UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer Identification No.)
Madison, N.J. 07940-1000 (201) 822-7000
(telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Common Shares Outstanding as of June 30, 1996: 369,678,128
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
(Dollars in millions, except per share figures)
<CAPTION>
Three Months Six Months
Ended Ended
June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . $1,476.6 $1,332.5 $2,859.3 $2,556.7
Costs and expenses:
Cost of sales. . . . . . . . . 287.0 272.5 549.7 508.3
Selling, general
and administrative. . . . . . 578.6 511.9 1,081.9 967.7
Research and development . . . 177.9 162.1 340.8 309.3
Other expense, net . . . . . . 13.1 20.4 34.3 28.4
1,056.6 966.9 2,006.7 1,813.7
Income before income taxes. . . 420.0 365.6 852.6 743.0
Income taxes. . . . . . . . . . 102.9 89.5 208.9 182.0
Income from continuing operations 317.1 276.1 643.7 561.0
Discontinued operations, net of
tax:
Loss from operations. . . . . . - (3.9) - (10.2)
Loss on disposal. . . . . . . . - (156.2) - (156.2)
Net income. . . . . . . . . . . $ 317.1 $ 116.0 $ 643.7 $ 394.6
Earnings per common share:
Continuing operations. . . . . $ .86 $ .74 $ 1.75 $ 1.51
Discontinued operations:
Loss from operations. . . . . - (.01) - (.03)
Loss on disposal. . . . . . . - (.42) - (.42)
Total . . . . . . . . . . . . . $ .86 $ .31 $ 1.75 $ 1.06
Dividends per common share. . . $ .33 $ .29 $ .62 $ .545
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in millions, except per share figures)
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Assets
Cash and cash equivalents . . . . . . . . $ 497.6 $ 321.4
Accounts receivable, net. . . . . . . . . 635.9 569.3
Inventories . . . . . . . . . . . . . . . 532.0 502.0
Prepaid expenses, deferred income
taxes and other current assets . . . . . 657.3 563.6
Total current assets. . . . . . . . . 2,322.8 1,956.3
Property, plant and equipment . . . . . . 3,219.1 3,136.0
Less accumulated depreciation . . . . . . 1,080.4 1,037.1
Property, net . . . . . . . . . . . . 2,138.7 2,098.9
Other assets. . . . . . . . . . . . . . . 695.6 609.4
$5,157.1 $ 4,664.6
Liabilities and Shareholders' Equity
Accounts payable. . . . . . . . . . . . . $ 337.0 $ 374.2
Short-term borrowings and current
portion of long-term debt. . . . . . . . 717.9 841.3
Other accrued liabilities . . . . . . . . 1,388.1 1,146.6
Total current liabilities . . . . . . 2,443.0 2,362.1
Long-term debt. . . . . . . . . . . . . . 46.9 87.1
Other long-term liabilities . . . . . . . 573.4 592.5
Shareholders' Equity:
Preferred shares - $1 par value
each; issued - none. . . . . . . . . . . - -
Common shares - $1 par value each; shares
issued: 1996 - 507,367,377
1995 - 502,965,382 . . . . . . . . . . . 507.4 503.0
Paid-in capital . . . . . . . . . . . . . 135.5 49.5
Retained earnings . . . . . . . . . . . . 4,757.7 4,341.8
Foreign currency translation
adjustment and other . . . . . . . . . . (135.3) (103.9)
Total . . . . . . . . . . . . . . . . 5,265.3 4,790.4
Less treasury shares, at cost -
1996, 137,689,249 shares;
1995, 138,796,653 shares . . . . . . . . 3,171.5 3,167.5
Total shareholders' equity. . . . . . 2,093.8 1,622.9
$5,157.1 $ 4,664.6
<FN>
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(UNAUDITED)
(Dollars in millions)
<CAPTION>
1996 1995
<S> <C> <C>
Operating Activities:
Income from continuing operations . . . . $ 643.7 $ 561.0
Depreciation and amortization . . . . . . 84.2 78.8
Working capital changes - source (use):
Accounts receivable. . . . . . . . . . . (84.2) (192.8)
Inventories. . . . . . . . . . . . . . . (45.9) (11.9)
Other current assets . . . . . . . . . . (97.0) (31.9)
Accounts payable and other accrued
liabilities . . . . . . . . . . . . . . 192.4 41.3
Other, net. . . . . . . . . . . . . . . . (17.1) (58.4)
Net cash provided by operating
activities . . . . . . . . . . . . . . . 676.1 386.1
Investing Activities:
Reduction of investments. . . . . . . . . .6 45.1
Purchases of investments. . . . . . . . . (15.5) (51.3)
Capital expenditures. . . . . . . . . . . (125.9) (103.7)
Other, net. . . . . . . . . . . . . . . . (1.1) .4
Net cash used for investing
activities . . . . . . . . . . . . . . . (141.9) (109.5)
Financing Activities:
Dividends paid to common shareholders . . (227.8) (202.8)
Repayment of long-term debt . . . . . . . (100.0) -
Short-term borrowings, net. . . . . . . . (59.1) (42.6)
Common shares repurchased . . . . . . . . (6.2) (13.8)
Proceeds from other equity
transactions . . . . . . . . . . . . . . 35.8 15.0
Other, net. . . . . . . . . . . . . . . . (.2) .5
Net cash used for financing
activities . . . . . . . . . . . . . . . (357.5) (243.7)
Effect of exchange rates on cash and
cash equivalents. . . . . . . . . . . . . (.5) (1.4)
Net Cash Flow from Continuing Operations . 176.2 31.5
Net Cash Flow from Discontinued Operations - 79.7
Net increase in cash and cash equivalents . 176.2 111.2
Cash and cash equivalents, beginning
of period . . . . . . . . . . . . . . . . 321.4 115.6
Cash and cash equivalents, end of period . $ 497.6 $ 226.8
<FN>
See notes to consolidated financial statements.
</TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Dollars in millions, except per share figures)
Basis of Presentation
The unaudited financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission for reporting on Form 10-Q. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The statements should be
read in conjunction with the accounting policies and notes to
consolidated financial statements included in the Company's 1995
Annual Report on Form 10-K.
In the opinion of management, the financial statements reflect
all adjustments necessary for a fair statement of the operations
for the interim periods presented.
Earnings Per Common Share
Earnings per common share is computed by dividing net income by
the weighted-average number of common shares outstanding. Shares
issuable through the exercise of stock options and warrants and
under deferred delivery agreements are not considered in the
calculation, as they do not have a material effect on the
determination of earnings per common share. The weighted-average
number of shares used in the computation of earnings per common
share for the six months ended June 30, 1996 and 1995 were
367,315,000 and 372,105,000, respectively.
During the first quarter of 1996, the Company issued
approximately 1.0 million shares of common stock in connection
with the acquisition of Canji, Inc., a gene therapy company
(accounted for using the purchase method of accounting). Also,
during the first six months of 1996, the Company issued
approximately 3.4 million shares of common stock in exchange and
settlement for warrants to purchase 14.2 million shares of common
stock.
Inventories
Inventories consisted of: June 30, December 31,
1996 1995
Finished products . . . . . . . $ 212.7 $ 213.2
Goods in process. . . . . . . . 212.3 179.4
Raw materials and supplies. . . 107.0 109.4
Total inventories . . . . . . $ 532.0 $ 502.0
Sales
Segment sales for the six months ended June 30, 1996 and 1995
were as follows:
1996 1995
Pharmaceutical products . . . . $2,504.2 $2,186.4
Health care products. . . . . . 355.1 370.3
Consolidated sales. . . . . . $2,859.3 $2,556.7
Legal and Environmental Matters
The Company is involved in various claims and legal proceedings
of a nature considered normal to its business, including
environmental matters and product liability cases. The recorded
liabilities for these matters at June 30, 1996 were not material.
Management believes that, except for the matters discussed in the
following paragraph, it is remote that any material liability in
excess of the amounts accrued will be incurred.
The Company is a defendant in more than 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, to settle the federal class action for a total of
$22.1 payable over three years. The settlement provides, among
other things, that the Company shall not refuse to grant
discounts on brand name prescription drugs to a retailer based
solely on its status as a retailer and that, to the extent a
retailer can demonstrate its ability to affect market share of a
Company brand name prescription drug in the same manner as a
managed care organization with which the retailer competes, it
will be entitled to negotiate similar incentives subject to the
rights, obligations, exemptions and defenses of the Robinson-
Patman Act and other laws and regulations. The District Court
approved the settlement of the federal class action on June 21,
1996. In early July, the Seventh Circuit Court of Appeals agreed
to review before trial the District Court s denial of defendant s
summary judgment motion seeking dismissal of all claims by
indirect purchasers of pharmaceutical products in all remaining
cases before the District Court. Three of the state antitrust
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 seek treble damages in an unspecified
amount and an injunction against the allegedly unlawful conduct.
The Company believes that all the antitrust actions are without
merit and is defending itself vigorously against all such claims.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations - three and six months ended June 30, 1996
compared with the corresponding periods in 1995.
Consolidated sales for the second quarter increased $144.1
million or 11 percent compared with the same period in 1995. For
the six months, sales rose $302.6 million or 12% over 1995.
Excluding the effect of foreign currency exchange rate changes,
consolidated sales grew 13 percent in the quarter and 12 percent
for the six-month period.
In the United States, many of the Company's pharmaceutical
products are subject to increasingly competitive pricing as
managed care, institutions, government agencies and other buying
groups seek price discounts. In most international markets, the
Company operates in an environment of government-mandated cost
containment programs. Several governments have placed
restrictions on physician prescription levels and patient
reimbursements, emphasized greater use of generic drugs and
enacted across-the-board price cuts as methods of cost control.
Since the Company is unable to predict the final form and timing
of any future domestic and international governmental or other
health care initiatives, their effect on future operations and
cash flows cannot be reasonably estimated.
Sales
Domestic ethical pharmaceutical sales advanced 24 percent for the
1996 second quarter and 27 percent for the six-month period.
Sales of respiratory products increased 29 percent in the quarter
and 26 percent for the first half, due to significant market
share growth for the CLARITIN brand of nonsedating
antihistamines. Sales growth in both periods was also aided by
increases for VANCENASE allergy and VANCERIL asthma products.
The respiratory sales gains also reflected a slight increase for
the quarter, and a moderate decline for the six-month period, in
sales of the PROVENTIL (albuterol) line of asthma products, due
to increased generic competition. Sales of the PROVENTIL line
totaled $89 million for the quarter and $206 million for the six
months, with metered-dose inhalers contributing approximately 70
percent to both periods. The PROVENTIL formulations of solution,
syrup and tablets have been subject to generic competition, and
in December 1995 generic metered-dose inhalers entered the
market. In response, the Company's generic pharmaceutical
marketing subsidiary, Warrick Pharmaceuticals, launched its own
version of a generic inhaler. While the generic inhalers have
significantly reduced branded PROVENTIL inhaler sales, the
Warrick inhaler largely offset the sales decline. Competition
from generic metered-dose inhalers will, however, continue to
negatively affect future sales and profitability of the PROVENTIL
(albuterol) line of asthma products.
U.S. sales of cardiovascular products rose 30 percent in the
quarter and 33 percent for the six-months, reflecting market
share gains for IMDUR, a once-daily oral nitrate. The quarter
also benefited from strong sales of NITRO-DUR transdermal
nitroglycerin patches, while K-DUR potassium supplements
experienced market share gains in the six months. Sales of anti-
infective and anticancer products grew 14 percent in the second
quarter and 36 percent for the six-month period, resulting from
increased utilization of INTRON-A, the Company s alpha interferon
anticancer and antiviral agent, for melanoma and hepatitis, and
the first quarter launch of CEDAX, a third-generation
cephalosporin antibiotic. Both periods, however, were negatively
affected by lower sales of EULEXIN, a prostate cancer therapy,
due to branded competition. Domestic dermatological product
sales advanced 28 percent for the quarter and 22 percent for the
six-months, primarily due to higher sales of LOTRISONE, an
antifungal/anti-inflammatory cream.
International ethical pharmaceutical product sales increased 3
percent in the second quarter and 4 percent for the six-month
period. Excluding the impact of foreign exchange rate
fluctuations, sales would have risen 7 percent in the quarter and
6 percent in the first half. Sales of anti-infective and
anticancer products grew 8 percent in the second quarter, and 9
percent for the six-month period, due to gains for INTRON A in
both periods.
International dermatological product sales advanced 4 percent in
the quarter and 6 percent for the six-month period, primarily
reflecting gains for ELOCON, a mid-potency topical
corticosteroid. Respiratory product sales grew 7 percent for the
second quarter and 4 percent for the six months, as strong
CLARITIN growth was tempered by a decline in sales of other
allergy products in Japan. Sales growth for both periods was
also aided by continued gains for LOSEC, an anti-ulcer treatment
licensed from AB Astra.
Worldwide sales of animal health products increased 6 percent in
the second quarter and 1 percent in the first half, excluding
foreign exchange rate fluctuations. The sales gains were driven
by the domestic June launch of NUFLOR, a bovine broad-spectrum
antibiotic.
Sales of health care products declined 3 percent in the second
quarter and 4 percent for the six-month period. Over-the-counter
product sales declined 27 percent in the quarter and 22 percent
for the first half, primarily due to introduction of a
competitive three-day product and price reductions for female
health products, along with aggressive private-label competition
for allergy/cold products. Foot care and sun care product sales
rose in the quarter and six-month periods.
Income before income taxes from continuing operations increased
15 percent for the quarter as compared with 1995, and represented
28.4 percent of sales versus 27.4 percent last year. For the
six-months, income before taxes from continuing operations also
grew 15 percent over 1995, representing 29.8 percent of sales
compared with 29.1 percent last year.
Cost of sales as a percentage of sales decreased to 19.4 percent
from 20.4 percent in the quarter, principally the result of a
favorable sales mix of higher margin pharmaceutical products.
For the first half, the cost of sales ratio declined to 19.2
percent from 19.9 percent, also the result of a favorable product
mix.
Selling, general and administrative expenses represented 39.2
percent of sales in the second quarter compared with 38.4 percent
last year, primarily reflecting increased CLARITIN promotions and
launch-related expenses for CEDAX in the U.S. For the six-month
period, the ratio was 37.8 percent versus 37.9 percent in 1995.
Research and development spending rose 10 percent in the quarter,
representing 12.0 percent of sales compared with 12.2 percent a
year ago. For the first half, spending also grew 10 percent, and
represented 11.9 percent of sales versus 12.1 percent in 1995.
The higher spending reflects the Company's funding of both
internal research efforts and research collaborations with
various partners. It is anticipated that total research and
development expenses will approximate $720 in 1996.
The effective tax rate for continuing operations was 24.5 percent
in the three- and six- month periods of both 1996 and 1995.
Earnings per common share from continuing operations advanced 16
percent in the second quarter to $.86 from $.74 in 1995. For the
six-month period, earnings per common share from continuing
operations increased 16 percent to $1.75 from $1.51 last year.
Excluding the impact of foreign currency exchange rates, earnings
per common share from continuing operations would have risen
approximately 20 percent in the quarter and 18 percent for the
six months.
Liquidity and financial resources - six months ended June 30,
1996
Cash generated from operations continues to be the Company's
major source of funds to finance working capital, additions to
property, shareholder dividends, common share repurchases and
repayment of debt. Cash provided from operations totaled $676.1
million for the first six months of 1996. This cash funded the
spending of $227.8 million for shareholder dividends and $125.9
million for capital expenditures, as well as provided for the
$100.0 million repayment of long-term debt and $59.1 reduction in
short-term borrowings.
In June 1995, the Board of Directors authorized the purchase of
$500 million of common shares. This program was completed during
the second quarter.
The Company's liquidity and financial resources continue to be
sufficient to meet its operating needs.
Cautionary Statements for Forward Looking Information
Management s discussion and analysis set forth above contains
certain forward looking statements, including statements
regarding the Company s financial position and results of
operations. These forward looking statements are based on
current expectations. Certain factors have been identified by
the Company in Exhibit 99 to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996 which
could cause the Company's actual results to differ materially
from expected and historical results. Exhibit 99 from that
quarterly report is incorporated by reference herein
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The first paragraph of Item 3, Legal Proceedings of Part I
of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (as updated in the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996),
relating to certain product liability actions pending against the
Company, is incorporated herein by reference. Subsidiaries of the
Company are defendants in lawsuits involving approximately 500
plaintiffs arising out of the use of synthetic estrogens by the
mothers of the plaintiffs.
The final paragraph of Item 3, Legal Proceedings of Part I
of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 (as updated in the Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996),
relating to certain antitrust actions pending against the
Company, is incorporated herein by reference. The amended
settlement was approved by the court on June 21, 1996. In early
July, the Seventh Circuit Court of Appeals agreed to review
before trial the court's denial of the defendants' summary
judgment motion seeking dismissal of all claims by indirect
purchasers of pharmaceutical products in all remaining cases
before the court
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits - The following Exhibits are filed with this
document:
Exhibit
Number Description
11 - Computation of Earnings Per Common Share
27 - Financial Data Schedule
99.1 - Company Statements Relating to Forward
Looking Information
99.2 - Exhibit 99 to Quarterly Report on Form 10-Q
for the quarterly period ended March 31,
1996 is hereby incorporated by reference.
b) Reports on Form 8-K:
No report has been filed during the three months ended
June 30, 1996.
SIGNATURE(S)
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Schering-Plough Corporation
(Registrant)
Date August 5, 1996 /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
WD060201.10Q
- 4 -
WD060201.10Q
- 13 -
WD060201.10Q
Exhibit 11
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(Amounts in millions, except per share figures)
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Earnings per Common Share, As Reported:
Income from continuing operations . . . $ 643.7 $ 561.0
Discontinued operations:
Loss from operations . . . . . . . . . - (10.2)
Loss on disposal . . . . . . . . . . . - (156.2)
Net income applicable to common shares. 643.7 394.6
Average Number of Common Shares
Outstanding . . . . . . . . . . . . . . 367.3 372.1
Earnings per Common Share:
Income from continuing operations . . . 1.75 1.51
Discontinued operations:
Loss from operations . . . . . . . . . - (.03)
Loss on disposal . . . . . . . . . . . - (.42)
Total . . . . . . . . . . . . . . . . . $ 1.75 $ 1.06
Earnings per Common Share, Assuming
Full Dilution: (a)
Average Number of Common Shares
Outstanding . . . . . . . . . . . . . . 367.3 372.1
Shares Contingently Issuable for
Stock Incentive Plans and Warrant
Agreements. . . . . . . . . . . . . . . 4.7 5.0
Average Number of Common Shares and
Common Share Equivalents Outstanding. . 372.0 377.1
Earnings per Common Share:
Continuing operations . . . . . . . . . 1.73 1.49
Discontinued operations:
Loss from operations . . . . . . . . . - (.03)
Loss on disposal . . . . . . . . . . . - (.41)
Earnings per Common Share, Assuming
Full Dilution . . . . . . . . . . . . $ 1.73 $ 1.05
(a) This calculation is submitted in accordance with the
regulations of the Securities and Exchange Commission although
not required by APB Opinion No. 15 because it results in dilution
of less than 3%.
</TABLE>
WD041001.10Q
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Schering-Plough Corporation and subsidiaries consolidated Financial Statements
and related Exhibits for the six months ended June 30, 1996, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 497600
<SECURITIES> 0
<RECEIVABLES> 635900
<ALLOWANCES> 0
<INVENTORY> 532000
<CURRENT-ASSETS> 2322800
<PP&E> 3219100
<DEPRECIATION> 1080400
<TOTAL-ASSETS> 5157100
<CURRENT-LIABILITIES> 2443000
<BONDS> 46900
0
0
<COMMON> 507400
<OTHER-SE> 1586400
<TOTAL-LIABILITY-AND-EQUITY> 5157100
<SALES> 2859300
<TOTAL-REVENUES> 2859300
<CGS> 549700
<TOTAL-COSTS> 549700
<OTHER-EXPENSES> 340800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 852600
<INCOME-TAX> 208900
<INCOME-CONTINUING> 643700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 643700
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.73
</TABLE>
Exhibit 99.1
Company Statements Relating
To Forward Looking Information
(Filed Pursuant to Rule 175)
1. Statement from press release issued by the company on May 30, 1996:
Mr. Richard J. Kogan, President and Chief Executive Officer, commenting on the
Company's earnings per share for 1996, stated that based on the company's
business results to date, the Company sees 1996 earnings per share coming
in slightly above $3.26 per share, or in the order of a 15 percent
increase, assuming no unforeseen changes in the marketplace.
