.0
Health care products . . 16.9 18.2 17.8
Industry segment totals. 151.8 139.4 125.8
Corporate. . . . . . . . 5.3 5.2 5.1
Consolidated assets,
capital expenditures,
depreciation and
amortization. . . . . . $ 157.1 $ 144.6 $ 130.9
</TABLE>
<TABLE>
<CAPTION>
Sales, Operating Profit and Identifiable Assets by Geographic Area
Sales Profit
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
United States. . . . . . $2,804.9 $2,470.2 $2,212.7 $1,037.1 $ 887.2 $ 684.3
Europe, Middle
East and Africa . . . . 1,277.3 $1,045.7 936.9 264.1 235.5 218.4
Latin America. . . . . . 373.8 387.0 325.4 104.5 101.8 77.2
Canada, Pacific
Area and Asia . . . . . 648.4 633.7 754.1 128.5 138.8 205.7
Total sales,
operating profit
and identifiable
assets . . . . . . . . $5,104.4 $4,536.6 $4,229.1 $1,534.2 $1,363.3 $1,185.6
</TABLE>
<TABLE>
<CAPTION>
Assets
1995 1994 1993
<S> <C> <C> <C>
United States. . . . . . $2,234.8 $2,344.2 $2,263.0
Europe, Middle
East and Africa . . . . 1,058.6 $ 887.5 689.2
Latin America. . . . . . 278.2 278.4 233.9
Canada, Pacific
Area and Asia . . . . . 410.3 429.6 498.7
Total sales,
operating profit
and identifiable
assets . . . . . . . . $3,981.9 $3,939.7 $3,684.8
/TABLE
<PAGE>
Sales, operating profit and identifiable assets as presented are
associated with each geographic area, based on the location of
the ultimate customers. The Company maintains manufacturing
facilities in Ireland and Puerto Rico for the production of
several significant finished and semi-finished products for
distribution to domestic and foreign subsidiaries. The sales,
operating profit and identifiable assets of these facilities have
been included in the geographic area in which the ultimate
customers are located.
<PAGE>
Report by Management
The management of Schering-Plough is responsible for the
preparation and the integrity of all information and
representations contained in the financial statements and related
data included in this Annual Report. This information was
prepared in accordance with generally accepted accounting
principles and is believed by management to present fairly the
Company's results of operations, financial position and cash
flows. It is important to recognize that the preparation of
financial statements requires the use of estimates and
assumptions that affect the reported amounts of assets,
liabilities, sales and expenses.
Schering-Plough maintains, and management relies on, a system of
internal accounting controls that provides reasonable assurance
of the integrity and reliability of the financial statements.
The system provides, at appropriate cost, that assets are
safeguarded, transactions are executed in accordance with manage-
ment's authorization, and fraudulent financial reporting
practices are prevented or detected. In establishing and
maintaining this system, judgments are required to assess and
balance the relative cost versus the expected benefit of a given
control.
The Company's internal accounting control system is clearly
documented, provides for careful selection and training of
supervisory and management personnel, and also requires
appropriate segregation of responsibilities and delegation of
authority. Formal policies and procedures are maintained and
systematically disseminated throughout the Company. In addition,
the Company maintains a corporate code of conduct for purposes of
determining possible conflicts of interest, compliance with laws
and confidentiality of proprietary information.
The Company's independent auditors, Deloitte & Touche LLP, audit
Schering-Plough's consolidated financial statements. They
evaluate the Company's internal accounting controls and perform
tests of procedures and accounting records to enable them to
render their report. In addition, Schering-Plough has an
internal audit function that assists management in discharging
its responsibilities. The internal audit staff, under the
direction of the staff vice president - corporate audits,
regularly performs audits using programs designed to test
compliance with Company policies and procedures, and to verify
the adequacy of internal accounting controls and other financial
policies. The internal auditors also continually evaluate the
effectiveness and accuracy of financial reporting by the
Company's various operations.
Management has considered the internal auditors' and independent
auditors' recommendations concerning the Company's system of
internal accounting controls and has taken appropriate action.
Such recommendations are communicated in accordance with Company
policy to the individuals responsible for implementation.
The Finance and Audit Committee of the Board of Directors
consists solely of non-employee directors. The Committee meets
periodically with management, the internal auditors and the
independent auditors to review audit results, financial
reporting, internal accounting controls and other financial
matters. Both the independent auditors and internal auditors
have free access to the Committee, with and without the presence
of management, to discuss the adequacy of Schering-Plough's
internal accounting controls, the quality of financial reporting
and other matters relating to their audits.
It is our opinion that the Company's system of internal
accounting controls in effect as of December 31, 1995, provides
reasonable assurance that the financial statements and related
data in this Annual Report are fairly presented in accordance
with generally accepted accounting principles.
/s/Richard J. Kogan
President and
Chief Executive Officer
/s/Jack L. Wyszomierski
Executive Vice President
and Chief Financial
Officer
/s/Thomas H. Kelly
Vice President
and Controller
INDEPENDENT AUDITORS' REPORT
DELOITTE & TOUCHE LLP
Schering-Plough Corporation, its Directors and Shareholders:
We have audited the accompanying consolidated balance sheets of
Schering-Plough Corporation and subsidiaries as of December 31,
1995 and 1994 and the related statements of consolidated income,
retained earnings and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial state-
ments 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 consolidated financial statements present
fairly, in all material respects, the financial position of
Schering-Plough Corporation and subsidiaries at December 31, 1995
and 1994 and the results of their operations and their cash flows
for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting
principles.
As discussed in the Notes to Consolidated Financial Statements,
the Company changed, in 1993, its method of accounting for post-
retirement benefits other than pensions to conform with Statement
of Financial Accounting Standards No. 106.
/s/Deloitte & Touche LLP
Parsippany, New Jersey
February 14, 1996
COMMON SHARE DIVIDENDS AND MARKET DATA
During 1995, the Board of Directors increased the quarterly
dividend rate from $.255 per share to $.29 per share, a 14
percent increase. Dividends paid on common shares in 1995 and
1994 totaled $416.4 million and $379.4 million, respectively.
The following table reflects the quarterly dividends per share
paid over the last two years, restated for the effect of the 1995
2-for-1 stock split:
<TABLE>
<CAPTION>
Quarter 1995 1994
<S> <C> <C>
1st $ .255 $ .225
2nd .29 .255
3rd .29 .255
4th .29 .255
$ 1.125 $ .99
</TABLE>
The approximate number of holders of record of common shares as of
December 31, 1995, was 34,100.
The Company's common shares are listed and principally traded on the
New York Stock Exchange. The following table reflects the reported
high and low sale prices for the common shares in each of the calendar
quarters during the past two years, restated for the effect of the
1995 2-for-1 stock split:
<TABLE>
<CAPTION>
1995 1994
Quarter High Low High Low
<S> <C> <C> <C> <C>
1st $ 39 7/16 $ 35 13/16 $34 9/16 $27 13/16
2nd 45 3/8 36 3/4 33 5/16 27 9/16
3rd 52 1/2 43 35 11/16 30 13/16
4th 60 5/8 51 3/4 37 13/16 34 15/16
__________________________________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schering-Plough Corporation and Subsidiaries
Six-Year Selected Financial & Statistical Data
(Dollars in millions, except per share figures)
1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Operating Results
Sales . . . . . . . . . . . . .$5,104.4 $4,536.6 $4,229.1 $3,944.6 $3,475.4 $3,194.9
Income before income taxes. . . 1,394.7 1,226.7 1,073.1 962.8 847.6 768.1
Income from continuing operations
before extraordinary item and
cumulative effect of
accounting changes . . . . . . 1,053.0 926.2 815.6 722.1 635.7 560.7
Discontinued operations . . . . (166.4) (4.2) 9.4 (2.1) 9.9 4.4
Extraordinary item. . . . . . . - - - (26.7) - -
Cumulative effect of accounting
changes. . . . . . . . . . . . - - (94.2) 27.1 - -
Net income. . . . . . . . . . . 886.6 922.0 730.8 720.4 645.6 565.1
Earnings per common share from
continuing operations before
extraordinary item and
cumulative effect of accounting
changes . . . . . . . . . . . 2.85 2.42 2.09 1.80 1.48 1.24
Discontinued operations . . . . (.45) (.01) .02 - .02 .01
Extraordinary item. . . . . . . - - - (.07) - -
Cumulative effect of accounting
changes. . . . . . . . . . . . - - (.24) .07 - -
Earnings per common share . . . 2.40 2.41 1.87 1.80 1.50 1.25
_____________________________________________________________________________________________
Investments
Research and development . . . $ 656.9 $ 610.1 $ 567.3 $ 510.5 $ 416.5 $ 370.5
Capital expenditures . . . . . 293.8 268.2 339.9 372.8 319.2 229.3
Financial Condition
Property, net . . . . . . . . .$2,098.9 $2,082.3 $1,967.7 $1,748.5 $1,490.4 $1,284.4
Total assets. . . . . . . . . . 4,664.6 4,325.7 4,316.9 4,156.6 4,013.2 4,103.1
Long-term debt. . . . . . . . . 87.1 185.8 182.3 184.1 753.6 182.9
Shareholders' equity. . . . . . 1,622.9 1,574.4 1,581.9 1,596.9 1,346.1 2,080.8
Net book value per common share 4.46 4.23 4.09 4.00 3.34 4.69
Financial Statistics
Income from continuing operations
before extraordinary item and
cumulative effect of accounting
changes as a percent of sales 20.6% 20.4% 19.3% 18.3% 18.3% 17.5%
Net income as a percent of sales 17.4% 20.3% 17.3% 18.3% 18.6% 17.7%
Return on average shareholders'
equity . . . . . . . . . . . . 55.5% 58.4% 46.0% 49.0% 37.7% 28.0%
Effective tax rate . . . . . . 24.5% 24.5% 24.0% 25.0% 25.0% 27.0%
Other Data
Cash dividends per common share $ 1.125 $ .99 $ .87 $ .75 $ .635 $ .533
Cash dividends on common shares 416.4 379.4 339.6 300.2 273.6 241.2
Depreciation and amortization . 157.1 144.6 130.9 124.5 118.0 111.2
Number of employees . . . . . . 20,100 20,000 20,300 19,800 19,000 18,500
Average common shares outstanding
(in millions) . . . . . . . . . 369.7 382.5 390.2 400.3 429.0 451.9
Actual common shares outstanding
at year end (in millions). . . . 364.2 372.0 387.1 399.0 403.6 444.0
Certain amounts for years prior to 1995 have been restated for the effect of discontinued
operations and a 2-for-1 stock split.
</TABLE>
<TABLE>
<CAPTION>
Quarterly Results of Operations
(Dollars in millions, except per share figures)
Three Months Ended March 31, June 30, September 30, December 31,
1995 1994 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales . . . . . . . $1,224.2 $1,132.9 $1,332.5 $1,149.0 $1,256.8 $1,095.2 $1,290.9 $1,159.5
Gross profit . . . . 988.4 899.7 1,060.0 921.6 1,019.0 888.9 1,032.2 919.6
Income before income
taxes . . . . . . . 377.4 337.7 365.6 309.3 334.6 299.6 317.1 280.1
Income from continuing
operations. . . . . 284.9 255.0 276.1 233.5 252.6 226.2 239.4 211.5
Discontinued operations (6.3) (1.8) (160.1) 7.2 - (1.9) - (7.7)
Net income . . . . . 278.6 253.2 116.0 240.7 252.6 224.3 239.4 203.8
Earnings per common
share from continuing
operations . . . . .77 .66 .74 .61 .68 .59 .66 .56
Discontinued operations (.02) (.01) (.43) .02 - - - (.02)
Earnings per common
share . . . . . . . .75 .65 .31 .63 .68 .59 .66 .54
____________________________________________________________________________________________
<FN>
Certain amounts for 1994 have been restated for the effect of discontinued operations and a
2-for-1 stock split. Discontinued operations includes a loss on disposal of $156.2, net of a
tax benefit of $75.3, ($.42 per share), during the second quarter of 1995.
</FN>
</TABLE>
APPENDIX TO EXHIBIT #13
Page 1 OF 2
The page preceding the management's discussion and analysis of
operations and financial condition of the 1995 annual report
to shareholders presents three bar charts. Across the bottom of
the page, beneath the charts, is a footnote stating that amounts
prior to 1995 have been restated for the effect of discontinued
operations. The following 3 sections provide the information
portrayed in the charts:
_______________________________________________________________
Title: Sales
The vertical axis is in millions of dollars starting at zero,
increasing in $1,000 million increments, ending at $6,000
million.
The horizontal axis is in years starting with 1991, ending with
1995.
The data points are:
1991 $3,475.4
1992 $3,944.6
1993 $4,229.1
1994 $4,536.6
1995 $5,104.4
_______________________________________________________________
Title: Research and Development
The vertical axis is in millions of dollars starting at zero,
increasing in $100 million increments, ending at $800 million.
The horizontal axis is in years starting with 1991, ending with
1995.
The data points are:
1991 $416.5
1992 $510.5
1993 $567.3
1994 $610.1
1995 $656.9
_______________________________________________________________
<PAGE>
Page 2 of 2
APPENDIX TO EXHIBIT #13
_______________________________________________________________
Title: Capital Expenditures
The vertical axis is in millions of dollars starting at zero,
increasing in $50 million increments, ending at $400 million.
The horizontal axis is in years starting with 1991, ending with
1995.
The data points are:
1991 $319.2
1992 $372.8
1993 $339.9
1994 $268.2
1995 $293.8
_______________________________________________________________
Schering-Plough Corporation and Subsidiaries
Subsidiaries of Registrant Exhibit 21
As of December 31, 1995 Page 1 of 3
State or Country
of Incorporation
Subsidiaries of Registrant or Organization
AESCA Chemisch-Pharmazeutische Fabrik GmbH Austria
American Image Productions, Inc. Tennessee
American Scientific Laboratories, Inc. Delaware
Beneficiadora e Industrializadora, S.A. de C.V. Mexico
Cacene, C.A. Venezuela
Calzado Confort C.A. Venezuela
Casacen, C.A. Venezuela
Chemibiotic (Ireland) Ltd. Ireland
Dashtag United Kingdom
Desarrollos Farmaceuticos y Cosmeticos S.A. Spain
DNAX Research Institute of Molecular and
Cellular Biology, Inc. California
Douglas Industries Inc. Delaware
Dr. Scholl's Foot Comfort Shops, Inc. Delaware
Essex Chemie A.G. Switzerland
Essex Farmaceutica, S.A. Colombia
Essex Quimica Industria E Comercio S.A. Brazil
Essex Pharma GmbH Germany
Essex Pharma S.A. Greece
EssexFarm S.A. Ecuador
Farmaceutica Essex S.A. Spain
Fulford (India) Limited India
Garden Insurance Company Ltd. Bermuda
Industria Quimica e Farmaceutica
Schering-Plough S.A. Brazil
Industrias Arco, Ltda. Costa Rica
Integrated Disease Management, Inc. Delaware
Integrated Therapeutics Group, Inc. Delaware
Key Pharma A.G. Switzerland
Key Pharmaceuticals Export Co., Inc. U.S. Virgin Islands
Key Pharmaceuticals, Inc. Florida
Kirby-Warrick Pharmaceuticals Limited United Kingdom
Laboratorios Essex S.A. Argentina
Loftus Bryan Chemicals Ltd. Ireland
Med-Nim (Proprietary) Limited South Africa
Ortopedia Nacional de Venezuela C.A. Venezuela
PPL, Inc. Tennessee
P.T. Schering-Plough Indonesia Indonesia
Pharmaceutical Supply Corporation Delaware
Pharmaco (Canada) Ltd. Canada
Pharmaco, Inc. Delaware
Plough (Australia) Pty. Limited Australia
Plough Benelux S.A. Belgium
Plough Broadcasting Company, Inc. Delaware
Plough Chile Ltda. Chile
Plough Consumer Products (Asia) Ltd. Hong Kong
Plough Consumer Products (Philippines) Inc. Philippines
Plough de Venezuela, C.A. Venezuela
Plough Export, Inc. Tennessee
Plough France France
Plough (Hellas) Ltd. Greece
Exhibit 21
Page 2 of 3
State or Country
of Incorporation
Subsidiaries of Registrant or Organization
Plough Laboratories, Inc. Tennessee
Plough Services A.G. Switzerland
Plough, S.p.A. Italy
Plough (UK) Limited United Kingdom
Plough/OTC Farma Lda. Portugal
Pro Medica AB Sweden
Professional Pharmaceutical Corporation Delaware
Professional Vaccine Corporation Delaware
S.C.A. - Stabilimenti Chimici dell'Adda, S.p.A. Italy
S-P RIL Limited United Kingdom
SBI - Distribuidora de Productos Farmaceuticos
Ltda. Brazil
Scheramex, S.A. de C.V. Mexico
Scherico Ltd. Switzerland
Schering Biotech Corporation Delaware
Schering Canada, Inc. Canada
Schering Corporation New Jersey
Schering Institutional Sales Corporation Delaware
Schering Laboratories Advertising Inc. Delaware
Schering Sales Corporation Delaware
Schering Transamerica Corporation New Jersey
Schering-Plough France
Schering-Plough AB Sweden
Schering-Plough A/S Denmark
Schering-Plough A/S Norway
Schering-Plough B.V. Netherlands
Schering-Plough, C.A. Venezuela
Schering-Plough N.V./S.A. Belgium
Schering-Plough OY Finland
Schering-Plough S.A. Argentina
Schering-Plough S.A. Colombia
Schering-Plough S.A. Panama
Schering-Plough S.A. Spain
Schering-Plough S.A. Uruguay
Schering-Plough, S.A. de C.V. Mexico
Schering-Plough S.p.A. Italy
Schering-Plough Animal Health Corporation Delaware
Schering-Plough Central East A.G. Switzerland
Schering-Plough China Limited Bermuda
Schering-Plough Compania Limitada Chile
Schering-Plough Coordination Center N.V./S.A. Belgium
Schering-Plough Corporation Philippines
Schering-Plough South Korea
Schering-Plough Corporation, U.S.A. Delaware
Schering-Plough del Caribe, Inc. New Jersey
Schering-Plough del Ecuador, S.A. Ecuador
Schering-Plough Farma, Lda Portugal
Schering-Plough (Grenada) Limited Grenada
Schering-Plough HealthCare Holding Company Delaware
Schering-Plough HealthCare Products Advertising
Corporation Tennessee
Schering-Plough HealthCare Products Canada, Inc. Canada
Exhibit 21
Page 3 of 3
State or Country
of Incorporation
Subsidiaries of Registrant or Organization
Schering-Plough HealthCare Products, Inc. Delaware
Schering-Plough HealthCare Products Sales
Corporation California
Schering-Plough Holdings Ltd. United Kingdom
Schering-Plough INT Limited United Kingdom
Schering-Plough (India) Limited India
Schering-Plough International, Inc. Delaware
Schering-Plough Investment Co., Inc. Delaware
Schering-Plough Investments Limited Delaware
Schering-Plough Kabushiki Kaisha Japan
Schering-Plough Labo N.V. Belgium
Schering-Plough Limited Iran
Schering-Plough Limited Taiwan
Schering-Plough Limited Thailand
Schering-Plough Limited United Kingdom
Schering-Plough Ltd. Switzerland
Schering-Plough Overseas Limited Delaware
Schering-Plough Pharmaceutical Industrial and
Commercial S.A. Greece
Schering-Plough Products, Inc. Delaware
Schering-Plough Pty Ltd. South Africa
Schering-Plough Pty Limited Australia
Schering-Plough Real Estate Co., Inc. Delaware
Schering-Plough Research Institute Delaware
Schering-Plough Sante Animale France
Schering-Plough Sdn. Bhd. Malaysia
Schering-Plough Tibbi Urunler Ticaret A.S. Turkey
Sentipharm A.G. Switzerland
Sentipharm Hong Kong Ltd. Hong Kong
Shanghai Schering-Plough Pharmaceutical Company
Ltd. China
SOL Limited Bermuda
SP HealthCare Products Corporation Delaware
SUNTAN Sensations, Inc. California
Technobiotic Limited Australia
The Coppertone Corporation Florida
W-J Liquidating Corp. Delaware
W-J Manufacturing Corporation Delaware
Warrick Pharmaceuticals Corporation Delaware
Warrick Pharmaceuticals Limited United Kingdom
Werthenstein Chemie A.G. Switzerland
White Laboratories, Inc. New Jersey
White Laboratories Ltd. United Kingdom
White Laboratories of Canada Limited Canada
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 2-83963, No. 33-19013, and No. 33-50606 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 Statement No. 2-
80012 on Form S-3 and Post-Effective Amendment No. 1 to
Registration Statement No. 2-77740 on Form S-3 of our reports dated
February 14, 1996, appearing in and incorporated by reference in
this Annual Report on Form 10-K of Schering-Plough Corporation for
the year ended December 31, 1995.
/s/DELOITTE & TOUCHE
Parsippany, New Jersey
February 28, 1996
Exhibit 99
Company Statements Relating
to Forward Looking Information
(Filed Pursuant to Rule 175)
1. Extract from news releases issued by the Company on January
2, 1996 and February 9, 1996:
- Mr. Richard J. Kogan, President and Chief Executive
Officer, commenting on the Company's earnings per share
for 1996 in a news release dated January 2, 1996,
stated that he expects earnings per share gains in the
low-to-mid teens in 1996. The Company reaffirmed this
expectation in another news release dated February 9,
1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL DATA EXTRACTED FROM THE SCHERING-PLOUGH
CORPORATION CONSOLIDATED FINANCIAL STATEMENTS, RELATED 10-K SCHEDULES AND
EXHIBITS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1994 AMOUNTS HAVE BEEN
RESTATED FOR THE EFFECT OF DISCONTINUED OPERATIONS AND A STOCK SPLIT IN 1995.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> DEC-31-1995 DEC-31-1994
<CASH> 321400 115600
<SECURITIES> 400 45000
<RECEIVABLES> 638400 685400
<ALLOWANCES> 69100 57500
<INVENTORY> 502000 466300
<CURRENT-ASSETS> 1956300 1739100
<PP&E> 3136000 3049700
<DEPRECIATION> 1037100 967400
<TOTAL-ASSETS> 4664600 4325700
<CURRENT-LIABILITIES> 2362100 2028800
<BONDS> 87100 185800
<COMMON> 503000 251500
0 0
0 0
<OTHER-SE> 1119900 1322900
<TOTAL-LIABILITY-AND-EQUITY> 4664600 4325700
<SALES> 5104400 4536600
<TOTAL-REVENUES> 5104400 4536600
<CGS> 1004800 906800
<TOTAL-COSTS> 1004800 906800
<OTHER-EXPENSES> 656900 610100
<LOSS-PROVISION> 14900 17100
<INTEREST-EXPENSE> 57600 56200
<INCOME-PRETAX> 1394700 1226700
<INCOME-TAX> 341700 300500
<INCOME-CONTINUING> 1053000 926200
<DISCONTINUED> (166400) (4200)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 886600 922000
<EPS-PRIMARY> 2.40 2.41
<EPS-DILUTED> 2.36 2.38
</TABLE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
officers and/or directors of Schering-Plough Corporation, a New
Jersey corporation (herein called the "Corporation"), does hereby
constitute and appoint William J. Silbey, Thomas H. Kelly and
Benjamin Croce, or any of them, his or her true and lawful
attorney or attorneys and agent or agents, to do any and all acts
and things and to execute any and all instruments which said
attorney or attorneys and agent or agents may deem necessary or
advisable to enable the Corporation to comply with the Securities
Exchange Act of 1934, as amended, and any rules, regulations,
requirements or requests of the Securities and Exchange
Commission thereunder or in respect thereof in connection with
the filing under said Act of the Annual Report of the Corporation
on Form 10-K for the fiscal year ended December 31, 1995 (herein
called the "Form 10-K"); including specifically, but without
limiting the generality of the foregoing, the power and authority
to sign the respective names of the undersigned officers and/or
directors as indicated below to the Form 10-K and/or to any
amendment of the Form 10-K and each of the undersigned does
hereby ratify and confirm all that said attorney or attorneys and
agent or agents, or any of them, shall do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents this 27th day of February, 1996.
/s/ Robert P. Luciano /s/ Richard J. Kogan
Robert P. Luciano, Chairman; Richard J. Kogan, President and
Director Chief Executive Officer;
Director
/s/ Jack L. Wyszomierski /s/ Thomas H. Kelly
Jack L. Wyszomierski, Executive Thomas H. Kelly, Vice President
Vice President and Chief and Controller; Principal
Financial Officer Accounting Officer
/s/ Hans W. Becherer /s/ Richard de J. Osborne
Hans W. Becherer Richard de J. Osborne
Director Director
/s/ Hugh A. D'Andrade /s/ Patricia F. Russo
Hugh A. D'Andrade Patricia F. Russo
Director Director
/s/ David C. Garfield /s/ William A. Schreyer
David C. Garfield William A. Schreyer
Director Director
/s/ Regina E. Herzlinger /s/ Robert F. W. van Oordt
Regina E. Herzlinger Robert F. W. van Oordt
Director Director
/s/ H. Barclay Morley /s/ R. J. Ventres
H. Barclay Morley R. J. Ventres
Director Director
/s/ Carl E. Mundy, Jr. /s/ James Wood
Carl E. Mundy, Jr. James Wood
Director Director
21982-1
