This summary is based on the fourth quarter fiscal 2007 earnings conducted by Schering Plough Corporation (SGP: chart) on February 12, 2008.
Management:
Chairman and CEO: Fred Hassan
EVP and President, Global Pharmaceuticals: Carrie S. Cox
EVP and President, Research Institute: Thomas P. Koestler
EVP and CFO: Robert J. Bertolini
Group VP, Corporate Communications and IR: Alex Kelly
Key Investor Issues:
- Fiscal 2007 GAAP rose 20% over fiscal 2006 to $12.7 billion.
- A GAAP net loss to common shareholders of $1.6 billion or $1.04 a share was recorded.
- The company acquired Organon BioSciences N.V. for 11 billion euros.
- Annual total equity income rose 40% to $2 billion in 2007.
Full Year Highlights:
Schering-Plough reported a net loss available to common shareholders of $1.6 billion or $1.04 per common share on a GAAP basis due to purchase accounting adjustments.
Earnings per common share would have been $1.37, excluding purchase accounting adjustments, acquisition-related items and other specified items. For fiscal 2006, Schering-Plough reported net income of $1.1 billion or 71 cents per common share on a GAAP basis and 87 cents per common share, excluding other specified items.
GAAP net sales were $12.7 billion, a 20% increase, compared to $10.6 billion in 2006.
Full-year 2007 net sales included $626 million of OBS net sales related to the period subsequent to the acquisition. In addition, the sales growth reflects a 4% favorable impact from foreign exchange. Schering-Plough''s adjusted sales for 2007 totaled $15.2 billion, an increase of $2.7 billion as compared to $12.5 billion on an adjusted basis in 2006.
On a GAAP basis, gross margin was 65.3% in 2007 as compared to 65.1% in 2006.
The gross margin percentage excluding purchase accounting adjustments and other specified items increased to 67.9% in 2007 as compared to 66.5% in 2006, due primarily to realized cost savings in 2007 from manufacturing streamlining activities during 2006.
Selling, general and administrative expenses were $5.5 billion for the 2007 full year.
Research and development spending for 2007 totaled $2.9 billion. The results include results of operations for OBS for the period subsequent to the acquisition. Acquired in-process research and development, a charge related to the purchase accounting of the OBS acquisition, totaled $3.8 billion for 2007. Equity income in 2007 totaled $2 billion, an increase of 40% compared to 2006.
Fourth Quarter Fiscal 2007 Highlights:
For the 2007 fourth quarter, due to purchase accounting adjustments, Schering-Plough reported a net loss available to common shareholders of $3.4 billion or $2.08 per common share on a GAAP basis.
Earnings per common share for the 2007 fourth quarter would have been 27 cents, excluding purchase accounting adjustments and acquisition-related items for the OBS acquisition and other specified items. For the 2006 fourth quarter, Schering-Plough reported net income available to common shareholders of $182 million or 12 cents per common share on a GAAP basis and 17 cents per common share excluding other specified items.
GAAP net sales for the quarter totaled $3.7 billion, up 41% as compared to the fourth quarter of 2006.
Sales for the quarter included $626 million of OBS net sales related to the period subsequent to the acquisition closing date. In addition, the sales growth, on a GAAP basis, reflects a 7% favorable impact from foreign exchange.
Global cholesterol joint venture net sales, which include VYTORIN and ZETIA, totaled $1.4 billion in the 2007 fourth quarter. Schering-Plough does not record sales of its cholesterol joint venture with Merck, as the venture is accounted for under the equity method. Including an adjustment of an assumed 50% of the global cholesterol joint venture net sales, Schering- Plough''s adjusted sales for the 2007 fourth quarter would have been $4.4 billion.
