-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HCma5eq3C0+06fPCBx0HJsLJpsST7XI+9RU5M+3SykPowH9qE3FckcimCSmGpniU Bzfbig25OUqLgHIK0Ws1Xw== 0000950123-96-002320.txt : 19960515 0000950123-96-002320.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950123-96-002320 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCK & CO INC CENTRAL INDEX KEY: 0000064978 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221109110 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03305 FILM NUMBER: 96563875 BUSINESS ADDRESS: STREET 1: ONE MERCK DR STREET 2: P O BOX 100 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 BUSINESS PHONE: 9084234044 MAIL ADDRESS: STREET 1: ONE MERCK DR STREET 2: PO BOX 100 WS3AB-05 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 10-Q 1 FORM 10-Q / MERCK & CO., INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File No. 1-3305 MERCK & CO., INC. P. O. Box 100 One Merck Drive Whitehouse Station, N.J. 08889-0100 (908) 423-1000 Incorporated in New Jersey I.R.S. Employer Identification No. 22-1109110 The number of shares of common stock outstanding as of the close of business on April 30, 1996: Class Number of Shares Outstanding ----- ---------------------------- Common Stock 1,216,545,822 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- 2 Part I - Financial Information MERCK & CO., INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995 ($ in millions except per share amounts)
Three Months Ended March 31 ---------------------------- 1996 1995 --------- --------- Sales $ 4,530.4 $ 3,817.3 --------- --------- Costs, Expenses and Other Materials and production 2,233.1 1,726.2 Marketing and administrative 814.3 770.0 Research and development 349.5 288.2 Gains on sales of specialty chemical businesses - (682.9) Restructuring charge - 175.0 Other (income) expense, net (105.5) 445.0 --------- --------- 3,291.4 2,721.5 --------- --------- Income Before Taxes 1,239.0 1,095.8 Taxes on Income 375.2 338.4 --------- --------- Net Income $ 863.8 $ 757.4 ========= ========= Per Share of Common Stock: Net Income $.70 $.61 Dividends Declared $.34 $.30 Average Number of Common Shares Outstanding (millions) 1,227.0 1,242.6
The accompanying notes are an integral part of this financial statement. - 1 - 3 MERCK & CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET MARCH 31, 1996 AND DECEMBER 31, 1995 ($ in millions)
March 31 December 31 1996 1995 -------- ----------- ASSETS Current Assets Cash and cash equivalents $ 1,753.4 $ 1,847.4 Short-term investments 1,712.2 1,502.4 Accounts receivable 2,432.2 2,495.7 Inventories 1,882.7 1,872.5 Prepaid expenses and taxes 830.4 899.5 --------- --------- Total current assets 8,610.9 8,617.5 --------- --------- Investments 2,027.7 1,969.6 Property, Plant and Equipment, at cost, net of allowance for depreciation of $2,565.6 in 1996 and $2,439.9 in 1995 5,401.4 5,269.1 Goodwill and Other Intangibles, net of accumulated amortization of $458.4 in 1996 and $411.5 in 1995 6,786.6 6,826.3 Other Assets 1,157.3 1,149.3 --------- --------- $23,983.9 $23,831.8 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 2,897.9 $ 3,105.2 Loans payable and current portion of long-term debt 573.7 423.1 Income taxes payable 1,831.2 1,743.0 Dividends payable 417.4 418.2 --------- --------- Total current liabilities 5,720.2 5,689.5 --------- --------- Long-Term Debt 1,516.2 1,372.8 --------- --------- Deferred Income Taxes and Noncurrent Liabilities 2,796.8 2,747.5 --------- --------- Minority Interests 2,287.3 2,286.3 --------- --------- Stockholders' Equity Common stock Authorized - 2,700,000,000 shares Issued - 1,483,468,799 shares - 1996 - 1,483,463,327 shares - 1995 4,761.3 4,742.5 Retained earnings 13,161.3 12,740.6 --------- --------- 17,922.6 17,483.1 Less treasury stock, at cost 260,714,513 shares - 1996 254,614,794 shares - 1995 6,259.2 5,747.4 --------- --------- Total stockholders' equity 11,663.4 11,735.7 --------- --------- $23,983.9 $23,831.8 ========= =========
The accompanying notes are an integral part of this financial statement. - 2 - 4 MERCK & CO., INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 ($ in millions)
Three Months Ended March 31 ----------------------------- 1996 1995 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Income before taxes $ 1,239.0 $ 1,095.8 Adjustments to reconcile income before taxes to cash provided from operations before taxes: Gains on sales of specialty chemical businesses - (682.9) Restructuring charge - 175.0 Other 111.7 448.2 Net changes in assets and liabilities 1.3 13.2 --------- --------- CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 1,352.0 1,049.3 INCOME TAXES PAID (168.4) (673.2) --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,183.6 376.1 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (265.6) (162.6) Purchase of securities, subsidiaries and other investments (1,860.0) (1,596.6) Proceeds from sale of securities, subsidiaries and other investments 1,556.5 1,500.3 Proceeds from sales of specialty chemical businesses, net of cash transferred - 1,321.1 Other (16.4) (43.7) --------- --------- NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (585.5) 1,018.5 --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term borrowings (.3) (16.2) Proceeds from issuance of debt 300.2 - Payments on debt (2.0) (4.3) Purchase of treasury stock (575.3) (530.9) Dividends paid to stockholders (438.5) (379.9) Other 50.5 53.3 --------- --------- NET CASH USED BY FINANCING ACTIVITIES (665.4) (878.0) --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (26.7) 100.5 --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (94.0) 617.1 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,847.4 1,604.0 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,753.4 $ 2,221.1 ========= =========
The accompanying notes are an integral part of this financial statement. Notes to Financial Statements 1. The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. Interim statements are subject to possible adjustments in connection with the annual audit of the Company's accounts for the full year 1996; in the Company's opinion, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. Certain reclassifications have been made to prior year amounts to conform with current year presentation. - 3 - 5 Notes to Financial Statements (continued) 2. Inventories consisted of:
($ in millions) ------------------------------ March 31 December 31 1996 1995 -------- ----------- Finished goods $1,082.3 $1,078.3 Raw materials and work in process 728.4 716.2 Supplies 72.1 78.0 -------- -------- Total (approximates current cost) 1,882.8 1,872.5 Reduction to LIFO cost .1 - -------- -------- $1,882.7 $1,872.5 ======== ========
3. In January 1996, the Company issued $250.0 million of 30-year debentures under its existing $1.0 billion shelf registration bearing a coupon of 6.3% payable semi-annually. 4. The Company, including Merck-Medco Managed Care (Medco), is party to a number of antitrust suits, four of which have been certified as class actions (one at the Federal level and three at the state level), instituted by most of the nation's retail pharmacies and consumers in several states, alleging conspiracies in restraint of trade and challenging the pricing and/or purchasing practices of the Company and Medco, respectively. Effective January 31, 1996, the Company and several other defendants entered into an agreement, subject to Court approval, to settle the Federal class action alleging conspiracy, which represents the single largest group of retail pharmacy claims, pursuant to which the Company would pay $51.8 million, payable in four equal annual installments. On April 4, 1996, the Court declined to approve the settlement. Subsequently, the Company and several other defendants entered into an amended settlement agreement, subject to Court approval, which provides for the same monetary payment and addresses the Court's concerns as expressed in its April 4, 1996 opinion. On May 8, 1996, the Court granted preliminary approval of the amended settlement. A hearing regarding final approval is scheduled for June 11, 1996. The Company has not engaged in any conspiracy and no admission of wrongdoing has been made or is included in the agreement, which was entered into in order to avoid the cost of litigation and the risk of an inaccurate adverse verdict by a jury presented by a case of this size and complexity. While it is not feasible to predict the final outcome of these proceedings, in the opinion of management, such proceedings should not ultimately result in any liability which would have a material adverse effect on the financial position, results of operations or liquidity of the Company. 5. Sales consisted of:
($ in millions) --------------------------- Three Months Ended March 31 --------------------------- 1996 1995 -------- -------- Cardiovasculars $1,631.3 $1,308.4 Anti-ulcerants 280.9 273.1 Antibiotics 215.4 229.4 Ophthalmologicals 149.8 110.8 Benign prostate hypertrophy 120.2 108.8 Vaccines/biologicals 112.1 96.7 Other Merck human health 48.7 93.7 Other human health 1,751.6 1,332.6 Animal health/crop protection 220.4 224.6 Specialty chemical - 39.2 -------- -------- $4,530.4 $3,817.3 ======== ========
Sales by therapeutic class include Medco sales of Merck products. Other human health primarily includes Medco sales of non-Merck products and Medco human health services, principally managed prescription drug programs. - 4 - 6 Notes to Financial Statements (continued) 6. Other (income) expense, net, consisted of:
($ in millions) -------------------------- Three Months Ended March 31 -------------------------- 1996 1995 --------- -------- Interest income $ (60.2) $ (50.2) Interest expense 34.5 22.1 Exchange (gains)/losses (7.5) 6.1 Minority interests 29.4 18.8 Equity pick-up (165.4) (92.0) Amortization of goodwill and other intangibles 47.0 47.8 Other, net 16.7 492.4 -------- -------- $ (105.5) $ 445.0 ======== ========
Minority interests include third parties' share of exchange gains and losses arising from translation of the financial statements into U.S. dollars. Interest paid for the three-month periods ended March 31, 1996 and 1995 was $10.3 million and $13.8 million, respectively. 7. Income taxes paid for the three-month periods ended March 31, 1996 and 1995 were $168.4 million and $673.2 million, respectively. The decrease in 1996 primarily reflects increased taxes paid in 1995 on the 1994 gain resulting from the sale to Astra of an interest in a joint venture, the 1995 gains on sales of subsidiaries and a change in laws affecting the calculation of Federal estimated payments. 8. Legal proceedings to which the Company is a party are discussed in Part I Item 3, Legal Proceedings, in the Annual Report on Form 10-K. Current developments are discussed in Part II of this filing. - 5 - 7 MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION Earnings per share for the first quarter of 1996 were $0.70, an increase of 15% over the first quarter of 1995. First quarter net income increased 14% to $863.8 million. Sales for the quarter were $4.5 billion, up 19% from the same period last year. Sales growth for the first quarter was affected by the divestiture of Kelco in the first quarter of 1995 and Medco Behavioral Care Corp. in the fourth quarter of 1995. Adjusting for these effects, sales were up 23% over the first quarter of 1995. Sales growth for the quarter was led by established major products, recent product introductions and growth from the Merck-Medco Managed Care business. Both domestic and international operations reported strong unit volume gains. Foreign exchange had essentially no effect on the first quarter sales growth. Sales of Merck human and animal health products increased 13% for the first quarter. Sales outside the United States accounted for 31% of 1996 first quarter sales, compared with 33% for the same period last year. Income growth for the quarter was driven by strong unit volume gains. The unfavorable effect of inflation, net of price, was partially offset by cost controls and productivity improvements in manufacturing and selling, general and administrative expenses. The growth in pretax income was reduced by the Company's share of the increase in taxes related to the Astra Merck joint venture and the European vaccine joint venture with Pasteur Merieux Serums et Vaccins. The reduction in pretax growth, however, was offset by a corresponding reduction in the Company's tax rate in 1996, resulting in no effect on net income growth. Results for the first quarter were paced by unit sales gains for 'Zocor', 'Mevacor', 'Vasotec', 'Vaseretic', 'Prinivil' and 'Proscar'. The 1995 introductions of 'Cozaar'* and 'Hyzaar'* in the U.S. and most major European markets and the launches of 'Fosamax', 'Trusopt' and 'Varivax' in the U.S. also contributed to the first quarter sales gain. Significant prescription volume growth in the Merck-Medco Managed Care business also contributed to the sales increase for the quarter. Together, Merck's cholesterol-lowering agents, 'Zocor' and 'Mevacor', hold about 40% of the worldwide cholesterol-lowering market, and combined sales continued to show significant growth in the first quarter of 1996. 'Zocor' is now the leading cholesterol reducer worldwide. It has grown significantly since the results of the landmark Scandinavian Simvastatin Survival Study (4S) were reported in November 1994. The cholesterol-lowering market continues to expand fueled by 4S and additional supportive data on the benefits of using this class of products to lower cholesterol in high risk patients. Several countries have approved a new indication for 'Zocor', based on 4S, as the only cholesterol-lowering medicine proven to save lives and prevent heart attacks in people with heart disease and high cholesterol. With fewer than one-third of patients who have coronary disease currently receiving cholesterol-lowering therapy, there is a strong potential for the continued growth of 'Zocor'. 'Mevacor' is the first cholesterol-lowering drug demonstrated in a study to regress atherosclerotic plaques in the carotid arteries of patients without coronary artery disease. This is the major finding of the three-year Asymptomatic Carotid Artery Progression Study (ACAPS). The study found that patients taking 'Mevacor' experienced significantly fewer major cardiac events than patients treated with placebo. In February, the U.S. Food and Drug Administration (F.D.A.) cleared addition of the study results to the clinical pharmacology section of the labeling for 'Mevacor'. 'Vasotec', Merck's angiotensin converting enzyme (ACE) inhibitor for reducing high blood pressure and treating heart failure, continued its solid growth. It remains the leading branded product in the worldwide cardiovascular market. *'Cozaar' and 'Hyzaar' are registered trademarks of E.I. du Pont de Nemours and Company, Wilmington, DE, USA. - 6 - 8 MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued) Sales of 'Proscar' also increased in the first quarter of 1996. The growth is attributed to the ongoing impact of the Scandinavian Reduction of the Prostate Study (SCARP) and the growing acceptance by urologists. 'Varivax', Merck's vaccine for the prevention of chickenpox, was licensed by the F.D.A. in March 1995. Since its introduction, more than 2.3 million doses of 'Varivax' have been sold to physicians, hospitals and clinics. 'Cozaar' and 'Hyzaar' (a combination of 'Cozaar' and the diuretic hydrochlorothiazide) were introduced in the U.S. in May 1995. 'Cozaar' has also been launched in 15 other countries including France, Germany, Spain, Brazil and the United Kingdom. Both products have been exceptionally well accepted. 'Cozaar' is the first in a new class of anti-hypertensive drugs called Angiotensin-II (A-II) receptor antagonists. In clinical studies 'Cozaar' and 'Hyzaar' had excellent tolerability profiles and were highly effective. Both products were developed in collaboration with the DuPont Merck Pharmaceutical Company. Merck introduced 'Trusopt', the first carbonic anhydrase inhibitor made in a topical (eyedrop) formulation, in the United States in May 1995. It also has been introduced in several European countries. Sales are proceeding at a strong pace. 'Trusopt' is indicated for the treatment of elevated intraocular pressure in patients with ocular hypertension or open-angle glaucoma. 'Trusopt' has been proven effective in the consistent lowering of intraocular pressure in most patients and may be used both as monotherapy and adjunctive therapy. Pepcid AC Acid Controller(TM), a non-prescription formulation of 'Pepcid', was introduced in the U.S. in June 1995 by Johnson & Johnson o Merck Consumer Pharmaceuticals Co. and quickly became the number one OTC acid relief product. It is being met with high levels of consumer satisfaction and acceptance by doctors and pharmacists. The OTC market for acid relief products continues to expand and sales of Pepcid AC(TM) are growing significantly. 'Fosamax', a breakthrough in the treatment of osteoporosis in postmenopausal women, already has been introduced in 25 countries including the United States where it became available last October. Early prescription trends are strong. A major consumer campaign - including full-page advertisements in major U.S. newspapers and magazines - is underway to educate American women about the consequences of osteoporosis, and the benefits of treatment with 'Fosamax'. In clinical trials, 'Fosamax' was shown to restore healthy bone lost due to osteoporosis. Even more important, the double-blind, placebo-controlled studies showed that 'Fosamax' reduced by 48 percent the proportion of women suffering new spinal fractures. 'Fosamax' is the first nonhormonal medicine for treating osteoporosis, a disease that affects about one-in-three women over the age of 50. On March 14, the F.D.A. gave Merck clearance to market 'Crixivan' (indinavir sulfate), an HIV protease inhibitor, under the provisions of the F.D.A.'s accelerated review process. It is indicated in the treatment of HIV infection in adults when antiretroviral therapy is warranted. 'Crixivan', a potent inhibitor of the HIV protease enzyme that is critical to replication of the virus that causes AIDS, can be taken in combination with other anti-HIV therapies or alone. On April 2, the F.D.A. licensed Merck to market 'Vaqta' (Hepatitis A Vaccine, Inactivated), a new vaccine for the prevention of hepatitis A in persons two years of age and older. Hepatitis A is a highly contagious virus that attacks the liver and can cause victims to be ill for several weeks. Because there is no treatment for hepatitis A and the medical and economic consequences of the disease are substantial, immunization of high risk individuals is recommended by the Centers for Disease Control and Prevention. The vaccine is now available. - 7 - 9 MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued) On April 15, Astra Merck Inc., a joint venture company owned equally by Merck and Astra AB of Sweden, announced it has received clearance from the F.D.A. to market its antisecretory medication 'Prilosec'* (omeprazole) in combination with the antibiotic Biaxin* (clarithromycin). The combination therapy will be indicated for the treatment of patients with H. pylori infection and duodenal ulcer to eradicate H. pylori, the bacteria now believed to cause approximately 90 percent of peptic ulcers. Astra Merck has also received F.D.A. clearance to market 'Prilosec' for the short-term treatment of active benign gastric ulcers. The Federal Trade Commission (F.T.C.) has recently instituted an investigation into whether pharmaceutical companies may have violated Federal antitrust laws in connection with establishing pricing practices. On March 13, 1996, the Company received a notice from the F.T.C. that it was included in this investigation. Management believes that the Company is currently operating in all material respects in accordance with applicable standards. While it is not feasible to predict or determine the outcome of the investigation, management does not believe that it should result in a materially adverse effect on the Company's financial position, results of operations or liquidity. *'Prilosec' is a registered trademark of Astra AB; Biaxin is a registered trademark of Abbott Laboratories. - 8- 10 Part II - Other Information Item 1. Legal Proceedings The Company, including Medco, is party to a number of antitrust suits, four of which have been certified as class actions (one at the Federal level and three at the state level), instituted by most of the nation's retail pharmacies and consumers in several states, alleging conspiracies in restraint of trade and challenging the pricing and/or purchasing practices of the Company and Medco, respectively. A significant number of other pharmaceutical companies and wholesalers have also been sued in the same or similar litigation. These actions, except for several actions pending in state courts, have been consolidated for pre-trial purposes in the United States District Court for the Northern District of Illinois. Effective January 31, 1996, the Company and several other defendants entered into an agreement, subject to Court approval, to settle the Federal class action alleging conspiracy, which represents the single largest group of retail pharmacy claims, pursuant to which the Company would pay $51.8 million, payable in four equal annual installments. On April 4, 1996, the Court declined to approve the settlement. Subsequently, the Company and several other defendants entered into an amended settlement agreement, subject to Court approval, which provides for the same monetary payment and addresses the Court's concerns as expressed in its April 4, 1996 opinion. On May 8, 1996, the Court granted preliminary approval of the amended settlement. A hearing regarding final approval is scheduled for June 11, 1996. The Company has not engaged in any conspiracy and no admission of wrongdoing has been made or is included in the agreement, which was entered into in order to avoid the cost of litigation and the risk of an inaccurate adverse verdict by a jury presented by a case of this size and complexity. While it is not feasible to predict the final outcome of these proceedings, in the opinion of management, such proceedings should not ultimately result in any liability which would have a material adverse effect on the financial position, results of operations or liquidity of the Company. The Federal Trade Commission (F.T.C.) has recently instituted an investigation into whether pharmaceutical companies may have violated Federal antitrust laws in connection with establishing pricing practices. On March 13, 1996, the Company received a notice from the F.T.C. that the Company was included in this investigation. Management believes that the Company is currently operating in all material respects in accordance with applicable standards. Accordingly, although management cannot predict the outcome of the investigation, it does not believe that the result of the investigation will have a material adverse effect on the financial position, results of operations or liquidity of the Company. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Number Description Method of Filing ------ ----------- ---------------- 3(a) Restated Certificate of Incorporated by reference to Form 10-K Incorporation of Merck Annual Report for the fiscal year & Co., Inc. (May 6, 1992) ended December 31, 1992 3(b) By-Laws of Merck & Co., Inc. Incorporated by reference to Form 10-K (as amended effective Annual Report for the fiscal year June 9, 1994) ended December 31, 1994 11 Computation of Earnings Filed with this document Per Common Share 12 Computation of Ratios of Filed with this document Earnings to Fixed Charges 27 Financial Data Schedule Filed with this document
(b) Reports on Form 8-K During the three-month period ending March 31, 1996, no current reports on Form 8-K were filed. - 9 - 11 Signatures Pursuant to the requirements of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MERCK & CO., INC. /s/ Mary M. McDonald ----------------------------------------- Date: May 10, 1996 MARY M. MCDONALD Senior Vice President and General Counsel /s/ Peter E. Nugent ----------------------------------------- Date: May 10, 1996 PETER E. NUGENT Vice President, Controller - 10 - 12 EXHIBIT INDEX
Exhibit Number Description - ------ ----------- 3(a) Restated Certificate of Incorporation of Merck & Co., Inc. (May 6, 1992) - Incorporated by reference to Form 10-K Annual Report for the fiscal year ended December 31, 1992 3(b) By-Laws of Merck & Co. Inc.(as amended effective June 9, 1994) - Incorporated by reference to Form 10-K Annual Report for the fiscal year ended December 31, 1994 11 Computation of Earnings Per Common Share 12 Computation of Ratios of Earnings to Fixed Charges 27 Financial Data Schedule
EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE 1 Exhibit 11 MERCK & CO., INC. AND SUBSIDIARIES Computation of Earnings Per Common Share (In millions except per share amounts)
Three Months Ended March 31 ---------------------------- 1996 1995 -------- -------- Net Income and Adjusted Earnings: Net Income............................................................... $ 863.8 $ 757.4 Effect on Earnings of Compensation Expense Relating to Stock Option and Incentive Plans........................................................ 2.0 2.8 -------- -------- Adjusted Earnings for Fully Diluted Earnings Per Share................... $ 865.8 $ 760.2 ======== ======== Weighted Average Shares and Share Equivalents Outstanding: Weighted Average Shares Outstanding (As Reported)........................ 1,227.0 1,242.6 Common Share Equivalents Issuable Under Stock Option and Incentive Plans........................................................ 31.5 20.0 Common Share Equivalents Issuable on Assumed Conversion of Debentures.... .4 .6 -------- -------- Weighted Average Shares and Share Equivalents Outstanding................ 1,258.9 1,263.2 ======== ======== Earnings Per Share (As Reported)......................................... $ .70 $ .61 ======== ======== Fully Diluted Earnings Per Share (a)..................................... $ .69 $ .60 ======== ========
(a) This calculation is submitted in accordance with the regulations of the Securities and Exchange Commission although not required by APB Opinion No.15 because it results in dilution of less than 3%. EX-12 3 COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES 1 Exhibit 12 MERCK & CO., INC. AND SUBSIDIARIES Computation of Ratios of Earnings to Fixed Charges (In millions except ratio data)
Three Months Ended March 31 Years Ended December 31 ------------ ---------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 ------------ ---------- ---------- ---------- ---------- ---------- Income Before Taxes and Cumulative Effect of Accounting Changes $ 1,239.0 $ 4,797.2 $ 4,415.2 $ 3,102.7 $ 3,563.6 $ 3,166.7 Add: One-third of rents 7.4 28.1 36.0 35.0 34.0 31.1 Interest expense, net 28.1 60.3 96.0 48.0 23.6 26.0 Preferred stock dividends 17.4 2.1 - - - - ---------- ---------- ---------- ---------- ---------- ---------- Earnings $ 1,291.9 $ 4,887.7 $ 4,547.2 $ 3,185.7 $ 3,621.2 $ 3,223.8 ========== ========== ========== ========== ========== ========== Fixed Charges One-third of rents $ 7.4 $ 28.1 $ 36.0 $ 35.0 $ 34.0 $ 31.1 Interest expense 34.5 98.7 124.4 84.7 72.7 68.7 Preferred stock dividends 17.4 2.1 - - - - ---------- ---------- ---------- ---------- ---------- ---------- Fixed Charges $ 59.3 $ 128.9 $ 160.4 $ 119.7 $ 106.7 $ 99.8 ========== ========== ========== ========== ========== ========== Ratio of Earnings to Fixed Charges 22 38 28 27 34 32 ========== ========== ========== ========== ========== ==========
For purposes of computing these ratios, "earnings" consist of income before taxes, cumulative effect of accounting changes, one-third of rents (deemed by the Company to be representative of the interest factor inherent in rent), interest expense, net of amounts capitalized, and dividends on preferred stock of subsidiary companies. "Fixed charges" consist of one-third of rents, interest expense as reported in the Company's consolidated financial statements and dividends on preferred stock of subsidiary companies. EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 3-MOS DEC-31-1996 MAR-31-1996 1,753 1,712 2,432 0 1,883 8,611 7,967 (2,566) 23,984 5,720 1,516 0 0 4,761 6,902 23,984 4,530 4,530 2,233 2,233 350 0 35 1,239 375 864 0 0 0 864 .70 .69 Not material to the Consolidated Financial Statements.
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