-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DXHhqBDfcFjchIjFwbSh8sBIckyE4koJr47ZeBUgo9dKVRXQshJQD5r8frLQpVdR tlvU/HY00QIxzheHCt6wQA== 0000950123-04-012294.txt : 20041021 0000950123-04-012294.hdr.sgml : 20041021 20041021065415 ACCESSION NUMBER: 0000950123-04-012294 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041021 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041021 DATE AS OF CHANGE: 20041021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHERING PLOUGH CORP CENTRAL INDEX KEY: 0000310158 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221918501 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06571 FILM NUMBER: 041088504 BUSINESS ADDRESS: STREET 1: ONE GIRALDA FARMS CITY: MADISON STATE: NJ ZIP: 07940-1000 BUSINESS PHONE: 9738227000 8-K 1 y67760e8vk.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OCTOBER 21, 2004 Date of Report (Date of Earliest Event Reported) SCHERING-PLOUGH CORPORATION (Exact name of registrant as specified in its charter) NEW JERSEY (State or other jurisdiction of incorporation) 1-6571 (Commission File Number) 22-1918501 (IRS Employer Identification Number) 2000 GALLOPING HILL ROAD KENILWORTH, NJ 07033 (Address of principal executive offices, including Zip Code) (908) 298-4000 (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Schering-Plough today issued a press release titled "Schering-Plough Reports Financial Results for 2004 Third Quarter" and provided additional supplemental financial data. The press release is attached to this 8-K as Exhibit 99.1. The supplemental financial data is attached to this 8-K as Exhibit 99.2. ITEM 7.01 REGULATION FD DISCLOSURE. Schering-Plough issued a press release titled "Schering-Plough Reports Financial Results for 2004 Third Quarter" on October 21, 2004, and the press release is attached to this 8-K as Exhibit 99.1. Schering-Plough also issued related supplemental data, which is attached to this 8-K as Exhibit 99.2. Disclosure Notice for Forward Looking Statements Cautionary Factors That May Affect Future Results (Cautionary Statements Under the Private Securities Litigation Reform Act of 1995) This 8-K, including each exhibit, the comments of Schering-Plough officers during our earnings teleconference/webcast on October 21, 2004 at 8:00 am (EDT), and other written reports and oral statements made from time to time by the company may contain "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events. They use words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "project," "intend," "plan," "potential," "will," and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. In particular, forward-looking statements include statements relating to future actions, ability to access the capital markets, prospective products, the status of product approvals, future performance or results of current and anticipated products, sales efforts, development programs, expenses and programs to reduce expenses, the cost of and savings from reductions in work force, the outcome of contingencies such as litigation and investigations, growth strategy and financial results. Any or all forward-looking statements here or in other publications may turn out to be wrong. Actual results may vary materially, and there are no guarantees about Schering-Plough's financial and operational performance or the performance of Schering-Plough stock. Schering-Plough does not assume the obligation to update any forward-looking statement. Many factors could cause actual results to differ from Schering-Plough's forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. Although it is not possible to predict or identify all such factors, they may include the following: - - A significant portion of net sales are made to major pharmaceutical and health care products distributors and major retail chains in the United States. Consequently, net sales and quarterly growth comparisons may be affected by fluctuations in the buying patterns of major distributors, retail chains and other trade buyers. These fluctuations may result from seasonality, pricing, wholesaler buying decisions or other factors. - - Competitive factors, including technological advances attained by competitors, patents granted to competitors, new products of competitors coming to the market, new indications for competitive products, and generic, prescription and/or OTC products that compete with products of Schering-Plough or the Merck/Schering-Plough Pharmaceuticals joint venture (such as competition from OTC statins, like the one approved for use in the U.K. for which impact in the cholesterol reduction market is not yet known). - - Increased pricing pressure both in the United States and abroad from managed care organizations, institutions and government agencies and programs. In the United States, among other developments, consolidation among customers may increase pricing pressures and may result in various customers having greater influence over prescription decisions through formulary decisions and other policies. - - The potential impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003; possible other U.S. legislation or regulatory action affecting, among other things, pharmaceutical pricing and reimbursement, including Medicaid and Medicare, involuntary approval of prescription medicines for over-the-counter use; and other health care reform initiatives and drug importation legislation. Legislation or regulations in markets outside the U.S. affecting product pricing, reimbursement or access. Laws and regulations relating to trade, antitrust, monetary and fiscal policies, taxes, price controls and possible nationalization. - - Patent positions can be highly uncertain and patent disputes are not unusual. An adverse result in a patent dispute can preclude commercialization of products or negatively impact sales of existing products or result in injunctive relief and payment of financial remedies. - - Uncertainties of the FDA approval process and the regulatory approval and review processes in other countries, including, without limitation, delays in approval of new products. - - Failure to meet Good Manufacturing Practices established by the FDA and other governmental authorities can result in delays in the approval of products, release of products, seizure or recall of products, suspension or revocation of the authority necessary for the production and sale of products, fines and other civil or criminal sanctions. The resolution of manufacturing issues with the FDA discussed in Schering-Plough's 10-Ks, 10-Qs and 8-Ks are subject to substantial risks and uncertainties. These risks and uncertainties, including the timing, scope and duration of a resolution of the manufacturing issues, will depend on the ability of Schering-Plough to assure the FDA of the quality and reliability of its manufacturing systems and controls, and the extent of remedial and prospective obligations undertaken by Schering-Plough. - - Difficulties in product development. Pharmaceutical product development is highly uncertain. Products that appear promising in development may fail to reach market for numerous reasons. They may be found to be ineffective or to have harmful side effects in clinical or pre-clinical testing, they may fail to receive the necessary regulatory approvals, they may turn out not to be economically feasible because of manufacturing costs or other factors or they may be precluded from commercialization by the proprietary rights of others. - - Efficacy or safety concerns with respect to marketed products, whether or not scientifically justified, leading to recalls, withdrawals or declining sales. - - Major products such as CLARITIN, CLARINEX, INTRON A, PEG-INTRON, REBETOL Capsules, REMICADE and NASONEX accounted for a material portion of Schering-Plough's 2003 revenues. If any major product were to become subject to a problem such as loss of patent protection, OTC availability of the Company's product or a competitive product (as has been disclosed for CLARITIN and its current and potential OTC competition), previously unknown side effects; if a new, more effective treatment should be introduced; generic availability of competitive products; or if the product is discontinued for any reason, the impact on revenues could be significant. Also, such information about important new products, such as ZETIA and VYTORIN, or important products in our pipeline, may impact future revenues. Further, the launch of VYTORIN may negatively impact sales of ZETIA. - - Unfavorable outcomes of government (local and federal, domestic and international) investigations, litigation about product pricing, product liability claims, other litigation and environmental concerns could preclude commercialization of products, negatively affect the profitability of existing products, materially and adversely impact Schering-Plough's financial condition and results of operations, or contain conditions that impact business operations, such as exclusion from government reimbursement programs. - - Economic factors over which Schering-Plough has no control, including changes in inflation, interest rates and foreign currency exchange rates. - - Instability, disruption or destruction in a significant geographic region - due to the location of manufacturing facilities, distribution facilities or customers - regardless of cause, including war, terrorism, riot, civil insurrection or social unrest; and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease. - - Changes in tax laws including changes related to taxation of foreign earnings. - - Changes in accounting standards promulgated by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the SEC, or the Public Company Accounting Oversight Board that would require a significant change to Schering-Plough's accounting practices. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. The following exhibits are filed with this 8-K: 99.1 Press release titled "Schering-Plough Reports Financial Results for 2004 Third Quarter" 99.2 Supplemental Financial Data SIGNATURES 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 hereunto duly authorized. Schering-Plough Corporation By: /s/ Douglas J. Gingerella --------------------------- Douglas J. Gingerella Vice President and Controller Date: October 21, 2004 Exhibit Index The following exhibits are filed with this 8-K: 99.1 Press release titled "Schering-Plough Reports Financial Results for 2004 Third Quarter" 99.2 Supplemental Financial Data EX-99.1 2 y67760exv99w1.txt PRESS RELEASE Exhibit 99.1 [SCHERING-PLOUGH LETTERHEAD] News Release FOR RELEASE: IMMEDIATELY Media Contact: Steve Galpin, Jr. (908) 298-7415 Investor Contacts: Alex Kelly Janet M. Barth (908) 298-7436 SCHERING-PLOUGH REPORTS FINANCIAL RESULTS FOR 2004 THIRD QUARTER KENILWORTH, N.J., Oct. 21, 2004 - Schering-Plough Corporation (NYSE: SGP) today reported financial results for the 2004 third quarter. "We are on track with our Action Agenda and working through what we knew would be a difficult year in 2004," said Fred Hassan, Schering-Plough chairman and CEO. "While significant challenges remain, the recent quarter brought several important achievements, which we believe should set the stage for our anticipated turnaround beginning in 2005. "Foremost among these was the on-time U.S. approval and rapid launch of the cholesterol-lowering product VYTORIN," said Hassan, "offering patients a powerful new treatment option for high cholesterol. We are also pleased with the continued competitive strength of ZETIA for high cholesterol and stabilizing prescription market share trends for certain other key products. In addition, our strategic agreement with Bayer will give us a strong partner to launch ZETIA when approved in Japan and expand our product portfolio and selling capabilities in the U.S. market." He said the company also made further progress in fulfilling its consent decree obligations and in resolving legal issues from the past, reaching a resolution of the investigation by the Philadelphia U.S. Attorney's Office and the U.S. Department of Justice. "Finally," he added, "we strengthened our balance sheet with the issuance of convertible preferred stock, giving us greater financial flexibility." VYTORIN (ezetimibe/simvastatin) is a new cholesterol-lowering therapy developed and marketed in partnership with Merck & Co., Inc. Approved for U.S. marketing on July 23, VYTORIN is a once-daily tablet containing ZETIA (ezetimibe), a cholesterol-absorption inhibitor discovered by Schering-Plough, and Merck's Zocor (simvastatin) statin product. VYTORIN is the first single tablet to provide powerful LDL cholesterol reduction through dual inhibition of the two sources of cholesterol by inhibiting the production of cholesterol in the liver and blocking the absorption of cholesterol in the - 2 - intestine, including cholesterol from food. VYTORIN has been shown to lower LDL cholesterol by 52 percent at the recommended starting dose (10/20 mg) and 60 percent at the maximum dose (10/80 mg). In head-to-head trials, VYTORIN provided superior reductions in LDL cholesterol versus current market leaders atorvastatin (Pfizer's Lipitor(R)) and simvastatin (Zocor) across the dosing range. With new health recommendations calling for even lower LDL cholesterol goals, VYTORIN is well positioned to compete in the cholesterol-lowering market and get more patients to their goals at their initial starting dosages. "Since the recent U.S. launch of VYTORIN, we are also getting a good early response in our efforts to gain acceptance of VYTORIN on managed care formularies," added Hassan. "We are gratified that - after only two months into the product's launch - managed care appears to be truly recognizing the value proposition of VYTORIN. We estimate that VYTORIN has been granted Tier 2 status or better on formularies for more than 50 percent of all U.S. covered lives, giving more than 100 million people good access to this important medical advance." Hassan said Schering-Plough is also working to upgrade the company's global infrastructure while relentlessly pursuing greater efficiencies and cost reductions. "There is still much work ahead for Schering-Plough," said Hassan. "But we are making steady progress in the Stabilization and Repair phases of our Action Agenda and continue to look forward to the anticipated turnaround beginning in 2005. We remain committed to a strategy that holds business integrity, quality and compliance at its core." THIRD QUARTER 2004 RESULTS Schering-Plough reported net income available for common shareholders of $14 million in the 2004 third quarter or 1 cent in diluted earnings per common share compared with a loss in the 2003 period of $265 million or 18 cents per share. Net income available for common shareholders and earnings per share in the 2004 third quarter reflected the accrual of $12 million for a dividend to be paid on Dec. 15, 2004, to holders of the recently issued Mandatory Convertible Preferred Stock. The loss in the 2003 period reflected the addition of $350 million to the company's litigation reserves. Special charges in the 2004 third quarter totaled $26 million or 1 cent per diluted share (as measured using the company's effective tax rate). The special charges related primarily to employee-termination costs stemming from reductions in the company's global workforce. Other factors affecting results for the 2004 third quarter included: the impact on sales of REBETOL for hepatitis C from generic and branded competition; the absence of LOSEC revenues; investments to expand pharmaceutical field forces; and higher manufacturing and related costs in - 3 - connection with Food and Drug Administration (FDA) consent decree, compliance and quality-systems obligations. Third quarter 2004 net sales of $2.0 billion were 1 percent lower than the 2003 period and included a favorable foreign exchange impact of 3 percent. Third quarter sales of Prescription Pharmaceuticals totaled $1.6 billion, down 2 percent, with a favorable foreign exchange impact of 3 percent. The company noted that net sales do not include sales of the cholesterol joint venture with Merck, which are recorded using the equity method, as described below. Consumer Health Care sales declined 1 percent to $239 million and Animal Health sales grew 8 percent to $183 million, including a favorable foreign exchange impact of 4 percent. Consolidated U.S. net sales were $800 million, down 4 percent, and net sales outside the United States were $1.2 billion, up 1 percent, including a 5 percent favorable impact from foreign exchange. Outside the United States, sales for the third quarter of 2004 reflected unfavorable comparisons due to the absence of LOSEC revenues in Europe. LOSEC revenues in the 2003 third quarter were $52 million. This is the final quarter of unfavorable LOSEC comparisons as the company's agreement with AstraZeneca ended in the 2003 third quarter. Global cholesterol franchise sales, which include VYTORIN and ZETIA, totaled $344 million in the 2004 third quarter compared with sales of $137 million in the comparable 2003 period. VYTORIN (also marketed as INEGY) has now been approved in 11 countries (including the United States) and ZETIA in 71 countries. In the United States, more than 12 million prescriptions have been written for ZETIA since its U.S. launch in November 2002, according to IMS Health. The company utilizes the equity method of accounting for its cholesterol joint venture with Merck. Under the equity method, the company records its share of the operating profits less its share of the research and development costs in "Equity income from cholesterol joint venture." "Equity income from cholesterol joint venture" for Schering-Plough totaled $95 million in the 2004 third quarter. The company noted that it incurs substantial costs, such as selling, general and administrative costs, that are not reflected in "Equity income from cholesterol joint venture" and are borne by the overall cost structure of Schering-Plough. Among prescription products recording higher sales in the 2004 third quarter was REMICADE, a treatment for immune-mediated inflammatory disorders that Schering-Plough markets in countries outside the United States (excluding Japan and certain Far East markets) for rheumatoid arthritis, Crohn's disease and ankylosing spondylitis. REMICADE sales in the 2004 third quarter rose 33 percent to $188 million, benefiting from greater medical use and expanded indications. Oncology products posting higher sales in the quarter included TEMODAR, a treatment for certain types of brain tumors, up 35 percent to $121 million; and CAELYX, for the treatment of ovarian cancer, metastatic breast cancer and Kaposi's sarcoma, up 32 percent to $39 million. - 4 - Sales of the company's hepatitis C products in the 2004 third quarter declined versus the year-ago period due to ongoing competition in a contracting market and increased U.S. generic competition for REBETOL. Third quarter global sales of PEG-INTRON were down 23 percent to $132 million; sales of REBETOL were down 58 percent to $52 million. The company's new PEG-INTRON REDIPEN precision-dosing pen for hepatitis C patients has gained broad acceptance by physicians and patients since its February launch in the U.S. market, with the result that the majority of U.S. PEG-INTRON prescriptions are now being written for the REDIPEN. In the company's allergy franchise, global CLARINEX sales in the third quarter of 2004 were $175 million, up 3 percent. Sales of CLARINEX outside the United States climbed 39 percent to $57 million in the third quarter due to market share gains and continued conversion from prescription CLARITIN. U.S. CLARINEX sales declined 8 percent to $118 million due to the continued contraction in the prescription antihistamine market, stemming from the late-2002 introduction of over-the-counter (OTC) CLARITIN and other branded and non-branded nonsedating antihistamines, coupled with a decline in market share. Global NASONEX sales rose 34 percent to $153 million, with U.S. sales climbing 40 percent to $104 million primarily due to favorable comparisons of trade inventories. In international markets, NASONEX sales were up 23 percent to $48 million due to market share gains and market growth. In Consumer Health Care, sales of OTC CLARITIN were roughly flat at $110 million reflecting increased private label competition. Sun care sales declined due to lower sales of sunless tanning products. Sales of foot care products rose 9 percent to $86 million, benefiting from higher sales of DR. SCHOLL'S FREEZE AWAY wart remover product. The company's gross margin was 64.1 percent for the 2004 third quarter versus 67.4 percent in the 2003 period. The change in the gross margin was primarily due to: lower production volumes coupled with increased spending related to the FDA consent decree and efforts to upgrade the company's global infrastructure, and the absence of European LOSEC revenues. Schering-Plough said its ongoing focus on operational excellence in all key functions, including compliance and quality, continues to increase the overall cost structure of the company. Selling, general and administrative expenses rose 2 percent to $892 million in the third quarter of 2004, primarily reflecting the field force expansion and the impact of foreign exchange, offset by lower promotional spending. Research and development spending for the third quarter totaled $378 million, down 1 percent, primarily due to the timing of spending on research programs. -5- The "Other, net" line reflects higher net interest expense from increased borrowings stemming from the long-term debt issued in the 2003 fourth quarter, offset by higher interest income related to higher cash balances resulting from the August issuance of $1.4 billion in Mandatory Convertible Preferred Stock. As of Sept. 30, 2004, the estimated annual effective tax rate was approximately 20 percent. As previously stated, the company reiterated that 2004 earnings are expected to be below those of 2003 when special charges are excluded. RECENT DEVELOPMENTS The company also offered the following summary of recent significant developments, including: o Launched the dual-inhibition cholesterol medicine VYTORIN in the U.S. market following its U.S. approval on July 23. o Entered into a strategic agreement with Bayer (announced Sept. 13; effective Oct. 1), giving Schering-Plough exclusive rights in the United States and Puerto Rico to market, sell and distribute Bayer's AVELOX (moxifloxacin HCl) and CIPRO (ciprofloxacin HCl) antibiotics and to undertake Bayer's U.S. commercialization activities for the erectile dysfunction medicine LEVITRA (vardenafil HCl) under Bayer's co-promotion agreement with GlaxoSmithKline PLC. In the Japanese market, Bayer will co-market Schering-Plough's cholesterol absorption inhibitor ZETIA when approved. o Issued 28.75 million Mandatory Convertible Preferred Shares with a 6 percent dividend, yielding proceeds of $1.4 billion, on Aug. 10 through an underwritten registered public offering. The securities will convert mandatorily into shares of Schering-Plough common stock on Sept. 14, 2007, unless otherwise converted. o Reached an agreement (announced July 30) with the U.S. Attorney's Office for the Eastern District of Pennsylvania and the U.S. Department of Justice to settle a previously disclosed investigation that began in 1999 of the company's managed care marketing programs. o Completed the European Mutual Recognition Process (MRP) for INEGY (marketed as VYTORIN in the United States) on Oct. 1. o Gained European Commission approval (announced Oct. 14) of REMICADE in the European Union, in combination with methotrexate, for the treatment of active and progressive psoriatic arthritis in patients who have responded inadequately to disease modifying anti-rheumatic drugs. o Gained additional U.S. marketing approvals for products in the respiratory franchise, including for a new scent-free formulation of NASONEX (announced Aug. 26) for seasonal and perennial - 6 - allergic rhinitis, and for CLARINEX Syrup (announced Sept. 1) for seasonal allergic rhinitis in children 2 years and older and perennial allergic rhinitis and chronic idiopathic urticaria, or hives of unknown cause, in children as young as 6 months. o Exercised its option with ViroPharma Incorporated (announced Aug. 23) to license pleconaril, under development for the treatment of the common cold in the United States and Canada. THIRD QUARTER 2004 CONFERENCE CALL AND WEBCAST Schering-Plough will conduct a conference call today at 8 a.m. (ET) to review the third quarter results. To listen live to the call, dial 1-706-634-5003. A replay of the call will be available starting at approximately 11 a.m. on Oct. 21 through 5 p.m. on Oct. 25. To listen to the replay, dial 1-706-645-9291 and enter the conference ID # 9501266. A live audio webcast of the conference call also will be available by going to the Investor Relations section of the Schering-Plough corporate Web site, www.schering-plough.com, and clicking on the "Presentations/Webcasts" link. A replay of the webcast will be available starting at approximately 11 a.m. on Oct. 21 through 5 p.m. on Oct. 28. DISCLOSURE NOTICE: The information in this press release includes certain "forward-looking" statements relating to the company's business prospects, earnings outlook, anticipated turnaround and resulting growth prospects, and savings goals relating to productivity and efficiency initiatives. Actual results may differ materially from forward-looking statements due to a number of risks and uncertainties, including the market viability of the company's marketed and pipeline products, including the current and pipeline products in the company's joint venture with Merck; possible changes in business strategies and the ability to successfully implement those business strategies; general market and economic factors; competitive product development; market acceptance of new products; product availability; current and future branded, generic or OTC competition; federal and state regulations and legislation; the research and regulatory processes for new products and indications; existing and new manufacturing issues that may arise; trade buying patterns; patent positions; litigation and investigations; and instability or destruction in a geographic area important to the company due to reasons such as war. For further details and a discussion of these and other risks and uncertainties that may impact forward-looking statements, see the company's past and future Securities and Exchange Commission filings, including the company's 8-K being filed today. The company does not assume any obligation to update any forward-looking statements. Schering-Plough is a global science-based health care company with leading prescription, consumer and animal health products. Through internal research and collaborations with partners, Schering-Plough discovers, develops, manufactures and markets advanced drug therapies to meet - 7 - important medical needs. Schering-Plough's vision is to earn the trust of the physicians, patients and customers served by its more than 30,000 people around the world. The company is based in Kenilworth, N.J., and its Web site is www.schering-plough.com. -8- SCHERING-PLOUGH CORPORATION Report for the period ended September 30 (unaudited): (Amounts in millions, except per share figures)
Third Quarter Nine Months ----------------------------- -------------------------------- 2004 2003 % 2004 2003 % ---- ---- - ---- ---- - Net Sales ................................ $1,978 $1,998 (1) $6,088 $6,386 (5) Cost of Sales ............................ 711 652 9 2,241 2,094 7 Selling, General and Administrative .................. 892 873 2 2,785 2,653 5 Research and Development a/ .............. 378 382 (1) 1,201 1,074 12 Other, Net ............................... 34 41 (16) 112 49 N/M Special Charges b/ ....................... 26 350 (93) 138 370 (63) Equity (Income) from Cholesterol Joint Venture ........... (95) (24) N/M (249) (21) N/M ------ ------ ------ ----- Income/(Loss) Before Income Taxes ........ 32 (276) N/M (140) 167 N/M Income Tax (Expense)/Benefit ............. (6) 11 N/M 28 (77) N/M ------ ------ ------ ----- Net Income/(Loss) ........................ $ 26 $ (265) N/M $ (112) $ 90 N/M ====== ====== ====== ====== Dividends on Preferred Shares ............ 12 0 N/M 12 0 N/M ------ ------ ------ ----- Net Income/(Loss) Available for Common Shareholders .................. $ 14 $ (265) N/M $ (124) $ 90 N/M ====== ====== ====== ====== Diluted Earnings/(Loss) per Common Share .......................... $ 0.01 $(0.18) N/M $(0.08) $ 0.06 N/M ====== ====== ====== ====== Effective Tax Rate ....................... 20.0% c/ 20.0% c/ Average Common Shares Outstanding - Diluted ................. 1,475 1,469 1,472 1,470 Actual Number of Common Shares Outstanding at September 30 ........... 1,472 1,469 1,472 1,469
- ---------- N/M - Not a meaningful percentage a/ Research and development in the first nine months of 2004 includes an $80 million upfront payment in conjunction with the licensing from Toyama Chemical Company Ltd. of garenoxacin, a quinolone antibiotic in development. b/ Special Charges for the third quarter ended September 30, 2004 consisted primarily of employee termination costs. Special charges for the nine months ended September 30, 2004 included $111 million of employee termination costs and $27 million of asset impairment charges primarily related to the company's anticipated exit from a small European research-and-development facility. Special Charges for 2003 included $20 million of asset impairment charges related to manufacturing facility assets and a $350 million non-tax deductible provision to increase litigation reserves. c/ In the 2003 third quarter, the Company reduced its estimate of the 2003 annual effective tax rate to 15% from 20% on income, excluding the $350 million non-tax deductible provision to increase litigation reserves. The Company noted that it incurs substantial costs, such as selling, general and administrative costs, that are not reflected in the "Equity income from cholesterol joint venture" and are borne by the overall cost structure of Schering-Plough. -9- SCHERING-PLOUGH CORPORATION Report for the period ended September 30 (unaudited): Net Sales by Major Product:
(Dollars in Millions) Third Quarter Nine Months ----------------------------- -------------------------------- 2004 2003 % 2004 2003 % ---- ---- - ---- ---- - PRESCRIPTION PHARMACEUTICALS .......................... $1,556 $1,585 (2) $4,681 $5,101 (8) Remicade .................... 188 142 33 535 382 40 Clarinex / Aerius ........... 175 169 3 530 561 (6) Nasonex ..................... 153 114 34 449 368 22 PEG-Intron .................. 132 172 (23) 425 641 (34) Temodar ..................... 121 90 35 309 237 31 Integrilin .................. 94 79 18 245 260 (6) Intron A .................... 81 103 (21) 239 302 (21) Claritin Rx * ............... 67 68 (1) 240 247 (3) Rebetol ..................... 52 125 (58) 239 540 (56) Subutex ..................... 45 37 22 136 103 32 Elocon ...................... 42 41 2 127 121 5 Caelyx ...................... 39 30 32 109 78 39 CONSUMER HEALTH CARE ..................... 239 243 (1) 868 802 8 OTC ...................................... 150 149 1 456 441 3 OTC Claritin ................ 110 111 (1) 344 336 2 FOOT CARE ................................ 86 80 9 252 224 12 SUN CARE ................................. 3 14 (79) 160 137 17 ANIMAL HEALTH ............................ 183 170 8 539 483 12 CONSOLIDATED NET SALES ................... $1,978 $1,998 (1) $6,088 $6,386 (5) ====== ====== ====== ======
N/M - not a meaningful percentage * Includes international sales of Claritin Rx only. Canadian sales of Claritin are now reported in the OTC Claritin line within Consumer Health Care. The prior period has been reclassified accordingly. Global cholesterol franchise sales, which include Zetia and Vytorin, totaled $344 million in the 2004 third quarter and $780 million for the nine month period. NOTE: Certain prior period amounts have been reclassified to conform to the current year presentation. Additional information about U.S. and international sales for specific products is available by calling the company or visiting the investor relations Web site at http://ir.schering-plough.com. # # # EX-99.2 3 y67760exv99w2.txt SUPPLEMENTAL FINANCIAL DATA Exhibit 99.2 SCHERING-PLOUGH CORPORATION STATEMENTS OF CONSOLIDATED INCOME (DOLLARS IN MILLIONS, EXCEPT EPS)
2004 ---------------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ----- ----- ----- ----- ----- ---- ---- Net Sales 1,963 2,147 4,110 1,978 6,088 Cost of Sales 740 790 1,530 711 2,241 ----- ----- ----- ----- ----- Gross Margin 1,223 1,357 2,580 1,267 3,847 Total SG&A 914 979 1,893 892 2,785 Research & Development 1/ 372 451 824 378 1,201 Other, Net 36 43 78 34 112 Special Charges 2/ 70 42 112 26 138 Equity (Income)/Loss from Cholesterol Joint Venture (78) (77) (154) (95) (249) ----- ----- ----- ----- ----- (Loss)/Income before Income Taxes (91) (81) (173) 32 (140) Income Tax (Benefit)/Expense (18) (16) (35) 6 (28) ----- ----- ----- ----- ----- Net (Loss)/Income (73) (65) (138) 26 (112) ===== ===== ===== ===== ===== Dividends on Preferred Shares - - - 12 12 Net (Loss)/Income Available to Common Shareholders (73) (65) (138) 14 (124) ===== ===== ===== ===== ===== Diluted (Loss)/Earnings per Common Share (0.05) (0.04) (0.09) 0.01 (0.08) ===== ===== ===== ===== ===== Avg. Shares Outstanding- Diluted 1,471 1,472 1,471 1,475 1,472 Actual Shares Outstanding 1,472 1,472 1,472 1,472 1,472 Ratios To Net Sales Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 37.7% 36.8% 37.2% 35.9% 36.8% Gross Margin 62.3% 63.2% 62.8% 64.1% 63.2% Total SG&A 46.6% 45.6% 46.1% 45.1% 45.7% Research & Development 19.0% 21.0% 20.0% 19.1% 19.7% (Loss)/Income Before Income Taxes (4.6%) (3.8%) (4.2%) 1.6% (2.3%) Income Taxes (Benefit)/Expense (0.9%) (0.8%) (0.8%) 0.3% (0.5%) Net (Loss)/Income (3.7%) (3.0%) (3.4%) 1.3% (1.8%) 2003 ---------------------------------------------------- 1st 2nd 6 3rd 9 4th 3rd Qtr. 9 Mos. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs vs $ $ $ $ $ $ $ 3rd Qtr. 9 Mos. ----- ----- ----- ----- ----- ----- ----- -------- ------ Net Sales 2,082 2,308 4,389 1,998 6,386 1,948 8,334 (1%) (5%) Cost of Sales 658 784 1,442 652 2,094 739 2,833 9% 7% ----- ----- ----- ----- ----- ----- ----- --- --- Gross Margin 1,424 1,524 2,947 1,346 4,292 1,209 5,501 (6%) (10%) Total SG&A 843 938 1,780 873 2,653 821 3,474 2% 5% Research & Development 1/ 322 369 691 382 1,074 395 1,469 (1%) 12% Other, Net 13 (4) 8 41 49 10 59 (16%) N/M Special Charges 2/ - 20 20 350 370 229 599 (93%) (63%) Equity (Income)/Loss from Cholesterol Joint Venture 30 (26) 4 (24) (21) (33) (54) N/M N/M ----- ----- ----- ----- ----- ----- ----- --- --- (Loss)/Income before Income Taxes 216 227 444 (276) 167 (213) (46) N/M N/M Income Tax (Benefit)/Expense 43 45 89 (11) 77 (32) 46 N/M N/M ----- ----- ----- ----- ----- ----- ----- --- --- Net (Loss)/Income 173 182 355 (265) 90 (181) (92) N/M N/M ===== ===== ===== ===== ===== ===== ===== === === Dividends on Preferred Shares - - - - - - - N/M N/M Net (Loss)/Income Available to Common Shareholders 173 182 355 (265) 90 (181) (92) N/M N/M ===== ===== ===== ===== ===== ===== ===== Diluted (Loss)/Earnings per Common Share 0.12 0.12 0.24 (0.18) 0.06 (0.12) (0.06) N/M N/M ===== ===== ===== ===== ===== ===== ===== === === Avg. Shares Outstanding- Diluted 1,470 1,471 1,471 1,469 1,470 1,470 1,469 Actual Shares Outstanding 1,469 1,469 1,469 1,469 1,469 1,471 1,471 Ratios To Net Sales Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 31.6% 34.0% 32.9% 32.6% 32.8% 37.9% 34.0% Gross Margin 68.4% 66.0% 67.1% 67.4% 67.2% 62.1% 66.0% Total SG&A 40.5% 40.6% 40.6% 43.7% 41.5% 42.1% 41.7% Research & Development 15.5% 16.0% 15.8% 19.1% 16.8% 20.3% 17.6% (Loss)/Income Before Income Taxes 10.4% 9.8% 10.1% (13.8%) 2.6% (11.0%) (0.6%) Income Taxes (Benefit)/Expense 2.1% 2.0% 2.0% (0.6%) 1.2% (1.6%) 0.5% Net (Loss)/Income 8.3% 7.9% 8.1% (13.3%) 1.4% (9.3%) (1.1%)
1/ Research and development in the first nine months of 2004 includes an $80 million upfront payment in conjunction with the licensing from Toyama Chemical Company LTD. of garenoxacin, a quinolone antibiotic in development. 2/ Special Charges for the third quarter ended September 30, 2004 consisted primarily of employee termination costs. Special charges for the nine months ended September 30, 2004 included $111 million of employee termination costs and $27 million of asset impairment charges primarily related to the company's anticipated exit from a small European research-and-development facility. Special Charges for 2003 included $20 million of asset impairment charges related to manufacturing facility assets recorded in the second quarter, the $350 million provision to increase litigation reserves recorded in the third quarter and $179 million of employee termination costs, primarily related to the VERP in the United States, as well as $50 million of asset impairment charges related to certain fixed and intangible assets recorded in the fourth quarter. Note: The Company noted that it incurs substantial costs, such as selling, general and administrative costs, that are not reflected in the "Equity income from cholesterol joint venture" and are borne by the overall cost structure of Schering-Plough. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 1 SCHERING-PLOUGH CORPORATION CONSOLIDATED SALES (DOLLARS IN MILLIONS)
2004 --------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ----- ----- ----- ----- ----- ---- ---- PRESCRIPTION PHARM: 1,481 1,644 3,125 1,556 4,681 U.S. 411 495 906 518 1,424 International 1,070 1,150 2,220 1,037 3,257 CONSUMER HEALTH CARE: 312 317 629 239 868 OTC: 157 150 306 150 456 OTC Claritin * 117 117 234 110 344 Other OTC 40 32 72 41 112 FOOT CARE: 76 89 166 86 252 SUN CARE: 79 78 157 3 160 ANIMAL HEALTH: 170 186 356 183 539 U.S. 41 36 77 56 133 International 129 150 279 127 406 TOTAL CONSOLIDATED: 1,963 2,147 4,110 1,978 6,088 ----- ----- ----- ----- ----- U.S. 738 827 1,565 800 2,365 International 1,225 1,320 2,545 1,178 3,723 2003 ----------------------------------------------------- 1st 2nd 6 3rd 9 4th 3rd Qtr. 9 Mos. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs vs $ $ $ $ $ $ $ 3rd Qtr. 9 Mos. ---- ----- ----- ----- ----- ----- ----- -------- ------ PRESCRIPTION PHARM: 1,646 1,871 3,517 1,585 5,101 1,509 6,611 (2%) (8%) U.S. 643 757 1,401 549 1,950 426 2,376 (6%) (27%) International 1,003 1,113 2,116 1,035 3,151 1,083 4,235 0% 3% CONSUMER HEALTH CARE: 293 266 559 243 802 225 1,026 (1%) 8% OTC: 157 135 291 149 441 147 588 1% 3% OTC Claritin * 129 97 225 111 336 97 432 (1%) 2% Other OTC 28 38 66 38 105 50 156 5% 7% FOOT CARE: 62 83 145 80 224 68 292 9% 12% SUN CARE: 74 48 123 14 137 10 146 (79%) 17% ANIMAL HEALTH: 143 171 313 170 483 214 697 8% 12% U.S. 45 49 94 57 150 68 218 0% (11%) International 98 122 220 113 333 146 479 12% 22% TOTAL CONSOLIDATED: 2,082 2,308 4,389 1,998 6,386 1,948 8,334 (1%) (5%) ----- ----- ----- ----- ----- ----- ----- U.S. 965 1,047 2,012 836 2,848 712 3,559 (4%) (17%) International 1,116 1,261 2,378 1,162 3,539 1,236 4,775 1% 5%
* Includes sales of Claritin in Canada. Notes: Certain prior period amounts have been reclassified to conform to the current year presentation. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 2 SCHERING-PLOUGH CORPORATION PRESCRIPTION PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
GLOBAL PRESCRIPTION PHARM U.S. INTERNATIONAL ------------------------- -------------------- --------------------- 2004 2003 2004 2003 2004 2003 ---- ---- ---- ---- ---- ---- 3rd 3rd 3rd Qtr. 3rd 3rd 3rd Qtr. 3rd 3rd 3rd Qtr. Qtr. Qtr. vs Qtr. Qtr. vs Qtr. Qtr. vs $ $ 3rd Qtr. $ $ 3rd Qtr. $ $ 3rd Qtr. ---- ---- -------- ---- ---- -------- ---- ---- -------- PRESCRIPTION PHARM: 1,556 1,585 (2%) 518 549 (6%) 1,037 1,035 0% Remicade 188 142 33% -- -- -- 188 142 33% Clarinex / Aerius 175 169 3% 118 128 (8%) 57 41 39% Nasonex 153 114 34% 104 74 40% 48 39 23% PEG-Intron 132 172 (23%) 49 85 (42%) 83 87 (5%) Temodar 121 90 35% 60 47 29% 61 44 40% Integrilin 94 79 18% 88 73 20% 5 6 (5%) Intron A 81 103 (21%) 30 38 (20%) 51 65 (22%) Claritin Rx * 67 68 (1%) -- -- -- 67 68 (1%) Rebetol 52 125 (58%) -- 50 (99%) 52 75 (31%) Subutex 45 37 22% -- -- -- 45 37 22% Elocon 42 41 2% 12 12 (3%) 31 29 5% Caelyx 39 30 32% -- -- -- 39 30 32%
* Includes international sales of Claritin Rx only. Canadian sales of Claritin are now reported in the OTC Claritin line within Consumer Health Care. Prior periods have been reclassified accordingly. Notes: Global cholesterol franchise sales, which include Zetia and Vytorin, totaled $344 million in the 2004 third quarter compared with sales of $137 million in 2003. U.S. sales of Zetia/Vytorin were $298 million in the 2004 third quarter. Certain prior period amounts have been reclassified to conform to the current year presentation. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 3 SCHERING-PLOUGH CORPORATION GLOBAL PRESCRIPTION PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2004 2003 ---------------------------------------- ------------------------------------------ 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 3rd Qtr. 9 Mos. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3rd Qtr. 9 Mos. ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------- ------ GLOBAL PRESCRIPTION PHARM: 1,481 1,644 3,125 1,556 4,681 1,646 1,871 3,517 1,585 5,101 1,509 6,611 (2%) (8%) Remicade 165 182 347 188 535 114 126 240 142 382 159 540 33% 40% Clarinex / Aerius 130 226 356 175 530 173 219 392 169 561 133 694 3% (6%) Nasonex 140 156 296 153 449 79 175 254 114 368 132 500 34% 22% PEG-Intron 148 144 293 132 425 221 247 469 172 641 162 802 (23%) (34%) Temodar 86 102 188 121 309 59 87 146 90 237 87 324 35% 31% Integrilin 73 78 151 94 245 89 92 181 79 260 46 306 18% (6%) Intron A 69 89 158 81 239 74 125 199 103 302 107 409 (21%) (21%) Claritin Rx * 91 82 173 67 240 89 90 179 68 247 81 328 (1%) (3%) Rebetol 99 88 187 52 239 219 196 415 125 540 100 639 (58%) (56%) Subutex 44 47 91 45 136 31 36 66 37 103 41 144 22% 32% Elocon 38 46 84 42 127 39 41 80 41 121 33 154 2% 5% Caelyx 34 35 70 39 109 22 26 49 30 78 32 111 32% 39%
* Includes international sales of Claritin Rx only. Canadian sales of Claritin are now reported in the OTC Claritin line within Consumer Health Care. Prior periods have been reclassified accordingly. Notes: Global cholesterol franchise sales, which include Zetia and Vytorin, totaled $344 million in the 2004 third quarter and $780 million year-to-date compared with sales of $137 million and $306 million, respectively, in 2003. U.S. sales of Zetia/Vytorin were $298 million in the 2004 third quarter. Certain prior period amounts have been reclassified to conform to the current year presentation. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 4 SCHERING-PLOUGH CORPORATION U.S. PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2004 2003 ----------------------------------------- ---------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 3rd Qtr. 9 Mos. Qtr. Qtr. Mos. Qtr. Mos. Qtr Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3rd Qtr. 9 Mos. ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------- ------ TOTAL U.S. PHARM: 411 495 906 518 1,424 643 757 1,401 549 1,950 426 2,376 (6%) (27%) Clarinex / Aerius 69 126 195 118 313 133 144 277 128 405 93 498 (8%) (23%) Nasonex 82 85 167 104 271 34 115 149 74 223 78 301 40% 21% PEG-Intron 63 50 113 49 163 126 146 272 85 358 76 434 (42%) (54%) Temodar 37 45 82 60 142 26 48 73 47 120 39 159 29% 18% Integrilin 68 72 139 88 228 84 87 171 73 244 40 284 20% (7%) Intron A 18 33 51 30 81 15 54 69 38 107 37 144 (20%) (24%) Rebetol 31 23 53 - 54 136 102 238 50 288 18 306 (99%) (81%) Elocon 7 12 19 12 31 10 11 21 12 33 3 37 (3%) (8%)
Notes: U.S. sales of Zetia/Vytorin were $298 million in the 2004 third quarter and $679 million year-to-date. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 5 SCHERING-PLOUGH CORPORATION INTERNATIONAL PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2004 2003 ---------------------------------------- --------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 3rd Qtr. 9 Mos. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3rd Qtr. 9 Mos. ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -------- ------ TOTAL INTERNATIONAL PHARM: 1,070 1,150 2,220 1,037 3,257 1,003 1,113 2,116 1,035 3,151 1,083 4,235 0% 3% Remicade 165 182 347 188 535 114 126 240 142 382 159 540 33% 40% Clarinex / Aerius 61 100 161 57 218 41 75 116 41 157 40 196 39% 39% Nasonex 58 71 129 48 178 44 60 105 39 144 55 199 23% 23% PEG-Intron 85 94 179 83 262 95 101 196 87 283 85 368 (5%) (7%) Temodar 49 57 106 61 168 34 40 73 44 117 48 165 40% 43% Integrilin 5 6 12 5 17 5 5 10 6 16 6 22 (5%) 9% Intron A 51 56 107 51 158 59 71 130 65 195 70 265 (22%) (19%) Claritin Rx 91 82 173 67 240 89 90 179 68 247 81 328 (1%) (3%) Rebetol 68 65 133 52 185 83 94 177 75 252 81 333 (31%) (27%) Subutex 44 47 91 45 136 31 36 66 37 103 41 144 22% 32% Elocon 31 34 65 31 96 29 30 58 29 88 30 117 5% 10% Caelyx 34 35 70 39 109 22 26 49 30 78 32 111 32% 39%
Notes: International cholesterol franchise sales, which include Zetia and Vytorin, totaled $46 million in the 2004 third quarter and $101 million year-to-date. Certain prior period amounts have been reclassified to conform to the current year presentation. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. 6 MISCELLANEOUS DATA (DOLLARS IN MILLIONS)
2004 ----------------------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ---- ---- ---- ---- ---- ---- ---- GEOGRAPHIC SALES U.S. 738 827 1,565 800 2,365 EUROPE AND CANADA 874 972 1,846 820 2,666 LATIN AMERICA 174 182 356 204 560 PACIFIC AREA AND ASIA 177 166 343 154 497 CONSOLIDATED SALES 1,963 2,147 4,110 1,978 6,088 ----- ----- ----- ----- ----- 2003 --------------------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ---- ---- ---- ---- ---- ---- ---- GEOGRAPHIC SALES U.S. 965 1,047 2,012 836 2,848 712 3,559 EUROPE AND CANADA 777 935 1,711 849 2,560 849 3,410 LATIN AMERICA 171 163 334 184 517 199 716 PACIFIC AREA AND ASIA 169 163 332 129 461 188 649 CONSOLIDATED SALES 2,082 2,308 4,389 1,998 6,386 1,948 8,334 ----- ----- ----- ----- ----- ----- -----
2004 ---------------------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ---- ---- ---- ---- ---- ---- ---- CONSOLIDATED SALES GROWTH RATES: As Reported (6%) (7%) (6%) (1%) (5%) Excluding Exchange (12%) (10%) (11%) (4%) (9%) OTHER, NET Interest Income $ 14 $ 15 $ 29 $ 20 $ 50 Interest Expense (48) (43) (91) (39) (130) FX Gains/(Losses) (1) (4) (4) 0 (4) Other Income/(Expense) (1) (11) (12) (15) (28) ------- ------- ------- ------- ------- Total Other, Net ($ 36) ($ 43) ($ 78) ($ 34) ($ 112) EFFECTIVE TAX RATE 20% 20% 20% 20% 20% 2003 ------------------------------------------------------------------- 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ ---- ---- ---- ---- ---- ---- ---- CONSOLIDATED SALES GROWTH RATES: As Reported (19%) (19%) (19%) (17%) (18%) (18%) (18%) Excluding Exchange (23%) (24%) (24%) (21%) (23%) (24%) (23%) OTHER, NET Interest Income $ 13 $ 15 $ 28 $ 9 $ 37 $ 20 $ 57 Interest Expense (13) (12) (25) (24) (49) (32) (81) FX Gains/(Losses) (1) - (1) 1 (1) - (1) Other Income/(Expense) (12) 1 (10) (27) (36) 2 (34) ------- ------- ------- ------- ------- ------- ------- Total Other, Net ($ 13) $ 4 ($ 8) ($ 41) ($ 49) ($ 10) ($ 59) EFFECTIVE TAX RATE 20% 20% 20% ** ** 15% **
** In the 2003 third quarter, the company reduced its estimate of the 2003 annual effective tax rate to 15% from 20% on income, excluding the $350 million non-tax deductible provision to increase litigation reserves. Note: All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Alex Kelly 908-298-7450 Janet M. Barth 908-298-7417 7 -----END PRIVACY-ENHANCED MESSAGE-----