According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2004, the federal putative class actions regarding the meetings held with investors the week of September 30, 2002, and other communications were consolidated and, pursuant to that consolidation, an amended complaint dated March 13, 2003, was filed, alleging violations of Sections 10(b), 20(a) and 20(A) of the Securities Exchange Act of 1934 relating to the alleged disclosures made during the meetings mentioned in the paragraph above. The Company filed a motion to dismiss these class actions May 6, 2003, and the plaintiffs have sought leave of the court, and thereafter filed a second amended complaint. On June 29, 2004, the Court dismissed the second amended complaint.

The original complaint alleges that the official who is Schering's Chairman, Chief Executive Officer and President, and Putnam Investment Management, LLC ("Putnam") violated the Securities Exchange Act of 1934 (the "Act"). Schering and its subsidiaries are engaged in the discovery, development, manufacturing, and marketing of pharmaceutical products worldwide. Defendants violated the Act when the CEO, on behalf of Schering, selectively provided non-public material, adverse information about Schering's projected earnings to management of Putnam at a luncheon meeting on October 1, 2002. Kogan made further selective disclosures of this non-public information to analysts at mid-day on October 3, 2002. It was not until approximately 11:00 p.m. on October 3, 2002 that Schering publicly announced that its 2003 and 2004 earnings would be far below analysts expectations. As a result of the selective disclosure by defendant Kogan of this adverse, material, non-public information to defendant Putnam and others, defendant Putnam and the others were able to sell enormous amounts of Schering shares before the general public received such information, thereby enabling the tippees to benefit from the receipt of their inside information to the detriment of plaintiff and the Class. From the time defendant Putnam first learned of the material inside information through the close of the market on October 4, 2002, Schering stock plunged from $21.80 per share to as low as $16.10 per share, a drop of over 25%.