UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 29, 2006
SCHERING–PLOUGH CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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| New Jersey
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1-6571
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22-1918501 |
| (State or Other Jurisdiction of
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(Commission File Number)
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(IRS Employer |
| Incorporation)
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Identification Number) |
2000 Galloping Hill Road
Kenilworth, NJ 07033
(Address of Principal Executive Office)
Registrant’s telephone number, including area code: (908) 298-4000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
TABLE OF CONTENTS
Item 8.01 Other Events.
On August 29, 2006, Schering-Plough Corporation (the “Company”) announced it has reached an
agreement with the U.S. Attorney’s Office for the District of Massachusetts and the U.S.
Department of Justice to settle the previously disclosed investigation involving the Company’s
sales, marketing and clinical trial practices and programs (the “Massachusetts Investigation”)
(see “Massachusetts Investigation” in Part I. Item 3. Legal Proceedings of the Company’s 2005
Form 10-K).
The agreement provides for an aggregate settlement amount of $435 million and is subject to court
approval. Under the agreement, Schering Sales Corporation, a subsidiary of Schering-Plough
Corporation, will plead guilty to one count of conspiracy to make false statements to the
government and pay a criminal fine of $180 million, and Schering-Plough Corporation will pay $255
million to resolve civil aspects of the investigation.
In connection with the settlement, Schering-Plough Corporation will also sign an addendum to an
existing corporate integrity agreement with the Office of Inspector General of the U.S.
Department of Health and Human Services. The addendum will not affect Schering-Plough
Corporation’s ongoing business with any customers, including the federal government.
As previously disclosed, the Company had recorded a liability of $500 million related to the
Massachusetts Investigation, the AWP investigations and AWP litigation by certain states (see
“AWP Investigations” and the litigation by certain states described under “AWP Litigation” in
Part I. Item 3. Legal Proceedings of the Company’s 2005 Form 10-K). The settlement amount of
$435 million relates only to the Massachusetts Investigation. The AWP investigations and
litigation are ongoing.
The company believes the settlement of the Massachusetts Investigation will not have a material
adverse effect on the Company’s results of operations, cash flows, financial condition or its
business. As the agreement is subject to court approval, the company cannot predict the timing
of the cash payments. At June 30, 2006, total cash, cash equivalents and short-term investments
was approximately $5.2 billion. Total cash, cash equivalents and short-term investments less
total debt was approximately $2.3 billion at June 30, 2006. Following these payments, the
Company expects that cash generated from operations and available cash and short-term investments
will provide the Company with the ability to fund cash needs for the intermediate term.
DISCLOSURE NOTICE
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995
The information in this 8-K and the attached press release includes certain “forward-looking
statements” within the meaning of the Securities Litigation Reform Act of 1995, including
statements relating to the final resolution of the investigation and the impact of the settlement
on Schering-Plough’s results of operations, cash flows, financial condition and business.
Forward-looking statements relate to expectations or forecasts of future events. Schering-Plough
does not assume the obligation to update any forward-looking statement. Many factors could cause
actual results to differ materially from Schering-Plough’s forward-looking statements, including
the final resolution of the matters discussed in this 8-K, which includes court approval and
Schering-Plough’s compliance with the corporate integrity agreement; market forces; economic
factors; product availability; patent and other intellectual property protection; current and
future branded, generic or over-the-counter competition; the regulatory process; and any
developments following regulatory approval, among other uncertainties. For further details about
these and other factors that may impact the forward-looking statements, see Schering-Plough’s
Securities and Exchange Commission filings, including Item 1A. Risk Factors, in the Company’s
second quarter 10-Q.