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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993 Commission file number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer Identification No.)
Madison, New Jersey 07940-1000 201-822-7000
(telephone number)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Shares, $1 par value New York Stock Exchange
Preferred Share Purchase Rights* New York Stock Exchange
*At the time of filing, the Rights were not traded separately from the Common
Shares.
Indicate by check mark whether the registrant has filed all reports required to
be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and has been
subject to such filing requirements for the past
90 days.
YES_X__ NO____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.__X_
Common shares outstanding as of January 31, 1994: 193,606,197
Aggregate market value of common shares at January 31, 1994 held by
non-affiliates based on
closing price: $12.1 billion.
Documents incorporated Part of Form 10-K
by reference incorporated into
Schering-Plough Corporation 1993
Annual Report to Shareholders Parts I, II, and IV
Schering-Plough Corporation Proxy
Statement for the annual meeting of
shareholders on April 26, 1994 Part III
Part I
Item 1. Business
General
Schering-Plough*, incorporated in 1970, is a worldwide company engaged in
the research, development, manufacturing and marketing of pharmaceutical
and health care products. Products include prescription drugs, vision
care, animal health, over-the-counter (OTC), foot care and sun care
products.
Business Segment and Other Financial Information
The "Business Segment Data" as set forth in the Notes to Consolidated
Financial Statements in the Company's 1993 Annual Report to Shareholders
is incorporated herein by reference.
Sales by major product groups for each of the three years in the period
ended December 31, 1993 were as follows (dollars in millions):
1993 1992 1991
Respiratory $1,185 $1,063 $ 986
Anti-infective and Anticancer 1,032 906 629
Dermatologicals 443 451 416
Cardiovasculars 316 267 238
Other Pharmaceuticals 399 405 345
OTC 312 346 376
Foot Care 240 214 218
Animal Health 154 157 141
Sun Care 131 117 113
Vision Care 112 111 140
Other Health Care Products 17 19 14
Consolidated Sales $4,341 $4,056 $3,616
Pharmaceutical Products
The Company's pharmaceutical operations include prescription drugs,
vision care products and animal health products. Principal prescription
products include: CELESTAMINE, CLARITIN, POLARAMINE, PROVENTIL, THEO-
DUR, TRINALIN, VANCENASE and VANCERIL, respiratory; CEDAX, EULEXIN,
GARAMYCIN, INTRON A, ISEPACIN and NETROMYCIN, anti-infective and
anticancer; DIPROLENE, DIPROSONE, ELOCON, FULVICIN, LOTRIMIN, LOTRISONE,
QUADRIDERM and VALISONE, dermatologicals; K-DUR, NITRO-DUR and NORMODYNE,
cardiovascular; CELESTONE, DIPROSPAN, LOSEC, NOIN, PALACOS and TRILAFON,
other pharmaceuticals.
* As used herein, the term "Schering-Plough" or "Company" refers to
Schering-Plough Corporation and its consolidated subsidiaries
unless the context indicates otherwise.
Item 1. Business (continued)
The Company's major vision care product line is contact lenses sold under
the DURASOFT trademark. The leading product within the DURASOFT line is
DURASOFT Colors, a soft lens that can alter the appearance of eye color.
Also, in early 1994 the Company received marketing clearance from the
U.S. Food and Drug Administration for its FRESHLOOK line of disposable
contact lenses. Animal health biological and pharmaceutical products
include antibiotics, vaccines, anti-arthritics, steroids and
nutritionals. Major animal health products are: GENTOCIN and GARASOL,
antibiotics, and BANAMINE, an anti-arthritic.
Pharmaceutical products also include pharmaceutical chemical substances
sold in bulk to third parties for production of their own products.
Prescription drugs are introduced and made known to physicians,
pharmacists, hospitals and managed care organizations by trained
professional service representatives, and are sold to hospitals, managed
care organizations and wholesale and retail druggists. Pharmaceutical
products are also promoted through journal advertising, direct mail
advertising and by distributing samples to physicians. Vision care
products are promoted and sold by a separate sales force to practitioners
and retail outlets. Animal health products are promoted and sold by a
separate sales force to veterinarians, distributors and animal producers.
To meet the anticipated worldwide need for its biotechnology-based
pharmaceutical compounds, the Company is expanding its manufacturing
facility in Brinny, Ireland. The total cost of the expansion is
expected to be approximately $160 million. The Company is also expanding
its Rathdrum, Ireland manufacturing operation to meet increasing demands.
The overall cost of this project is expected to approximate $78 million.
The Company's subsidiaries own (or have licensed rights under) a number
of patents and patent applications, both in the United States and abroad.
In the aggregate, patents and patent applications are believed to be of
material importance to the operations of the pharmaceutical segment. In
December 1989, the U.S. patent covering PROVENTIL, an asthma product,
expired. The PROVENTIL formulations of the tablet, syrup and solution
have been subject to generic competition. In January 1994, the Food and
Drug Administration issued bioequivalence standards for generic albuterol
metered dose inhalers, which may result in generic inhaler entries late
in 1994. The introduction of a generic inhaler will negatively affect
the sales and profitability of PROVENTIL.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and is
expected to be available to the Company in sufficient quantities to meet
operating requirements.
Worldwide, the Company's pharmaceutical products are sold under
trademarks. Trademarks are considered in the aggregate to be of material
importance to the pharmaceutical business and are protected by
registration or common law in the United States and most other markets
where the products are sold or likely to be sold.
Item 1. Business (continued)
Seasonal patterns do not have a pronounced effect on the combined
activities of this industry segment.
There is generally no significant backlog of orders since the Company's
business is normally conducted on an immediate shipment basis.
The pharmaceutical industry is highly competitive and includes other
large companies with substantial resources for research, product
development and promotion. There are numerous domestic and international
competitors in this industry. Some of the principal competitive
techniques used by the Company for its pharmaceutical products include
research and development of new and improved products, product quality,
varied dosage forms and strengths, and educational services for the
medical community.
Health Care Products
The principal product categories in the health care segment are the
Company's over-the-counter (OTC) medicines, foot care and sun care
products primarily sold in the United States. Principal products
include: AFRIN and DURATION nasal decongestants; CHLOR-TRIMETON
antihistamine; CORICIDIN and DRIXORAL cold and decongestant tablets;
CORRECTOL laxative; CLEAR AWAY and DUO BRAND wart remover; DI-GEL
antacid; GYNE-LOTRIMIN and FEMCARE for vaginal yeast infections; DR.
SCHOLL'S foot care products; LOTRIMIN AF and TINACTIN antifungals;
COPPERTONE, QT, SHADE, SOLARCAINE and TROPICAL BLEND sun care products; A
and D ointment; and PAAS egg coloring and holiday products. Business in
this segment is conducted through wholesale and retail drug, food chain
and variety outlets, and is promoted directly to the consumer through
television, radio, print and other advertising media.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and is
expected to be available to the Company in sufficient quantities to meet
operating requirements.
Trademarks for the major products included in this segment are registered
in the United States and most overseas countries where these products are
marketed. Trademarks are considered to be vital to the operations of
this segment.
Principally due to the seasonal sales of sun care products, operating
profits in this segment are relatively higher in the first half of the
year.
There is generally no significant backlog of orders since the Company's
business is normally conducted on an immediate shipment basis.
The health care products' industry is highly competitive and includes
other large companies with substantial resources for product development
and promotion. There are several dozen significant competitors in this
industry. The Company believes that in the United
Item 1. Business (continued)
States it has a leading position in the foot care and sun care
industries, with its DR. SCHOLL'S lines of foot pads, cushions, wart
removal and other treatments and its brands of sun care products. In
addition, the Company's brands are among the leaders in nasal sprays,
laxatives, antifungals and vaginal yeast infection treatments sold OTC.
The principal competitive techniques used by the Company in this industry
segment include switching prescription products to OTC medicines, the
development and introduction of new and improved products, and product
promotion methods to gain and retain consumer acceptance.
Foreign Operations
Foreign activities are carried out primarily through wholly-owned
subsidiaries wherever market potential is adequate and circumstances
permit. In addition, the Company is represented in some markets through
joint ventures, licensees or other distribution arrangements. There are
approximately 11,200 employees outside the United States.
Foreign operations are subject to certain risks which are inherent in
conducting business overseas. These risks include possible national-
ization, expropriation, importation limitations and other restrictive
governmental actions. Also, fluctuations in foreign currency exchange
rates can significantly impact the Company's consolidated financial
results. For additional information on foreign operations, see
"Management's Discussion and Analysis of Operations and Financial
Condition" and "Business Segment Data" in the Company's 1993 Annual
Report to Shareholders which is incorporated herein by reference.
Operations in Puerto Rico
The Company has operations in Puerto Rico that manufacture products for
distribution to both domestic and foreign markets. These businesses
operate under tax-relief and other incentives granted by the government
of Puerto Rico that expire at various dates through 2018.
The Company has also been exempt from U.S. tax on certain income derived
from its operations in Puerto Rico. The Omnibus Budget Reconciliation
Act of 1993 will phase down this exemption over the next five years to 40
percent of the pre-amendment level. The Company will be partially
impacted by this change in 1994.
Under present U.S. tax laws, accumulated funds generated from operations
in Puerto Rico can be remitted tax-free to the parent company. Under
recently revised Puerto Rico tax laws, remittance of these funds, with
the exception of certain amounts qualifying for tax free distribution,
will result in a tollgate tax of from 5 percent to 10 percent based upon
prescribed dividend and investment restrictions.
For additional information relating to the Puerto Rico operations, see
"Income Taxes" in the Notes to Consolidated Financial Statements in the
Company's 1993 Annual Report to Shareholders which is incorporated herein
by reference.
Item 1. Business (continued)
Research and Development
The Company's research activities are primarily aimed at discovering and
developing new and enhanced pharmaceutical products of medical and
commercial significance. Company sponsored research and development
expenditures were $577.6 million, $521.5 million and $425.9 million in
1993, 1992, and 1991, respectively. Research expenditures represented
approximately 13 percent of consolidated sales in 1993 and 1992 and 12
percent in 1991.
The Company's pharmaceutical research activities are concentrated in the
therapeutic areas of allergic and inflammatory disorders, infectious and
cardiovascular diseases, oncology and central nervous system disorders.
The Company also has substantial efforts directed toward biotechnology
and immunology.
While several pharmaceutical compounds are in varying stages of
development, it cannot be predicted when or if products will become
available for commercial sale.
Government Regulation
Most products manufactured or sold by the Company are subject to varying
degrees of governmental regulation in the countries in which operations
are conducted. In the United States, the drug industry has long been
subject to regulation by various federal, state and local agencies,
primarily as to product safety, efficacy, advertising and labeling.
Compliance with the broad regulatory powers of the Food and Drug
Administration (the "FDA") requires significant amounts of Company time,
testing and documentation, and corresponding costs to obtain clearance of
new drugs. Similar product regulations also apply in many international
markets.
In the United States, many of the Company's pharmaceutical products are
subject to competitive pricing as managed care groups, institutions and
the government seek price discounts. President Clinton's health care
reform proposal includes several measures that, if enacted, will have an
impact on operations of the Company. These measures include, but are not
limited to, the requirement of all health plans to offer prescription
drug coverage, the extension of Medicare coverage to include outpatient
drugs, and rebates on Medicare sales. In addition, prices of new drugs
would be reviewed with the Secretary of Health and Human Services, who
would be empowered to deny Medicare reimbursement for those drugs deemed
too expensive.
In most international markets, the Company operates in an environment of
government-mandated cost containment programs. In addition, several
markets have enacted across-the-board price reductions or directly
control selling prices as a further method of cost control. Currently, a
number of other international markets are reviewing the implementation of
additional programs to contain health care costs.
For additional information on prescription drug pricing, see
"Management's Discussion and Analysis of Operations and Financial
Condition" in the Company's 1993 Annual Report to Shareholders which is
incorporated herein by reference.
Item 1. Business (continued)
The Company has and will continue to comply with the government
regulations of the countries in which operations are conducted.
Environment
To date, compliance with federal, state and local environmental
protection laws has not had a materially adverse effect on the Company.
The Company has and will continue to make necessary expenditures for
environmental protection. Worldwide capital expenditures during 1993
included approximately $31.7 million for environmental control purposes.
It is anticipated that continued compliance with such environmental
regulations will not significantly affect the Company's financial
condition, results of operations or its competitive position. For
additional information on environmental matters, see "Legal and
Environmental Matters" in the Notes to the Consolidated Financial
Statements in the Company's 1993 Annual Report to Shareholders which is
incorporated herein by reference.
Employees
There were approximately 21,600 people employed by the Company at
December 31, 1993.
Item 2. Properties
The Company's corporate headquarters are located in Madison, New Jersey.
Principal manufacturing facilities are located in Kenilworth and Union,
New Jersey, Des Plaines, Illinois, Miami, Florida, the Commonwealth of
Puerto Rico, Argentina, Australia, Belgium, Canada, Colombia, France,
Ireland, Italy, Japan, Mexico and Spain (pharmaceutical products);
Cleveland and Memphis, Tennessee (health care products). The Company's
principal research facilities are located in Kenilworth and Union, New
Jersey and Palo Alto, California (DNAX Research Institute).
The major portion of properties is owned by the Company. These
properties are maintained in good operating condition, and the
manufacturing plants have capacities considered appropriate to meet the
Company's needs.
Item 3. Legal Proceedings
Schering Corporation and White Laboratories, Inc., which are Company
subsidiaries, are defendants in approximately 95 lawsuits, involving
approximately 140 plaintiffs, arising out of the use of synthetic
estrogens by the mothers of the plaintiffs. In many of these lawsuits, a
substantial number of other drug companies are also defendants. The
female plaintiffs claim various injuries, including cancerous or
precancerous lesions of the vagina and cervix and a multiplicity of
pregnancy problems. A number of suits involve infants with birth defects
born to daughters whose mothers took the drug. The total amount claimed
against all defendants in all the suits amounts to approximately $750
million. While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that the ultimate
liability, if any, will not have a material impact on the Company's
consolidated financial position or results of operations.
Item 3. Legal Proceedings (continued)
The Company has been named as a potentially responsible party ("PRP") by
the government under the Comprehensive Environmental Response,
Compensation and Liability Act, commonly known as Superfund. The Company
is also a party to a number of proceedings brought under Superfund.
These proceedings seek to require the owners or operators of facilities
that treated, stored or disposed of hazardous substances and transporters
and generators of such substances to clean up contaminated facilities or
reimburse the government for its clean up costs. The Company has been
named a PRP or a party to these proceedings as an alleged generator of
hazardous substances found at certain facilities. In each proceeding,
the government or private litigants allege that the Company is jointly
and severally liable for clean up costs. Although joint and several
liability is alleged, a company's share of clean up costs is frequently
determined on the basis of the type and quantity of hazardous substances
sent to a facility by the generator. However, this allocation process
varies greatly from facility to facility and can take years to complete.
The Company's potential share of clean up costs also depends on how many
other parties are involved in the proceedings, insurance coverage,
available indemnity contracts and contribution rights against other
parties. While it is not feasible to predict or determine the outcome of
these proceedings, in the opinion of management, such proceedings should
not ultimately result in a liability which would have a material adverse
effect on the Company's consolidated financial position or results of
operations.
The Company is a defendant in approximately sixty antitrust lawsuits
filed in several states and federal courts, including California,
Georgia, Illinois, Louisiana, Minnesota, New York, Pennsylvania, South
Carolina and Texas. More than fifty of these are class action lawsuits.
These actions were commenced in the second half of 1993 and in 1994 by
independent and chain pharmacies against the Company and other
pharmaceutical manufacturers, and in some instances, wholesalers and mail
order pharmacies, alleging (1) conspiracy to restrain trade by jointly
refusing to sell pharmaceuticals at discounted prices to plaintiffs,
and/or (2) price discrimination. The federal cases have all been
consolidated in the United States District Court for the Northern
District of Illinois for pretrial and discovery purposes. Plaintiffs
seek treble damages in an unspecified amount and an injunction against
the allegedly unlawful conduct. The Company has not conspired to
restrain trade and believes that its pricing practices have been and are
in compliance with the law. The Company will defend itself vigorously
against the claims in all these actions. While it is not feasible to
predict or determine the outcome of these actions, management believes
that such actions should not result in any liability which would have a
material adverse effect on the Company's consolidated financial position
or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
The following information regarding executive officers is included
herein in accordance with Part III, Item 10.
Officers are elected to serve for one year and until their successors
shall have been duly elected.
Name and Current Position Business Experience Age
Robert P. Luciano Present position 1986 60
Chairman and
Chief Executive Officer
Richard J. Kogan Present position 1986 52
President and
Chief Operating Officer
David E. Collins Present position 1989; President 59
Executive Vice President and Chief Operating Officer - Galen
and President Associates, Inc. 1988-1989
Schering-Plough
HealthCare Products
Donald R. Conklin Present position 1989; Executive 57
Executive Vice President Vice President - Pharmaceutical
and President Operations 1987-1989
Schering-Plough
Pharmaceuticals
Hugh A. D'Andrade Present position 1984 55
Executive Vice President
Administration
Harold R. Hiser, Jr. Present position 1986 62
Executive Vice President
Finance
Joseph C. Connors Present position 1992; Vice 45
Senior Vice President President and General Counsel
and General Counsel 1991; Staff Vice President and
Deputy General Counsel 1987-1991
Allan S. Kushen Present position 1981 64
Senior Vice President
Public Affairs
Daniel A. Nichols Present position 1991; Vice 53
Senior Vice President President Taxes 1983-1991
Taxes
Executive Officers of the Registrant (continued)
Name and Current Position Business Experience Age
Gordon C. O'Brien Present position 1988 53
Senior Vice President
Human Resources
J. Martin Comey Present position 1991; Vice 59
Vice President President and Treasurer
Administration and Business 1979-1990
Development
John T. Fogarty Present position 1990; Staff 64
Vice President, Secretary Vice President and Secretary
and Associate General Counsel 1980-1989
Geraldine U. Foster Present position 1988 51
Vice President
Investor Relations
Domenic Guastadisegni Present position 1990; Staff 63
Vice President Vice President - Corporate Audits
Corporate Audits 1980-1989
Thomas H. Kelly Present position 1991; Partner, 44
Vice President and Deloitte & Touche 1982-1990
Controller
Robert S. Lyons Present Position 1991; Staff 53
Vice President Vice President - Corporate
Corporate Information Information Services 1988-1990
Services
Jack L. Wyszomierski Present position 1991; Staff 38
Vice President and Vice President - Planning
Treasurer and Business Development
1987-1990
Part II
Item 5.Market for Registrant's Common Equity and Related Stockholder
Matters
The Common Share Dividends and Market Data as set forth in the Company's
1993 Annual Report to Shareholders are incorporated herein by reference.
Item 6.Selected Financial Data
The Six-Year Selected Financial and Statistical Data as set forth in the
Company's 1993 Annual Report to Shareholders is incorporated herein by
reference.
Item 7.Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's Discussion and Analysis of Operations and Financial
Condition as set forth in the Company's 1993 Annual Report to
Shareholders is incorporated herein by reference.
Item 8.Financial Statements and Supplementary Data
The Consolidated Balance Sheets as of December 31, 1993 and 1992, and the
related Statements of Consolidated Income, Consolidated Retained Earnings
and Consolidated Cash Flows for each of the three years in the period
ended December 31, 1993, Notes to Consolidated Financial Statements, the
Independent Auditors' Report of Deloitte & Touche and Quarterly Results
of Operations, as set forth in the Company's 1993 Annual Report to
Shareholders, are incorporated herein by reference.
Item 9.Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Part III
Item 10.Directors and Executive Officers of the Registrant
The information concerning directors and nominees for directors as set
forth in the Company's Proxy Statement for the annual meeting of share-
holders on April 26, 1994 is incorporated herein by reference.
Information required as to executive officers is included in Part I of
this filing under the caption "Executive Officers of the Registrant."
Item 11.Executive Compensation
Executive compensation information as set forth in the Company's Proxy
Statement for the annual meeting of shareholders on April 26, 1994 is
incorporated herein by reference.
Item 12.Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners
and management as set forth in the Company's Proxy Statement for the
annual meeting of shareholders on April 26, 1994 is incorporated herein
by reference.
Item 13.Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions as
set forth in the Company's Proxy Statement for the annual meeting of
shareholders on April 26, 1994 is incorporated herein by reference.
Part IV
Item 14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1.Financial Statements
The following consolidated financial statements and independent auditors'
report, included in the Company's 1993 Annual Report to Shareholders, are
incorporated herein by reference.
Statements of Consolidated Income for the
Years Ended December 31, 1993, 1992 and 1991
Statements of Consolidated Retained Earnings for
the Years Ended December 31, 1993, 1992 and 1991
Statements of Consolidated Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991
Consolidated Balance Sheets at December 31, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2.Financial Statement Schedules
Page in
Form 10-K
Independent Auditors' Report . . . . . . . . . . . . 18
Schedule I - Marketable Securities - Other
Investments. . . . . . . . . . . . . . . . . . . . 19
Schedule V - Property, Plant and Equipment . . . . . 20
Schedule VI - Accumulated Depreciation of
Property, Plant and Equipment. . . . . . . . . . . 21
Schedule VIII - Valuation and Qualifying Accounts. . 22
Schedule IX - Short-term Borrowings. . . . . . . . . 23
Schedule X - Supplementary Income Statement
Information. . . . . . . . . . . . . . . . . . . . 24
Item 14. (continued)
(a) 2.Financial Statement Schedules (continued)
Schedules not included have been omitted because they are not applicable
or not required or because the required information is set forth in the
financial statements or the notes thereto. Columns omitted from
schedules filed have been omitted because the information is not
applicable.
Financial statements of fifty percent or less owned companies accounted
for by the equity method have been omitted because, considered
individually or in the aggregate, they do not constitute a significant
subsidiary.
(a) 3. Exhibits
Exhibit Method
Number Description of Filing
3(a) A complete copy of the Certificate Incorporated by
of Incorporation as amended and reference to Exhibit
currently in effect. 3(a) to the Company's
Annual Report for 1989
on Form 10-K
3(b) A complete copy of the By-Laws Incorporated by
as amended and currently in effect. reference to Exhibit
4(b) to the Company's
Form S-8 (No. 33-
19013)
4(a) Rights Agreement between the Incorporated by
Company and The Bank of New York reference to Exhibit 4
dated July 25, 1989. to the Company's
Quarterly Report for
the period ended
June 30, 1989 on
Form 10-Q
4(b) Indenture dated as of November 1, Incorporated by
1982 between the Company and The reference to Exhibit
Chase Manhattan Bank, N.A. as 4(a) to the Company's
Trustee. Registration Statement
on Form S-3, File No.
2-80012
4(c) Supplemental Indenture No. 1 Incorporated by
dated as of November 1, 1991 reference to Exhibit 4.1
to Indenture dated as of to the Company's Report
November 1, 1982. on Form 8-K dated
November 20, 1991
4(d) LYNX Equity Unit Agreement Incorporated by
reference to Exhibit
10.1 to the Company's
Report on Form 8-K dated
October 1, 1991
Item 14. (continued)
(a) 3. Exhibits (continued)
Exhibit Method
Number Description of Filing
4(e) LYNX Equity Unit Guarantee Incorporated by
Agreement reference to Exhibit
10.1 to the Company's
Report on Form 8-K dated
October 1, 1991
10(a) The Company's Executive Incentive Plan incorporated by
Plan (as amended) and Trust related reference to Exhibit
thereto 10(a) to the Company's
Annual Report for 1991
on Form 10-K. Trust
Agreement incorporated
by reference to Exhibit
10(a) to the Company's
Annual Report for 1988
on Form 10-K
10(b) The Company's 1983 Stock Incentive Incorporated by
Plan (as amended) reference to Exhibit
10(c) to the Company's
Annual Report for 1988
on Form 10-K
10(c) The Company's 1987 Stock Incentive Incorporated by
Plan (as amended) reference to Exhibit
10(d) to the Company's
Annual Report for 1990
on Form 10-K
10(d) The Company's 1992 Stock Incentive Incorporated by
Plan (as amended) reference to Exhibit
10(d) to the Company's
Annual Report for 1992
on Form 10-K
10(e)(i) Employment agreement between the Incorporated by
Company and Robert P. Luciano reference to Exhibit
10(e)(i) to the
Company's Annual Report
for 1989 on Form 10-K
10(e)(ii) Employment agreement between the Incorporated by
Company and Richard J. Kogan reference to Exhibit
10(e)(ii) to the
Company's Annual Report
for 1989 on Form 10-K
10(e)(iii) Employment agreement between the Incorporated by
Company and David E. Collins reference to Exhibit
10(e)(iv) to the
Company's Annual Report
for 1989 on Form 10-K
Item 14. (continued)
(a) 3. Exhibits (continued)
Exhibit Method
Number Description of Filing
10(e) Agreements between the Company and Incorporated by
(iv) certain executive officers related reference to Exhibit
to termination payments 10(e)(v) to the
Company's Annual Report
for 1989 on Form 10-K
10(f) Directors Deferred Compensation Plan incorporated by
Plan and Trust related thereto reference to Exhibit 10
(f) to the Company's
Annual Report for 1991
on Form 10-K. Trust
Agreement incorporated
by reference to Exhibit
10(a) to the Company's
Annual Report for 1988
on Form 10-K
10(g) Pension Plan for Directors Plan incorporated by
and Trust related thereto reference to Exhibit
10(g) to the Company's
Annual Report for 1987
on Form 10-K; Trust
Agreement incorporated
by reference to Exhibit
10(g) to the Company's
Annual Report for 1988
on Form 10-K; Amendment
to Trust Agreement filed
with this document
10(h) Supplemental Executive Retirement Plan incorporated by
Plan and Trust related thereto reference to Exhibit
10(h) to the Company's
Annual Report for 1987
on Form 10-K; Trust
Agreement incorporated
by reference to Exhibit
10(g) to the Company's
Annual Report for 1988
on Form 10-K; Amendment
to Trust Agreement filed
with this document in
10(g) above
10(i) Directors Stock Award Plan Incorporated by
reference to Exhibit
10(i) to the Company's
Annual Report for 1988
on Form 10-K
11 Computation of Earnings Per Filed with this document
Common Share
Item 14. (continued)
(a) 3. Exhibits (continued)
Exhibit Method
Number Description of Filing
12 Computation of Ratio of Filed with this document
Earnings to Fixed charges
13 The Financial Section of the Filed with this document
Company's 1993 Annual Report
to Shareholders. With the
exception of those portions of
said Annual Report which are
specifically incorporated by
reference in this Form 10-K, such
report shall not be deemed filed
as part of this Form 10-K
22 Subsidiaries of the registrant Filed with this document
24 Consents of experts and counsel Filed with this document
25 Power of attorney Filed with this document
All other exhibits are not applicable. Copies of above exhibits
will be furnished upon request.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Schering-Plough Corporation
(Registrant)
Date March 4, 1994 By /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
By * By *
Robert P. Luciano Regina E. Herzlinger
Chairman and Chief Executive Director
Officer and Director
By * By *
Richard J. Kogan H. Barclay Morley
President and Chief Operating Director
Officer and Director
By * By *
Harold R. Hiser, Jr. Richard de J. Osborne
Executive Vice President - Finance Director
and Principal Financial Officer
By * By *
Thomas H. Kelly William A. Schreyer
Vice President and Controller Director
and Principal Accounting Officer
By * By *
Hans W. Becherer Robert F. W. van Oordt
Director Director
By * By *
Hugh A. D'Andrade R. J. Ventres
Director Director
By * By *
Virginia A. Dwyer James Wood
Director Director
By *
David C. Garfield
Director
*By /s/ Thomas H. Kelly Date March 4, 1994
Thomas H. Kelly
Attorney-in-fact
INDEPENDENT AUDITORS' REPORT
Schering-Plough Corporation:
We have audited the consolidated balance sheets of Schering-Plough
Corporation and subsidiaries as of December 31, 1993 and 1992 and
the related statements of consolidated income, retained earnings and
cash flows for each of the three years in the period ended December
31, 1993, and have issued our report thereon dated February 15,
1994; such financial statements and report are included in your 1993
Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the financial statement
schedules of Schering-Plough Corporation and subsidiaries, listed in
Item 14. These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express our
opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
/s/DELOITTE & TOUCHE
Parsippany, New Jersey
February 15, 1994
Schedule I
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
MARKETABLE SECURITIES - OTHER INVESTMENTS
DECEMBER 31, 1993
(Dollars in millions)
Name of Issuer Amount at Which Market Value
or Title of Principal Carried in at Balance
Each Group Amount Balance Sheet Sheet Date
Short-Term Investments:
Santander Federal Savings
Bank certificates
of deposit (a) $100.0 $100.2 $100.2
Municipal obligations 85.0 92.0 92.0
Other investments 15.0 15.0 15.0
Total $200.0 $207.2 $207.2
(a) Collateralized by United States government obligations.
SCHEDULE V
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in millions)
BALANCE AT BALANCE
BEGINNING ADDITIONS RETIREMENTS TRANSLATION AT END
CLASSIFICATION OF YEAR AT COST OR SALES ADJUSTMENTS OF YEAR
1993
Land $ 47.5 $ - $ (.2) $ (.2) $ 47.1
Buildings and
improvements 978.0 402.3 (56.2) (4.3) 1,319.8
Equipment 1,007.2 182.2 (35.8) (7.0) 1,146.6
Construction in
progress 546.8 (219.3) (1.6) (.5) 325.4
TOTAL $2,579.5 $ 365.2 $ (93.8) $(12.0) $2,838.9
1992
Land $ 44.2 $ 4.9 $ (1.2) $ (.4) $ 47.5
Buildings and
improvements 922.3 77.3 (13.3) (8.3) 978.0
Equipment 952.3 120.7 (54.4) (11.4) 1,007.2
Construction in
progress 349.2 200.3(a) (.5) (2.2) 546.8
TOTAL $2,268.0 $ 403.2 $ (69.4) $(22.3) $2,579.5
1991
Land $ 43.2 $ .9 $ - $ .1 $ 44.2
Buildings and
improvements 884.5 51.1 (14.0) .7 922.3
Equipment 887.7 100.8 (36.6) .4 952.3
Construction in
progress 165.1 186.6(a) (2.6) .1 349.2
TOTAL $1,980.5 $ 339.4 $ (53.2) $ 1.3 $2,268.0
(a) Additions to construction in progress are net of transfers to other plant and
equipment classifications for those construction projects completed during the year.
Depreciation is provided over the estimated useful lives of the assets, generally by use
of the straight-line method. Service lives used in the determination of depreciation
expense are as follows: buildings and improvements - 20 to 50 years; manufacturing
equipment - 10 to 15 years; furniture and fixtures (equipment) - 6 to 12 years; and
automotive equipment - 3 to 10 years.
PAGE
SCHEDULE VI
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in millions)
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND RETIREMENTS TRANSLATION AT END
DESCRIPTION OF YEAR EXPENSES OR SALES ADJUSTMENTS OF YEAR
1993
Buildings and
improvements $ 338.7 $ 35.3 $ (51.0) $ (1.4) $ 321.6
Equipment 492.3 91.6 (31.4) (2.9) 549.6
TOTAL $ 831.0 $ 126.9 $ (82.4) $ (4.3) $ 871.2
1992
Buildings and
improvements $ 323.2 $ 36.2 $ (17.6) $ (3.1) $ 338.7
Equipment 454.4 83.6 (40.6) (5.1) 492.3
TOTAL $ 777.6 $ 119.8 $ (58.2) $ (8.2) $ 831.0
1991
Buildings and
improvements $ 293.9 $ 39.1 $ (10.3) $ .5 $ 323.2
Equipment 402.2 75.7 (23.9) .4 454.4
TOTAL $ 696.1 $ 114.8 $ (34.2) $ .9 $ 777.6
_______________________________________________________________________________
/TABLE
SCHEDULE VIII SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
(Dollars in millions)
Valuation and qualifying accounts deducted from assets to which they apply:
Allowances for accounts receivable:
RESERVE RESERVE RESERVE
FOR DOUBTFUL FOR CASH FOR CLAIMS
ACCOUNTS DISCOUNTS AND OTHER TOTAL
1993
Balance at beginning of year $ 32.5 $ 9.0 $ 1.8 $ 43.3
Additions:
Charged to costs and expenses 5.1 54.3 16.1 75.5
Total 37.6 63.3 17.9 118.8
Translation adjustment (1.1) (.1) - (1.2)
Deductions from reserves (6.0) (55.3) (11.4) (72.7)
Balance at end of year $ 30.5 $ 7.9 $ 6.5 $ 44.9
1992
Balance at beginning of year $ 33.4 $ 6.8 $ 4.3 $ 44.5
Additions:
Charged to costs and expenses 20.5 50.9 5.0 76.4
Total 53.9 57.7 9.3 120.9
Translation adjustment (1.6) (.1) (.1) (1.8)
Deductions from reserves (19.8) (48.6) (7.4) (75.8)
Balance at end of year $ 32.5 $ 9.0 $ 1.8 $ 43.3
1991
Balance at beginning of year $ 39.1 $ 5.9 $ 2.6 $ 47.6
Additions:
Charged to costs and expenses 4.6 46.2 10.3 61.1
Total 43.7 52.1 12.9 108.7
Translation adjustment (.1) (.1) - (.2)
Deductions from reserves (10.2) (45.2) (8.6) (64.0)
Balance at end of year $ 33.4 $ 6.8 $ 4.3 $44.5
/TABLE
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
SCHEDULE IX SHORT-TERM BORROWINGS (a)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in millions)
WEIGHTED MAXIMUM AVERAGE WEIGHTED
CATEGORY OF AVERAGE AMOUNT AMOUNT AVERAGE
AGGREGATE INTEREST OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM BALANCE AT RATE AT DURING THE DURING THE DURING THE
BORROWINGS DEC. 31 DEC. 31 YEAR YEAR (b) YEAR (c)
1993
Commercial paper $961.4 3.3 % $1,025.9 $996.1 3.1 %
Bank loans and
notes payable $112.0 5.7 % $ 202.9 $163.0 7.8 %
1992
Commercial paper $715.8 3.4 % $1,153.0 $840.2 3.7 %
Bank loans and
notes payable $229.6 9.8 % $ 345.5 $153.1 9.0 %
1991
Commercial paper $396.0 4.8 % $ 692.3 $559.7 6.1 %
Bank loans and
notes payable $209.6 8.5 % $ 245.8 $225.9 9.3 %
____________________________________________________________________________________
(a)Excludes the current portion of long-term debt.
(b)For commercial paper, represents average of daily balances outstanding; for
bank loans and notes payable, represents average of quarterly balances outstanding.
(c)Computed by dividing interest costs for the year by the average balance
outstanding during the year.
/TABLE
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in millions)
CHARGED TO
COSTS AND EXPENSES
1993 1992 1991
Maintenance and repairs $ 84.1 $ 77.2 $ 71.4
Royalties 101.9 92.9 45.3
Advertising costs 317.1 308.4 289.8
________________________________________________________________