Schering-Plough does not record sales of its cholesterol joint venture and incurs substantial costs such as selling, general and administrative costs that are not reflected in "Equity income" and are borne by the overall cost structure of Schering-Plough. As a result, Schering-Plough's gross margin and ratios of selling, general and administrative (SG&A) expenses and R&D expenses as a percentage of sales do not reflect the benefit of the impact of the cholesterol joint venture's operating results.
Schering-Plough's gross margin on a GAAP basis was unfavorably affected by purchase accounting adjustments and as a result was 57.9 percent for the 2007 fourth quarter as compared to 65.5 percent in the 2006 period. The gross margin percentage excluding purchase accounting adjustments and other specified items decreased to 66.7 percent for the fourth quarter of 2007 as compared to 67.2 percent for the fourth quarter of 2006.
SG&A expenses were $1.6 billion in the fourth quarter of 2007 versus $1.3 billion in the prior-year period. SG&A in the fourth quarter of 2007 increased primarily due to the impact of the inclusion of SG&A expenses from OBS and increased promotional spending.
Research and development spending for the 2007 fourth quarter increased
to $855 million compared to $631 million in the fourth quarter of 2006. The
increase in R&D expenses was due to the inclusion of OBS expenses, higher
spending for clinical trials and related activi
|SOURCE Schering-Plough Corporation|
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