-----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, EzmDCAGahT/TBJqcICqkurfJA2jcIvWkX9qvsziI6UKvATLvYh3eCxkvbi2Mapi8 7GtoVynBMj4uZ3mFXaMQ/Q== 0000950123-05-004773.txt : 20050421 0000950123-05-004773.hdr.sgml : 20050421 20050421074538 ACCESSION NUMBER: 0000950123-05-004773 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050421 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050421 DATE AS OF CHANGE: 20050421 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: 05763154 BUSINESS ADDRESS: STREET 1: ONE GIRALDA FARMS CITY: MADISON STATE: NJ ZIP: 07940-1000 BUSINESS PHONE: 9738227000 8-K 1 y07978e8vk.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 Date of Report (Date of earliest event reported): April 21, 2005 SCHERING-PLOUGH CORPORATION (Exact Name of Registrant as Specified in its Charter) New Jersey 1-6571 22-1918501 (State or Other Jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification Number) 2000 Galloping Hill Road Kenilworth, NJ 07033 (Address of Principal Executive Office) Registrant's telephone number, including area code: (908) 298-4000 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 2005 First Quarter" and provided additional supplemental financial data. The press release is furnished as Exhibit 99.1 to this 8-K. The supplemental financial data is furnished as Exhibit 99.2 to this 8-K. ITEM 8.01 OTHER EVENTS. Disclosure Notice for Forward Looking Statements This 8-K, including each exhibit, the comments of Schering-Plough officers during our earnings teleconference/webcast on April 21, 2005 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, estimates of rebates, discounts and returns, 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 U.S. 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 new and existing generic, prescription and/or OTC products that compete with products of Schering-Plough or the Merck/Schering-Plough Cholesterol Partnership (such as competition from OTC statins, like the one approved for use in the U.K., the impact of which in the cholesterol reduction market is not yet known). - Increased pricing pressure both in the U.S. and abroad from managed care organizations, institutions and government agencies and programs. In the U.S., 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 in the regulatory and approval processes in the U.S. and other countries, including delays in the approval of new products and new indications and uncertainties in the FDA's approval process; and uncertainties concerning regulatory decisions regarding labeling and other matters. - Failure to meet current 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. - Post-marketing issues. Once a product is approved and marketed, clinical trials of marketed products or post-marketing surveillance may raise efficacy or safety concerns. Whether or not scientifically justified, this new information could lead to recalls, withdrawals or adverse labeling of marketed products, which may negatively impact sales. Concerns of prescribers or patients relating to the safety or efficacy of Schering-Plough products, or other companies' products or pharmaceutical products generally, may also negatively impact sales. - Major products such as CLARITIN, CLARINEX, INTRON A, PEG-INTRON, REBETOL Capsules, REMICADE, TEMODAR and NASONEX accounted for a material portion of Schering-Plough's 2004 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, sales 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 and auditing 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 furnished pursuant to Item 2.02 with this 8-K: 99.1 Press release dated April 21, 2005 titled "Schering-Plough Reports Financial Results for 2005 First Quarter" (furnished pursuant to Item 2.02) 99.2 Supplemental Financial Data (furnished pursuant to Item 2.02) 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: April 21, 2005 Exhibit Index The following exhibits are furnished with this 8-K: 99.1 Press release dated April 21, 2005 titled "Schering-Plough Reports Financial Results for 2005 First Quarter" (furnished pursuant to Item 2.02) 99.2 Supplemental Financial Data (furnished pursuant to Item 2.02) EX-99.1 2 y07978exv99w1.txt PRESS RELEASE EXHIBIT 99.1 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 2005 FIRST QUARTER KENILWORTH, N.J., April 21, 2005 - Schering-Plough Corporation (NYSE: SGP) today reported financial results for the 2005 first quarter. "Out of the severe challenges that we have faced, we are emerging stronger," said Fred Hassan, Schering-Plough chairman and CEO. "We are now well advanced in the Stabilize and Repair stages of our six- to eight-year Action Agenda and are working toward the Turnaround phase. We continue to make critical investments in our longer-term future, even as we begin securing our top-line growth goals and focusing on delivering a sustainable bottom-line turnaround," he added. "Looking back, we can be proud of the progress achieved in our Action Agenda since we announced it two years ago," said Hassan. "We also know that much work remains to be done. We are competing in markets that are highly competitive, seasonal and frequently volatile. Our industry environment is experiencing heightened competition, rapid changes and a new caution among regulators, physicians and patients about the safety of medicines. Still, while the road ahead will be challenging, we have reason for growing confidence. The hard work by our colleagues across the New Schering-Plough is starting to deliver significant, positive results. We are delivering on what we said we would do, and look forward to the anticipated Turnaround beginning later this year." Hassan noted that the first quarter 2005 financial performance represented the second consecutive quarter of higher sales and a clear signal that top-line growth is starting to drive bottom-line growth. "In defining our anticipated Turnaround, we think that the beginning of our Turnaround phase will be marked by two or three quarters of solid performance, as demonstrated by growth in sales and earnings per share versus prior year quarters, excluding special items." The company noted that its base business continues to firm up while its cholesterol franchise (shared with Merck & Co., Inc.) is making steady progress. The company said it is also pleased with its improving execution as evidenced by recent approvals and launches, progress on several compliance -2- and legal fronts, and its focus on re-engineering the company through its Value Enhancement Initiative (VEI). While the first quarter 2005 results were strong versus the 2004 period, the company cautioned against projecting out a full-year based on these results, as certain favorable circumstances helped benefit the first quarter. These factors included a higher proportional share of ZETIA profits from the company's Cholesterol Joint Venture, a milestone earned from its Cholesterol Joint Venture partner, timing of R&D expenses, positive impact of foreign exchange and certain other items. Hassan said, "We remain cautiously optimistic that we see the beginning of positive trends. Working with our partner Merck, our cholesterol franchise is gaining share in the very competitive and very large U.S. cholesterol market, and also making progress in several important markets outside this country. VYTORIN, offering dual inhibition of both sources of LDL cholesterol, is further penetrating the U.S. market since last year's launch and ZETIA is continuing to show good strength in spite of the VYTORIN market share progress," said Hassan. "In our specialty care therapy areas, REMICADE is achieving good sales growth as it leverages an expanding array of anti-inflammatory indications. Sales are up significantly versus last year for TEMODAR, which last month gained U.S. approval after priority review as treatment for the most prevalent form of brain cancer. Sales for our hepatitis C franchise are benefiting from the successful launch in Japan late last year of our combination therapy PEG-INTRON and REBETOL, now the leading therapy in that market. In primary care, we have increased our U.S. market share for NASONEX nasal spray for allergies. Overall, we're also pleased with the balance Schering-Plough enjoys between its specialty and primary care product lines." Hassan noted that the company continues to make progress in its consent decree with the U.S. Food and Drug Administration (FDA), having completed 173 of 212 significant steps and 25 of 31 validation actions as of March 31 without incurring any additional payments for missed deadlines. Schering-Plough also continued taking steps to improve its financial flexibility, following on the issuance in August 2004 of $1.4 billion in Mandatory Convertible Preferred Stock. In the 2005 first quarter, the company continued to implement its plan to repatriate approximately $9.4 billion in overseas funds under the American Jobs Creation Act. FIRST QUARTER 2005 RESULTS Schering-Plough reported net income available to common shareholders of $105 million in the 2005 first quarter or 7 cents in diluted earnings per common share compared with a net loss in the 2004 period of $73 million or 5 cents per share. First quarter earnings reflected special charges of $27 million, or approximately 2 cents per diluted share, primarily for employee termination costs. The -3- higher earnings in the 2005 first quarter were primarily driven by increased sales versus the 2004 period and higher equity income from the Cholesterol Joint Venture with Merck & Co., Inc. First quarter 2005 net sales of $2.4 billion were 21 percent higher than the 2004 period. The first quarter sales increase was driven by U.S. and international product growth, 6 percent of which relates to the U.S. sales contribution from the antibiotics AVELOX and CIPRO under an agreement with Bayer that became effective in October 2004, and a 4 percent positive impact from currency exchange. The company noted that net sales under U.S. Generally Accepted Accounting Principles (GAAP) does not include sales of the cholesterol products marketed in partnership with Merck, as the company accounts for the Cholesterol Joint Venture under the equity method as described below. Global Cholesterol Joint Venture net sales, which include VYTORIN and ZETIA, totaled approximately $505 million in the 2005 first quarter, more than double the net sales of $188 million in the comparable 2004 period. U.S. Cholesterol Joint Venture net sales for the 2005 period totaled $426 million, sharply higher versus $169 million in 2004. VYTORIN has now been launched in 13 countries, including the United States, and ZETIA in 60 countries. Overall, the company shares in approximately 50 percent of the profits of the joint venture with Merck, although there are different profit sharing arrangements for the cholesterol products in countries around the world. Accordingly, including an adjustment of an assumed 50 percent of global Cholesterol Joint Venture net sales (see note and table below), Schering-Plough's adjusted net sales for the first quarter of 2005 would have totaled $2.6 billion, an increase of $564 million or 27 percent, as compared to $2.1 billion on a similar adjusted basis in the first quarter of 2004. 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 income from operations (which includes milestones earned from Merck) in "Equity income from cholesterol joint venture." "Equity income from cholesterol joint venture" for Schering-Plough totaled $220 million in the 2005 first quarter versus $78 million in the first quarter of 2004. The increase in equity income reflected the quarter's strong sales performance for VYTORIN and ZETIA, the higher share of ZETIA profits on the first $300 million of U.S. ZETIA sales, and the recognition of a milestone from Merck related to certain European approvals of VYTORIN. 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. On a reported basis, first quarter 2005 sales of Prescription Pharmaceuticals, which do not include sales of the Cholesterol Joint Venture, totaled $1.8 billion, up 25 percent, including a favorable impact from foreign exchange of 4 percent and the sales contribution of AVELOX and CIPRO. Consumer Health Care sales rose 6 percent to $330 million. Animal Health sales grew 14 percent to -4- $193 million, reflecting solid growth across core brands and a favorable foreign exchange impact of 4 percent. Among prescription products recording higher sales in the 2005 first quarter were 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, early rheumatoid arthritis, psoriatic arthritis, Crohn's disease and ankylosing spondylitis, and TEMODAR, a treatment for certain types of brain tumors. Sales for REMICADE rose 33 percent to $220 million, due primarily to greater demand and expanded indications. TEMODAR sales totaled $131 million in the 2005 first quarter, up 52 percent, benefiting from increased utilization for a new U.S. indication, newly diagnosed glioblastoma multiforme (GBM), the most prevalent form of brain cancer. Also posting higher sales in the quarter was CAELYX, for the treatment of ovarian cancer, metastatic breast cancer and Kaposi's sarcoma, up 27 percent to $43 million, largely as a result of increased use in treating breast cancer. In the company's prescription respiratory business, global NASONEX sales rose 30 percent to $183 million, with U.S. sales climbing 32 percent to $109 million as the product captured greater U.S. market share versus the 2004 period. U.S. sales also benefited from the nationwide availability, announced Jan. 12, of a new scent-free, alcohol-free formulation of NASONEX nasal spray. In international markets, NASONEX sales were up 27 percent to $74 million as a result of market share gains and market growth. Global CLARINEX sales in the first quarter of 2005 were $144 million, up 11 percent. Sales of CLARINEX outside the United States rose 26 percent to $77 million in the first quarter due to market share gains and continued conversion from prescription CLARITIN. In the U.S., CLARINEX continued to experience reduced market share in a declining market. As a result, sales decreased 3% to $67 million from an unusually weak comparable period in 2004. International sales of prescription CLARITIN rose 22 percent to $111 million in the first quarter, due mainly to a strong allergy season in Japan. Sales for the company's hepatitis C products rose in the 2005 first quarter, driven primarily by higher sales in Japan as a result of the December 2004 launch of the PEG-INTRON and REBETOL combination therapy. In Japan, PEG-INTRON has become the leading interferon therapy prescribed for the treatment of hepatitis C. First quarter global sales of PEG-INTRON were up 14 percent to $170 million; sales of REBETOL were down 35 percent to $64 million, due to ongoing international competition and U.S. market share erosion from generic competition. Also contributing to growth in 2005 first quarter net sales were products under the strategic agreement with Bayer. Under the agreement, Schering-Plough has exclusive rights in the United States and Puerto Rico to market, sell and distribute the AVELOX and CIPRO antibiotics and to undertake Bayer's U.S. commercialization activities for the erectile dysfunction medicine LEVITRA under -5- 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. Sales of AVELOX and CIPRO totaled $110 million in the quarter. Schering-Plough records its share of LEVITRA results as alliance revenue within net sales. In Consumer Health Care, sales of OTC CLARITIN were essentially flat at $116 million, primarily reflecting increased private label competition. Sales of foot care products rose 10 percent to $84 million, benefiting from higher sales of DR. SCHOLL'S FREEZE AWAY wart remover product and the launch of the new DR. SCHOLL'S MEMORY FIT Insole. The company's gross margin was 62.5 percent for the 2005 first quarter compared with 62.3 percent in the 2004 period. Schering-Plough said its ongoing focus on operational excellence in all key functions, including compliance and quality, continues to affect the overall cost structure of the company. Selling, general and administrative expenses rose 18 percent to $1.1 billion in the first quarter of 2005 versus the prior year, primarily reflecting the previously announced field force expansions to prepare for the U.S. launch of VYTORIN, the addition in the 2004 fourth quarter of more than 800 Bayer sales representatives, and increased selling expenses in Europe to support the continued launch of ZETIA and VYTORIN, coupled with increased promotional spending, primarily for NASONEX. Research and development spending for the 2005 first quarter totaled $384 million, up 3 percent. The company expects R&D spending in subsequent quarters to be higher, reflecting the timing of clinical trials and the progression of the early-stage pipeline. The "Other, net" line primarily reflects interest expense from the long-term debt issued in the 2003 fourth quarter, offset by higher interest income related to higher cash and cash equivalent balances resulting from the August 2004 issuance of $1.4 billion in Mandatory Convertible Preferred Stock. Schering-Plough recorded income tax expense in the 2005 first quarter of $64 million. This primarily reflected tax expense in international locations, which was higher due to increased international income. RECENT DEVELOPMENTS The company also offered the following summary of recent significant developments, including: - Gained U.S. approval for TEMODAR Capsules (announced March 16) for use in combination with radiotherapy for the treatment of adult patients with newly diagnosed glioblastoma multiforme (GBM), a form of malignant brain cancer. The approval was based on data that demonstrated a significant overall survival benefit in patients who were treated with -6- TEMODAR in combination with radiotherapy. TEMODAR also received full approval for the treatment of adult patients with refractory anaplastic astrocytoma (AA), another form of brain tumor. - Gained U.S. approval of ASMANEX TWISTHALER 220 mcg (announced March 31) for the first-line maintenance treatment of asthma as preventive therapy in patients 12 years of age and older. ASMANEX is expected to be available in the United States in the fall of 2005. - Presented results from a clinical trial conducted in 1,902 patients with high cholesterol showing that VYTORIN (ezetimibe/simvastatin) provided greater reduction in LDL ("bad") cholesterol across the dosing ranges compared to Lipitor. At the most commonly used starting doses of these two therapies, VYTORIN 10/20 mg decreased LDL cholesterol by 51 percent compared with 36 percent for Lipitor 10 mg (p<0.001). The results were presented on March 8 at the American College of Cardiology's 2005 Annual Scientific Session in Orlando, Fla. - Gained U.S. approval (announced March 4) and began introducing CLARINEX-D 24 HOUR Extended Release Tablets for the relief of the nasal and non-nasal symptoms of seasonal allergic rhinitis (outdoor allergies), including nasal congestion, in patients 12 years of age and older. - Acquired most of the assets of NeoGenesis Pharmaceuticals, Inc., of Cambridge, Mass., effective February 14, 2005. NeoGenesis was a privately held biopharmaceutical company focused on applying novel screening and chemistry technologies to discover and develop small molecule drugs. - Reported on a ruling by the Federal Court of Appeals for the 11th Circuit, based in Atlanta, that Schering-Plough did not violate antitrust laws in patent litigation settlements involving its controlled-release potassium chloride supplement K-DUR 20 (potassium chloride) USP (announced March 9). The company had consistently maintained that the patent litigation settlements complied with the law and benefited consumers by allowing generic product to enter the market two to five years before the expiration of the relevant patent. - Reported results of two independent, investigator-initiated retrospective analyses of real world treatment data comparing the two approved forms of pegylated interferon, PEG-INTRON versus Pegasys, both used in combination with ribavirin. The results were presented for the first time at the European Association for the Study of the Liver (EASL) 40th Annual Meeting (April 15). - Reported on the status of the U.S. regulatory application for posaconazole, an oral agent for invasive fungal infections, which was filed in the United States and European Union in May 2004. The company on March 24 reported that the U.S. Food and Drug Administration had requested an extension of its regulatory review, and thus the company anticipates FDA action -7- on posaconazole by the end of the first half of 2005. Posaconazole is also under regulatory review in Europe. FIRST QUARTER 2005 CONFERENCE CALL AND WEBCAST Schering-Plough will conduct a conference call today at 8 a.m. (ET) to review the 2005 first quarter results. To listen live to the call, dial 1-877-565-9664 or 1-706-634-5003. A replay of the call will be available starting at approximately 11 a.m. today through 5 p.m. on April 25. To listen to the replay, dial 1-800-642-1687 or 1-706-645-9291 and enter the conference ID # 4712425. 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. today through 5 p.m. on May 19. NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent of global Cholesterol Joint Venture net sales, is a non-U.S. GAAP measure used by management in evaluating the performance of the company's overall business. The company believes that this performance measure contributes to a more complete understanding by investors of the overall results of the company. The company provides this information to supplement the reader's understanding of the importance to the company of its share of results from the operations of the Cholesterol Joint Venture. Net sales (excluding the Cholesterol Joint Venture net sales) is required to be presented under U.S. GAAP. The Cholesterol Joint Venture's net sales are included as a component of income from operations in the calculation of the company's "Equity income from cholesterol joint venture." DISCLOSURE NOTICE: The information in this press release includes certain "forward-looking" statements within the meaning of the Securities Litigation Reform Act of 1995 relating to the company's business prospects, trends in top and bottom line performance, the timing of the anticipated turnaround and resulting growth prospects, the future impacts of the American Jobs Creation Act of 2004 and the potential of certain products including ZETIA, VYTORIN, ASMANEX, CLARINEX-D 24 Hour Extended Release Tablets and posaconazole. Forward-looking statements relate to expectations or forecasts of future events and not to historical information. There are no guarantees about any of the forward-looking statements, Schering-Plough stock or Schering-Plough's business. 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 (and the Cholesterol Joint Venture's) marketed and pipeline products; possible changes in business strategies and the ability to successfully -8- implement those business strategies; general market and economic factors; regulations and legislation; label/use changes and concerns of prescribers or patients relating to Schering-Plough products, other companies' products or pharmaceutical products generally; 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. For further details and a discussion of these and other risks and uncertainties that may impact forward-looking statements, see Schering-Plough's 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 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. # # # -9- SCHERING-PLOUGH CORPORATION Report for the period ended March 31 (unaudited): (Amounts in millions, except percentages and per share figures)
First Quarter ------------------------- 2005 2004 % ------ -------- -- Net Sales.................................. $2,369 $ 1,963 21 Cost of Sales.............................. 889 740 20 Selling, General and Administrative.................... 1,081 914 18 Research and Development .................. 384 372 3 Other, Net................................. 17 36 (52) Special Charges a/......................... 27 70 (61) Equity Income from Cholesterol Joint Venture............. (220) (78) N/M ------ -------- Income/(Loss) Before Income Taxes.......... 191 (91) N/M Income Tax Expense/(Benefit)............... 64 (18) N/M ------ -------- Net Income/(Loss).......................... $ 127 $ (73) N/M ====== ======== Preferred Stock Dividends.................. 22 - N/M ------ -------- Net Income/(Loss) Available to Common Shareholders.................... $ 105 $ (73) N/M ====== ======== Diluted Earnings/(Loss) per Common Share...................................... $ 0.07 $ (0.05) N/M ====== ======== Effective Tax Rate b/...................... N/M 20% Average Common Shares Outstanding - Diluted................... 1,480 1,471 Actual Number of Common Shares Outstanding at March 31................. 1,475 1,472
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. N/M - Not a meaningful percentage a/ Special Charges for the first quarter of 2005 related primarily to employee termination costs for a headcount reduction at a European manufacturing facility. Special Charges for the first quarter of 2004 included $44 million of employee termination costs and $26 million of asset impairment charges primarily related to the Company's anticipated exit from a small European research-and-development facility. b/ Tax expense during the first quarter of 2005 primarily related to foreign tax expense as the company did not recognize the benefit of U.S. tax operating losses. It should be noted that in the fourth quarter ended December 31, 2004, the Company recorded the impact of the intended repatriation of funds under the American Jobs Creation Act. -10- SCHERING-PLOUGH CORPORATION Report for the period ended March 31 (unaudited):
First Quarter Net Sales by Major Product: ------------------------- (Dollars in millions) 2005 2004 % ------ ------ -- GLOBAL PHARMACEUTICALS $1,846 $1,481 25 Remicade 220 165 33 Nasonex 183 140 30 PEG-Intron 170 148 14 Clarinex / Aerius 144 130 11 Temodar 131 86 52 Claritin Rx* 111 91 22 Integrilin 75 73 3 Intron A 73 69 6 Avelox 73 - N/M Rebetol 64 99 (35) Subutex 51 44 16 Caelyx 43 34 27 Elocon 41 38 6 Cipro 37 - N/M Other Pharmaceuticals 430 364 18 CONSUMER HEALTH CARE 330 312 6 OTC 162 157 4 OTC Claritin 116 117 (1) FOOT CARE 84 76 10 SUN CARE 84 79 5 ANIMAL HEALTH 193 170 14 ------ ------ -- CONSOLIDATED NET SALES $2,369 $1,963 21 ====== ====== ==
N/M - not a meaningful percentage * Includes international sales of Claritin Rx only. Canadian sales of Claritin are reported in the OTC Claritin line within Consumer Health Care. NOTE: Additional information about U.S. and international sales for specific products is available by calling the company or visiting the investor relations Web site at http://ir.schering-plough.com. -11- SCHERING-PLOUGH CORPORATION Reconciliation of Non-U.S. GAAP Financial Measure Adjusted net sales, defined as net sales plus an assumed 50 percent of global Cholesterol Joint Venture net sales.
(Dollars in millions) Three-Months Ended March 31 (unaudited) ---------------------------------------- 2005 2004 ------- ------ NET SALES, AS REPORTED $ 2,369 $1,963 50 percent of Cholesterol Joint Venture Net Sales(a) 252 94 ------- ------ Adjusted net sales $ 2,621 $2,057 ======= ======
(a) Total net sales of the Cholesterol Joint Venture for the three months ended March 31, 2005 and 2004 were $505 million and $188 million, respectively. NOTE: Adjusted net sales, defined as net sales plus an assumed 50 percent of global Cholesterol Joint Venture net sales, is a non-U.S. GAAP measure used by management in evaluating the performance of the company's overall business. The company believes that this performance measure contributes to a more complete understanding by investors of the overall results of the company. The company provides this information to supplement the reader's understanding of the importance to the company of its share of results from the operations of the Cholesterol Joint Venture. Net sales (excluding the Cholesterol Joint Venture net sales) is required to be presented under U.S. GAAP. The Cholesterol Joint Venture's net sales are included as a component of income from operations in the calculation of the company's "Equity income from cholesterol joint venture." Net sales of the Cholesterol Joint Venture do not include net sales of cholesterol products in non-joint venture territories. EX-99.2 3 y07978exv99w2.txt SUPPLEMENTAL FINANCIAL DATA Exhibit 99.2 SCHERING-PLOUGH CORPORATION STATEMENTS OF CONSOLIDATED OPERATIONS (DOLLARS IN MILLIONS, EXCEPT EPS) (UNAUDITED)
2005 2004 --------------------------------------------------------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. ----- --- --- --- --- --- ---- ----- ----- ----- ----- ----- ----- ----- -------- Net Sales 2,369 1,963 2,147 4,110 1,978 6,088 2,184 8,272 21% Cost of Sales 889 740 790 1,530 711 2,241 829 3,070 20% ----- ----- ----- ----- ----- ----- ----- ----- ---- Gross Margin 1,480 1,223 1,357 2,580 1,267 3,847 1,355 5,202 21% Total SG&A 1,081 914 979 1,893 892 2,785 1,026 3,811 18% Research & Development 1/ 384 372 451 824 378 1,201 406 1,607 3% Other, Net 17 36 43 78 34 112 33 146 (52%) Special Charges 2/ 27 70 42 112 26 138 15 153 (61%) Equity Income from Cholesterol Joint Venture (220) (78) (77) (154) (95) (249) (98) (347) N/M ----- ----- ----- ----- ----- ----- ----- ----- ---- Income/(Loss) before Income Taxes 191 (91) (81) (173) 32 (140) (27) (168) N/M Income Tax Expense/(Benefit) 3/ 64 (18) (16) (35) 6 (28) 807 779 N/M ----- ----- ----- ----- ----- ----- ----- ----- ---- Net Income/(Loss) 127 (73) (65) (138) 26 (112) (834) (947) N/M ===== ===== ===== ===== ===== ===== ===== ===== ==== Preferred Stock Dividends 22 - - - 12 12 22 34 N/M ----- ----- ----- ----- ----- ----- ----- ----- ---- Net Income/(Loss) Available to Common Shareholders 105 (73) (65) (138) 14 (124) (856) (981) N/M ===== ===== ===== ===== ===== ===== ===== ===== ==== Diluted Earnings/(Loss) per Common Share 0.07 (0.05) (0.04) (0.09) 0.01 (0.08) (0.58) (0.67) N/M ===== ===== ===== ===== ===== ===== ===== ===== ==== Avg. Shares Outstanding- Diluted 1,480 1,471 1,472 1,471 1,475 1,472 1,473 1,472 Actual Shares Outstanding 1,475 1,472 1,472 1,472 1,472 1,472 1,474 1,474 Ratios To Net Sales Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Sales 37.5% 37.7% 36.8% 37.2% 35.9% 36.8% 37.9% 37.1% Gross Margin 62.5% 62.3% 63.2% 62.8% 64.1% 63.2% 62.1% 62.9% Total SG&A 45.6% 46.6% 45.6% 46.1% 45.1% 45.7% 47.0% 46.1% Research & Development 16.2% 19.0% 21.0% 20.0% 19.1% 19.7% 18.6% 19.4% Income/(Loss) Before Income Taxes 8.0% (4.6%) (3.8%) (4.2%) 1.6% (2.3%) (1.3%) (2.0%) Income Taxes Expense/(Benefit) 2.7% (0.9%) (0.8%) (0.8%) 0.3% (0.5%) 37.0% 9.4% Net Income/(Loss) 5.3% (3.7%) (3.0%) (3.4%) 1.3% (1.8%) (38.2%) (11.4%)
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. 1/ Research and development in 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 first quarter ended March 31, 2005 related primarily to employee termination costs for a headcount reduction at a European manufacturing facility. Special charges for the first quarter ended March 31, 2004 included $44 million of employee termination costs, as well as $26 million of asset impairment charges primarily related to the Company's exit from a small European research-and-development facility. Special Charges for the twelve months ended December 31, 2004 included $119 million of employee termination costs, as well as $27 million of asset impairment charges and $7 million of closure costs primarily related to the aforementioned research-and-development facility. 3/ Tax expense during the first quarter of 2005 primarily related to foreign tax expense as the company did not recognize the benefit of U.S. tax operating losses. In the fourth quarter ended December 31, 2004, the Company recorded the impact of the intended repatriation of funds under the American Jobs Creation Act of 2004. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 1 SCHERING-PLOUGH CORPORATION CONSOLIDATED SALES (DOLLARS IN MILLIONS)
2005 2004 ----------------------------------------- --------------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. ----- ---- ---- ---- ---- ---- ---- ----- ----- ----- ----- ----- ----- ----- -------- PRESCRIPTION PHARM: 1,846 1,481 1,644 3,125 1,556 4,681 1,737 6,417 25% U.S. 549 411 495 906 518 1,424 584 2,007 33% International 1,297 1,070 1,150 2,220 1,037 3,257 1,153 4,410 21% CONSUMER HEALTH CARE: 330 312 317 629 239 868 217 1,085 6% OTC: 162 157 150 306 150 456 121 578 4% OTC Claritin * 116 117 117 234 110 344 75 419 (1%) Other OTC 46 40 32 72 41 112 46 159 18% FOOT CARE: 84 76 89 166 86 252 79 331 10% SUN CARE: 84 79 78 157 3 160 17 176 5% ANIMAL HEALTH: 193 170 186 356 183 539 230 770 14% U.S. 44 41 36 77 56 133 61 194 8% International 149 129 150 279 127 406 169 575 15% TOTAL CONSOLIDATED: 2,369 1,963 2,147 4,110 1,978 6,088 2,184 8,272 21% ----- ----- ----- ----- ----- ----- ----- ----- U.S. 897 738 827 1,565 800 2,365 854 3,219 21% International 1,472 1,225 1,320 2,545 1,178 3,723 1,330 5,053 20%
* Includes net sales of Claritin in Canada. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 2 SCHERING-PLOUGH CORPORATION PRESCRIPTION PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
GLOBAL PRESCRIPTION PHARM U.S. INTERNATIONAL -------------------------- --------------------- ---------------------- 2005 2004 2005 2004 2005 2004 ----- ----- ---- ---- ----- ----- 1st 1st 1st Qtr. 1st 1st 1st Qtr. 1st 1st 1st Qtr. Qtr. Qtr. vs Qtr. Qtr. vs Qtr. Qtr. vs $ $ 1st Qtr. $ $ 1st Qtr. $ $ 1st Qtr. ----- ----- -------- ---- ---- --------- ----- ----- -------- PRESCRIPTION PHARM: 1,846 1,481 25% 549 411 33% 1,297 1,070 21% Remicade 220 165 33% - - - 220 165 33% Nasonex 183 140 30% 109 82 32% 74 58 27% PEG-Intron 170 148 14% 52 63 (17%) 118 85 38% Clarinex / Aerius 144 130 11% 67 69 (3%) 77 61 26% Temodar 131 86 52% 57 37 54% 74 49 50% Claritin Rx 1/ 111 91 22% - - - 111 91 22% Integrilin 75 73 3% 71 68 6% 4 5 (25%) Intron A 73 69 6% 32 18 80% 41 51 (20%) Avelox 2/ 73 - N/M 73 - N/M - - N/M Rebetol 64 99 (35%) - 31 N/M 70 68 2% Subutex 51 44 16% - - - 51 44 16% Caelyx 43 34 27% - - - 43 34 27% Elocon 41 38 6% 4 7 (46%) 37 31 18% Cipro 2/ 37 - N/M 37 - N/M - - N/M
1/ Includes international net sales of Claritin Rx only. Canadian net sales of Claritin are reported in the OTC Claritin line within Consumer Health Care. 2/ Includes net sales in Puerto Rico All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 3 SCHERING-PLOUGH CORPORATION GLOBAL PRESCRIPTION PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2005 2004 ------------------------------------------ --------------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. ----- ----- ---- ---- ---- ---- ---- ----- ----- ----- ----- ----- ----- ----- -------- GLOBAL PRESCRIPTION PHARM: 1,846 1,481 1,644 3,125 1,556 4,681 1,737 6,417 25% Remicade 220 165 182 347 188 535 212 746 33% Nasonex 183 140 156 296 153 449 145 594 30% PEG-Intron 170 148 144 293 132 425 138 563 14% Clarinex / Aerius 144 130 226 356 175 530 162 692 11% Temodar 131 86 102 188 121 309 150 459 52% Claritin Rx 1/ 111 91 82 173 67 240 80 321 22% Integrilin 75 73 78 151 94 245 81 325 3% Intron A 73 69 89 158 81 239 79 318 6% Avelox 2/ 73 - - - - - 44 44 N/M Rebetol 64 99 88 187 52 239 49 287 (35%) Subutex 51 44 47 91 45 136 50 185 16% Caelyx 43 34 35 70 39 109 40 150 27% Elocon 41 38 46 84 42 127 42 168 6% Cipro 2/ 37 - - - - - 43 43 N/M
1/ Includes international net sales of Claritin Rx only. Canadian net sales of Claritin are reported in the OTC Claritin line within Consumer Health Care. 2/ Includes net sales in Puerto Rico All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 4 SCHERING-PLOUGH CORPORATION U.S. PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2005 2004 ---------------------------------------- ---------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ---- ----- -------- TOTAL U.S. PHARM: 549 411 495 906 518 1,424 584 2,007 33% Nasonex 109 82 85 167 104 271 81 353 32% PEG-Intron 52 63 50 113 49 163 42 205 (17%) Clarinex / Aerius 67 69 126 195 118 313 107 420 (3%) Temodar 57 37 45 82 60 142 79 220 54% Integrilin 71 68 72 139 88 228 74 301 6% Intron A 32 18 33 51 30 81 29 109 80% Avelox 1/ 73 - - - - - 44 44 N/M Rebetol - 31 23 53 - 54 - 45 N/M Elocon 4 7 12 19 12 31 9 40 (46%) Cipro 1/ 37 - - - - - 43 43 N/M
1/ Includes net sales in Puerto Rico All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 5 SCHERING-PLOUGH CORPORATION INTERNATIONAL PHARMACEUTICAL SALES - KEY PRODUCT SALES (DOLLARS IN MILLIONS)
2005 2004 ----------------------------------------- --------------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. ----- ---- ---- ---- ---- ---- ---- ---- ----- ----- ----- ----- ----- ----- -------- TOTAL INTERNATIONAL PHARM: 1,297 1,070 1,150 2,220 1,037 3,257 1,153 4,410 21% Remicade 220 165 182 347 188 535 212 746 33% Nasonex 74 58 71 129 48 178 64 242 27% PEG-Intron 118 85 94 179 83 262 96 358 38% Clarinex / Aerius 77 61 100 161 57 218 55 272 26% Temodar 74 49 57 106 61 168 72 239 50% Claritin Rx 1/ 111 91 82 173 67 240 80 321 22% Integrilin 4 5 6 12 5 17 7 24 (25%) Intron A 41 51 56 107 51 158 50 208 (20%) Rebetol 70 68 65 133 52 185 57 242 2% Subutex 51 44 47 91 45 136 50 185 16% Caelyx 43 34 35 70 39 109 40 150 27% Elocon 37 31 34 65 31 96 32 128 18%
1/ Canadian net sales of Claritin are reported in the OTC Claritin line within Consumer Health Care. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 6 SCHERING-PLOUGH CORPORATION CHOLESTEROL FRANCHISE SALES (DOLLARS IN MILLIONS)
2005 2004 --------------------------------------- --------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th 1st Qtr. Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year vs $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1st Qtr. --- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- -------- GLOBAL ZETIA: 1/ 331 189 242 431 294 725 328 1,052 N/M U.S. 269 169 212 381 256 637 274 910 59% International 62 20 30 50 38 88 54 142 N/M GLOBAL VYTORIN: 1/ 2/ 178 - 5 5 50 55 75 131 N/M U.S. 157 - - - 42 42 59 102 N/M International 21 - 5 5 8 13 16 29 N/M GLOBAL CHOLESTEROL: 1/ 509 189 247 436 344 780 403 1,183 N/M U.S. 426 169 212 381 298 679 333 1,012 N/M International 83 20 35 55 46 101 70 171 N/M
1/ Substantially all sales of cholesterol products are not included in the Company's net sales. Global sales include sales under the Merck/Schering-Plough partnership, plus any sales that are not part of the partnership, such as Schering-Plough sales of cholesterol products in Latin America. In the first quarter of 2005 and 2004, sales in non-joint venture territories of the cholesterol franchise totaled $4 and $1, respectively. 2/ Vytorin received first regulatory approval in 2004. The results of the operation of the joint venture are reflected in equity income and have no impact on the Company's gross and other operating margins. The company utilizes the equity method of accounting for the joint venture. The cholesterol agreements provide for the sharing of net income/(loss) based upon percentages that vary by product, sales level and country. In the U.S. market, Schering-Plough receives a greater share of profits on the first $300 of ZETIA sales. Above $300 of ZETIA sales, the companies share profits equally. Schering-Plough's allocation of joint venture income is increased by milestones earned. Further, either partner's share of the joint venture's net income/(loss) is subject to a reduction if the partner fails to perform a specified minimum number of physician details in a particular country. The partners agree annually to the minimum number of physician details by country. All figures rounded. Totals may not add due to rounding. N/M - not a meaningful percentage. Page 7 STATEMENTS OF CONSOLIDATED OPERATIONS (DOLLARS IN MILLIONS) (UNAUDITED)
2005 2004 ----------------------------------------- ----------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ $ $ $ $ $ $ $ ----- ---- ---- ---- ---- ---- ---- ----- --- ----- ----- ----- ----- ----- GEOGRAPHIC SALES U.S. 897 738 827 1,565 800 2,365 854 3,219 EUROPE AND CANADA 1,035 874 972 1,846 820 2,666 929 3,595 LATIN AMERICA 210 174 182 356 204 560 223 782 PACIFIC AREA AND ASIA 227 177 166 343 154 497 178 676 ----- ----- ----- ----- ----- ----- ----- ----- CONSOLIDATED SALES 2,369 1,963 2,147 4,110 1,978 6,088 2,184 8,272 ----- ----- ----- ----- ----- ----- ----- -----
2005 2004 ----------------------------------------- -------------------------------------------------- 1st 2nd 6 3rd 9 4th 1st 2nd 6 3rd 9 4th Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year Qtr. Qtr. Mos. Qtr. Mos. Qtr. Year $ $ $ $ $ $ $ $ $ $ $ $ $ $ ----- ---- ---- ---- ---- ---- ---- ----- ----- ----- ----- ------ ------ ------ CONSOLIDATED SALES GROWTH RATES: As Reported 21% (6%) (7%) (6%) (1%) (5%) 12% (1%) Excluding Exchange 17% (12%) (10%) (11%) (4%) (9%) 8% (5%) OTHER, NET Interest Income $33 $14 $15 $29 $20 $50 $31 $80 Interest Expense (45) (48) (43) (91) (39) (130) (38) (168) FX Gains/(Losses) (4) (1) (4) (4) 0 (4) (1) (5) Other Income/(Expense) (1) (1) (11) (12) (15) (28) (25) (53) --- --- ---- ---- ---- ---- ---- ---- Total - Other, Net ($17) ($36) ($43) ($78) ($34) ($112) ($33) ($146)
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 Page 8 -----END PRIVACY-ENHANCED MESSAGE-----