0000310158
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2008-12-31 0000310158
2009-04-01 2009-06-30
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2008-04-01 2008-06-30
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2008-01-01 2008-06-30
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style="font-family: 'Times New Roman', Times"> </font></b>
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</font></b> </div> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">1.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">BASIS OF PRESENTATION</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> These unaudited Condensed Consolidated Financial
Statements of Schering-Plough Corporation and subsidiaries (Schering-Plough),
have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission (SEC) for reporting on <font style="white-space:
nowrap">Form 10-Q.</font> Certain information and disclosures
normally included in financial statements prepared in accordance with U.S. Generally
Accepted Accounting Principles have been condensed or omitted pursuant to
such SEC rules and regulations. These statements should be read in conjunction
with the accounting policies and notes to the consolidated financial statements
included in Schering-Plough’s 2008 <font style="white-space:
nowrap">10-K.</font> </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In the opinion
of Schering-Plough’s management, these financial statements reflect
all adjustments necessary, including normal recurring accruals, for a fair
presentation of the statements of operations, cash flows and financial position
for the interim periods presented. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Second quarter
and six months ended June 30, 2008, income tax expense has been revised
from the prior year <font style="white-space: nowrap">10-Q</font>
which reflected an overstatement of income tax expense relating to the accounting
for the purchase of Organon BioSciences N.V. (OBS). This change resulted in
a reduction of income tax expense and a corresponding increase in net income
and net income available to common shareholders of $26 million for
the second quarter of 2008 and $49 million for the six months ended
June 30, 2008, along with an associated increase in per share amounts.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> In November 2007, Schering-Plough acquired
OBS, a company that discovers, develops and manufactures human prescription
and animal health products. </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough has
evaluated all subsequent events through July 24, 2009, the date of
filing of this <font style="white-space: nowrap">10-Q.</font>
</div> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 2%; margin-right: 0%;
font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b><i><font style="font-family: 'Times New Roman',
Times">Impact of Recently Issued Accounting Standards</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> As of January 1, 2009, Schering-Plough
implemented Financial Accounting Standards Board (FASB) Staff Position (FSP)
Emerging Issues Task Force (EITF) <font style="white-space: nowrap">No. 03-6-1</font>
(FSP <font style="white-space: nowrap">EITF 03-6-1),</font>
“Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities.” FSP <font style="white-space:
nowrap">EITF 03-6-1</font> requires Schering-Plough to treat
unvested deferred stock units as participating securities in accordance with
the two-class method in the calculation of both basic and diluted earnings
per share. FSP <font style="white-space: nowrap">EITF 03-6-1</font>
must be applied retrospectively. The effect of the retrospective application
of FSP <font style="white-space: nowrap">EITF 03-6-1</font>
was not material to Schering-Plough’s earnings per share in 2008,
2007 or 2006. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> As of June 30, 2009, Schering-Plough
implemented FASB Staff Position <font style="white-space: nowrap">FAS 107-1</font>
and APB <font style="white-space: nowrap">28-1,</font> “Interim
Disclosures about Fair Value of Financial Instruments,” (FSP <font
style="white-space: nowrap">FAS 107-1</font> and APB <font
style="white-space: nowrap">28-1).</font> FSP <font style="white-space:
nowrap">FAS 107-1</font> and APB <font style="white-space:
nowrap">28-1,</font> amends FASB Statement No. 107, Disclosures
about Fair Value of Financial Instruments, to require disclosures about fair
value of financial instruments in interim as well as in annual financial statements.
This FSP also amends APB Opinion No. 28, Interim Financial Reporting,
to require those disclosures in all interim financial statements. The FSP
is effective for periods ending after June 15, 2009. In the second
quarter of 2009, Schering-Plough implemented FSP <font style="white-space:
nowrap">FAS 107-1</font> and APB <font style="white-space:
nowrap">28-1.</font> See Note 13, “Financial Instruments.”
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> In September 2006, the FASB issued Statement
of Financial Accounting Standards (SFAS) No. 157, “Fair
Value Measurements.” The standard defines fair value, establishes
a framework for measuring fair value in accordance with U.S. Generally
Accepted Accounting Principles, and expands disclosures about fair value measurements.
The standard codifies the definition of fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The standard
clarifies the principle that fair value should be based on the assumptions
market participants would use when pricing the asset or liability and establishes
a fair value hierarchy that prioritizes the information used to develop those
assumptions. For calendar-year companies, the standard became effective January 1,
2008 (see Note 14, “Fair Value Measurements”)
except for non-financial items measured on a non-recurring basis for which
it is effective beginning January 1, 2009. The implementation of
the non-financial items measured on a non-recurring basis provisions of this
standard did not have a material impact on Schering-Plough’s condensed
consolidated financial statements. </div> </div> <!-- END PAGE
WIDTH --> <!-- PAGEBREAK --> <div style="margin-left: 0%">
<!-- BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> In December 2007,
the FASB issued EITF Issue <font style="white-space: nowrap">No. 07-1,</font>
“Accounting for Collaborative Arrangements,” which is
effective for calendar-year companies beginning January 1, 2009.
The Task Force clarified the manner in which costs, revenues and sharing payments
made to, or received by, a partner in a collaborative arrangement should be
presented in the income statement and set forth certain disclosures that should
be required in the partners’ financial statements. The implementation
of this standard did not have a material impact on Schering-Plough’s
condensed consolidated financial statements. Schering-Plough has a number
of collaborative arrangements. For collaborative arrangements, sales are generally
included in Net sales and payments to collaboration partners are classified
in the statement of condensed consolidated operations based on their nature
in Cost of sales or Research and development, as appropriate. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> In December 2007, the FASB issued SFAS No. 141
(revised 2007), “Business Combinations,” (SFAS 141R).
For calendar-year companies, the standard is applicable to new business combinations
occurring on or after January 1, 2009. SFAS 141R requires
an acquiring entity to recognize all the assets acquired and liabilities assumed
in a transaction at the acquisition-date fair value with limited exceptions.
Most significantly, SFAS 141R requires that acquisition costs generally
be expensed as incurred, certain acquired contingent liabilities be recorded
at fair value, and acquired in-process research and development be recorded
at fair value as an indefinite-lived intangible asset at the acquisition date.
The implementation of this standard did not have a material impact on Schering-Plough’s
condensed consolidated financial statements. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In December 2007,
the FASB issued SFAS No. 160, “Noncontrolling
Interests in Consolidated Financial Statements — An Amendment
of ARB No. 51,” which is effective for calendar-year companies
beginning January 1, 2009. The standard establishes new accounting
and reporting standards for the noncontrolling interest in a subsidiary and
for the deconsolidation of a subsidiary. The implementation of this standard
did not have a material impact on Schering-Plough’s condensed consolidated
financial statements. </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> In March 2008, the
FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities — An Amendment of FASB
Statement No. 133,” which is effective for calendar-year
companies beginning January 1, 2009. The standard enhances required
disclosures regarding derivatives and hedging activities. The implementation
of this standard did not have a material impact on Schering-Plough’s
condensed consolidated financial statements. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In April 2008,
the FASB issued FSP <font style="white-space: nowrap">No. FAS 142-3,</font>
“Determination of the Useful Life of Intangible Assets”
<font style="white-space: nowrap">(FSP 142-3).</font>
<font style="white-space: nowrap">FSP 142-3</font> amends
the factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible Assets” (SFAS 142).
<font style="white-space: nowrap">FSP 142-3</font> is
effective for calendar-year companies beginning January 1, 2009.
The requirement for determining useful lives must be applied prospectively
to intangible assets acquired after the effective date and the disclosure
requirements must be applied prospectively to all intangible assets recognized
as of, and subsequent to, the effective date. The implementation of this standard
did not have a material impact on Schering-Plough’s condensed consolidated
financial statements. </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> In April 2009, the
FASB issued FSP No. FAS 141(R)-1, “Accounting
for Assets Acquired and Liabilities Assumed in a Business Combination That
Arise from Contingencies.” FSP FAS 141(R)-1 amends the
provisions in Statement 141R for the initial recognition and measurement,
subsequent measurement and accounting, and disclosures for assets and liabilities
arising from contingencies in business combinations. The FSP is effective
for contingent assets or contingent liabilities acquired in business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. The implementation
of this standard did not have a material impact on Schering-Plough’s
condensed consolidated financial statements. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In May 2009, the
FASB issued SFAS 165, “Subsequent Events.” This
standard establishes the accounting and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are available
to be issued. It requires the disclosure of the date through which an entity
has evaluated subsequent events and the basis for that date. The implementation
of this standard did not have a material impact on Schering-Plough’s
condensed consolidated financial statements. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In June 2009,
the FASB issued SFAS No. 166, “Accounting for
Transfers of Financial Assets, an amendment of SFAS No. 140”
(SFAS 166). SFAS 166 amends SFAS No. 140
to improve the relevance, representational faithfulness, and comparability
of the information that a reporting entity provides in its financial reports
about a transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s
continuing involvement in transferred financial assets. This Statement is
effective as of the beginning of each reporting entity’s first annual
reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter. Earlier application is prohibited. The recognition
and measurement provisions of this Statement shall be applied to transfers
that occur on or after the effective date. Schering-Plough is currently assessing
the impact of the adoption of SFAS 166. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In June 2009,
the FASB issued SFAS No. 167, “Amendments to FASB
Interpretation No. 46(R)” (SFAS 167). SFAS 167
amends certain requirements of FASB Interpretation No. 46 (revised
December 2003), Consolidation of Variable Interest Entities, to improve financial
reporting by enterprises involved with variable interest entities and to provide
more relevant and reliable information to users of financial statements. This
Statement is effective as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15, 2009,
for interim periods within that first annual reporting period, and for interim
and annual reporting periods thereafter. Earlier application is prohibited.
Schering-Plough is currently assessing the impact of the adoption of SFAS 167.
</div> </div> </body> </html>
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Tagged Note 2 - sgp:ProductivityTransformationProgramTextBlock--> <div
style="margin-left: 0%"> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">2.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">PRODUCTIVITY TRANSFORMATION PROGRAM</font></b> </td>
</tr> </table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Schering-Plough’s Productivity
Transformation Program (PTP) is designed to reduce and avoid costs and increase
productivity. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The following table summarizes activities
reflected in the condensed consolidated financial statements related to the
Productivity Transformation Program, for the six months ended June 30,
2009: </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"> <!-- Table Width
Row BEGIN --> <tr style="font-size: 1pt" valign="bottom"> <td
width="35%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="7%" align="right"> </td><!--
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colindex=02 type=hang1 --> <td width="2%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="7%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="2%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="6%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="2%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> <td width="2%"> </td><!--
colindex=06 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=06 type=lead --> <td width="5%" align="right"> </td><!--
colindex=06 type=body --> <td width="1%" align="left"> </td><!--
colindex=06 type=hang1 --> <td width="2%"> </td><!--
colindex=07 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=07 type=lead --> <td width="4%" align="right"> </td><!--
colindex=07 type=body --> <td width="1%" align="left"> </td><!--
colindex=07 type=hang1 --> <td width="2%"> </td><!--
colindex=08 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=08 type=lead --> <td width="4%" align="right"> </td><!--
colindex=08 type=body --> <td width="1%" align="left"> </td><!--
colindex=08 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="10" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Charges Included in</b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Special,<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> </tr> <tr
style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Merger and<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Acquisition-<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Non-cash<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> </tr> <tr
style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Research and<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Related<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Total<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Cash<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Charges<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Accrued<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>Cost of Sales</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Development</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>Charges</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Charges</b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>Payments</b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>/(Credits)</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>Liability</b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="26" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Accrued liability at January 1, 2009
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 155 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Employee termination costs
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 74
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
74 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
(113 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (39 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Accelerated depreciation
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 7 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 2 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 9 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
9 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Foreign exchange and other </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> — </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> —
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (1 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(4 </td> <td nowrap="nowrap" align="left" valign="bottom"> ) </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(5 </td> <td nowrap="nowrap" align="left" valign="bottom"> ) </td>
</tr> <tr valign="bottom" style="font-size: 1pt"> <td>  
</td> <td>   </td> <td style="border-top: 1px
solid #000000">   </td> <td style="border-top: 1px solid
#000000">   </td> <td>   </td> <td>
  </td> <td style="border-top: 1px solid #000000">  
</td> <td style="border-top: 1px solid #000000">   </td>
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> </tr> <tr
valign="bottom" style="background: #CCEEFF"> <td nowrap="nowrap" align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 20pt">
Total </div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 7 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 2 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 74 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 83 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> (114 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
5 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 3px double #000000">   </td>
<td style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Accrued liability at June 30, 2009 </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 111 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td style="border-top: 3px double #000000">  
</td> <td style="border-top: 3px double #000000">   </td>
<td>   </td> </tr> </table> <div align="left"
style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt;
font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> For the three months ended June 30,
2009, special, merger and acquisition-related costs totaled $29 million,
of which $18 million related to employee termination costs and $11 million
related to the planned merger with Merck & Co., Inc (Merck).
Planned merger costs are not included in the table above. For the six months
ended June 30, 2009, special, merger and acquisition-related costs
totaled $104 million, of which $74 million related to employee
termination costs and $30 million related to the planned merger with
Merck. </div> </div> <!-- END PAGE WIDTH --> <!-- PAGEBREAK
--> <div style="margin-left: 0%"> <!-- BEGIN PAGE WIDTH -->
<div style="margin-top: 0pt; font-size: 1pt"> </div> <div align="center"
style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial,
Helvetica; color: #000000; background: #FFFFFF"> <b> <font style="font-family:
'Times New Roman', Times"> </font> </b> </div> <div
style="margin-top: 0pt; font-size: 1pt"> </div> <div align="center"
style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial,
Helvetica; color: #000000; background: #FFFFFF"> <b> <font style="font-family:
'Times New Roman', Times"> </font> </b> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
The following table summarizes activities reflected in the condensed consolidated
financial statements related to the Productivity Transformation Program, for
the six months ended June 30, 2008: </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="51%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="7%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="4%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="5%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="5%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> <td width="3%"> </td><!--
colindex=06 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=06 type=lead --> <td width="4%" align="right"> </td><!--
colindex=06 type=body --> <td width="1%" align="left"> </td><!--
colindex=06 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Special, and<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Acquisition-<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Related<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Total<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Cash<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Non-cash<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Accrued<br /> </b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Charges</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Charges</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Payments</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Charges</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Liability</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="18"
align="center" valign="bottom"> <b>(Dollars in millions)</b>
</td> <td>   </td> </tr> <tr style="line-height:
3pt; font-size: 1pt"> <td>  </td> </tr> <tr
valign="bottom" style="background: #CCEEFF"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Accrued liability
at January 1, 2008 </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 174 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Employee termination costs </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 84 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 84
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
(97 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
42 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 29 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Accrued liability at June 30, 2008 </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 203 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td style="border-top: 3px double #000000">  
</td> <td style="border-top: 3px double #000000">   </td>
<td>   </td> </tr> </table> <div align="left"
style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt;
font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> For the three months ended June 30,
2008, special and acquisition-related charges totaled $94 million
($77 million of employee termination costs and $17 million
of other OBS acquisition related costs). For the six months ended June 30,
2008, special and acquisition-related charges totaled $117 million
($84 million of employee termination costs and $33 million
of other OBS acquisition related costs). </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 3 - us-gaap:EquityMethodInvestmentsDisclosureTextBlock--> <div
style="margin-left: 0%"> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">3.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">EQUITY INCOME</font></b> </td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> In May 2000, Schering-Plough and Merck entered into
two separate sets of agreements to jointly develop and market certain products
in the U.S. including (1) two cholesterol-lowering drugs
and (2) an allergy/asthma drug. In December 2001, the cholesterol
agreements were expanded to include all countries of the world except Japan.
In general, the companies agreed that the collaborative activities under these
agreements would operate in a virtual joint venture to the maximum degree
possible by relying on the respective infrastructures of the two companies.
These agreements generally provide for equal sharing of development costs
and for co-promotion of approved products by each company. </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
The cholesterol agreements provide for Schering-Plough and Merck to jointly
develop and commercialize ezetimibe in the cholesterol management field: </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 4%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> i. as a once-daily monotherapy (managed
as ZETIA in the U.S. and Asia and EZETROL in Europe); </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 4%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> ii. in co-administration with various approved
statin drugs; and </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 4%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> iii. as a
fixed-combination tablet of ezetimibe and simvastatin (Zocor), Merck’s
cholesterol-modifying medicine. This combination medication (ezetimibe/simvastatin)
is managed as VYTORIN in the U.S. and as INEGY in many international
countries. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> ZETIA/EZETROL (ezetimibe) and VYTORIN/INEGY
(the combination of ezetimibe/simvastatin) are approved for use in the U.S. and
have been launched in many international markets. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough
utilizes the equity method of accounting in recording its share of activity
from the Merck/Schering-Plough cholesterol joint venture. As such, Schering-Plough’s
net sales do not include the sales of the joint venture. The cholesterol joint
venture agreements provide for the sharing of operating income generated by
the joint venture based upon percentages that vary by product, sales level
and country. In the U.S. market, Schering-Plough receives a greater
share of profits on the first $300 million of annual ZETIA sales.
Above $300 million of annual ZETIA sales, Merck and Schering-Plough
generally share profits equally. Schering-Plough’s allocation of
the joint venture income is increased by milestones recognized. Further, either
company’s share of the joint venture’s income from operations
is subject to a reduction if that company fails to perform a specified minimum
number of physician details in a particular country. The companies agree annually
to the minimum number of physician details by country. </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
The companies bear the costs of their own general sales forces and commercial
overhead in marketing joint venture products around the world. In the U.S.,
Canada and Puerto Rico, the cholesterol agreements provide for a reimbursement
to each company for physician details that are set on an annual basis, and
in Italy, a contractual amount is included in the profit sharing calculation
that is not reimbursed. In the U.S., Canada and Puerto Rico this amount is
equal to each company’s agreed physician details multiplied by a
contractual fixed fee. Schering-Plough reports these amounts as part of equity
income from the cholesterol joint venture. These amounts do not represent
a reimbursement of specific, incremental and identifiable costs for Schering-
Plough’s detailing of the cholesterol products in these markets.
In addition, these amounts are not reflective of Schering-Plough’s
sales effort related to the joint venture as Schering-Plough’s sales
force and related costs associated with the joint venture are generally estimated
to be higher. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Costs of the joint venture that the companies
contractually share are a portion of manufacturing costs, specifically identified
promotion costs (including direct-to-consumer advertising and direct and identifiable
out-of-pocket promotion) and other agreed upon costs for specific services
such as market support, market research, market expansion, a specialty sales
force and physician education programs. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Certain specified
research and development expenses are generally shared equally by Schering-Plough
and Merck. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The unaudited financial information below
presents summarized combined financial information for the <font style="white-space:
nowrap">Merck/Schering-Plough</font> cholesterol joint venture for
the three and six months ended June 30, 2009 and 2008: </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF; text-align: left"> <!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom"> <td width="59%"> </td><!--
colindex=01 type=maindata --> <td width="2%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="4%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="5%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="4%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="5%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="4%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="5%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Net sales </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 1,033
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,153 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,979 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 2,385 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Cost of sales </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 43 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 51 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 85 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
104 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Income from operations </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
708 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 782 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 1,369 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1,636
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Amounts related to physician details, among other expenses, that are invoiced
by Schering-Plough and Merck in the U.S., Canada and Puerto Rico are deducted
from income from operations of the cholesterol joint venture. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough’s share of the cholesterol
joint venture’s income from operations for the three and six months
ended June 30, 2009 was $339 million and $707 million,
respectively. For the three and six months ended June 30, 2008, Schering-Plough’s
share of the cholesterol joint venture’s income from operations
were $436 million and $895 million, respectively. Included
in Schering-Plough’s share of income from operations is income of
$64 million for the three and six months ended June 30,
2008 related to the termination of a respiratory joint venture with Merck.
In the U.S. market, Schering-Plough receives a greater share of income
from operations on the first $300 million of annual ZETIA sales.
As a result, Schering-Plough’s share of the cholesterol joint venture’s
income from operations is generally higher in the first quarter than in subsequent
quarters. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The following information provides a summary
of the components of Schering-Plough’s equity income from the cholesterol
joint venture for the three and six months ended June 30, 2009 and
2008: </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"> <!-- Table Width
Row BEGIN --> <tr style="font-size: 1pt" valign="bottom"> <td
width="56%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="2%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="8%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="8%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="2%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="8%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Schering-Plough’s share of income
from operations </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 339 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 436 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 707
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
895 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Contractual amounts
for physician details </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 38 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
61 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 73 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 123 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Elimination of intercompany
profit and other, net </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (7 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(4 </td> <td nowrap="nowrap" align="left" valign="bottom"> ) </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(10 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (8 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Total equity income
from cholesterol joint venture </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 370 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 493
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
770 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,010 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
At June 30, 2009 and December 31, 2008, Schering-Plough
had net receivables (including undistributed income) from the Merck/Schering-Plough
Joint Venture of $32 million and $130 million, respectively.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Equity income from the joint venture excludes
any profit arising from transactions between Schering-Plough and the joint
venture until such time as there is an underlying profit realized by the joint
venture in a transaction with a party other than Schering-Plough or Merck.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Due to the virtual nature of the cholesterol
joint venture, Schering-Plough 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. These costs
are reported on their respective line items in the statements of condensed
consolidated operations and are not separately identifiable. The cholesterol
agreements do not provide for any jointly owned facilities and, as such, products
resulting from the joint venture are manufactured in facilities owned by either
Schering-Plough or Merck. </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough and
Merck are developing a single-tablet combination of ezetimibe and atorvastatin
as a treatment for elevated cholesterol levels. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In April 2008,
the Merck/Schering-Plough joint venture received a not-approvable letter from
the U.S. Food and Drug Administration (FDA) for the proposed fixed combination
of loratadine/montelukast. During the second quarter of 2008 the respiratory
joint venture was terminated in accordance with the agreements. This action
has no impact on the cholesterol joint venture. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> See Note 17,
“Legal, Environmental and Regulatory Matters,” —
“Litigation and Investigations relating to the Merck/Schering-Plough
Cholesterol Joint Venture,” for additional information. </div>
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 4 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">4.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">SHARE-BASED COMPENSATION</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> A summary of the options, deferred stock
units and performance-based deferred stock units granted during the three
and six months ended June 30, 2009 and 2008 is as follows: </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0"
style="font-size: 7pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF; text-align: left"> <!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom"> <td width="28%"> </td><!--
colindex=01 type=maindata --> <td width="1%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="6%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="1%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="6%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="1%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="6%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="1%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="6%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> <td width="1%"> </td><!--
colindex=06 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=06 type=lead --> <td width="6%" align="right"> </td><!--
colindex=06 type=body --> <td width="1%" align="left"> </td><!--
colindex=06 type=hang1 --> <td width="1%"> </td><!--
colindex=07 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=07 type=lead --> <td width="6%" align="right"> </td><!--
colindex=07 type=body --> <td width="1%" align="left"> </td><!--
colindex=07 type=hang1 --> <td width="1%"> </td><!--
colindex=08 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=08 type=lead --> <td width="6%" align="right"> </td><!--
colindex=08 type=body --> <td width="1%" align="left"> </td><!--
colindex=08 type=hang1 --> <td width="1%"> </td><!--
colindex=09 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=09 type=lead --> <td width="6%" align="right"> </td><!--
colindex=09 type=body --> <td width="1%" align="left"> </td><!--
colindex=09 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Three Months Ended June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="14" align="center" valign="bottom" style="border-bottom: 1px
solid #000000"> <b>Six Months Ended June 30,</b> </td>
<td>   </td> </tr> <tr style="font-size: 8pt"
valign="bottom" align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="6"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2009</b> </td> <td>   </td> <td>
  </td> <td colspan="6" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2008</b> </td> <td>  
</td> <td>   </td> <td colspan="6" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2009</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" align="center" valign="bottom" style="border-bottom: 1px
solid #000000"> <b>2008</b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Weighted-<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Weighted-<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Weighted-<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Weighted-<br /> </b>
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="left"
valign="bottom"> <b>Number of<br /> </b> </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Average<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Average<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Average<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Average<br /> </b>
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="left"
valign="bottom"> <b>Underlying Shares<br /> </b> </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Underlying<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Grant-Date<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Underlying<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Grant-Date<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Underlying<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Grant-Date<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Underlying<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Grant-Date<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="border-bottom: 1px solid #000000;
width: 1%; padding-bottom: 1px"> <b>in Thousands</b> </div>
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Shares</b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>Fair Value</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Shares</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Fair Value</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Shares</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Fair Value</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>Shares</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Fair
Value</b> </td> <td>   </td> </tr>
<tr style="line-height: 3pt; font-size: 1pt"> <td>  </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-7pt; margin-left: 7pt"> Stock options </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
7,818 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 7.67 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 7,747 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 6.00 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
7,820 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 7.67 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 13,584 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 5.35 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -7pt; margin-left: 7pt"> Deferred stock units
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 4,591 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 22.91
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 4,613 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 18.87 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
4,610 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 22.89 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 4,708
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 18.49 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -7pt; margin-left: 7pt"> Performance-based deferred
stock units </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 30 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 16.57 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1,043 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 27.93 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1,064
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 19.35 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
</tr> <tr valign="bottom"> <td nowrap="nowrap" align="left"
valign="bottom"> <div style="text-indent: -7pt; margin-left: 7pt">
Total Awards </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 12,409 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 12,390 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 13,473 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
19,356 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td style="border-top: 3px double #000000">   </td>
<td style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Options generally become exercisable in equal annual installments over a three-year
period. The deferred stock units generally vest at the end of a three-year
period from the date they were granted. The performance-based deferred stock
units vest at the end of a three-year performance period if specific pre-established
levels of performance, market conditions and service are met. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> The weighted-average assumptions used in the Black-Scholes
option pricing model for the three and six months ended June 30,
2009 and 2008, were as follows: </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="55%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="2%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="9%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="9%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="2%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="9%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="2%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="line-height: 3pt; font-size: 1pt"> <td>  </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Dividend yield </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1.1 </td> <td nowrap="nowrap" align="left" valign="bottom"> %
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1.1 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1.1 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1.1 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Volatility </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 41.5 </td>
<td nowrap="nowrap" align="left" valign="bottom"> % </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
36.7 </td> <td nowrap="nowrap" align="left" valign="bottom"> %
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 41.5 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 31.4 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Risk-free interest rate </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1.9 </td> <td nowrap="nowrap" align="left" valign="bottom"> %
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 3.0 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1.9 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 2.8 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Expected term of
options (in years) </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 4.5 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
4.5 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 4.5 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 4.5 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> </table> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Total compensation expense related to stock
options, deferred stock units and performance-based deferred stock units for
the three and six months ended June 30, 2009 was $34 million
and $81 million, respectively. Total compensation expense related
to stock options, deferred stock units and performance-based deferred stock
units for the three and six months ended June 30, 2008 was $59 million
and $119 million, respectively. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> At June 30,
2009, the total remaining unrecognized compensation cost related to the performance-based
deferred stock units granted in 2009 amounted to $26 million, which
will be amortized over the weighted-average remaining requisite service period
of 2.5 years. The remaining unrecognized compensation cost for the
performance-based deferred stock units may vary each reporting period based
on changes in the expected achievement of performance measures. </div>
</div> <!-- END PAGE WIDTH --> <!-- PAGEBREAK --> <div
style="margin-left: 0%"> <!-- BEGIN PAGE WIDTH --> <div style="margin-top:
0pt; font-size: 1pt"> </div> <div align="center" style="margin-left:
0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b> <font style="font-family: 'Times
New Roman', Times"> </font> </b> </div> <div style="margin-top:
0pt; font-size: 1pt"> </div> <div align="center" style="margin-left:
0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b> <font style="font-family: 'Times
New Roman', Times"> </font> </b> </div> <div style="margin-top:
18pt; font-size: 1pt">  </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 5 - us-gaap:OtherIncomeAndOtherExpenseDisclosureTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">5.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">OTHER EXPENSE/(INCOME), NET</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The components of other expense/(income),
net are as follows: </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <table border="0" width="100%" align="center"
cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF; text-align: left">
<!-- Table Width Row BEGIN --> <tr style="font-size: 1pt" valign="bottom">
<td width="58%"> </td><!-- colindex=01 type=maindata
--> <td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="2%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="8%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="8%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="2%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="8%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="2%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Interest cost incurred </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 113
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
145 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
229 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
288 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Less: amount capitalized
on construction </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (3 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(5 </td> <td nowrap="nowrap" align="left" valign="bottom"> ) </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(10 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (10 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Interest expense </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
110 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 140 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 219 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 278 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Interest income
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (7 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> (17 </td> <td nowrap="nowrap"
align="left" valign="bottom"> ) </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (11 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(39 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Foreign exchange losses/(gains) </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
3 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 11 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (14 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 7 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Other, net </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (17 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 20pt"> Total other expense/(income), net </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
106 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
134 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
194 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
229 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 3px double #000000">   </td> <td style="border-top:
3px double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
</tr> </table> <div align="left" style="margin-left: 0%; margin-right:
0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF"> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> For the six months
ended June 30, 2008, Schering-Plough recognized a gain of $17 million
($12 million after tax) on the sale of a manufacturing site. </div>
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 6 - us-gaap:IncomeTaxDisclosureTextBlock--> <div style="margin-left:
0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="3%"></td> <td width="97%"></td>
</tr> <tr valign="top"> <td> <b><font style="font-family:
'Times New Roman', Times">6.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">INCOME TAXES</font></b> </td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough expects to report a U.S. Net
Operating Loss (NOL) carryforward of approximately $1.3 billion on
its 2008 tax return, which will be available to offset future U.S. taxable
income, in varying amounts, through 2028. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> This U.S. NOL
carryforward could be materially reduced after examination of Schering-Plough’s
income tax returns by the Internal Revenue Service (IRS). Schering-Plough
continues to maintain a valuation allowance against its U.S. deferred
tax assets, as management cannot conclude that it is more likely than not
the benefit of the U.S. net deferred tax assets can be realized.
</div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 7 - us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">7.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">RETIREMENT PLANS AND OTHER POST-RETIREMENT BENEFITS</font></b>
</td> </tr> </table> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough has
defined benefit pension plans covering eligible employees in the U.S. and
certain foreign countries. In addition, Schering-Plough provides post-retirement
medical and life insurance benefits primarily to its eligible U.S. retirees
and their dependents through its post-retirement benefit plans. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> The components of net pension expense were as follows:
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"> <!-- Table Width
Row BEGIN --> <tr style="font-size: 1pt" valign="bottom"> <td
width="56%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="2%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="8%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="8%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="3%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="8%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="3%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Service cost </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
52 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
55 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
103 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
108 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Interest cost </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 59 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
59 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 116 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 118 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Expected return on plan
assets </div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (57 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> (60 </td> <td nowrap="nowrap"
align="left" valign="bottom"> ) </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (113 </td>
<td nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(119 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Amortization, net </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 10 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
7 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 21 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 13 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Settlement </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> — </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Net pension expense </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 64
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
61 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
127 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
120 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 3px double #000000">   </td> <td style="border-top:
3px double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
</tr> </table> <div align="left" style="margin-left: 0%; margin-right:
0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF"> </div> </div> <!--
END PAGE WIDTH --> <!-- PAGEBREAK --> <div style="margin-left:
0%"> <!-- BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> The components of
other post-retirement benefits expense were as follows: </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <table
border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <!-- Table Width Row BEGIN --> <tr style="font-size:
1pt" valign="bottom"> <td width="61%"> </td><!--
colindex=01 type=maindata --> <td width="2%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="1%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="9%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="1%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="8%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="1%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="8%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="1%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Service cost </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
6 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
7 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
12 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
14 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Interest cost </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 9 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
9 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 18 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 19 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Expected return on plan
assets </div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (3 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> (3 </td> <td nowrap="nowrap"
align="left" valign="bottom"> ) </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (6 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(6 </td> <td nowrap="nowrap" align="left" valign="bottom"> ) </td>
</tr> <tr valign="bottom"> <td nowrap="nowrap" align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Amortization, net </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> (1 </td> <td
nowrap="nowrap" align="left" valign="bottom"> ) </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (2 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 3 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Net other post-retirement benefits expense </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
11 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
14 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
22 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
30 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 3px double #000000">   </td> <td style="border-top:
3px double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
</tr> </table> <div align="left" style="margin-left: 0%; margin-right:
0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF"> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> For the three
and six months ended June 30, 2009, Schering-Plough contributed $45 million
and $185 million, respectively, to its retirement plans. For the
three and six months ended June 30, 2008, Schering-Plough contributed
$48 million and $96 million, respectively, to its retirement
plans. Schering-Plough expects to contribute approximately $420 million
to its retirement plans during the remainder of 2009. </div> </div>
</body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 8 - us-gaap:EarningsPerShareTextBlock--> <div style="margin-left:
0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="3%"></td> <td width="97%"></td>
</tr> <tr valign="top"> <td> <b><font style="font-family:
'Times New Roman', Times">8.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">EARNINGS PER COMMON SHARE</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> As of January 1, 2009, Schering-Plough
implemented FSP <font style="white-space: nowrap">EITF 03-6-1.</font>
The provisions of FSP <font style="white-space: nowrap">EITF 03-6-1</font>
require <font style="white-space: nowrap">Schering-Plough</font>
to treat unvested deferred stock units as participating securities in accordance
with the two-class method in the calculation of both basic and diluted earnings
per share. FSP <font style="white-space: nowrap">EITF 03-6-1</font>
must be applied retrospectively. The effect of the retrospective application
of FSP <font style="white-space: nowrap">EITF 03-6-1</font>
was not material to Schering-Plough’s earnings per share in 2008.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The following tables summarize the components
of basic and diluted earnings per common share computations. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF; text-align: left"> <!-- Table Width Row BEGIN -->
<tr style="font-size: 1pt" valign="bottom"> <td width="56%"> </td><!--
colindex=01 type=maindata --> <td width="2%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="2%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="8%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="8%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="4%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="8%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="2%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> <u>Reconciliation of undistributed earnings</u>:
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Net income available
to common shareholders </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 633 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 424 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 1,401
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
700 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Less: Dividends on common stock </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
106 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 106 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 212 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 211 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Less: Dividends on unvested
participating securities </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 2 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 3 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 20pt"> Undistributed earnings(1)
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 526 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 317 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,187 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 486 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> </tr> </table> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 0pt; font-size: 1pt"> </div>
</div> <!-- END PAGE WIDTH --> <!-- PAGEBREAK --> <div
style="margin-left: 0%"> <!-- BEGIN PAGE WIDTH --> <div style="margin-top:
0pt; font-size: 1pt"> </div> <div align="center" style="margin-left:
0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b> <font style="font-family: 'Times
New Roman', Times"> </font> </b> </div> <div style="margin-top:
0pt; font-size: 1pt"> </div> <div align="center" style="margin-left:
0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b> <font style="font-family: 'Times
New Roman', Times"> </font> </b> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="52%"> </td><!-- colindex=01
type=maindata --> <td width="7%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="3%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="7%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="3%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="7%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="3%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="7%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="3%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars and shares in millions)</b> </td> <td>
  </td> </tr> <tr style="line-height: 3pt; font-size:
1pt"> <td>  </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> <u>Basic earnings
per common share computation</u>: </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Net income available to common shareholders </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
633 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
424 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,401 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 700 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Less: Dividend equivalents on unvested participating
securities </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 1 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
2 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 2 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Less: Undistributed earnings allocated to unvested participating securities(1)
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 6 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 4 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
13 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 6 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Undistributed earnings allocated to common shareholders
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 626 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 419 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,386 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 692 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> EPS denominator: </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Weighted-average shares
outstanding for basic earnings per common share </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1,632 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 1,624 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1,630
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,623 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Basic earnings per common share </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 0.38
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
0.26 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
0.85 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
0.43 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 12pt; font-size: 1pt">  </div> <table
border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <!-- Table Width Row BEGIN --> <tr style="font-size:
1pt" valign="bottom"> <td width="52%"> </td><!--
colindex=01 type=maindata --> <td width="7%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="3%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="7%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="3%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="7%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="3%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="7%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="3%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars and shares in millions)</b> </td> <td>
  </td> </tr> <tr style="line-height: 3pt; font-size:
1pt"> <td>  </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> <u>Diluted earnings
per common share computation</u>: </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Net income available to common shareholders </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
633 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
424 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,401 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 700 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Add: Preferred stock dividends </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
75 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> — </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Less: Dividend equivalents on unvested participating
securities </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 1 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
2 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 2 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Less: Undistributed earnings allocated to unvested
participating securities(1) </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 6 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
4 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 13 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 6 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 626 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 419
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,461 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 692 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> EPS denominator calculation: </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Weighted-average shares outstanding for basic earnings
per common share </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1,632 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1,624 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 1,630 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1,623
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Dilutive effect of options(2) </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
8 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 5 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 3 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Dilutive effect of preferred
shares(3) </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 91 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom" style="font-size: 1pt"> <td>  
</td> <td>   </td> <td style="border-top: 1px
solid #000000">   </td> <td style="border-top: 1px solid
#000000">   </td> <td>   </td> <td>
  </td> <td style="border-top: 1px solid #000000">  
</td> <td style="border-top: 1px solid #000000">   </td>
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Weighted-average shares
outstanding for diluted earnings per common share </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1,640 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 1,625 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 1,726
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,626 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Diluted earnings per common share </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 0.38 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 0.26
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
0.85 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
0.43 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="2%"></td> <td width="1%"></td>
<td width="97%"></td> </tr> <tr> <td align="right"
valign="top"> (1) </td> <td></td> <td valign="bottom">
For the three and six months ended June 30, 2009, 17 million
of unvested outstanding deferred stock units and performance-based deferred
stock units are considered participating securities. For the three and six
months ended June 30, 2008, 19 million of unvested outstanding
deferred stock units and performance-based deferred stock units are considered
participating securities. The undistributed earnings are allocated to both
common shares and unvested participating securities in computing the earnings
per share under the two-class method.</td> </tr> <tr style="line-height:
3pt; font-size: 1pt"> <td> </td> </tr> <tr>
<td align="right" valign="top"> (2) </td> <td></td>
<td valign="bottom"> For the three and six months ended June 30,
2009, 35 million and 40 million, respectively, of equivalent
common shares issuable under Schering-Plough’s stock incentive plans
were excluded from the computation of diluted EPS because their effect would
have been antidilutive. For the three and six months ended June 30,
2008, 65 million and 53 million, respectively, of equivalent
common shares issuable under Schering-Plough’s stock incentive plans
were excluded from the computation of diluted EPS because their effect would
have been antidilutive.</td> </tr> <tr style="line-height:
3pt; font-size: 1pt"> <td> </td> </tr> <tr>
<td align="right" valign="top"> (3) </td> <td></td>
<td valign="bottom"> For the six months ended June 30, 2009,
approximately 91 million common shares, obtainable upon conversion
of Schering-Plough’s 2007 mandatory convertible preferred stock
were dilutive to earnings per share and were therefore included in the computation
of diluted earnings per share. For the three months ended June 30,
2009 and 2008, and for the six months ended June 30, 2008 approximately
91 million common shares, obtainable upon conversion of the 2007
mandatory convertible preferred stock were excluded from the computation of
diluted earnings per share because their effect would have been antidilutive.</td>
</tr> </table> <div style="margin-top: 3pt; font-size: 1pt"> 
</div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 9 - us-gaap:ComprehensiveIncomeNoteTextBlock--> <div style="margin-left:
0%"> <div style="font-size: 0pt; margin-left: 0%; width: 12%; align:
left; border-bottom: 0pt solid #000000"> </div><!-- callerid=999
iwidth=468 length=60 --> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF; text-align: left"><!-- TABLE 05 --> <tr> <td width="3%"></td>
<td width="97%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">9.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">COMPREHENSIVE INCOME</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Comprehensive income is comprised of the
following: </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"><!-- TABLE 01
--> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="63%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="4%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="5%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="2%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="5%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="4%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Net income </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
671 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
462 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,476 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 775 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Foreign currency translation adjustment </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
629 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (1 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 194 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 450 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Unrealized gain (loss) on
investments available for sale </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 13 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
4 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 9 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> (5 </td> <td nowrap="nowrap" align="left"
valign="bottom"> ) </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 20pt">
Total comprehensive income </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1,313 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 465
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,679 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,220 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 3px double #000000">   </td>
<td style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> </div>
</body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 10 - us-gaap:InventoryDisclosureTextBlock--> <div style="margin-left:
0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF;
text-align: left"><!-- TABLE 05 --> <tr> <td width="4%"></td>
<td width="96%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">10.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">INVENTORIES</font></b> </td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Inventories consisted of the following: </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<table border="0" width="100%" align="center" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF; text-align: left"><!-- TABLE 01 --> <!--
Table Width Row BEGIN --> <tr style="font-size: 1pt" valign="bottom">
<td width="78%"> </td><!-- colindex=01 type=maindata
--> <td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="4%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="9%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>June 30,<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>December 31,<br />
</b> </td> <td>   </td> </tr> <tr
style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>2009</b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2008</b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="6" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Finished products </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,150 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,212 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Goods in process </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1,928 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 1,428 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="background: #CCEEFF"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Raw materials and
supplies </div> </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 606 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 679 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom" style="font-size: 1pt"> <td>  
</td> <td>   </td> <td style="border-top: 1px
solid #000000">   </td> <td style="border-top: 1px solid
#000000">   </td> <td>   </td> <td>
  </td> <td style="border-top: 1px solid #000000">  
</td> <td style="border-top: 1px solid #000000">   </td>
<td>   </td> </tr> <tr valign="bottom"> <td
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
20pt"> Total inventories and inventory classified in other non-current
assets </div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 3,684 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 3,319 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom" style="font-size: 1pt"> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
For the six months ended June 30, 2008, $762 million of
amortization of the fair value <font style="white-space: nowrap">step-up</font>
recorded as part of the OBS acquisition are included in Depreciation and amortization
in the condensed consolidated statements of cash flows. </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Included in Other assets (non-current) at June 30, 2009 and December 31,
2008 was $206 million and $205 million, respectively, of
inventory not expected to be sold within one year. </div> </div>
</body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 11 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"><!-- TABLE 05 -->
<tr> <td width="4%"></td> <td width="96%"></td>
</tr> <tr valign="top"> <td> <b><font style="font-family:
'Times New Roman', Times">11.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">GOODWILL AND OTHER INTANGIBLE ASSETS</font></b> </td>
</tr> </table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Goodwill was $2,802 million at
June 30, 2009 as compared to $2,778 million at December 31,
2008. The increase was due to foreign currency translation. </div> </div>
<!-- END PAGE WIDTH --> <!-- PAGEBREAK --> <div style="margin-left:
0%"> <!-- BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> The components of
other intangible assets, net are as follows: </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"><!-- TABLE 01 --> <!-- Table Width Row BEGIN --> <tr
style="font-size: 1pt" valign="bottom"> <td width="43%"> </td><!--
colindex=01 type=maindata --> <td width="2%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="4%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="7%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="3%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> <td width="3%"> </td><!--
colindex=06 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=06 type=lead --> <td width="7%" align="right"> </td><!--
colindex=06 type=body --> <td width="1%" align="left"> </td><!--
colindex=06 type=hang1 --> <td width="3%"> </td><!--
colindex=07 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=07 type=lead --> <td width="3%" align="right"> </td><!--
colindex=07 type=body --> <td width="1%" align="left"> </td><!--
colindex=07 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="10" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30, 2009</b> </td>
<td>   </td> <td>   </td> <td
colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>December 31, 2008</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Gross<br />
</b> </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Gross<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
</tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Carrying<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Accumulated<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Carrying<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Accumulated<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Amount</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Amortization</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Net</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Amount</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>Amortization</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Net</b>
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td colspan="22" align="center" valign="bottom"> <b>(Dollars in
millions)</b> </td> <td>   </td> </tr>
<tr style="line-height: 3pt; font-size: 1pt"> <td>  </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Patents </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 3,852
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
609 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
3,243 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 3,803 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 418 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 3,385 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Trademarks and other
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 2,782 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 251 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
2,531 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 2,756 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 180 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
2,576 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Licenses and other </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
800 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 627 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 173 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 796 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
603 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 193 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 20pt"> Total other intangible assets </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 7,434
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,487 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 5,947 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 7,355 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 1,201
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
6,154 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> </tr> </table> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> These intangible assets are amortized on
the straight-line method over their respective useful lives. The residual
value of intangible assets is estimated to be zero. Amortization expense for
the three months ended June 30, 2009 and 2008 was $133 million
and $148 million, respectively and $262 million and $291 million
for the six months ended June 30, 2009 and 2008, respectively. Annual
amortization expenses related to these intangible assets for the years 2009
to 2013 is expected to be approximately $524 million. </div>
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 12 - us-gaap:DebtDisclosureTextBlock--> <div style="margin-left:
0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF;
text-align: left"><!-- TABLE 05 --> <tr> <td width="4%"></td>
<td width="96%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">12.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">BORROWINGS</font></b> </td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough’s outstanding borrowings
at June 30, 2009 and December 31, 2008 were as follows:
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"><!-- TABLE 01
--> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="78%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="4%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="9%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>June 30,<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>December 31,<br />
</b> </td> <td>   </td> </tr> <tr
style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>2009</b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2008</b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="6" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> <i>Short-term</i>
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Short-term borrowings
and current portion of long-term debt </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 260
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
244 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Current portion of capital leases </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
1 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 20pt"> Total short-term
borrowings and current portion of long-term debt </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 261
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
245 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 3px double #000000">   </td> <td style="border-top:
3px double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> <i>Long-term</i>
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> 5.00% senior
unsecured Euro-denominated notes due 2010 </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 707
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
698 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Floating rate Euro-denominated term loan due 2012 </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 636 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 698 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> 5.30% senior unsecured notes due 2013 </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,248 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1,247 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> 5.375% senior unsecured Euro-denominated notes due 2014
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 2,118 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 2,090
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> 6.00% senior
unsecured notes due 2017 </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 996 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
995 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> 6.50% senior unsecured notes due 2033 </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,143 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1,143 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> 6.55% senior
unsecured notes due 2037 </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 994 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
994 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Capital leases </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
20 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 19 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
Other long-term borrowings </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 46 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
47 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom"
style="background: #CCEEFF"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 20pt"> Total long-term borrowings,
net of current portion </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 7,908 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 7,931
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 3px double #000000">   </td> <td style="border-top:
3px double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> </tr> </table> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The decrease in the Floating rate Euro-denominated
term loan due 2012 was due to an early principal repayment of Euro 50 million
in the first quarter of 2009. No prepayment penalty was incurred relating
to this principal repayment. The other changes in outstanding Euro-denominated
borrowings at June 30, 2009 were due to foreign currency translation
on Euro-denominated debt balances. </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 13 - us-gaap:ScheduleOfFinancialInstrumentsOwnedAndPledgedAsCollateralTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"><!-- TABLE 05 -->
<tr> <td width="4%"></td> <td width="96%"></td>
</tr> <tr valign="top"> <td> <b><font style="font-family:
'Times New Roman', Times">13.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">FINANCIAL INSTRUMENTS</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Schering-Plough adopted FSP <font style="white-space:
nowrap">FAS 107-1</font> and APB Opinion <font style="white-space:
nowrap">28-1</font> in the second quarter of 2009. The guidance requires
disclosures about fair value of financial instruments in interim as well as
annual financial statements. </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> The table below
presents the carrying values and estimated fair values for certain of Schering-Plough’s
financial instruments at June 30, 2009 and December 31,
2008. Estimated fair values were determined based on market prices, where
available, or dealer quotes. The carrying values of all other financial instruments,
including cash and cash equivalents, approximated their estimated fair values
at June 30, 2009 and December 31, 2008. </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <table
border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <!-- Table Width Row BEGIN --> <tr style="font-size:
1pt" valign="bottom"> <td width="59%"> </td><!--
colindex=01 type=maindata --> <td width="2%"> </td><!--
colindex=02 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="5%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="6%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="5%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="6%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30, 2009</b> </td>
<td>   </td> <td>   </td> <td
colspan="6" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>December 31, 2008</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Carrying<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Estimated<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Carrying<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Estimated<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>Value</b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Fair Value</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>Value</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Fair
Value</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" align="center" valign="bottom"> <b>(Dollars
in millions)</b> </td> <td>   </td> </tr>
<tr style="line-height: 3pt; font-size: 1pt"> <td>  </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> <i>ASSETS:</i> </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> Short-term investments </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 1,411
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,411 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 5 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 5 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Long-term investments(1)
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 159 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 159 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
157 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 157 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="line-height:
9pt"> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> <td>   </td> <td>
  </td> <td>   </td> <td>  
</td> <td>   </td> <td>   </td>
<td>   </td> </tr> <tr valign="bottom"> <td
nowrap="nowrap" align="left" valign="bottom"> <i>LIABILITIES:</i>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom" style="background: #CCEEFF"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Short-term borrowings
and current portion of long-term debt </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 261
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
261 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
245 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
245 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Long-term debt </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 7,908 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
8,386 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 7,931 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 7,891
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="2%"></td> <td width="1%"></td>
<td width="97%"></td> </tr> <tr> <td align="right"
valign="top"> <font style="font-size: 1pt; color: white">.</font>(1)
</td> <td></td> <td valign="bottom"> Long-term investments,
which are included in other non-current assets, primarily consist of debt
and equity securities held in non-qualified trusts to fund long-term employee
benefit obligations. The long-term employee benefit obligations are included
as liabilities in the condensed consolidated balance sheets. These assets
can only be used to fund the related employee benefit obligations.</td>
</tr> </table> <div style="margin-top: 3pt; font-size: 1pt"> 
</div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 14 - us-gaap:FairValueDisclosuresTextBlock--> <div style="margin-left:
0%"> <div style="font-size: 0pt; margin-left: 0%; width: 12%; align:
left; border-bottom: 0pt solid #000000"> </div><!-- callerid=999
iwidth=468 length=60 --> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF; text-align: left"> <tr> <td width="4%"></td>
<td width="96%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">14.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">FAIR VALUE MEASUREMENTS</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Schering-Plough’s condensed consolidated
balance sheet at June 30, 2009 includes the following assets that
are measured at fair value on a recurring basis: </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="43%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="8%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="11%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="11%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="8%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Quoted Prices<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>in Active Markets<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> </tr> <tr style="font-size:
8pt" valign="bottom" align="center"> <td nowrap="nowrap" align="center"
valign="bottom">   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom">  
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>for
Identical<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Significant<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Significant<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Total<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Assets and<br /> </b> </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Other
Observable<br /> </b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom"> <b>Unobservable<br /> </b> </td>
<td>   </td> </tr> <tr style="font-size: 8pt"
valign="bottom" align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>Fair Value at<br
/> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Liabilities<br /> </b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>Inputs<br /> </b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Inputs<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30, 2009</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>(Level 1)</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>(Level 2)</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>(Level 3)</b> </td> <td>   </td>
</tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="14" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> <i>Assets</i>
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom"> <td align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Securities held
for employee compensation </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 104 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 104 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> —
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Other </div> </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
8 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 5 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 3 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> — </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom" style="font-size: 1pt"> <td>  
</td> <td>   </td> <td style="border-top: 1px
solid #000000">   </td> <td style="border-top: 1px solid
#000000">   </td> <td>   </td> <td>
  </td> <td style="border-top: 1px solid #000000">  
</td> <td style="border-top: 1px solid #000000">   </td>
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> </tr> <tr valign="bottom">
<td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 20pt"> Total assets </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 112
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
109 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
3 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
— </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
At June 30, 2009 there were no liabilities that were subject to fair
value measurement. </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> The majority of Schering-Plough’s
assets measured at fair value on a recurring basis are measured using unadjusted
quoted prices in active markets for identical items (Level 1) as
inputs, multiplied by the number of units held at the balance sheet date.
As of June 30, 2009, assets with fair values measured using significant
other observable inputs (Level 2) include measurements using
quoted prices for identical items in markets that are not active and measurements
using inputs that are derived principally from or corroborated by observable
market data. </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 15 - us-gaap:SegmentReportingDisclosureTextBlock--> <div
style="margin-left: 0%"> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF; text-align: left"> <tr> <td width="4%"></td>
<td width="96%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">15.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">SEGMENT DATA</font></b> </td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough has three reportable segments: Prescription
Pharmaceuticals, Animal Health and Consumer Health Care. The segment sales
and profit data that follow are consistent with Schering-Plough’s
current management reporting structure. The Prescription Pharmaceuticals segment
discovers, develops, manufactures and markets human pharmaceutical products.
The Animal Health segment discovers, develops, manufactures and markets animal
health products. The Consumer Health Care segment develops, manufactures and
markets <font style="white-space: nowrap">over-the-counter,</font>
foot care and sun care products, primarily in the U.S. </div> </div>
<!-- END PAGE WIDTH --> <!-- PAGEBREAK --> <div style="margin-left:
0%"> <!-- BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> <b><i>Net
sales by segment:</i></b> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <table border="0" width="100%"
align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family:
'Times New Roman', Times; color: #000000; background: #FFFFFF; text-align:
left"> <!-- Table Width Row BEGIN --> <tr style="font-size: 1pt"
valign="bottom"> <td width="64%"> </td><!-- colindex=01
type=maindata --> <td width="2%"> </td><!-- colindex=02
type=gutter --> <td width="1%" align="right"> </td><!--
colindex=02 type=lead --> <td width="5%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="4%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="4%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Prescription Pharmaceuticals
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 3,589 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 3,702 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 6,968
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
7,259 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Animal Health </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 677 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
818 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,307 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 1,540 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> Consumer Health Care </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 381 </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
401 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 765 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 778 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 1px solid #000000">   </td>
<td style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> </tr> <tr valign="bottom"> <td align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 20pt">
Consolidated net sales </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 4,647 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 4,921
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
9,040 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 9,577 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> </tr> <tr valign="bottom"
style="font-size: 1pt"> <td>   </td> <td>  
</td> <td style="border-top: 3px double #000000">   </td>
<td style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 12pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family:
Arial, Helvetica; color: #000000; background: #FFFFFF"> <b><i><font
style="font-family: 'Times New Roman', Times">Profit by segment:</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"> <!-- Table Width
Row BEGIN --> <tr style="font-size: 1pt" valign="bottom"> <td
width="65%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="5%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="3%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="4%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="4%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30,</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30,</b> </td> <td>
  </td> </tr> <tr style="font-size: 8pt" valign="bottom"
align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>2009</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>2008(1)</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>2009</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom" style="border-bottom: 1px solid #000000">
<b>2008(1)</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="14" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> </tr> <tr style="line-height: 3pt; font-size: 1pt">
<td>  </td> </tr> <tr valign="bottom" style="background:
#CCEEFF"> <td nowrap="nowrap" align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Prescription Pharmaceuticals
</div> </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 813 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 746 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 1,766 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 1,260 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> Animal Health </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 117 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 4 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 244 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
(82 </td> <td nowrap="nowrap" align="left" valign="bottom"> )
</td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td align="left" valign="bottom"> <div style="text-indent: -10pt;
margin-left: 10pt"> Consumer Health Care </div> </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
60 </td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 63 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 177 </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom"> 169 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> </tr>
<tr valign="bottom"> <td align="left" valign="bottom"> <div
style="text-indent: -10pt; margin-left: 10pt"> Corporate and other(2) </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (217 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (311 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (480 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> (483 </td> <td nowrap="nowrap" align="left" valign="bottom">
) </td> </tr> <tr valign="bottom" style="font-size: 1pt">
<td>   </td> <td>   </td> <td
style="border-top: 1px solid #000000">   </td> <td style="border-top:
1px solid #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 1px solid #000000">
  </td> <td style="border-top: 1px solid #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 1px solid #000000">   </td> <td
style="border-top: 1px solid #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
1px solid #000000">   </td> <td style="border-top: 1px
solid #000000">   </td> <td>   </td>
</tr> <tr valign="bottom" style="background: #CCEEFF"> <td
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
20pt"> Income before income taxes </div> </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom"> $ </td>
<td nowrap="nowrap" align="right" valign="bottom"> 773 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 502
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom"> $ </td> <td nowrap="nowrap" align="right" valign="bottom">
1,707 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom"> $ </td> <td nowrap="nowrap" align="right"
valign="bottom"> 864 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> </tr> <tr valign="bottom" style="font-size:
1pt"> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> <td>   </td> <td style="border-top:
3px double #000000">   </td> <td style="border-top: 3px
double #000000">   </td> <td>   </td>
<td>   </td> <td style="border-top: 3px double #000000">
  </td> <td style="border-top: 3px double #000000">  
</td> <td>   </td> <td>   </td>
<td style="border-top: 3px double #000000">   </td> <td
style="border-top: 3px double #000000">   </td> <td>
  </td> </tr> </table> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="2%"></td> <td width="1%"></td>
<td width="97%"></td> </tr> <tr> <td align="right"
valign="top"> (1) </td> <td></td> <td valign="bottom">
For the three months ended June 30, 2009, the Prescription Pharmaceuticals
and the Animal Health segments’ profits include expense of $102 million
and $33 million, respectively, primarily related to the amortization
of fair values of intangible assets acquired as part of the OBS transaction.
For the six months ended June 30, 2009, the Prescription Pharmaceuticals
and the Animal Health segment’s profits includes expense of $199 million
and $65 million, respectively, related to the amortization of fair
values of intangible assets acquired as part of the OBS transaction. For the
three months ended June 30, 2008, the Prescription Pharmaceuticals
and the Animal Health segments’ profits include expense of $171 million
and $186 million, respectively, related to purchase accounting items
from the OBS transaction. For the six months ended June 30, 2008,
the Prescription Pharmaceuticals segment’s profit and the Animal
Health segment’s loss includes expense of $603 million
and $445 million, respectively, related to purchase accounting items
from the OBS transaction.</td> </tr> <tr style="line-height:
3pt; font-size: 1pt"> <td> </td> </tr> <tr>
<td align="right" valign="top"> (2) </td> <td></td>
<td valign="bottom"> For the three and six months ended June 30,
2009, “Corporate and other” included special, merger and
acquisition related charges of $29 million and $104 million,
respectively. For the three and six months ended June 30, 2008, “Corporate
and other” included special and acquisition related charges of $94 million
and $117 million, respectively.</td> </tr> </table>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div style="margin-top: 3pt; font-size: 1pt">  </div>
<div style="font-size: 1pt; margin-left: 0%; width: 12%; align: left; border-bottom:
1pt solid #000000"> </div><!-- callerid=999 iwidth=468 length=60
--> <div style="margin-top: 3pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough’s consolidated net sales
do not include sales of VYTORIN and ZETIA, which are managed in the cholesterol
joint venture with Merck, as Schering-Plough accounts for this joint venture
under the equity method of accounting (see Note 3, “Equity
Income,” for additional information). The Prescription Pharmaceuticals
segment includes equity income from the Merck/Schering-Plough joint venture.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> “Corporate and other”
includes interest income and expense, foreign exchange gains and losses, headquarters
expenses, special, merger and acquisition-related charges and other miscellaneous
items. The accounting policies used for segment reporting are the same as
those described in Note 1, “Summary of Significant Accounting
Policies,” in Schering-Plough’s 2008 <font style="white-space:
nowrap">10-K.</font> </div> </div> <!-- END PAGE WIDTH
--> <!-- PAGEBREAK --> <div style="margin-left: 0%"> <!--
BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size: 1pt">
</div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> Sales of products
comprising 10 percent or more of Schering-Plough’s U.S. or
international sales for the three and six months ended June 30, 2009,
were as follows: </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table border="0" width="100%" align="center" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF; text-align: left"> <!-- Table Width
Row BEGIN --> <tr style="font-size: 1pt" valign="bottom"> <td
width="31%"> </td><!-- colindex=01 type=maindata -->
<td width="2%"> </td><!-- colindex=02 type=gutter
--> <td width="1%" align="right"> </td><!-- colindex=02
type=lead --> <td width="14%" align="right"> </td><!--
colindex=02 type=body --> <td width="1%" align="left"> </td><!--
colindex=02 type=hang1 --> <td width="3%"> </td><!--
colindex=03 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=03 type=lead --> <td width="11%" align="right"> </td><!--
colindex=03 type=body --> <td width="1%" align="left"> </td><!--
colindex=03 type=hang1 --> <td width="3%"> </td><!--
colindex=04 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=04 type=lead --> <td width="14%" align="right"> </td><!--
colindex=04 type=body --> <td width="1%" align="left"> </td><!--
colindex=04 type=hang1 --> <td width="3%"> </td><!--
colindex=05 type=gutter --> <td width="1%" align="right"> </td><!--
colindex=05 type=lead --> <td width="11%" align="right"> </td><!--
colindex=05 type=body --> <td width="1%" align="left"> </td><!--
colindex=05 type=hang1 --> </tr> <!-- Table Width Row END -->
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom">
<b>Three Months Ended<br /> </b> </td> <td>
  </td> <td>   </td> <td colspan="6"
nowrap="nowrap" align="center" valign="bottom"> <b>Six Months Ended<br
/> </b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="6" nowrap="nowrap" align="center" valign="bottom"
style="border-bottom: 1px solid #000000"> <b>June 30, 2009</b>
</td> <td>   </td> <td>   </td>
<td colspan="6" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>June 30, 2009</b> </td>
<td>   </td> </tr> <tr style="font-size: 8pt"
valign="bottom" align="center"> <td nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td>   </td> <td
colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>Percentage
of<br /> </b> </td> <td>   </td> <td>
  </td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
  </td> <td>   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>Percentage of<br /> </b> </td> <td>  
</td> </tr> <tr style="font-size: 8pt" valign="bottom" align="center">
<td nowrap="nowrap" align="center" valign="bottom">   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Amount</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom" style="border-bottom:
1px solid #000000"> <b>Applicable Sales</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom" style="border-bottom: 1px solid
#000000"> <b>Amount</b> </td> <td>   </td>
<td>   </td> <td colspan="2" nowrap="nowrap" align="center"
valign="bottom" style="border-bottom: 1px solid #000000"> <b>Applicable
Sales</b> </td> <td>   </td> </tr>
<tr style="font-size: 8pt" valign="bottom" align="center"> <td nowrap="nowrap"
align="center" valign="bottom">   </td> <td>  
</td> <td colspan="2" nowrap="nowrap" align="center" valign="bottom">
<b>(Dollars in millions)</b> </td> <td>  
</td> <td>   </td> <td colspan="2" nowrap="nowrap"
align="center" valign="bottom"> <b>(%)</b> </td> <td>
  </td> <td>   </td> <td colspan="2"
nowrap="nowrap" align="center" valign="bottom"> <b>(Dollars in millions)</b>
</td> <td>   </td> <td>   </td>
<td colspan="2" nowrap="nowrap" align="center" valign="bottom"> <b>(%)</b>
</td> <td>   </td> </tr> <tr style="line-height:
3pt; font-size: 1pt"> <td>  </td> </tr> <tr
valign="bottom" style="background: #CCEEFF"> <td nowrap="nowrap" align="left"
valign="bottom"> <div style="text-indent: -10pt; margin-left: 10pt">
<b>U.S.</b> </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom">  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> </tr> <tr valign="bottom"> <td nowrap="nowrap"
align="left" valign="bottom"> <div style="text-indent: -10pt; margin-left:
10pt"> NASONEX </div> </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom"> $ </td> <td
nowrap="nowrap" align="right" valign="bottom"> 183 </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td>  
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td nowrap="nowrap" align="right" valign="bottom"> 13 </td>
<td nowrap="nowrap" align="left" valign="bottom"> % </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
$ </td> <td nowrap="nowrap" align="right" valign="bottom"> 340
</td> <td nowrap="nowrap" align="left" valign="bottom">  
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 12 </td> <td nowrap="nowrap" align="left" valign="bottom">
% </td> </tr> <tr valign="bottom" style="background: #CCEEFF">
<td nowrap="nowrap" align="left" valign="bottom"> <div style="text-indent:
-10pt; margin-left: 10pt"> <b>International</b> </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom">   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td>   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td nowrap="nowrap" align="right" valign="bottom">   </td>
<td nowrap="nowrap" align="left" valign="bottom">   </td>
<td>   </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom">   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> </tr> <tr
valign="bottom"> <td nowrap="nowrap" align="left" valign="bottom">
<div style="text-indent: -10pt; margin-left: 10pt"> REMICADE </div>
</td> <td>   </td> <td nowrap="nowrap" align="left"
valign="bottom">   </td> <td nowrap="nowrap" align="right"
valign="bottom"> 565 </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td>   </td> <td nowrap="nowrap"
align="left" valign="bottom">   </td> <td nowrap="nowrap"
align="right" valign="bottom"> 18 </td> <td nowrap="nowrap" align="left"
valign="bottom"> % </td> <td>   </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td
nowrap="nowrap" align="right" valign="bottom"> 1,083 </td> <td
nowrap="nowrap" align="left" valign="bottom">   </td> <td>
  </td> <td nowrap="nowrap" align="left" valign="bottom">
  </td> <td nowrap="nowrap" align="right" valign="bottom">
18 </td> <td nowrap="nowrap" align="left" valign="bottom"> % </td>
</tr> </table> <div align="left" style="margin-left: 0%; margin-right:
0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF"> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> For the three
and six months ended June 30, 2009, net sales outside the U.S. totaled
$3.2 billion and $6.1 billion, respectively. Net sales outside
the U.S. approximated 68 percent of consolidated net sales for both
periods. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Schering-Plough does not disaggregate assets
on a segment basis for internal management reporting and, therefore, such
information is not presented. </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 16 - sgp:ProductLicensesTextBlock--> <div style="margin-left:
0%"> <div style="margin-top: 12pt; font-size: 1pt">  </div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF;
text-align: left"> <tr> <td width="4%"></td> <td width="96%"></td>
</tr> <tr valign="top"> <td> <b><font style="font-family:
'Times New Roman', Times">16.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">PRODUCT LICENSES</font></b> </td> </tr>
</table> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> In December 2007, Schering-Plough and Centocor
revised their distribution agreement regarding the development, commercialization
and distribution of both REMICADE and golimumab, extending Schering-Plough’s
rights to exclusively market REMICADE to match the duration of Schering-Plough’s
exclusive marketing rights for golimumab. Effective upon regulatory approval
of golimumab in the EU, Schering-Plough’s marketing rights for both
products will now extend for 15 years after the first commercial
sale of golimumab within the EU. After operating expenses and subject to certain
adjustments, Schering-Plough currently is entitled to receive an approximately
60 percent share of profits on Schering-Plough’s distribution
in the Schering-Plough marketing territory. Beginning in 2010, subject to
the approval of golimumab within the EU, share of profits will change over
time to a 50 percent share of profits by 2014 for both products and
the share of profits will remain fixed thereafter for the remainder of the
term. The changes to the duration of REMICADE marketing rights and the profit
sharing arrangement for the products are all conditioned on approval of golimumab
being granted in the EU prior to September 1, 2014. Schering-Plough
may independently develop and market golimumab for a Crohn’s disease
indication in its territories, with an option for Centocor to participate.
In addition, Schering-Plough and Centocor agreed to utilize an autoinjector
device in the commercialization of golimumab and further agreed to share its
development costs. </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 17 - sgp:LegalEnvironmentalAndRegulatoryMattersTextBlock-->
<div style="margin-left: 0%"> <div style="margin-top: 12pt; font-size:
1pt">  </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF; text-align: left"> <tr> <td width="4%"></td>
<td width="96%"></td> </tr> <tr valign="top"> <td>
<b><font style="font-family: 'Times New Roman', Times">17.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">LEGAL, ENVIRONMENTAL AND REGULATORY MATTERS</font></b>
</td> </tr> </table> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough is
involved in various claims, investigations and legal proceedings. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough records a liability for contingencies
when it is probable that a liability has been incurred and the amount can
be reasonably estimated. Schering-Plough adjusts its liabilities for contingencies
to reflect the current best estimate of probable loss or minimum liability,
as the case may be. Where no best estimate is determinable, Schering-Plough
records the minimum amount within the most probable range of its liability.
Expected insurance recoveries have not been considered in determining the
amounts of recorded liabilities for environmental related matters. </div>
<div style="margin-top: 3pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> If Schering-Plough believes that a loss contingency
is reasonably possible, rather than probable, or the amount of loss cannot
be estimated, no liability is recorded. However, where a liability is reasonably
possible, disclosure of the loss contingency is made. </div> <div
style="margin-top: 3pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Schering-Plough reviews the status of all claims, investigations and legal
proceedings on an ongoing basis, including related insurance coverages. From
time to time, Schering-Plough may settle or otherwise resolve these matters
on terms and conditions management believes are in the best interests of Schering-Plough.
Resolution of any or all claims, investigations and legal proceedings, individually
or in the aggregate, could have a material adverse effect on Schering-Plough’s
condensed consolidated results of operations, cash flows or financial condition.
</div> </div> <!-- END PAGE WIDTH --> <!-- PAGEBREAK
--> <div style="margin-left: 0%"> <!-- BEGIN PAGE WIDTH -->
<div style="margin-top: 0pt; font-size: 1pt"> </div> <div align="center"
style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial,
Helvetica; color: #000000; background: #FFFFFF"> <b> <font style="font-family:
'Times New Roman', Times"> </font> </b> </div> <div
style="margin-top: 0pt; font-size: 1pt"> </div> <div align="center"
style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial,
Helvetica; color: #000000; background: #FFFFFF"> <b> <font style="font-family:
'Times New Roman', Times"> </font> </b> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Except for the matters discussed in the remainder of this Note, the recorded
liabilities for contingencies at June 30, 2009, and the related expenses
incurred during the three and six months ended June 30, 2009, were
not material. In the opinion of management, based on the advice of legal counsel,
the ultimate outcome of these matters, except matters discussed in the remainder
of this Note, is not expected to have a material impact on Schering-Plough’s
consolidated results of operations, cash flows or financial condition. </div>
<div style="margin-top: 12pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 2%; margin-right: 0%; font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<b><i><font style="font-family: 'Times New Roman', Times">AWP
Litigation and Investigations</font></i></b> </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough continues to respond to existing
and new litigation by certain states and private payors and investigations
by the Department of Health and Human Services, the Department of Justice
and several states into industry and Schering-Plough practices regarding average
wholesale price (AWP). Schering-Plough is cooperating with these investigations.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> These litigations and investigations relate
to whether the AWP used by pharmaceutical companies for certain drugs improperly
exceeds the average prices paid by providers and, as a consequence, results
in unlawful inflation of certain reimbursements for drugs by state programs
and private payors that are based on AWP. The complaints allege violations
of federal and state law, including fraud, Medicaid fraud and consumer protection
violations, among other claims. In the majority of cases, the plaintiffs are
seeking class certifications. In some cases, classes have been certified.
The outcome of these litigations and investigations could include substantial
damages, the imposition of substantial fines, penalties and injunctive or
administrative remedies. </div> <div style="margin-top: 12pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 2%;
margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000;
background: #FFFFFF"> <b><i><font style="font-family: 'Times
New Roman', Times">Securities and Class Action Litigation</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 2%; margin-right: 0%;
font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <i><font style="font-family: 'Times New Roman', Times">Federal
Securities Litigation</font></i> </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Following Schering-Plough’s
announcement that the FDA had been conducting inspections of Schering-Plough’s
manufacturing facilities in New Jersey and Puerto Rico and had issued reports
citing deficiencies concerning compliance with current Good Manufacturing
Practices, several lawsuits were filed against Schering-Plough and certain
named officers. These lawsuits allege that the defendants violated the federal
securities law by allegedly failing to disclose material information and making
material misstatements. Specifically, they allege that Schering-Plough failed
to disclose an alleged serious risk that a new drug application for CLARINEX
would be delayed as a result of these manufacturing issues, and they allege
that Schering-Plough failed to disclose the alleged depth and severity of
its manufacturing issues. These complaints were consolidated into one action
in the U.S. District Court for the District of New Jersey, and a
consolidated amended complaint was filed on October 11, 2001, purporting
to represent a class of shareholders who purchased shares of Schering-Plough
stock from May 9, 2000 through February 15, 2001. The complaint
seeks compensatory damages on behalf of the class. The Court certified the
shareholder class on October 10, 2003. Notice of pendency of the
class action was sent to members of that class in July 2007. On February 18,
2009 the Court signed an order preliminarily approving a settlement agreement.
The proposed settlement agreement was presented to the Court on June 1,
2009. The Court took the settlement agreement under advisement. </div>
<div style="margin-top: 12pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 2%; margin-right: 0%; font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<i><font style="font-family: 'Times New Roman', Times">ERISA Litigation</font></i>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> On March 31, 2003, Schering-Plough
was served with a putative class action complaint filed in the U.S. District
Court in New Jersey alleging that Schering-Plough, retired Chairman, CEO and
President Richard Jay Kogan, Schering-Plough’s Employee Savings
Plan (Plan) administrator, several current and former directors, and certain
former corporate officers breached their fiduciary obligations to certain
participants in the Plan. The complaint seeks damages in the amount of losses
allegedly suffered by the Plan. The complaint was dismissed on June 29,
2004. The plaintiffs appealed. On August 19, 2005 the U.S. Court
of Appeals for the Third Circuit reversed the dismissal by the District Court
and the matter has been remanded back to the District Court for further proceedings.
On September 30, 2008, the District Court entered an order granting
in part, and denying in part, the named putative class representative’s
motion for class certification. Schering-Plough thereafter petitioned the
United States District Court of Appeals for the Third Circuit for leave to
appeal the class certification decision. Schering-Plough’s petition
was granted on December 10, 2008 and the appeal is currently pending
before the Third Circuit. </div> </div> <!-- END PAGE WIDTH
--> <!-- PAGEBREAK --> <div style="margin-left: 0%"> <!--
BEGIN PAGE WIDTH --> <div style="margin-top: 0pt; font-size: 1pt">
</div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 0pt; font-size:
1pt"> </div> <div align="center" style="margin-left: 0%; margin-right:
0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <b> <font style="font-family: 'Times New Roman', Times">
</font> </b> </div> <div style="margin-top: 12pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 2%;
margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000;
background: #FFFFFF"> <i><font style="font-family: 'Times New
Roman', Times">K-DUR Antitrust Litigation</font></i> </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> Schering-Plough had settled patent litigation with
Upsher-Smith, Inc. (Upsher-Smith) and ESI Lederle, Inc. (Lederle) relating
to generic versions of K-DUR, Schering-Plough’s long-acting potassium
chloride product supplement used by cardiac patients, for which Lederle and
Upsher Smith had filed Abbreviated New Drug Applications. Following the commencement
of an FTC administrative proceeding alleging anti-competitive effects from
those settlements (which has been resolved in Schering-Plough’s
favor), alleged class action suits were filed in federal and state courts
on behalf of direct and indirect purchasers of K-DUR against Schering-Plough,
Upsher-Smith and Lederle. These suits claim violations of federal and state
antitrust laws, as well as other state statutory and common law causes of
action. These suits seek unspecified damages. In February 2009, a special
master recommended that the U.S. District Court for the District
of New Jersey dismiss the class action lawsuits on summary judgment. The U.S. District
Court judge has not yet ruled on the recommendation. </div> <div
style="margin-top: 12pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family:
Arial, Helvetica; color: #000000; background: #FFFFFF"> <i><font
style="font-family: 'Times New Roman', Times">Third-party Payor Actions</font></i>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Several purported class action litigations
have been filed following the announcement of the settlement of the Massachusetts
Investigation. Plaintiffs in these actions seek damages on behalf of third-party
payors resulting from the allegations of off-label promotion and improper
payments to physicians that were at issue in the Massachusetts Investigation.
</div> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 2%; margin-right: 0%;
font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <i><font style="font-family: 'Times New Roman', Times">Litigation
and Investigations relating to the Merck/Schering-Plough Cholesterol Joint
Venture</font></i> </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> <i>Background.</i>  In
January 2008, the Merck/Schering-Plough Cholesterol Joint Venture announced
the results of the ENHANCE clinical trial (Effect of Combination Ezetimibe
and High-Dose Simvastatin vs. Simvastatin Alone on the Atherosclerotic Process
in Patients with Heterozygous Familial Hypercholesterolemia). In July 2008
the Merck/Schering-Plough Cholesterol Joint Venture announced the results
of the SEAS clinical trial (Simvastatin and Ezetimibe in Aortic Stenosis).
Litigation and investigations with respect to matters relating to these clinical
trials have been disclosed in prior filings. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Schering-Plough
is cooperating fully with the various investigations and responding to the
requests for information, and Schering-Plough intends to vigorously defend
the lawsuits that have been filed relating to the ENHANCE study. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> <i>Investigations and Inquiries.</i>  Through
the date of filing this <font style="white-space: nowrap">10-Q,</font>
Schering-Plough, the Cholesterol Joint Venture <font style="white-space:
nowrap">and/or</font> its joint venture partner, Merck, received
a number of governmental inquiries and have been the subject of a number of
investigations and inquiries relating to the ENHANCE clinical trial. These
include several letters from Congress, including the Subcommittee on Oversight
and Investigations of the House Committee on Energy and Commerce, and the
ranking minority member of the Senate Finance Committee, collectively seeking
a combination of witness interviews, documents and information on a variety
of issues related to the Merck/Schering-Plough Cholesterol Joint Venture’s
ENHANCE clinical trial. These also include several subpoenas from state officials,
including State Attorneys General, and requests for information from U.S. Attorneys
and the Department of Justice seeking similar information and documents. In
addition, Schering-Plough received letters from the Subcommittee on Oversight
and Investigations of the House Committee on Energy and Commerce seeking certain
information and documents related to the SEAS clinical trial, and other matters.
Schering-Plough, Merck and the Joint Venture are cooperating with these investigations
and responding to the inquiries. </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> In January 2008,
after the initial release of ENHANCE data, the FDA stated that it would review
the results of the ENHANCE trial. On January 8, 2009 the FDA announced
the results of its review. The FDA stated that following two years of treatment,
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <table width="100%" border="0" cellpadding="0" cellspacing="0"
style="text-align: left"> <tr> <td width="4%"></td> <td
width="2%"></td> <td width="94%"></td> </tr> <tr
valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times;
color: #000000; background: #FFFFFF"> <td> </td> <td>
•  </td> <td align="left"> Carotid artery thickness
increased by 0.011 mm in the VYTORIN group and by 0.006 mm in the simvastatin
group. The difference in the changes in carotid artery thickness between the
two groups was <b>not </b>statistically significant. </td>
</tr> <tr style="line-height: 6pt; font-size: 1pt"> <td> </td>
</tr> <tr valign="top" style="font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> <td> </td>
<td> •  </td> <td align="left"> The levels
of LDL cholesterol decreased by 56% in the VYTORIN group and decreased by
39% in the simvastatin group. The difference in the reductions in LDL cholesterol
between the two groups <b>was </b>statistically significant. </td>
</tr> </table> </div> <!-- END PAGE WIDTH --> <!--
PAGEBREAK --> <div style="margin-left: 0%"> <!-- BEGIN PAGE WIDTH
--> <div style="margin-top: 0pt; font-size: 1pt"> </div> <div
align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt;
font-family: Arial, Helvetica; color: #000000; background: #FFFFFF"> <b>
<font style="font-family: 'Times New Roman', Times"> </font> </b>
</div> <div style="margin-top: 0pt; font-size: 1pt"> </div>
<div align="center" style="margin-left: 0%; margin-right: 0%; font-size:
10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">
<b> <font style="font-family: 'Times New Roman', Times"> </font>
</b> </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> The FDA also stated that the results from
ENHANCE do not change its position that an elevated LDL cholesterol is a risk
factor for cardiovascular disease and that lowering LDL cholesterol reduces
the risk for cardiovascular disease. The FDA also stated that pending the
results of the IMPROVE-IT clinical trial, patients should not stop taking
VYTORIN or other cholesterol lowering medications and should talk to their
doctors if they have any questions. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> <i>Litigation.</i>  Schering-Plough
continues to respond to existing and new litigation, including civil class
action lawsuits alleging common law and state consumer fraud claims in connection
with Schering-Plough’s sale and promotion of the Merck/Schering-Plough
joint venture products VYTORIN and ZETIA; several putative shareholder securities
class action lawsuits (where several officers are also named defendants) alleging
false and misleading statements and omissions by Schering-Plough and its representatives
related to the timing of disclosures concerning the ENHANCE results, allegedly
in violation of Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934; a putative shareholder securities class action lawsuit (where
several officers and directors are also named), alleging material misstatements
and omissions related to the ENHANCE results in the offering documents in
connection with Schering-Plough’s 2007 securities offerings, allegedly
in violation of the Securities Act of 1933, including Section 11;
several putative class action suits alleging that Schering-Plough and certain
officers and directors breached their fiduciary duties under ERISA and seeking
damages in the amount of losses allegedly suffered by the Plans; a Shareholder
Derivative Action alleging that the Board of Directors breached its fiduciary
obligations relating to the timing of the release of the ENHANCE results;
and a letter on behalf of a single shareholder requesting that the Board of
Directors investigate the allegations in the litigation described above and,
if warranted, bring any appropriate legal action on behalf of Schering-Plough.
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> On July 15, 2009, Schering-Plough
and Merck announced a settlement with a multistate group of 36 Attorneys General
that was investigating whether the companies violated state consumer protection
laws in connection with the ENHANCE clinical trial or the promotion and marketing
of VYTORIN. As part of the civil resolution of these investigations, the companies
agreed to reimburse the 35 states and the District of Columbia for
their collective investigative costs, which totalled $5.4 million.
The payments under this settlement will be made by the Merck/Schering-Plough
Pharmaceuticals cholesterol joint venture. The settlement agreement does not
require any further payment. </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> With respect to
VYTORIN and ZETIA, the agreement also includes voluntary assurances of compliance
by the companies, including assurances that the companies will continue to
comply with various laws and regulations, such as the U.S. Food and
Drug Administration (FDA) Amendments Act, the Food, Drug and Cosmetic Act,
and various laws requiring truthful and non-misleading marketing of products.
The agreement is not an admission by the companies of any misconduct or liability.
</div> <div style="margin-top: 12pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 2%; margin-right: 0%;
font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <i><font style="font-family: 'Times New Roman', Times">Legal
Proceedings Related to the Merck Combination</font></i> </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> <i>Class Action Suits.</i>  Since
the announcement of the proposed combination, several putative class action
lawsuits seeking to enjoin the merger, among other things, have been filed
on behalf of shareholders of Schering-Plough in federal and state court. </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> On April 30, 2009, the federal actions were
consolidated. On July 23, 2009, Schering-Plough entered into an agreement
regarding a settlement of the consolidated federal class action for certain
disclosures relating to the proposed merger. See Schering-Plough’s
<font style="white-space: nowrap">Form 8-K</font> filed
July 24, 2009. The agreement to make the additional disclosures does not constitute
an acknowledgment that the additional disclosures are required under any applicable
state or federal law, statute, rule or regulation. The parties also agreed
that plaintiffs’ counsel may apply to the Court for an award of
attorneys’ fees and costs. </div> <div style="margin-top:
6pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Two additional
putative class action complaints have been filed on behalf of public shareholders
of Merck. On June 4, 2009, plaintiffs filed a consolidated class
action complaint seeking, among other things, class action status, an order
preliminarily and permanently enjoining the proposed combination, rescission
of the combination if it is consummated, and attorneys’ fees and
expenses. On July 23, 2009, Schering-Plough and Merck entered into an agreement
regarding a settlement of these consolidated actions for certain disclosures
relating to the proposed merger which had previously been made. The agreement
to make the additional disclosures does not constitute an acknowledgment that
the additional disclosures are required under any applicable state or federal
law, statute, rule or regulation. The parties also agreed that plaintiffs’
counsel may apply to the court for an award of attorneys’ fees and
costs. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> <i>Centocor Distribution Agreement.</i>  On
May 27, 2009, Centocor, a wholly owned subsidiary of Johnson &
Johnson, delivered to Schering-Plough a notice initiating an arbitration proceeding
to resolve whether, as a result of the proposed merger between Schering-Plough
and Merck, Centocor is permitted to terminate Schering-Plough’s
rights to distribute and commercialize REMICADE and golimumab in certain territories.
The arbitration process involves a number of steps, including the selection
of an independent arbitrator, information exchanges and hearings, before a
final decision will be reached. The arbitration proceeding is expected to
take place over the next 9 to 12 months and could continue after
the merger has closed. </div> <div style="margin-top: 12pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 2%;
margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000;
background: #FFFFFF"> <b><i><font style="font-family: 'Times
New Roman', Times">Tax Matters</font></i></b> </div>
<div style="margin-top: 6pt; font-size: 1pt">  </div>
<div align="left" style="margin-left: 0%; margin-right: 0%; text-indent:
4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000;
background: #FFFFFF"> In October 2001, IRS auditors asserted that two interest
rate swaps that Schering-Plough entered into with an unrelated party should
be recharacterized as loans from affiliated companies, resulting in additional
tax liability for the 1991 and 1992 tax years. In September 2004, Schering-Plough
made payments to the IRS in the amount of $194 million for income
tax and $279 million for interest. Schering-Plough filed refund claims
for the tax and interest with the IRS in December 2004. Following the IRS’s
denial of Schering-Plough’s claims for a refund, Schering-Plough
filed suit in May 2005 in the U.S. District Court for the District
of New Jersey for refund of the full amount of the tax and interest. This
refund litigation has been tried in Newark District court and a decision has
not yet been rendered. Schering-Plough’s tax reserves were adequate
to cover the above-mentioned payments. </div> <div style="margin-top:
12pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b><i><font style="font-family:
'Times New Roman', Times">Pending Administrative Obligations</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> In connection with the settlement of an
investigation with the U.S. Department of Justice and the U.S. Attorney’s
Office for the Eastern District of Pennsylvania, Schering-Plough entered into
a five-year corporate integrity agreement (CIA). The CIA was amended in August
2006 in connection with the settlement of the Massachusetts Investigation,
commencing a new five-year term. Failure to comply with the obligations under
the CIA could result in financial penalties. To date, Schering-Plough believes
it has complied with its obligations. </div> <div style="margin-top:
12pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b><i><font style="font-family:
'Times New Roman', Times">Other Matters</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 2%; margin-right: 0%;
font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background:
#FFFFFF"> <i><font style="font-family: 'Times New Roman', Times">Products
Liability</font></i> </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Beginning in May
2007, a number of complaints were filed in various jurisdictions asserting
claims against Organon USA, Inc., Organon Pharmaceuticals USA, Inc., Organon
International (Organon), and Schering-Plough Corporation arising from Organon’s
marketing and sale of NUVARING, a combined hormonal contraceptive vaginal
ring. The plaintiffs contend that Organon and Schering-Plough failed to adequately
warn of the alleged increased risk of venous thromboembolism (VTE) posed by
NUVARING, <font style="white-space: nowrap">and/or</font> downplayed
the risk of VTE. The plaintiffs seek damages for injuries allegedly sustained
from their product use, including some alleged deaths, heart attacks and strokes.
The majority of the cases are currently pending in a federal Multidistrict
litigation venued in Missouri and in New Jersey state court. Other cases are
pending in other states. </div> <div style="margin-top: 12pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 2%;
margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000;
background: #FFFFFF"> <i><font style="font-family: 'Times New
Roman', Times">French Matter</font></i> </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
Based on a complaint to the French competition authority from a competitor
in France and pursuant to a court order, the French competition authority
has obtained documents from a French subsidiary of Schering-Plough relating
to SUBUTEX, one of the products that the subsidiary markets and sells. Any
resolution of this matter adverse to the French subsidiary could result in
the imposition of civil fines and injunctive or administrative remedies. On
July 17, 2007, the Juge des Libertés et de la Détention
ordered the annulment of the search and seizure on procedural grounds. On
July 19, 2007, the French authority appealed the order to the French
Supreme Court. On May 20, 2009, the French Supreme Court overturned
that annulment and remanded the case to the Paris Court of Appeal on the basis
that the Juge des Libertés et de la Détention had not examined
each document to assess whether it should have been seized and whether it
had been lawfully seized. The case is now pending before the Paris Court of
Appeal. </div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> In April 2007, the competitor also requested
interim relief, a portion of which was granted by the French competition authority
in December 2007. The interim relief required Schering-Plough’s
French subsidiary to publish in two specialized newspapers information including
that the generic has the same quantitative and qualitative composition and
the same pharmaceutical form as, and is substitutable for, SUBUTEX. In February
2008, the Paris Court of Appeal confirmed the decision of the French competition
authority. In January 2009, the French Supreme Court confirmed the decision
of the French competition authority. </div> <div style="margin-top:
12pt; font-size: 1pt">  </div> <div align="left" style="margin-left:
2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color:
#000000; background: #FFFFFF"> <b><i><font style="font-family:
'Times New Roman', Times">Environmental</font></i></b>
</div> <div style="margin-top: 6pt; font-size: 1pt"> 
</div> <div align="left" style="margin-left: 0%; margin-right: 0%;
text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color:
#000000; background: #FFFFFF"> Schering-Plough has responsibilities for
environmental cleanup under various state, local and federal laws, including
the Comprehensive Environmental Response, Compensation and Liability Act,
commonly known as Superfund. At several Superfund sites (or equivalent sites
under state law), Schering-Plough is alleged to be a potentially responsible
party (PRP). Schering-Plough believes that it is remote at this time that
there is any material liability in relation to such sites. Schering-Plough
estimates its obligations for cleanup costs for Superfund sites based on information
obtained from the federal Environmental Protection Agency (EPA), an equivalent
state agency <font style="white-space: nowrap">and/or</font> studies
prepared by independent engineers, and on the probable costs to be paid by
other PRPs. Schering-Plough records a liability for environmental assessments
<font style="white-space: nowrap">and/or</font> cleanup when it
is probable a loss has been incurred and the amount can be reasonably estimated.
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<b><font style="font-family: 'Times New Roman', Times">18.  </font></b>
</td> <td> <b><font style="font-family: 'Times New Roman',
Times">MERGER AGREEMENT WITH MERCK & CO., INC.</font></b>
</td> </tr> </table> <div style="margin-top: 6pt; font-size:
1pt">  </div> <div align="left" style="margin-left: 0%;
margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New
Roman', Times; color: #000000; background: #FFFFFF"> On March 9,
2009 Merck & Co., Inc. (Merck) and Schering-Plough announced
that their Boards of Directors had unanimously approved a definitive merger
agreement under which Merck and Schering-Plough will combine, under the name
Merck, in a stock and cash transaction. The merger agreement was filed as
an exhibit to Schering-Plough’s <font style="white-space: nowrap">Form 8-K</font>
dated March 11, 2009. </div> <div style="margin-top: 6pt;
font-size: 1pt">  </div> <div align="left" style="margin-left:
0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times
New Roman', Times; color: #000000; background: #FFFFFF"> Under the terms
of the agreement, Schering-Plough shareholders will receive 0.5767 shares
and $10.50 in cash for each share of Schering-Plough. Each Merck share will
automatically become a share of the combined company. </div> <div
style="margin-top: 6pt; font-size: 1pt">  </div> <div
align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size:
10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
The transaction is subject to approval by Merck and Schering-Plough shareholders
and the satisfaction of customary closing conditions and regulatory approvals,
including expiration or termination of the applicable waiting period under
the <font style="white-space: nowrap">Hart-Scott-Rodino</font>
Antitrust Improvements Act of 1976, as amended, as well as clearance by the
European Commission (EC) under the EC Merger Regulation and certain other
foreign jurisdictions. Merck and Schering-Plough expect to complete the transaction
in the fourth quarter of 2009. </div> </div> </body> </html>
N/A
false
--12-31
2009-06-30
10-Q
0000310158
0
Yes
Large Accelerated
Filer 31979690761
SCHERING-PLOUGH
CORPORATION No Yes
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