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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
For the fiscal year ended December 31, 1997 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.)
(973) 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 30, 1998: 732,902,378
Aggregate market value of common shares at January 30, 1998 held
by non-affiliates based on closing price: $53 billion.
Part of Form 10-K
Documents incorporated by reference incorporated into
Schering-Plough Corporation 1997 Parts I, II and IV
Annual Report to Shareholders
Schering-Plough Corporation Proxy Part III
Statement for the annual meeting of
shareholders on April 28, 1998
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, foot care, sun care
and over-the-counter (OTC) 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 1997 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, 1997 were as follows
(dollars in millions):
1997 1996 1995
Allergy/Respiratory $2,708 $2,113 $1,834
Anti-infective and Anticancer 1,156 1,135 1,031
Dermatologicals 571 560 515
Cardiovasculars 637 533 408
Other Pharmaceuticals 649 512 493
Animal Health 389 196 190
Foot Care 300 261 240
Sun Care 148 123 127
OTC 208 210 250
Other Health Care Products 12 13 16
Consolidated Sales $6,778 $5,656 $5,104
In June 1997, the Company purchased the worldwide animal health
operations of Mallinckrodt Inc. The acquisition was recorded
under the purchase method of accounting at a cost of
approximately $490 million, which includes the assumption of debt
and direct costs of the acquisition.
Pharmaceutical Products
The Company's pharmaceutical operations include prescription
drugs and animal health products. Prescription products include:
CLARITIN, CLARITIN-D, PROVENTIL, THEO-DUR, VANCENASE and
VANCERIL, allergy/respiratory; CEDAX, EULEXIN, GARAMYCIN,
INTRON A, and NETROMYCIN, anti-infective and anticancer;
DIPROLENE, DIPROSONE, ELOCON, and LOTRISONE, dermatologicals;
IMDUR, K-DUR, NITRO-DUR and NORMODYNE, cardiovasculars;
CELESTONE, LOSEC, and SUBUTEX, other pharmaceuticals. Animal
health biological and pharmaceutical products include
anthelmintics, antibiotics, vaccines, anti-arthritics, steroids
and nutritionals. Animal health products include: GENTOCIN and
NUFLOR, antibiotics; BANAMINE, an anti-arthritic; RALGRO, a
growth promotant; TRIBRISSEN, an antimicrobial; OTOMAX, a steroid
ointment and OPTIMMUNE, an ophthalmic ointment.
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.
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 and disease management programs. 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 foot care,
sun care and OTC products primarily sold in the United States.
Products include: CLEAR AWAY wart remover; DR. SCHOLL'S foot care
products; LOTRIMIN AF and TINACTIN antifungals; COPPERTONE and
SOLARCAINE sun care products; AFRIN nasal decongestant; CHLOR-
TRIMETON antihistamine; CORICIDIN and DRIXORAL cold and
decongestant products; CORRECTOL laxative; GYNE-LOTRIMIN for
vaginal yeast infections; A & D ointment; and PAAS egg coloring
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 some 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
insoles, 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 and antifungals sold OTC.
The principal competitive techniques used by the Company in this
industry segment include the development and introduction of new
and improved products, switching prescription products to OTC
medicines, 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 12,300 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 1997 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 $847
million, $723 million and $657 million in 1997, 1996, and 1995,
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 Food and Drug Administration 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 1997 included approximately $7
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 1997 Annual Report to Shareholders which is
incorporated herein by reference.
Employees
There were approximately 22,700 people employed by the Company at
December 31, 1997.
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, Omaha, Nebraska, the
Commonwealth of Puerto Rico, Argentina, Australia, Belgium,
Canada, Colombia, France, Ireland, Italy, Japan, Mexico,
Singapore and Spain (pharmaceutical products); and Cleveland,
Tennessee (health care products).
The Company's principal research facilities are located in
Kenilworth and Union, New Jersey and Palo Alto, California (DNAX)
and San Diego, California (Canji and Syntro) and Elkhorn,
Nebraska.
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 185 lawsuits
involving approximately 730 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.
The Company is a defendant in more than 160 antitrust actions
commenced (starting in 1993) 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 and alleges 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 United States
District Court in Illinois approved the settlement of the federal
class action on June 21, 1996. In June 1997, the Seventh Circuit
Court of Appeals dismissed all appeals from that settlement, and
it is not subject to further review. In addition, in August,
1997, the Seventh Circuit ruled that there was sufficient
evidence of participation in the alleged conspiracy by certain
wholesalers to require them to proceed to trial.
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 consumers of prescription medicine. In addition, an
action has been brought in Alabama purportedly on behalf of
consumers in Alabama and several other states. Plaintiffs are
seeking to maintain the action as a class action. The Company
has settled the retailer class action in Wisconsin and the
alleged class action in Minnesota, subject to Court approval; the
settlement amounts were not significant. Plaintiffs generally
seek treble damages in an unspecified amount and an injunction
against the allegedly unlawful conduct.
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 the antitrust
actions are without merit and is defending itself vigorously
against all such claims.
In April 1997, certain of the plaintiffs in the federal class
action commenced another purported class action in United States
District Court in Illinois against the Company and the other
defendants who settled the previous federal class action. The
complaint alleges that the defendants conspired not to implement
the settlement commitments following the settlement discussed
above. The District Court has denied the plaintiff's motion for
a preliminary injunction hearing. The Company believes the
action is without merit and is defending itself vigorously.
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 investigation is ongoing.
The Company vigorously denies that it has engaged in any price-
fixing conspiracy.
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. The case is against another pharmaceutical wholesaler and
11 pharmaceutical companies and alleges that the defendants
conspired to drive the plaintiff's wholesaler subsidiary 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.
In February 1998, Geneva Pharmaceuticals, Inc. (Geneva) submitted
an Abbreviated New Drug Application (ANDA) to the U.S. Food and
Drug Administration seeking to market a generic form of Claritin
in the United States several years before the expiration of the
Company's patents. Geneva has alleged that certain of the
Company's U.S. Claritin patents are invalid and unenforceable.
The Claritin patents are material to the Company's business. In
March 1998, the Company filed suit in federal court seeking a
ruling that Geneva's ANDA submission constitutes willful
infringement of the Company's patents and that its challenge to
the Company's patents is without merit. The Company believes
that it should prevail in the suit. However, as with any
litigation, there can be no assurance that the Company will
prevail.
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 64
Chairman of the Board and Chief Executive Officer
1986-1995
Richard Jay Kogan Present position 1996; 56
President and President and Chief
Chief Executive Officer Operating Officer 1986-1995
Hugh A. D'Andrade Present position 1996; 59
Vice Chairman and Executive Vice President
Chief Administrative Officer Administration 1984-1995
Rodolfo C. Bryce Present position 1997; President 51
Executive Vice President Schering-Plough HealthCare
and President Schering-Plough Products 1996; President
HealthCare Products Schering-Plough International
1993-1996
Raul E. Cesan Present position 1994; 50
Executive Vice President President Schering
and President Laboratories 1992-1994
Schering-Plough
Pharmaceuticals
Joseph C. Connors Present position 1996; 49
Executive Vice President Senior Vice President and
and General Counsel General Counsel 1992-1995
Jack L. Wyszomierski Present position 1996; 42
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; 55
Senior Vice President Vice President - Investor
Investor Relations and Relations 1988-1994
Corporate Communications
Daniel A. Nichols Present position 1991 57
Senior Vice President
Taxes
Gordon C. O'Brien Present position 1988 57
Senior Vice President
Human Resources
Thomas H. Kelly Present position 1991 48
Vice President and
Controller
Robert S. Lyons Present position 1991 57
Vice President
Corporate Information
Services
E. Kevin Moore Present position 1996; 45
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; 61
Vice President President - Technical Operations
and President, Schering Schering Laboratories 1990-1995
Technical Operations
William J. Silbey Present position 1996; 38
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 share price data as set forth in the
Company's 1997 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 1997 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 1997 Annual Report to
Shareholders is incorporated herein by reference.
Item 7(a). Quantitative and Qualitative Disclosures about Market
Risk
The Market Risk Disclosures as set forth in Management's Discussion
and Analysis of Operations and Financial Condition in the Company's
1997 Annual Report to Shareholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The Consolidated Balance Sheets as of December 31, 1997 and 1996,
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, 1997, Notes to Consolidated
Financial Statements, the Independent Auditors' Report of Deloitte &
Touche LLP dated February 12, 1998 and Quarterly Data, as set forth
in the Company's 1997 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 28, 1998 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 28,
1998 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 28, 1998 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 28, 1998 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
1997 Annual Report to Shareholders, are incorporated
herein by reference.
Statements of Consolidated Income for the
Years Ended December 31, 1997, 1996 and 1995
Statements of Consolidated Retained Earnings for
the Years Ended December 31, 1997, 1996 and 1995
Statements of Consolidated Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995
Consolidated Balance Sheets at December 31, 1997 and
1996
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; Certificate of Amendment of Certificate of
Incorporation incorporated by reference to Exhibit 3
to the Company's Quarterly Report for the period ended
June 30, 1997 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 June 24, 1997. Incorporated by
reference to Exhibit 1 to the Form 8-A filed by the
Company on June 30, 1997, 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.
Exhibit
Number Description
4(c) 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; amendment to Trust
Agreement incorporated by reference to Exhibit 10(b)
to the Company's Quarterly Report for the period ended
March 31, 1997 on Form 10-Q, File No. 1-6571.
10(b) 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(c) 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(d) The Company's 1997 Stock Incentive Plan.*
Incorporated by reference to Exhibit 10 to the
Company's Quarterly Report for the period ended
September 30, 1997 on Form 10-Q, 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.
Exhibit
Number Description
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
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) 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; Amended and Restated
Trust Agreement incorporated by reference to Exhibit
10(a) to the Company's Quarterly Report for the period
ended March 31, 1997 on Form 10-Q, File No. 1-6571.
Exhibit
Number Description
10(h) 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 incorporated by
reference to Exhibit 10(i) to the Company's Annual Report
for 1996 on Form 10-K, File No. 1-6571.
10(i) 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*. Incorporated by reference to Exhibit 10(k) to
the Company's Annual Report for 1996 on Form 10-K, File
No. 1-6571.
10(l) ** Form of Split Dollar Agreement and related Collateral
Assignment between the Company and its executive
officers.*
12 ** Computation of Ratio of Earnings to Fixed Charges.
13 ** The Financial Section of the Company's 1997 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 ** Cautionary Statements regarding "Safe Harbor" provision
of the Private Securities Litigation Reform Act of 1995.
All other exhibits are not applicable. Copies of above exhibits
will be furnished upon request.
* Compensatory plan, contract or arrangement.
** Filed with this document.
(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 19, 1998 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 Donald L. Miller
Chairman and Director Director
By * By *
Richard Jay Kogan H. Barclay Morley
President and Chief Executive Director
Officer and Director
By * By *
Jack L. Wyszomierski Carl E. Mundy, Jr.
Executive Vice President and Director
Chief Financial Officer
By * By *
Thomas H. Kelly Richard de J. Osborne
Vice President and Controller Director
and Principal Accounting Officer
By * By *
Hans W. Becherer Patricia F. Russo
Director Director
By * By *
Hugh A. D'Andrade William A. Schreyer
Director Director
By * By *
David C. Garfield Robert F. W. van Oordt
Director Director
By * By *
Regina E. Herzlinger James Wood
Director Director
*By /s/ Thomas H. Kelly Date March 19, 1998
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, 1997
and 1996 and the related statements of consolidated income,
retained earnings and cash flows for each of the three years
in the period ended December 31, 1997, and have issued our
report thereon dated February 12, 1998; such financial
statements and report are included in your 1997 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 12, 1998
SCHEDULE II
SCHERING-PLOUGH CORPORATION AND
SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND
1995
(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
1997
Balance at beginning of
year $ 50 $ 12 $ 11 $ 73
Additions:
Charged to costs and
expenses 17 103 20 140
Deductions from reserves (18) (101) (7) (126)
Balance at end of year $ 49 $ 14 $ 24 $ 87
1996
Balance at beginning of
year $ 49 $ 8 $ 12 $ 69
Additions:
Charged to costs and
expenses 2 90 10 102
Deductions from reserves (1) (86) (11) (98)
Balance at end of year $ 50 $ 12 $ 11 $ 73
1995
Balance at beginning of
year $ 44 $ 8 $ 6 $ 58
Additions:
Charged to costs and
expenses 15 74 12 101
Deductions from reserves (10) (74) (6) (90)
Balance at end of year $ 49 $ 8 $ 12 $ 69