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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, 1996 Commission file
number 1-6571
SCHERING-PLOUGH CORPORATION
Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer
Madison, New Jersey 07940-1000 Identification No.)
(201) 822-7000 (telephone number)
Securities registered pursuant to section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Shares, $1 par value New York Stock Exchange
Preferred Share Purchase Rights* New York Stock Exchange
*At the time of filing, the Rights were not traded separately
from the Common Shares.
Indicate by check mark whether the registrant has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and has been subject to such filing requirements for the past 90
days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Common shares outstanding as of January 31, 1997: 365,597,802
Aggregate market value of common shares at January 31, 1997 held
by non-affiliates based on closing price: $27.6 billion.
Part of Form 10-K
Documents incorporated by reference incorporated into
Schering-Plough Corporation 1996 Parts I, II and IV
Annual Report to Shareholders
Schering-Plough Corporation Proxy Part III
Statement for the annual meeting of
shareholders on April 22, 1997
Part I
Item 1. Business
General
The terms "Schering-Plough" and the "Company," as used herein,
refer to Schering-Plough Corporation and its subsidiaries, except
as otherwise indicated by the context. Schering-Plough
Corporation is a holding company which was incorporated in 1970.
Subsidiaries of Schering-Plough Corporation are engaged in the
discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide. Products
include prescription drugs, animal health, over-the-counter
(OTC), foot care and sun care products.
Business Segment and Other Financial Information
The "Business Segment Data" as set forth in the Notes to
Consolidated Financial Statements in the Company's 1996 Annual
Report to Shareholders is incorporated herein by reference. Sales
by major product groups for continuing operations for each of the
three years in the period ended December 31, 1996 were as follows
(dollars in millions):
1996 1995 1994
Allergy/Respiratory $2,113 $1,834 $1,465
Anti-infective and Anticancer 1,135 1,031 939
Dermatologicals 560 515 488
Cardiovasculars 533 408 333
Other Pharmaceuticals 512 493 489
OTC 210 250 264
Foot Care 261 240 248
Animal Health 196 190 167
Sun Care 123 127 129
Other Health Care Products 13 16 15
Consolidated Sales $5,656 $5,104 $4,537
Pharmaceutical Products
The Company's pharmaceutical operations include prescription
drugs and animal health products. Prescription products include:
CELESTAMINE, CLARITIN, CLARITIN-D, POLARAMINE, PROVENTIL, THEO-
DUR, TRINALIN, VANCENASE and VANCERIL, allergy/respiratory;
CEDAX, EULEXIN, GARAMYCIN, INTRON A, ISEPACIN and NETROMYCIN,
anti-infective and anticancer; DIPROLENE, DIPROSONE, ELOCON,
LOTRISONE, QUADRIDERM and VALISONE, dermatologicals; IMDUR,K-DUR,
NITRO-DUR and NORMODYNE, cardiovasculars; CELESTONE, DIPROSPAN,
LOSEC, NOIN, and PALACOS, other pharmaceuticals. Animal health
biological and pharmaceutical products include antibiotics,
vaccines, anti-arthritics, steroids and nutritionals. Major
animal health products are: GENTOCIN and NUFLOR, antibiotics;
BANAMINE, an anti-arthritic; OTOMAX, a steroid ointment and
OPTIMMUNE, an ophthalmic ointment.
Pharmaceutical products also include pharmaceutical chemical
substances sold in bulk to third parties for production of their
own products.
Prescription drugs are introduced and made known to physicians,
pharmacists, hospitals and managed care organizations by trained
professional service representatives, and are sold to hospitals,
managed care organizations and wholesale and retail druggists.
Pharmaceutical products are also promoted through journal
advertising, direct mail advertising, consumer advertising and by
distributing samples to physicians. Animal health products are
promoted and sold by a separate sales force to veterinarians,
distributors and animal producers.
The Company's subsidiaries own (or have licensed rights under) a
number of patents and patent applications, both in the United
States and abroad. In the aggregate, patents and patent
applications are believed to be of material importance to the
operations of the pharmaceutical segment. In December 1989, the
U.S. patent covering PROVENTIL, an asthma product, expired. In
December 1995, generic metered-dose inhalers entered the
market; the PROVENTIL solution, syrup and tablet formulations had
previously been subject to generic competition. In response to
generic inhaler competition, the Company's generic pharmaceutical
marketing subsidiary, Warrick Pharmaceuticals, launched its own
generic inhaler in December 1995. While generic inhalers
have significantly reduced branded PROVENTIL inhaler sales, the
Warrick inhaler has moderated the decline. In December 1996,
the Company further enhanced its position in the albuterol asthma
market by launching PROVENTIL HFA, a new metered-dose inhaler
that uses an advanced delivery system and a propellant free of
ozone-damaging chlorofluorocarbons. Competition from generic
metered-dose inhalers will, however, continue to negatively
affect future sales and profitability of the PROVENTIL
(albuterol) line of asthma products.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and
is expected to be available to the Company in sufficient
quantities to meet operating requirements.
Worldwide, the Company's pharmaceutical products are sold under
trademarks. Trademarks are considered in the aggregate to be of
material importance to the pharmaceutical business and are
protected by registration or common law in the United States and
most other markets where the products are sold or likely to be
sold.
Seasonal patterns do not have a pronounced effect on the combined
activities of this industry segment
There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.
The pharmaceutical industry is highly competitive and includes
other large companies with substantial resources for research,
product development and promotion. There are numerous domestic
and international competitors in this industry. Some of the
principal competitive techniques used by the Company for its
pharmaceutical products include research and development of new
and improved products, high product quality, varied dosage forms
and strengths, disease management programs, and educational
services for the medical community. In the United States, many
of the Company's pharmaceutical products are subject to
increasingly competitive pricing as managed care groups,
institutions, government agencies and other buying groups seek
price discounts and rebates.
Health Care Products
The product categories in the health care segment are OTC
medicines, foot care and sun care products primarily sold in the
United States. Products include: AFRIN nasal decongestant;
CHLOR-TRIMETON antihistamine; CORICIDIN and DRIXORAL cold and
decongestant products; CORRECTOL laxative; CLEAR AWAY and DUO
FILM wart removers; GYNE-LOTRIMIN for vaginal yeast infections;
DR. SCHOLL'S foot care products; LOTRIMIN AF and TINACTIN
antifungals; COPPERTONE, SHADE and SOLARCAINE sun care products;
A & D ointment; and PAAS egg coloring and holiday products.
Business in this segment is conducted through wholesale and
retail drug, food chain and variety outlets, and is promoted
directly to the consumer through television, radio, print and
other advertising media.
Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and
is expected to be available to the Company in sufficient
quantities to meet operating requirements.
Trademarks for the major products included in this segment are
registered in the United States and most overseas countries where
these products are marketed. Trademarks are considered to be
very important to the operations of this segment.
Principally due to the seasonal sales of sun care products,
operating profits in this segment are relatively higher in the
first half of the year.
There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.
The health care products' industry is highly competitive and
includes other large companies with substantial resources for
product development and promotion. There are several dozen
significant competitors in this industry. The Company believes
that in the United States it has a leading position in the foot
care and sun care industries, with its DR. SCHOLL'S lines of foot
pads, cushions, wart removal and other treatments and its brands
of sun care products. In addition, the Company's brands are
among the leaders in nasal sprays, laxatives and antifungals sold
OTC. The principal competitive techniques used by the Company in
this industry segment include switching prescription products to
OTC medicines, the development and introduction of new and
improved products, and product promotion methods to gain and
retain consumer acceptance.
Foreign Operations
Foreign activities are carried out primarily through wholly-owned
subsidiaries wherever market potential is adequate and circum-
stances permit. In addition, the Company is represented in some
markets through joint ventures, licensees or other distribution
arrangements. There are approximately 11,700 employees outside
the United States.
Foreign operations are subject to certain risks which are
inherent in conducting business overseas. These risks include
possible nationalization, expropriation, importation limitations
and other restrictive governmental actions. Also, fluctuations
in foreign currency exchange rates can impact the Company's
consolidated financial results. For additional information on
foreign operations, see "Management's Discussion and Analysis of
Operations and Financial Condition", "Financial Instruments" and
"Business Segment Data" in the Company's 1996 Annual Report to
Shareholders which is incorporated herein by reference.
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 $722.8
million, $656.9 million, $610.1 million in 1996, 1995, and 1994,
respectively. Research expenditures represented approximately 13
percent of consolidated sales in each of the three years.
The Company's pharmaceutical research activities are concentrated
in the therapeutic areas of allergic and inflammatory disorders,
infectious and cardiovascular diseases, oncology and central
nervous system disorders. The Company also has substantial
efforts directed toward biotechnology, gene therapy and
immunology. Research activities include expenditures for both
internal research efforts and research collaborations with
various partners.
While several pharmaceutical compounds are in varying stages of
development, it cannot be predicted when or if products will
become available for commercial sale.
Government Regulation
Most products manufactured or sold by the Company are subject to
varying degrees of governmental regulation in the countries in
which operations are conducted. In the United States, the drug
industry has long been subject to regulation by various federal,
state and local agencies, primarily as to product safety,
efficacy, advertising and labeling. Compliance with the broad
regulatory powers of the FDA requires significant amounts of
Company time, testing and documentation, and corresponding costs
to obtain clearance of new drugs. Similar product regulations
also apply in many international markets.
In most international markets, the Company operates in an
environment of government-mandated cost-containment programs.
Several governments have placed restrictions on physician
prescription levels and patient reimbursements, emphasized
greater use of generic drugs and enacted across-the-board price
cuts as methods of cost control.
Since the Company is unable to predict the final form and timing
of any future domestic and international governmental or other
health care initiatives, their effect on operations and cash
flows cannot be reasonably estimated.
The Company has and will continue to comply with the government
regulations of the countries in which operations are conducted.
Environment
To date, compliance with federal, state and local environmental
protection laws has not had a materially adverse effect on the
Company. The Company has made and will continue to make
necessary expenditures for environmental protection. Worldwide
capital expenditures during 1996 included approximately $11.1
million for environmental control purposes. It is anticipated
that continued compliance with such environmental regulations
will not significantly affect the Company's financial statements
or its competitive position. For additional information on
environmental matters, see "Legal and Environmental Matters" in
the Notes to the Consolidated Financial Statements in the
Company's 1996 Annual Report to Shareholders which is
incorporated herein by reference.
Employees
There were approximately 20,600 people employed by the Company at
December 31, 1996.
Item 2. Properties
The Company's corporate headquarters is located in Madison, New
Jersey. Principal manufacturing facilities are located in
Kenilworth, New Jersey, Miami, Florida, the Commonwealth of
Puerto Rico, Argentina, Australia, Belgium, Canada, Colombia,
France, Ireland, Italy, Japan, Mexico and Spain (pharmaceutical
products); Cleveland, Tennessee (health care products). Other
manufacturing facilities are located in Omaha, Nebraska. In
addition, a manufacturing facility for pharmaceutical products is
currently under construction in Singapore. This facility is
scheduled for completion in 1997.
The Company's principal research facilities are located in
Kenilworth and Union, New Jersey and Palo Alto, California (DNAX
Research Institute) and San Diego, California (Canji, Inc.).
The major portion of properties are owned by the Company. These
properties are well maintained, adequately insured and in good
operating condition. The Company's manufacturing facilities have
capacities considered appropriate to meet the Company's needs.
Item 3. Legal Proceedings
Subsidiaries of the Company are defendants in 149 lawsuits
involving approximately 600 plaintiffs arising out of the use of
synthetic estrogens by the mothers of the plaintiffs. In
virtually all of these lawsuits, one being an alleged class
action, many other pharmaceutical companies are also named
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
mother took the drug. The total amount claimed against all
defendants in all the suits amounts to more than $2 billion.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of the amount accrued will
be incurred.
The Company is a party to, or otherwise involved in,
environmental clean-ups or proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund, or under equivalent state laws. These
proceedings seek to require the owners or operators of facilities
that treated, stored or disposed of hazardous substances and
transporters and generators of such substances to clean-up
contaminated facilities or reimburse the government or private
parties for their clean-up costs. The Company is alleged to be a
potentially responsible party ("PRP") as an alleged generator of
hazardous substances found at certain facilities. In each
proceeding, the government or private litigants allege that any
one PRP, including the Company, is jointly and severally liable
for clean-up costs. Although joint and several liability is
alleged, a company's share of clean-up costs is frequently
determined on the basis of the type and quantity of hazardous
substances sent to a facility by the generator. However, this
allocation process varies greatly from facility to facility and
can take years to complete. The Company's potential share of
clean-up costs also depends on how many other PRP's are involved
in the proceedings, insurance coverage, available indemnity
contracts and contribution rights against other PRP's or parties.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of amounts accrued will be
incurred.
In 1994, a judgment in the amount of $63.6 million, including
$57.5 million in punitive damages, was entered against the
Company in state court in Portland, Oregon in connection with a
product liability lawsuit involving THEO-DUR. An appeal from the
judgment has been taken. While the success of the appeal cannot
be predicted with certainty, the Company will vigorously pursue
its case through the appellate courts. The Company currently has
insurance coverage for amounts in excess of a $3 million self-
insured retention.
The Company is a defendant in more than 160 antitrust actions
commenced in state and federal courts by independent retail
pharmacies, chain retail pharmacies and consumers. The
plaintiffs allege price discrimination and/or conspiracy between
the Company and other defendants to restrain trade by jointly
refusing to sell prescription drugs at discounted prices to the
plaintiffs. One of the federal cases is a class action on behalf
of approximately two-thirds of all retail pharmacies in the
United States alleging a price-fixing conspiracy. The Company
has agreed to settle the federal class action for a total of
$22.1 million payable over three years. The settlement provides,
among other things, that the Company shall not refuse to grant
discounts on brand-name prescription drugs to a retailer based
solely on its status as a retailer and that, to the extent a
retailer can demonstrate its ability to affect market share of a
Company brand name prescription drug in the same manner as a
managed care organization with which the retailer competes, it
will be entitled to negotiate similar incentives subject to the
rights, obligations, exemptions and defenses of the Robinson-
Patman Act and other laws and regulations. The District Court
approved the settlement of the federal class action on June 21,
1996. In early July, the Seventh Circuit Court of Appeals agreed
to review before trial the District Court's denial of defendant's
summary judgment motion seeking dismissal of all claims by
indirect purchasers of pharmaceutical products in all remaining
cases before the District Court. In addition, the Seventh Circuit
Court of Appeals will hear an appeal by the plaintiffs from the
grant of summary judgment to the wholesaler defendants and an
appeal by certain plaintiffs from the approval of the settlement
by the District Court. Four of the state antitrust cases have
been certified as class actions. Two are class actions on behalf
of certain retail pharmacies in California and Wisconsin, and the
other two are class actions in California and the District of
Columbia, on behalf of certain consumers of prescription
medicine. Plaintiffs seek treble damages in an unspecified amount
and an injunction against the allegedly unlawful conduct. The
Company believes that all the antitrust actions are without merit
and is defending itself vigorously against all such claims.
Another of the actions, which was commenced in June 1994 by a
group of nine chain food stores, including The Great Atlantic and
Pacific Tea Company, Inc. ("A&P"), against three mail order
pharmacies and 16 drug manufacturers, is pending in the United
States District Court for the Northern District of Illinois. Mr.
James Wood, a director of the Company, is an executive officer of
A&P. Mr. Wood does not participate in any review or
deliberations by the Board of Directors relating to this action.
Plaintiffs in all cases seek treble damages and/or penalties in
an unspecified amount and an injunction against the allegedly
unlawful conduct. The Company believes that all these actions
are without merit and is defending itself vigorously against all
such claims.
The Company is a defendant in a state court action in Texas
brought by Foxmeyer Health Corporation, the parent of a
pharmaceutical wholesaler that filed for bankruptcy in August
1996, against another pharmaceutical wholesaler and 11
pharmaceutical companies alleging that the defendants conspired
to drive the plaintiff out of business. Plaintiff is seeking
damages in the amount of $400 million. The Company believes that
this action is without merit and is defending itself vigorously
against all claims.
On March 13, 1996, the Company was notified that the United
States Federal Trade Commission (FTC) is investigating whether
the Company, along with other pharmaceutical companies, conspired
to fix prescription drug prices. The Company has produced a
substantial amount of documentation to the FTC. The Company
vigorously denies that it has engaged in any price-fixing
conspiracy.
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 1996; Chairman 63
Chairman of the Board and Chief Executive Officer
1986-1995
Richard Jay Kogan Present position 1996; 55
President and President and Chief
Chief Executive Officer Operating Officer 1986-1995
Hugh A. D'Andrade Present position 1996; 58
Vice Chairman and Executive Vice President
Chief Administrative Officer Administration 1984-1995
Rodolfo C. Bryce Present position 1997; President 50
Executive Vice President Schering-Plough HealthCare
and President Schering-Plough Products 1996; President
HealthCare Products Schering-Plough International
1993-1996; President Schering
Laboratories 1990-1992.
Raul E. Cesan Present position 1994; 49
Executive Vice President President Schering
and President Laboratories 1992-1994;
Schering-Plough President Schering-Plough
Pharmaceuticals International 1988-1992
Joseph C. Connors Present position 1996; 48
Executive Vice President Senior Vice President and
and General Counsel General Counsel 1992-1995
Jack L. Wyszomierski Present position 1996; 41
Executive Vice President Vice President and Treasurer
and Chief Financial Officer 1991-1995
Name and Current Position Business Experience Age
Geraldine U. Foster Present position 1994; 54
Senior Vice President Vice President - Investor
Investor Relations and Relations 1988-1994
Corporate Communications
Daniel A. Nichols Present position 1991 56
Senior Vice President
Taxes
Gordon C. O'Brien Present position 1988 56
Senior Vice President
Human Resources
Thomas H. Kelly Present position 1991 47
Vice President and
Controller
Robert S. Lyons Present position 1991 56
Vice President
Corporate Information
Services
E. Kevin Moore Present position 1996; 44
Vice President and Staff Vice President and
Treasurer Assistant Treasurer 1993-1995;
Treasurer-Europe, The Dun and
Bradstreet Corporation 1990-1993
John E. Nine Present position 1996; 60
Vice President President - Technical Operations
and President, Schering Schering Laboratories 1990-1995
Technical Operations
William J. Silbey Present position 1996; 37
Staff Vice President, Corporate Counsel 1993-1995;
Secretary and Associate Partner - Stearns, Weaver, Miller,
General Counsel Weissler, Alhadeff & Sitterson,
P.A. 1992-1993
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 1996 Annual Report to Shareholders are incorporated herein
by reference.
Item 6. Selected Financial Data
The Six-Year Selected Financial & Statistical Data as set forth in
the Company's 1996 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 1996 Annual Report to
Shareholders is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheets as of December 31, 1996 and 1995,
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, 1996, Notes to Consolidated
Financial Statements, the Independent Auditors' Report of Deloitte &
Touche LLP dated February 14, 1997 and Quarterly Results of
Operations, as set forth in the Company's 1996 Annual Report to
Shareholders, are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Not applicable.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors and nominees for directors as
set forth in the Company's Proxy Statement for the annual meeting of
shareholders on April 22, 1997 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 22,
1997 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 22, 1997 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 22, 1997 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
1996 Annual Report to Shareholders, are incorporated
herein by reference.
Statements of Consolidated Income for the
Years Ended December 31, 1996, 1995 and 1994
Statements of Consolidated Retained Earnings for
the Years Ended December 31, 1996, 1995 and 1994
Statements of Consolidated Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994
Consolidated Balance Sheets at December 31, 1996 and
1995
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. Financial Statement Schedules
Page in
Form 10-K
Independent Auditors' Report . . . . . . . . . . . . 19
Schedule II - Valuation and Qualifying Accounts. . . 20
Schedules not included have been omitted because they are not
applicable or not required or because the required information
is set forth in the financial statements or the notes thereto.
Columns omitted from schedules filed have been omitted because
the information is not applicable.
Financial statements of fifty percent or less owned companies
accounted for by the equity method have been omitted because,
considered individually or in the aggregate, they do not
constitute a significant subsidiary.
(a) 3. Exhibits
Exhibit
Number Description
3(a) A complete copy of the Certificate of Incorporation
as amended and currently in effect. Incorporated by
reference to Exhibit 3 (i) to the Company's
Quarterly Report for the period ended June 30, 1995
on Form 10-Q, File No. 1-6571.
3(b) A complete copy of the By-Laws as amended and
currently in effect. Incorporated by reference to
Exhibit 4(2) to the Company's Registration Statement
on Form S-3, File No. 333-853.
4(a) Rights Agreement between the Company and The Bank of
New York dated July 25, 1989. Incorporated by
reference to Exhibit 4 to the Company's Quarterly
Report for the period ended June 30, 1989 on
Form 10-Q, File No. 1-6571.
4(b) Indenture dated as of November 1, 1982 between the
Company and The Chase Manhattan Bank, N.A. as
Trustee. Incorporated by reference to Exhibit 4(a)
to the Company's Registration Statement on Form S-3,
File No. 2-80012.
4(c) Supplemental Indenture No. 1 dated as of November 1,
1991 to Indenture dated as of November 1, 1982.
Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 8-K dated November 20,
1991, File No. 1-6571.
4(d) LYNX Equity Unit Agreement. Incorporated by
reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.
4(e) LYNX Equity Unit Guarantee Agreement. Incorporated
by reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.
Exhibit
Number Description
4(f) Form of Participation Rights Agreement between the
Company and The Chase Manhattan Bank (National
Association), as Trustee. Incorporated by reference
to Exhibit 4.6 to the Company's Registration
Statement on Form S-4, Amendment No. 1, File
No. 33-65107.
10(a) The Company's Executive Incentive Plan (as amended)
and Trust related thereto*. Plan incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended March 31, 1994 on
Form 10-Q; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.
10(b) The Company's 1983 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(c) to the Company's Annual Report for 1988 on
Form 10-K, File No. 1-6571.
10(c) The Company's 1987 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1990 on
Form 10-K, File No. 1-6571.
10(d) The Company's 1992 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1992 on
Form 10-K, File No. 1-6571; amendment of December 11,
1995 incorporated by reference to Exhibit 10(d)
to the Company's Annual Report for 1995 on Form 10-K,
File No. 1-6571.
10(e)(i) Employment agreement between the Company and Robert
P. Luciano (as amended)*. Incorporated by reference
to Exhibit 10(e) (i) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(a) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by
reference to Exhibit 10(e)(i) to the Company's Annual
Report for 1994 on Form 10-K, File No. 1-6571.
10(e)(ii) Employment agreement between the Company and Richard
J. Kogan (as amended)*. Incorporated by reference to
Exhibit 10(e)(ii) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(b) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by
reference to Exhibit 10(e)(ii) to the Company's
Exhibit
Number Description
Annual Report for 1994 on Form 10-K; third amendment
incorporated by reference to Exhibit 10(a) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.
10(e)(iii) Employment agreement between the Company and Hugh A.
D'Andrade (as amended)*. Incorporated by
reference to Exhibit 10(c) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; first amendment incorporated by
reference to Exhibit 10(e)(iii) to the Company's
Annual Report for 1994 on Form 10-K, File No. 1-
6571; second amendment incorporated by reference to
Exhibit 10(e)(iii) to the Company's Annual Report for
1995 on Form 10-K, File No. 1-6571.
10(e)(iv) Form of employment agreement between the Company and
its executive officers effective upon a change of
control*. Incorporated by reference to Exhibit
10(e)(iv) to the Company's Annual Report for 1994 on
Form 10-K, File No. 1-6571.
10(f) Directors Deferred Compensation Plan and Trust
related thereto*. Plan incorporated by reference to
Exhibit 10(f) to the Company's Annual Report for
1991 on Form 10-K; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.
10(g) Pension Plan for Directors and Trust related
thereto*. Plan incorporated by reference to Exhibit
10(g) to the Company's Annual Report for 1987 on
Form 10-K; Trust Agreement incorporated by reference
to Exhibit 10(g) to the Company's Annual Report for
1988 on Form 10-K; amendment to Trust Agreement
incorporated by reference to Exhibit 10(g) to the
Company's Annual Report for 1993 on Form 10-K, File
No. 1-6571.
10(h) Supplemental Executive Retirement Plan and Trust
related thereto*. Plan incorporated by reference
to Exhibit 10(h) to the Company's Annual Report for
1987 on Form 10-K; amendments to Plan incorporated
by reference to Exhibit 10(h) to the Company's
Annual Report for 1994 on Form 10-K; Trust
Agreement incorporated by reference to Exhibit 10(g)
to the Company's Annual Report for 1988 on Form
10-K; amendment to Trust Agreement incorporated by
reference to Exhibit 10(g) to the Company's Annual
Report for 1993 on Form 10-K, File No. 1-6571.
Exhibit
Number Description
10(i) Directors' Stock Award Plan*. Incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended September 30, 1994 on
Form 10-Q, File No. 1-6571; amendment of January 1,
1997 filed with this document.
10(j) The Company's Deferred Compensation Plan*. Plan
incorporated by reference to Exhibit 10(b) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.
10(k) The Company's Directors Deferred Stock Equivalency
Program*. Filed with this document.
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed Charges.
13 The Financial Section of the Company's 1996 Annual
Report to Shareholders. With the exception of those
portions of said Annual Report which are specifically
incorporated by reference in this Form 10-K, such
report shall not be deemed filed as part of this Form
10-K.
21 Subsidiaries of the registrant.
23 Consents of experts and counsel.
24 Power of attorney.
27 Financial Data Schedule.
99.1 Cautionary Statements regarding "Safe Harbor" provision
of the Private Securities Litigation Reform Act of
1995.
99.2 Forward-looking statements by the Company.
All other exhibits are not applicable. Copies of above
exhibits will be furnished upon request.
* Compensatory plan, contract or arrangement.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized
Schering-Plough Corporation
(Registrant)
Date March 3, 1997 By /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
By * By *
Robert P. Luciano H. Barclay Morley
Chairman and Director Director
By * By *
Richard Jay Kogan Carl E. Mundy, Jr.
President and Chief Executive Director
Officer and Director
By * By *
Jack L. Wyszomierski Richard de J. Osborne
Executive Vice President and Director
Chief Financial Officer
By * By *
Thomas H. Kelly Patricia F. Russo
Vice President and Controller Director
and Principal Accounting Officer
By * By *
Hans W. Becherer William A. Schreyer
Director Director
By * By *
Hugh A. D'Andrade Robert F. W. van Oordt
Director Director
By * By *
David C. Garfield R. J. Ventres
Director Director
By * By *
Regina E. Herzlinger James Wood
Director Director
*By /s/ Thomas H. Kelly Date March 3, 1997
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, 1996 and
1995 and the related statements of consolidated income, retained
earnings and cash flows for each of the three years in the period
ended December 31, 1996, and have issued our report thereon dated
February 14, 1997; such financial statements and report are
included in your 1996 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the
financial statement schedule of Schering-Plough Corporation and
subsidiaries, listed in Item 14. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express our opinion based on our audits. In
our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
/s/DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 14, 1997
SCHEDULE II
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(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
1996
Balance at beginning of year $ 49.6 $ 8.1 $ 11.4 $ 69.1
Additions:
Charged to costs and expenses 2.4 90.4 10.2 103.0
Translation adjustment (.1) .1 .1 .1
Deductions from reserves (1.5) (86.7) (11.0) (99.2)
Balance at end of year $ 50.4 $ 11.9 $ 10.7 $ 73.0
1995
Balance at beginning of year $ 44.0 $ 7.9 $ 5.6 $ 57.5
Additions:
Charged to costs and expenses 14.9 74.3 12.1 101.3
Translation adjustment .3 (.1) - .2
Deductions from reserves (9.6) (74.0) (6.3) (89.9)
Balance at end of year $ 49.6 $ 8.1 $ 11.4 $ 69.1
1994
Balance at beginning of year $ 30.5 $ 7.9 $ 6.5 $ 44.9
Additions:
Charged to costs and expenses 17.1 62.4 3.2 82.7
Translation adjustment .6 (.1) .1 .6
Deductions from reserves (4.2) (62.3) (4.2) (70.7)
Balance at end of year $ 44.0 $ 7.9 $ 5.6 $ 57.5