-----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, E5w+gIKF1Q6CQaFd7I4GKK6yUjNjZ9Dft9LOggjRZmXXwLPtelKdC+C1JRBhIsWp 9F4a2ukaxbY1Bju/OC+sBQ== 0000950123-97-005056.txt : 19970617 0000950123-97-005056.hdr.sgml : 19970617 ACCESSION NUMBER: 0000950123-97-005056 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970616 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03305 FILM NUMBER: 97624681 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-K/A 1 AMENDMENT TO FORM 10-K 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1997 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------ FORM 10-K/A AMENDMENT TO FORM 10-K ANNUAL REPORT Filed pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 ------------------ MERCK & CO., INC. P.O. BOX 100 WHITEHOUSE STATION, NEW JERSEY 08889-0100 ================================================================================ 2 AMENDMENT NO. 1 The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its annual report on Form 10-K for the fiscal year ended December 31, 1996 as set forth below: 1. Add Exhibit Numbers 99(a), 99(b) and 99(c) as follows:
EXHIBIT METHOD OF NUMBER DESCRIPTION FILING 99(a) -- Financial statements and exhibits Filed with this Form 10-K/A required by Form 11-K Annual Report Amendment pursuant to Section 15(d) of the Securities Exchange Act of 1934 for the Merck & Co., Inc. Employee Savings and Security Plan for the fiscal year ended December 31, 1996 99(b) -- Financial statements and exhibits Filed with this Form 10-K/A required by Form 11-K Annual Report Amendment pursuant to Section 15(d) of the Securities Exchange Act of 1934 for the Merck & Co., Inc. Employee Stock Purchase and Savings Plan for the fiscal year ended December 31, 1996 99(c) -- Financial statements and exhibits Filed with this Form 10-K/A required by Form 11-K Annual Report Amendment pursuant to Section 15(d) of the Securities Exchange Act of 1934 for the Hubbard Farms, Inc. Employee Savings Plan for the fiscal year ended December 31, 1996
2 3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. MERCK & CO., INC. Dated: June 16, 1997 By RAYMOND V. GILMARTIN (CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER) By /s/ CELIA A. COLBERT CELIA A. COLBERT (ATTORNEY-IN-FACT) PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE - ------------------------------------------ ---------------------------------- --------------- RAYMOND V. GILMARTIN Chairman of the Board, President and Chief Executive Officer ; Principal Executive Officer ; Director JUDY C. LEWENT Senior Vice President and Chief Financial Officer; Principal Financial Officer PETER E. NUGENT Vice President, Controller ; Principal Accounting Officer June 16, 1997 H. BREWSTER ATWATER, JR. DEREK BIRKIN LAWRENCE A. BOSSIDY WILLIAM G. BOWEN JOHNNETTA B. COLE LLOYD C. ELAM Directors CHARLES E. EXLEY, JR. WILLIAM N. KELLEY EDWARD M. SCOLNICK SAMUEL O. THIER
CELIA A. COLBERT, BY SIGNING HER NAME HERETO, DOES HEREBY SIGN THIS DOCUMENT PURSUANT TO POWERS OF ATTORNEY DULY EXECUTED BY THE PERSONS NAMED, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS AN EXHIBIT TO FORM 10-K, ON BEHALF OF SUCH PERSONS, ALL IN THE CAPACITIES AND ON THE DATE STATED, SUCH PERSONS INCLUDING A MAJORITY OF THE DIRECTORS OF THE COMPANY. By /s/CELIA A. COLBERT CELIA A. COLBERT (ATTORNEY-IN-FACT) EX-99.A 2 FINANCIAL STATEMENTS RE EMPL. SAVINGS & SEC. PLAN 1 EXHIBIT 99(A) FINANCIAL STATEMENTS AND EXHIBITS REQUIRED BY FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-3305 --------------------- MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN (FULL TITLE OF THE PLAN) MERCK & CO., INC. P.O. BOX 100 WHITEHOUSE STATION, NEW JERSEY 08889-0100 (NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE) 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Merck & Co., Inc.: We have audited the accompanying Statements of Net Assets Available for Benefits of the Merck & Co., Inc. Employee Savings and Security Plan as of December 31, 1996 and 1995, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1996. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and 1995, and the changes in its net assets available for benefits for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP New York, New York May 21, 1997 1 3 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND --------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO -------------- ------------ ------------ ------------ ----------- ----------- ----------- DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------- ------------------------------------------------------ Assets: Investments at market value.................. $1,606,821,436 $204,709,495 $876,254,437 $145,105,856 $24,777,615 $43,649,523 $62,317,069 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Receivables Employer's contribution......... 2,625,228 1,286,362 520,058 200,830 46,992 101,859 129,949 Participants' contributions........ 5,866,877 -- 3,755,053 621,829 106,181 187,053 267,050 Accrued interest and dividends............ 210,593 -- 72,001 -- -- -- -- -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total receivables.... 8,702,698 1,286,362 4,347,112 822,659 153,173 288,912 396,999 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Net assets available for benefits................. $1,615,524,134 $205,995,857 $880,601,549 $145,928,515 $24,930,788 $43,938,435 $62,714,068 ============== ============ ============ ============ =========== =========== ===========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 2 4
FIDELITY FIDELITY FIDELITY RETIREMENT FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY RETIREMENT GOVERNMENT INTERMEDIATE GROWTH OTC OVERSEAS BALANCED MONEY MONEY BOND FUND FUND PORTFOLIO FUND FUND MARKET MARKET ------------ ----------- ----------- ----------- ----------- ----------- ----------- DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------- ------------------------------------------------------------------------------------------------- Assets: Investments at market $ 13,088,728 $13,878,448 $25,261,544 $22,079,860 $46,168,307 $37,299,452 $40,403,016 value.................. ---------- ---------- ---------- ---------- ---------- ---------- ---------- Receivables Employer's contribution......... 26,252 34,390 63,005 50,667 52,242 27,827 37,541 Participants' contributions........ 56,090 59,474 108,254 94,620 197,847 159,841 173,141 Accrued interest and dividends............ -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total receivables.... 82,342 93,864 171,259 145,287 250,089 187,668 210,682 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits................. $ 13,171,070 $13,972,312 $25,432,803 $22,225,147 $46,418,396 $37,487,120 $40,613,698 ========== ========== ========== ========== ========== ========== ==========
FIDELITY U.S. EQUITY PARTICIPANTS' INDEX LOAN PORTFOLIO ACCOUNT ----------- ------------ DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - ------------------------ ---------------------------------- Assets: Investments at market value.................. $18,771,886 $ 33,056,200 ---------- ---------- Receivables Employer's contribution......... 47,254 -- Participants' contributions........ 80,444 -- Accrued interest and dividends............ -- 138,592 ---------- ---------- Total receivables.... 127,698 138,592 ---------- ---------- Net assets available for benefits................. $18,899,584 $ 33,194,792 ========== ==========
5 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND --------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO -------------- ------------ ------------ ------------ ----------- ----------- ----------- DECEMBER 31, 1995 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------- ------------------------------------------------------ Assets: Investments at market value.................. $1,310,187,757 $162,413,187 $749,525,828 $144,381,469 $11,810,154 $25,894,841 $30,827,770 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Receivables Employer's contribution......... 2,395,939 1,191,980 481,823 234,083 31,626 76,191 82,420 Participants' contributions........ 5,258,171 -- 3,521,557 678,359 55,489 121,664 144,841 Accrued interest and dividends............ 117,021 -- -- -- -- -- -- -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total receivables.... 7,771,131 1,191,980 4,003,380 912,442 87,115 197,855 227,261 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Net assets available for benefits................. $1,317,958,888 $163,605,167 $753,529,208 $145,293,911 $11,897,269 $26,092,696 $31,055,031 ============= =========== =========== =========== ========== ========== ==========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 4 6
FIDELITY FIDELITY FIDELITY RETIREMENT FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY RETIREMENT GOVERNMENT INTERMEDIATE GROWTH OTC OVERSEAS BALANCED MONEY MONEY BOND FUND FUND PORTFOLIO FUND FUND MARKET MARKET ------------ ----------- ----------- ----------- ----------- ----------- ----------- DECEMBER 31, 1995 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------- ---------------------------------------------------------------------------- Assets: Investments at market value.................. $ 10,005,333 $11,431,417 $13,252,190 $13,137,278 $47,696,317 $23,490,236 $30,212,509 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Receivables Employer's contribution......... 25,157 35,460 46,242 40,252 59,180 26,355 36,658 Participants' contributions........ 47,009 53,709 62,264 61,724 224,095 110,366 141,950 Accrued interest and dividends............ -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total receivables.... 72,166 89,169 108,506 101,976 283,275 136,721 178,608 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net assets available for benefits................. $10,077,499 $11,520,586 $13,360,696 $13,239,254 $47,979,592 $23,626,957 $30,391,117 ========== ========== ========== ========== ========== ========== ========== FIDELITY U.S. EQUITY PARTICIPANTS' INDEX LOAN PORTFOLIO ACCOUNT ----------- ------------ DECEMBER 31, 1995 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------- ----------------------------- Assets: Investments at market value.................. $ 7,479,999 $ 28,629,229 ---------- ---------- Receivables Employer's contribution......... 28,512 -- Participants' contributions........ 35,144 -- Accrued interest and dividends............ -- 117,021 ---------- ---------- Total receivables.... 63,656 117,021 ---------- ---------- Net assets available for benefits................. $ 7,543,655 $ 28,746,250 ========== ==========
5 7 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND -------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO -------------- ------------ ----------- ------------ ----------- ----------- ----------- YEAR ENDED DECEMBER 31, 1996 - ---------------------------- --------------------------------------------- Additions to net assets attributed to: Investment income (loss) Net appreciation (depreciation) in market value of investments........... $ 211,138,860 $ 37,853,024 $164,408,456 $ (7,440,273) $ 2,111,751 $ 3,343,969 $ 5,750,034 Interest................ 2,754,651 128,219 1,389,039 388,007 50,134 121,890 121,870 Dividends............... 41,228,538 105 3,541 23,170,398 1,371,557 1,874,117 2,623,427 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total income on investments......... 255,122,049 37,981,348 165,801,036 16,118,132 3,533,442 5,339,976 8,495,331 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Contributions to the Plan By participants......... 83,226,993 -- 33,667,003 13,985,741 2,482,755 5,853,428 6,887,545 By the employer......... 34,365,225 16,866,802 6,760,612 3,046,129 545,568 1,252,828 1,469,398 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total contributions... 117,592,218 16,866,802 40,427,615 17,031,870 3,028,323 7,106,256 8,356,943 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total additions....... 372,714,267 54,848,150 206,228,651 33,150,002 6,561,765 12,446,232 16,852,274 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Deductions from net assets attributed to: Benefits paid to participants............ (77,706,159) (8,121,213) (40,943,914) (6,834,744) (1,333,085) (2,452,417) (2,300,592) -------------- ------------ ------------ ------------ ----------- ----------- ----------- Transfers among funds and plans: Net reallocations......... 2,557,138 (4,309,225) (34,070,632) (25,534,155) 7,766,827 7,921,643 17,143,938 Loans to participants..... -- (735,093) (9,495,305) (1,707,823) (179,279) (546,013) (576,802) Loan repayments by participants............ -- 708,071 5,353,541 1,561,324 217,291 476,294 540,219 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Net transfers among funds and plans..... 2,557,138 (4,336,247) (38,212,396) (25,680,654) 7,804,839 7,851,924 17,107,355 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Total deductions and net transfers among funds and plans............... (75,149,021) (12,457,460) (79,156,310) (32,515,398) 6,471,754 5,399,507 14,806,763 -------------- ------------ ------------ ------------ ----------- ----------- ----------- Net increase/(decrease)... 297,565,246 42,390,690 127,072,341 634,604 13,033,519 17,845,739 31,659,037 Net assets available for benefits Beginning of year... 1,317,958,888 163,605,167 753,529,208 145,293,911 11,897,269 26,092,696 31,055,031 -------------- ------------ ------------ ------------ ----------- ----------- ----------- End of year......... $1,615,524,134 $205,995,857 $880,601,549 $145,928,515 $24,930,788 $43,938,435 $62,714,068 ============== ============ ============ ============ =========== =========== ===========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 6 8
FIDELITY FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY RETIREMENT INTERMEDIATE GROWTH OTC OVERSEAS BALANCED MONEY BOND FUND FUND PORTFOLIO FUND FUND MARKET ------------ ----------- ----------- ----------- ----------- ----------- YEAR ENDED DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - -------------------------------------------------------------------------------------------------------------------- Additions to net assets attributed to: Investment income (loss) Net appreciation (depreciation) in market value of investments........... $ (314,230) $ (653,011) $ 1,200,080 $ 871,004 $ 1,773,161 $ -- Interest................ 23,452 41,479 59,103 55,061 108,634 49,330 Dividends............... 730,979 1,703,791 2,788,799 1,345,776 2,174,249 1,414,298 ----------- ----------- ----------- ----------- ----------- ----------- Total income on investments......... 440,201 1,092,259 4,047,982 2,271,841 4,056,044 1,463,628 ----------- ----------- ----------- ----------- ----------- ----------- Contributions to the Plan By participants......... 1,657,185 2,263,591 3,553,123 3,033,651 3,375,413 1,801,530 By the employer......... 351,850 490,136 733,434 636,209 769,835 367,911 ----------- ----------- ----------- ----------- ----------- ----------- Total contributions... 2,009,035 2,753,727 4,286,557 3,669,860 4,145,248 2,169,441 ----------- ----------- ----------- ----------- ----------- ----------- Total additions....... 2,449,236 3,845,986 8,334,539 5,941,701 8,201,292 3,633,069 ----------- ----------- ----------- ----------- ----------- ----------- Deductions from net assets attributed to: Benefits paid to participants............ (885,161) (451,155) (958,011) (1,035,354) (3,153,689) (3,820,723) ----------- ----------- ----------- ----------- ----------- ----------- Transfers among funds and plans: Net reallocations......... 1,557,736 (929,409) 4,723,825 4,096,832 (6,580,402) 14,123,484 Loans to participants..... (120,922) (196,470) (265,944) (247,991) (469,673) (364,229) Loan repayments by participants............ 92,682 182,774 237,698 230,705 441,276 288,562 ----------- ----------- ----------- ----------- ----------- ----------- Net transfers among funds and plans..... 1,529,496 (943,105) 4,695,579 4,079,546 (6,608,799) 14,047,817 ----------- ----------- ----------- ----------- ----------- ----------- Total deductions and net transfers among funds and plans............... 644,335 (1,394,260) 3,737,568 3,044,192 (9,762,488) 10,227,094 ----------- ----------- ----------- ----------- ----------- ----------- Net increase/(decrease)... 3,093,571 2,451,726 12,072,107 8,985,893 (1,561,196) 13,860,163 Net assets available for benefits Beginning of year... 10,077,499 11,520,586 13,360,696 13,239,254 47,979,592 23,626,957 ----------- ----------- ----------- ----------- ----------- ----------- End of year......... $ 13,171,070 $13,972,312 $25,432,803 $22,225,147 $46,418,396 $37,487,120 =========== =========== =========== =========== =========== =========== FIDELITY RETIREMENT FIDELITY GOVERNMENT U.S. EQUITY PARTICIPANTS' MONEY INDEX LOAN MARKET PORTFOLIO ACCOUNT ----------- ----------- ------------ YEAR ENDED DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - --------------------------------------------------------------------- Additions to net assets attributed to: Investment income (loss) Net appreciation (depreciation) in market value of investments........... $ -- $ 2,234,895 $ -- Interest................ 177,204 41,229 -- Dividends............... 1,645,601 381,900 -- ----------- ----------- ----------- Total income on investments......... 1,822,805 2,658,024 -- ----------- ----------- ----------- Contributions to the Plan By participants......... 2,348,649 2,317,379 -- By the employer......... 560,721 513,792 -- ----------- ----------- ----------- Total contributions... 2,909,370 2,831,171 -- ----------- ----------- ----------- Total additions....... 4,732,175 5,489,195 -- ----------- ----------- ----------- Deductions from net assets attributed to: Benefits paid to participants............ (3,852,910) (1,049,585) (513,606) ----------- ----------- ----------- Transfers among funds and plans: Net reallocations......... 9,550,054 6,899,238 197,384 Loans to participants..... (561,476) (143,038) 15,610,058 Loan repayments by participants............ 354,738 160,119 (10,845,294) ----------- ----------- ----------- Net transfers among funds and plans..... 9,343,316 6,916,319 4,962,148 ----------- ----------- ----------- Total deductions and net transfers among funds and plans............... 5,490,406 5,866,734 4,448,542 ----------- ----------- ----------- Net increase/(decrease)... 10,222,581 11,355,929 4,448,542 Net assets available for benefits Beginning of year... 30,391,117 7,543,655 28,746,250 ----------- ----------- ----------- End of year.........$40,613,698 $18,899,584 $ 33,194,792 =========== =========== ===========
1 9 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF THE PLAN: The Merck & Co., Inc. Employee Savings and Security Plan (the "Plan") was designed to provide an easy, economical way for employees to become stockholders of Merck & Co., Inc. (the "Company" or "Merck") as well as a systematic means of saving and investing for the future. Regular full-time, part-time, and temporary employees of the Company and of certain wholly-owned subsidiaries as defined by the Plan document who were not covered by a collective bargaining agreement are eligible to enroll in the Plan as of the first day of the third month following their date of hire. The Plan is administered by a management committee appointed by the Chief Executive Officer. All costs of administering the Plan are borne by the Company. CONTRIBUTIONS Participants may contribute from 2% up to 15% of their base pay. In addition, the Company matches 75% of employee contributions up to 6% of base pay per pay period. Company matching contributions are invested according to the following age parameters: Under age 50 -- 50% of Company matching contributions is invested in the Merck Common Stock Fund (Non-participant directed) and 50% is invested in the funds to which the participant is currently contributing (Participant directed). Age 50 and above -- Participants have the option to invest all Company matching contributions in any of the available fund options (Participant directed). INVESTMENT OPTIONS Participants direct the investment of their contributions into any investment option including the Merck Common Stock Fund (Participant directed). The following is a brief description of each option: Merck Common Stock Fund The Merck Common Stock Fund invests primarily in Merck Common Stock and a small portion of money market instruments for liquidity. This liquidity allows for daily trading in the fund. Ownership is measured in units rather than shares. An investment in this option allows the participant to become a stockholder and part owner of the Company. The value of the investment can go up or down depending on general factors affecting the stock market and specific factors affecting the Company's business. This is neither a mutual fund nor a diversified or managed investment option. Investing in a non-diversified single stock involves more investment risk than investing in a diversified fund. Fidelity Magellan Fund Funds are invested primarily in domestic and foreign common stock and securities convertible into common stock. Up to 20% of assets may also be invested in debt securities of all types and qualities issued by foreign and domestic issuers if the fund manager believes they have potential for capital appreciation. 8 10 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Fidelity Equity-Income Fund Funds are invested in income-producing equity securities. Normally, at least 65% of the fund's assets will be invested in income producing equity securities. The fund has the flexibility to invest the balance in all types of domestic and foreign securities, including bonds. Fidelity Growth Company Fund Funds are invested primarily in common stock, and securities convertible into common stock, of companies considered to have above-average growth characteristics. These characteristics are most often associated with companies in new and emerging areas of the economy, although the fund may also hold shares in larger, mature or declining industry firms which have been revitalized. Fidelity Growth & Income Portfolio Funds are invested primarily in U.S. and foreign stocks, focusing on those that pay current dividends and offer potential growth of earnings such as common stocks, convertible securities, preferred stocks and warrants. Fidelity Intermediate Bond Fund This fund seeks high current income by investing in U.S. and foreign investment grade debt securities rated Baa or better by Moody's or BBB or better by Standard & Poor's. Investment securities include corporate bonds, mortgage securities, bank obligations and U.S. government and agency securities, as well as short-term investments. The fund's dollar-weighted average maturity will range between three and ten years under normal circumstances. Fidelity Retirement Growth Fund Funds are invested primarily in common stocks of domestic or foreign issuers, although they can be invested in all types of securities. Foreign securities may involve a higher degree of risk. The fund's emphasis is on the realization of capital gains rather than on dividend income. Fidelity OTC Portfolio Funds are invested primarily in securities traded on the over-the-counter (OTC) securities market. These are frequently the securities of smaller or newer companies whose instruments may have limited marketability and may be subject to more erratic market movement. Fidelity Overseas Fund Funds are invested primarily in foreign securities. Fidelity Balanced Fund Funds are invested in a broadly diversified portfolio of high-yielding securities, including common stocks, preferred stocks and bonds. The objective is to provide a balanced investment in both stocks and bonds, thereby affording the opportunity for capital growth and current income; however, at least 25% of total assets will always be invested in fixed-income senior securities. 9 11 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Fidelity Retirement Money Market Funds are invested in high-quality U.S. dollar-denominated money market instruments of U.S. and foreign issuers. Normally, the fund intends to invest more than 25% of its total assets in obligations of institutions in the financial services industry. Fidelity Retirement Government Money Market Funds are invested in obligations issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities, and in repurchase agreements secured by these obligations. An investment in the portfolio is not insured or guaranteed by the U.S. government. Fidelity U.S. Equity Index Portfolio Funds are primarily invested in securities of the companies which comprise the S&P 500 Index. VESTING Participants are immediately vested in their contributions, all Company matching contributions, plus actual earnings thereon. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In the event of Plan termination, participants will become fully vested in their account balances. PARTICIPANTS' LOAN ACCOUNT Participants may borrow from their account balances with interest charged at a rate of the prime rate plus 1%. Loan terms range from one to five years or up to thirty years for the purchase of a primary residence. The minimum loan is $500 and the maximum loan is the lesser of $50,000 less the highest outstanding loan balance during the one year period prior to the new loan application date, or 50% of the participant's account balance less any current outstanding loan. Activity related to these borrowings is reflected in the Participants' Loan Account column of the financial statements. BENEFITS PAID TO PARTICIPANTS In-service and termination distributions are made throughout the year in accordance with applicable Plan provisions. At December 31, 1996 and 1995, net assets available for benefits included distributions in process of payment of $2,827,505 and $3,314,348, respectively. 2. SUMMARY OF ACCOUNTING POLICIES: The financial statements of the Plan have been prepared on the accrual basis of accounting. The investments of the Plan are stated at quoted market value. Dividend income is recorded on the ex-dividend date. The appreciation in market value of investments is based on the beginning of the year market value or value at the time of purchase during the year and is included in the Statement of Changes in Net Assets Available for Benefits. 10 12 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) USE OF ESTIMATES The financial statements are prepared in conformity with generally accepted accounting principles and, accordingly, include amounts that are based on management's best estimates and judgments. 3. INCOME TAXES: The Plan obtained a tax determination letter from the Internal Revenue Service on September 18, 1995 indicating that it had been designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan sponsor believes that the Plan is designed and operated in compliance with the IRC. 4. OTHER MATTERS: Net reallocations in 1996 of $2,557,138 consist of $1,641,044 transferred between the Plan and the Merck & Co., Inc. Employee Stock Purchase and Savings Plan for employees who changed their status during the year, $709,870 for Medco employees who were transferred from the Merck-Medco division (which has a separate savings plan) into the Plan and $206,224 of adjustments to amounts transferred to Astra Merck (which has a separate plan) in 1995. 5. SUBSEQUENT EVENTS: Effective July 1, 1997, Merck will change certain investment choices offered to Plan participants. Specifically, five new funds will be added while eight funds, existing as of December 31, 1996, will be eliminated and replaced with seven similar new funds and one similar existing fund. Investments held in the eight eliminated funds will automatically transfer to the corresponding replacement funds. The Plan sponsor anticipates that these fund transfers will have no effect on the Plan's tax status. 11 13 SCHEDULE I EIN: 22-1109110 PLAN NO.: 001 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1996
NUMBER OF NAME OF ISSUER UNITS/SHARES AT AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE - ------------------------------------------------------------------------------------- ------------ -------------- Merck Common Stock Fund*.............................................. 79,602,291 $424,794,757 $1,080,963,932 Fidelity Magellan Fund................................................ 1,799,321 126,942,040 145,105,856 Fidelity Equity-Income Fund........................................... 578,529 21,457,652 24,777,615 Fidelity Growth Company Fund.......................................... 1,078,874 37,326,607 43,649,523 Fidelity Growth & Income Portfolio.................................... 2,027,939 52,361,662 62,317,069 Fidelity Intermediate Bond Fund....................................... 1,298,523 13,244,985 13,088,728 Fidelity Retirement Growth Fund....................................... 802,739 14,422,331 13,878,448 Fidelity OTC Portfolio................................................ 772,309 22,880,052 25,261,544 Fidelity Overseas Fund................................................ 715,897 20,627,404 22,079,860 Fidelity Balanced Fund................................................ 3,279,255 40,896,906 46,168,307 Fidelity Retirement Money Market...................................... 37,271,301 37,271,301 37,299,452 Fidelity Retirement Government Money Market........................... 40,403,289 40,403,289 40,403,016 Fidelity U.S. Equity Index Portfolio.................................. 696,551 15,501,768 18,771,886 Participants' Loan Account (with interest rates ranging from 8.25% to 10.0%).............................................................. -- 33,056,200 33,056,200 ------------ -------------- Total Investments............................................. $901,186,954 $1,606,821,436 =========== =============
- --------------- * Denotes a party-in-interest to the Plan. 12 14 SCHEDULE II EIN: 22-1109110 PLAN NO.: 001 MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(A) FOR THE YEAR ENDED DECEMBER 31, 1996
CURRENT VALUE OF ASSETS ON IDENTITY OF PARTY INVOLVED PURCHASE SELLING COST OF TRANSACTION NET GAIN/ AND DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS) - ---------------------------------------- ------------ ------------ ------------ ------------ ----------- Merck Common Stock Fund 254 purchase transactions............ $107,282,495 $ -- $107,282,495 $107,282,495 $ -- 254 sales transactions............... -- 140,519,057 132,905,449 140,519,057 7,613,608 Fidelity Magellan Fund 254 purchase transactions............ 46,456,997 -- 46,456,997 46,456,997 -- 254 sales transactions............... -- 38,292,336 41,818,112 38,292,336 (3,525,776)
- --------------- (a) Reportable transactions are transactions that, individually or in the aggregate, exceed 5% of the Plan's net assets as of the beginning of the Plan year. 13 15 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 21, 1997 included in the financial statements and exhibits required by Form 11-K Annual Report for the Merck & Co., Inc. Employee Savings and Security Plan into the Company's previously filed Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101, 33-40177, 33-51235, 33-53463, 33-64273 and 33-64665), on Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785, 33-57421 and 333-17045). It should be noted that we have not audited any financial statements of the Plan subsequent to December 31, 1996 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP New York, New York June 16, 1997 EX-99.B 3 FINAN. STMT. RE EMPL. STOCK PURCHASE & SAV. PLAN 1 EXHIBIT 99(B) FINANCIAL STATEMENTS AND EXHIBITS REQUIRED BY FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-3305 --------------------- MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN (Full title of the plan) MERCK & CO., INC. P.O. BOX 100 WHITEHOUSE STATION, NEW JERSEY 08889-0100 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Merck & Co., Inc.: We have audited the accompanying Statements of Net Assets Available for Benefits of the Merck & Co., Inc. Employee Stock Purchase and Savings Plan as of December 31, 1996 and 1995, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1996. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and 1995, and the changes in its net assets available for benefits for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP New York, New York May 21, 1997 1 3 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND -------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO ------------ ----------- ------------ ---------- -------- ---------- ---------- DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - ------------------------------------------------------------------------------- ----------------------------------------------- Assets: Investments at market value........ $200,633,783 $47,040,077 $122,082,571 $7,849,145 $915,537 $1,008,987 $1,986,353 ------------ ----------- ------------ ---------- -------- ---------- ---------- Receivables Employer's contribution.......... 61,525 61,525 -- -- -- -- -- Participants' contributions...... 312,196 -- 260,255 16,059 1,873 2,064 4,064 Accrued interest and dividends... 19,508 -- 13,822 -- -- -- -- ------------ ----------- ------------ ---------- -------- ---------- ---------- Total receivables.............. 393,229 61,525 274,077 16,059 1,873 2,064 4,064 ------------ ----------- ------------ ---------- -------- ---------- ---------- Net assets available for benefits.... $201,027,012 $47,101,602 $122,356,648 $7,865,204 $917,410 $1,011,051 $1,990,417 =========== ========== =========== ========= ======== ========= =========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 2 4
FIDELITY FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY RETIREMENT INTERMEDIATE GROWTH OTC OVERSEAS BALANCED MONEY BOND FUND FUND PORTFOLIO FUND FUND MARKET ------------ ---------- --------- -------- ---------- ----------- DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - ------------------------------------------------------------- ------------------------------------------------ Assets: Investments at market value........ $369,411 $616,783 $719,063 $800,300 $3,807,066 $2,210,381 ------------ ---------- --------- -------- ---------- ----------- Receivables Employer's contribution.......... -- -- -- -- -- -- Participants' contributions...... 756 1,262 1,471 1,637 7,789 4,522 Accrued interest and dividends... -- -- -- -- -- -- ------------ ---------- --------- -------- ---------- ----------- Total receivables.............. 756 1,262 1,471 1,637 7,789 4,522 ------------ ---------- --------- -------- ---------- ----------- Net assets available for benefits.... $370,167 $618,045 $720,534 $801,937 $3,814,855 $2,214,903 =========== ========== ======== ======== ========= =========== FIDELITY RETIREMENT FIDELITY GOVERNMENT U.S. EQUITY PARTICIPANTS' MONEY INDEX LOAN MARKET PORTFOLIO ACCOUNT ----------- ----------- ------------ DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - -------------------------------------------------------------------------------- Assets: Investments at market value........ $4,596,289 $ 508,094 $6,123,726 ----------- ----------- ------------ Receivables Employer's contribution.......... -- -- -- Participants' contributions...... 9,404 1,040 -- Accrued interest and dividends... -- -- 5,686 ----------- ----------- ------------ Total receivables.............. 9,404 1,040 5,686 ----------- ----------- ------------ Net assets available for benefits.... $4,605,693 $ 509,134 $6,129,412 =========== ========== ===========
3 5 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND -------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO ------------ ----------- ------------ ---------- -------- -------- --------- DECEMBER 31, 1995 (PARTICIPANT DIRECTED, SEE NOTE 1) - ----------------------------------------- -------------------------------------------- Assets: Investments at market value............ $162,873,709 $38,672,420 $100,656,597 $6,961,838 $457,255 $503,394 $989,067 ------------ ----------- ------------ ---------- -------- -------- -------- Receivables Employer's contribution.............. 60,176 60,176 -- -- -- -- -- Participants' contributions.......... 299,114 -- 251,458 17,392 1,142 1,258 2,471 Accrued interest and dividends....... 8,025 -- 2,339 -- -- -- -- ------------ ----------- ------------ ---------- -------- -------- -------- Total receivables.................. 367,315 60,176 253,797 17,392 1,142 1,258 2,471 ------------ ----------- ------------ ---------- -------- -------- -------- Net assets available for benefits........ $163,241,024 $38,732,596 $100,910,394 $6,979,230 $458,397 $504,652 $991,538 ============ =========== ============ ========== ======== ======== ========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 4 6
FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY INTERMEDIATE GROWTH OTC OVERSEAS BALANCED BOND FUND FUND PORTFOLIO FUND FUND ------------ ---------- --------- -------- ---------- DECEMBER 31, 1995 (PARTICIPANT DIRECTED; SEE NOTE 1) - ----------------------------------------- ------------------------------------------------------------- Assets: Investments at market value............ $299,003 $509,817 $325,866 $577,768 $3,553,980 ------------ ---------- --------- -------- ---------- Receivables Employer's contribution.............. -- -- -- -- -- Participants' contributions.......... 747 1,274 814 1,443 8,878 Accrued interest and dividends....... -- -- -- -- -- ------------ ---------- --------- -------- ---------- Total receivables.................. 747 1,274 814 1,443 8,878 ------------ ---------- --------- -------- ---------- Net assets available for benefits........ $299,750 $511,091 $326,680 $579,211 $3,562,858 =========== ========== ======== ======== ========= FIDELITY FIDELITY RETIREMENT FIDELITY RETIREMENT GOVERNMENT U.S. EQUITY PARTICIPANTS' MONEY MONEY INDEX LOAN MARKET MARKET PORTFOLIO ACCOUNT ----------- ----------- ----------- ----------- DECEMBER 31, 1995 (PARTICIPANT DIRECTED; SEE NOTE 1) - ----------------------------------------- ------------------------------------------------------- Assets: Investments at market value............ $ 961,593 $3,735,338 $ 201,511 $4,468,262 ----------- ----------- ----------- ----------- Receivables Employer's contribution.............. -- -- -- -- Participants' contributions.......... 2,402 9,332 503 -- Accrued interest and dividends....... -- -- -- 5,686 ----------- ----------- ----------- ----------- Total receivables.................. 2,402 9,332 503 5,686 ----------- ----------- ----------- ----------- Net assets available for benefits........ $ 963,995 $3,744,670 $ 202,014 $4,473,948 =========== =========== ========== ===========
5 7 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
MERCK COMMON STOCK FUND -------------------------- (NON- FIDELITY FIDELITY FIDELITY PARTICIPANT (PARTICIPANT FIDELITY EQUITY- GROWTH GROWTH & DIRECTED; DIRECTED; MAGELLAN INCOME COMPANY INCOME TOTAL SEE NOTE 1) SEE NOTE 1) FUND FUND FUND PORTFOLIO ------------ ----------- ------------ ---------- -------- ---------- ---------- YEAR ENDED DECEMBER 31, 1996 - ------------------------------------- ---------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in market value of investments.................... $ 29,967,611 $ 8,250,110 $ 21,487,998 $ (346,882) $ 77,940 $ 68,297 $ 179,644 Interest......................... 454,901 73,102 298,693 28,719 1,488 4,689 4,340 Dividends........................ 2,027,915 -- -- 1,159,573 51,407 42,146 84,448 ------------ ----------- ------------ ---------- -------- ---------- ---------- Total income on investments.... 32,450,427 8,323,212 21,786,691 841,410 130,835 115,132 268,432 ------------ ----------- ------------ ---------- -------- ---------- ---------- Contributions to the Plan By participants.................. 11,961,538 -- 8,299,607 1,197,695 150,295 242,118 343,905 By the employer.................. 2,196,499 2,196,499 -- -- -- -- -- ------------ ----------- ------------ ---------- -------- ---------- ---------- Total contributions............ 14,158,037 2,196,499 8,299,607 1,197,695 150,295 242,118 343,905 ------------ ----------- ------------ ---------- -------- ---------- ---------- Total additions................ 46,608,464 10,519,711 30,086,298 2,039,105 281,130 357,250 612,337 ------------ ----------- ------------ ---------- -------- ---------- ---------- Deductions from net assets attributed to: Benefits paid to participants...... (7,181,432) (1,606,034) (4,398,057) (314,137) (10,389) (9,912) (61,394) ------------ ----------- ------------ ---------- -------- ---------- ---------- Transfers among funds and plans: Net reallocations.................. (1,641,044) (343,214) (2,778,943) (769,024) 193,092 161,958 444,149 Loans to participants.............. -- (498,781) (2,595,391) (181,630) (11,229) (16,151) (27,899) Loan repayments by participants.... -- 297,324 1,132,347 111,660 6,409 13,254 31,686 ------------ ----------- ------------ ---------- -------- ---------- ---------- Net transfers among funds and plans........................ (1,641,044) (544,671) (4,241,987) (838,994) 188,272 159,061 447,936 ------------ ----------- ------------ ---------- -------- ---------- ---------- Total deductions and net transfers among funds and plans........................ (8,822,476) (2,150,705) (8,640,044) (1,153,131) 177,883 149,149 386,542 ------------ ----------- ------------ ---------- -------- ---------- ---------- Net increase................. 37,785,988 8,369,006 21,446,254 885,974 459,013 506,399 998,879 Net assets available for benefits Beginning of year............ 163,241,024 38,732,596 100,910,394 6,979,230 458,397 504,652 991,538 ------------ ----------- ------------ ---------- -------- ---------- ---------- End of year.................. $201,027,012 $47,101,602 $122,356,648 $7,865,204 $917,410 $1,011,051 $1,990,417 ============ =========== ============ ========== ======== ========== ==========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 6 8
FIDELITY FIDELITY RETIREMENT FIDELITY FIDELITY FIDELITY INTERMEDIATE GROWTH OTC OVERSEAS BALANCED BOND FUND FUND PORTFOLIO FUND FUND ------------ ------------ ------------ ------------ ------------- YEAR ENDED DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - ---------------------------- --------------------------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in market value of investments.................... $(10,372) $(29,444) $ 33,364 $ 35,062 $ 154,191 Interest......................... 568 2,604 2,243 3,515 14,229 Dividends........................ 21,886 74,917 75,696 47,665 172,176 -------- -------- -------- -------- ---------- Total income on investments.... 12,082 48,077 111,303 86,242 340,596 -------- -------- -------- -------- ---------- Contributions to the Plan By participants.................. 103,352 138,009 162,281 195,125 386,335 By the employer.................. -- -- -- -- -- -------- -------- -------- -------- ---------- Total contributions............ 103,352 138,009 162,281 195,125 386,335 -------- -------- -------- -------- ---------- Total additions................ 115,434 186,086 273,584 281,367 726,931 -------- -------- -------- -------- ---------- Deductions from net assets attributed to: Benefits paid to participants...... (2,010) (35,877) (6,261) (5,510) (143,564) -------- -------- -------- -------- ---------- Transfers among funds and plans: Net reallocations.................. (34,929) (37,326) 135,028 (45,720) (295,329) Loans to participants.............. (9,647) (16,555) (16,186) (20,858) (91,680) Loan repayments by participants.... 1,569 10,626 7,689 13,447 55,639 -------- -------- -------- -------- ---------- Net transfers among funds and plans........................ (43,007) (43,255) 126,531 (53,131) (331,370) -------- -------- -------- -------- ---------- Total deductions and net transfers among funds and plans........................ (45,017) (79,132) 120,270 (58,641) (474,934) -------- -------- -------- -------- ---------- Net increase................. 70,417 106,954 393,854 222,726 251,997 Net assets available for benefits Beginning of year............ 299,750 511,091 326,680 579,211 3,562,858 -------- -------- -------- -------- ---------- End of year.................. $370,167 $618,045 $720,534 $801,937 $3,814,855 ======== ======== ======== ======== ========== FIDELITY FIDELITY RETIREMENT FIDELITY RETIREMENT GOVERNMENT U.S. EQUITY FIDELITY PARTICIPANTS' MONEY MONEY INDEX INTERMEDIATE LOAN MARKET MARKET PORTFOLIO BOND FUND ACCOUNT ------------ ------------ ----------- ------------ ------------ YEAR ENDED DECEMBER 31, 1996 (PARTICIPANT DIRECTED; SEE NOTE 1) - ---------------------------- ---------------------------------------------------------------------------------- Additions to net assets attributed to: Investment income Net appreciation (depreciation) in market value of investments.................... $ -- $ -- $ 67,703 $(10,372) $ -- Interest......................... 3,376 16,799 536 568 -- Dividends........................ 64,658 223,402 9,941 21,886 -- ---------- ---------- -------- -------- ---------- Total income on investments.... 68,034 240,201 78,180 12,082 -- ---------- ---------- -------- -------- ---------- Contributions to the Plan By participants.................. 155,888 473,907 113,021 103,352 -- By the employer.................. -- -- -- -- -- ---------- ---------- -------- -------- ---------- Total contributions............ 155,888 473,907 113,021 103,352 -- ---------- ---------- -------- -------- ---------- Total additions................ 223,922 714,108 191,201 115,434 -- ---------- ---------- -------- -------- ---------- Deductions from net assets attributed to: Benefits paid to participants...... (146,511) (251,017) (1,982) (2,010) (188,777) ---------- ---------- -------- -------- ---------- Transfers among funds and plans: Net reallocations.................. 1,176,547 428,261 124,406 (34,929) -- Loans to participants.............. (17,795) (91,146) (8,552) (9,647) 3,603,500 Loan repayments by participants.... 14,745 60,817 2,047 1,569 (1,759,259) ---------- ---------- -------- -------- ---------- Net transfers among funds and plans........................ 1,173,497 397,932 117,901 (43,007) 1,844,241 ---------- ---------- -------- -------- ---------- Total deductions and net transfers among funds and plans........................ 1,026,986 146,915 115,919 (45,017) 1,655,464 ---------- ---------- -------- -------- ---------- Net increase................. 1,250,908 861,023 307,120 70,417 1,655,464 Net assets available for benefits Beginning of year............ 963,995 3,744,670 202,014 299,750 4,473,948 ---------- ---------- -------- -------- ---------- End of year.................. $2,214,903 $4,605,693 $509,134 $370,167 $ 6,129,412 ========== ========== ======== ======== ==========
7 9 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF THE PLAN: The Merck & Co., Inc. Employee Stock Purchase and Savings Plan (the "Plan") was designed to provide an easy, economical way for employees to become stockholders of Merck & Co., Inc. (the "Company" or "Merck") as well as a systematic means of saving and investing for the future. Generally, any regular full-time, part-time, or temporary employee of the Company who is a U.S. resident covered by a collective bargaining agreement providing for participation in this Plan as defined by the Plan document, and has completed one year of employment, is eligible to participate. The Plan is administered by a management committee appointed by the Chief Executive Officer. All costs of administering the Plan are borne by the Company. CONTRIBUTIONS Depending on the terms of the applicable collective bargaining agreements, participants may contribute from 2% up to either 10% or 15% of their base pay per pay period. In addition, the Company will match 50% of employee contributions up to 5% of base pay per pay period, or contributions of a predetermined dollar amount negotiated with each bargaining group, whichever is less. Pursuant to current collective bargaining agreements, the Company match is subject to a monthly cap of $60. Company matching contributions are invested entirely in the Merck Common Stock Fund (Non-participant directed), and may not be reallocated into any other investment option. INVESTMENT OPTIONS Participants direct the investment of their contributions into any investment option including the Merck Common Stock Fund (Participant directed). The following is a brief description of each option: Merck Common Stock Fund The Merck Common Stock Fund invests primarily in Merck Common Stock and a small portion of money market instruments for liquidity. This liquidity allows for daily trading in the fund. Ownership is measured in units rather than shares. An investment in this option allows the participant to become a stockholder and part owner of the Company. The value of the investment can go up or down depending on general factors affecting the stock market and specific factors affecting the Company's business. This is neither a mutual fund nor a diversified or managed investment option. Investing in a non-diversified single stock involves more investment risk than investing in a diversified fund. Fidelity Magellan Fund Funds are invested primarily in domestic and foreign common stock and securities convertible into common stock. Up to 20% of assets may also be invested in debt securities of all types and qualities issued by foreign and domestic issuers if the fund manager believes they have potential for capital appreciation. Fidelity Equity-Income Fund Funds are invested in income-producing equity securities. Normally, at least 65% of the fund's assets will be invested in income producing equity securities. The fund has the flexibility to invest the balance in all types of domestic and foreign securities, including bonds. Fidelity Growth Company Fund Funds are invested primarily in common stock, and securities convertible into common stock, of companies considered to have above-average growth characteristics. These characteristics are most often associated with companies in new and emerging areas of the economy, although the fund may also hold shares in larger, mature or declining industry firms which have been revitalized. 8 10 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) Fidelity Growth & Income Portfolio Funds are invested primarily in U.S. and foreign stocks, focusing on those that pay current dividends and offer potential growth of earnings such as common stocks, convertible securities, preferred stocks and warrants. Fidelity Intermediate Bond Fund This fund seeks high current income by investing in U.S. and foreign investment grade debt securities rated Baa or better by Moody's or BBB or better by Standard & Poor's. Investment securities include corporate bonds, mortgage securities, bank obligations and U.S. government and agency securities, as well as short-term investments. The fund's dollar-weighted average maturity will range between three and ten years under normal circumstances. Fidelity Retirement Growth Fund Funds are invested primarily in common stocks of domestic or foreign issuers, although they can be invested in all types of securities. Foreign securities may involve a higher degree of risk. The fund's emphasis is on the realization of capital gains rather than on dividend income. Fidelity OTC Portfolio Funds are invested primarily in securities traded on the over-the-counter (OTC) securities market. These are frequently the securities of smaller or newer companies whose instruments may have limited marketability and may be subject to more erratic market movement. Fidelity Overseas Fund Funds are invested primarily in foreign securities. Fidelity Balanced Fund Funds are invested in a broadly diversified portfolio of high-yielding securities, including common stocks, preferred stocks and bonds. The objective is to provide a balanced investment in both stocks and bonds, thereby affording the opportunity for capital growth and current income; however, at least 25% of total assets will always be invested in fixed-income senior securities. Fidelity Retirement Money Market Funds are invested in high-quality U.S. dollar-denominated money market instruments of U.S. and foreign issuers. Normally, the fund intends to invest more than 25% of its total assets in obligations of institutions in the financial services industry. Fidelity Retirement Government Money Market Funds are invested in obligations issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities, and in repurchase agreements secured by these obligations. An investment in the portfolio is not insured or guaranteed by the U.S. government. Fidelity U.S. Equity Index Portfolio Funds are primarily invested in securities of the companies which comprise the S&P 500 Index. VESTING Participants are immediately vested in their contributions, all Company matching contributions, plus actual earnings thereon. 9 11 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In the event of Plan termination, participants will become fully vested in their account balances. PARTICIPANTS' LOAN ACCOUNT Participants may borrow from their account balances with interest charged at a rate of the prime rate plus 1%. Loan terms range from one to five years or up to thirty years for the purchase of a primary residence. The minimum loan is $500 and the maximum loan is the lesser of $50,000 less the highest outstanding loan balance during the one year period prior to the new loan application date, or 50% of the participant's account balance less any current outstanding loan. Activity related to these borrowings is reflected in the Participants' Loan Account column of the financial statements. BENEFITS PAID TO PARTICIPANTS In-service and termination distributions are made throughout the year in accordance with applicable Plan provisions. At December 31, 1996 and 1995, net assets available for benefits included distributions in process of payment of $610,665 and $772,218, respectively. 2. SUMMARY OF ACCOUNTING POLICIES: The financial statements of the Plan have been prepared on the accrual basis of accounting. The investments of the Plan are stated at quoted market value. Dividend income is recorded on the ex-dividend date. The appreciation in market value of investments is based on the beginning of the year market value or value at the time of purchase during the year and is included in the Statement of Changes in Net Assets Available for Benefits. USE OF ESTIMATES The financial statements are prepared in conformity with generally accepted accounting principles and, accordingly, include amounts that are based on management's best estimates and judgments. 3. INCOME TAXES: The Plan obtained a tax determination letter from the Internal Revenue Service on September 18, 1995 indicating that it had been designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan sponsor believes that the Plan is designed and operated in compliance with the IRC. 4. OTHER MATTERS: Net reallocations in 1996 of ($1,641,044) consist of transfers between the Plan and the Merck & Co., Inc. Employee Savings and Security Plan for employees who changed their status during the year. 5. SUBSEQUENT EVENTS: Effective July 1, 1997, Merck will change certain investment choices offered to Plan participants. Specifically, five new funds will be added while eight funds, existing as of December 31, 1996, will be eliminated and replaced with seven similar new funds and one similar existing fund. Investments held in the eight eliminated funds will automatically transfer to the corresponding replacement funds. The Plan sponsor anticipates that these fund transfers will have no effect on the Plan's tax status. 10 12 SCHEDULE I EIN: 22-1109110 PLAN NO.: 004 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1996
NUMBER OF NAME OF ISSUER UNITS/SHARES AT AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE - -------------------------------------------------------------------- ---------------- ----------- ------------- Merck Common Stock Fund*............................................ 12,454,686 $68,920,950 $169,122,648 Fidelity Magellan Fund.............................................. 97,342 6,971,698 7,849,145 Fidelity Equity-Income Fund......................................... 21,377 790,658 915,537 Fidelity Growth Company Fund........................................ 24,941 890,602 1,008,987 Fidelity Growth & Income Portfolio.................................. 64,642 1,679,128 1,986,353 Fidelity Intermediate Bond Fund..................................... 36,651 376,343 369,411 Fidelity Retirement Growth Fund..................................... 35,680 641,488 616,783 Fidelity OTC Portfolio.............................................. 21,987 651,686 719,063 Fidelity Overseas Fund.............................................. 25,954 747,537 800,300 Fidelity Balanced Fund.............................................. 270,441 3,354,497 3,807,066 Fidelity Retirement Money Market.................................... 2,191,435 2,191,435 2,210,381 Fidelity Retirement Government Money Market......................... 4,596,614 4,596,614 4,596,289 Fidelity U.S. Equity Index Portfolio................................ 18,854 423,690 508,094 Participants' Loan Account (with interest rates ranging from 9.5% to 10.0%)............................................................ -- 6,123,726 6,123,726 ----------- ------------ Total Investments........................................... $98,360,052 $200,633,783 =========== ============
- --------------- * Denotes a party-in-interest to the Plan. 11 13 SCHEDULE II EIN: 22-1109110 PLAN NO.: 004 MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(a) FOR THE YEAR ENDED DECEMBER 31, 1996
CURRENT VALUE IDENTITY OF PARTY INVOLVED PURCHASE SELLING COST OF OF ASSETS ON AND DESCRIPTION OF ASSET PRICE PRICE ASSET TRANSACTION DATE NET GAIN - ----------------------------------------------- ---------- ---------- ----------- ---------------- --------- Merck Common Stock Fund 246 purchase transactions.................. $15,546,578 $ -- $15,546,578 $ 15,546,578 $ -- 243 sales transactions..................... -- 15,493,214 9,038,716 15,493,214 6,454,498
- --------------- (a) Reportable transactions are transactions that, individually or in the aggregate, exceed 5% of the Plan's net assets as of the beginning of the Plan year. 12 14 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 21, 1997 included in the financial statements and exhibits required by Form 11-K Annual Report for the Merck & Co., Inc. Employee Stock Purchase and Savings Plan into the Company's previously filed Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101, 33-40177, 33-51235, 33-53463, 33-64273 and 33-64665), on Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785, 33-57421, and 333-17045). It should be noted that we have not audited any financial statements of the Plan subsequent to December 31, 1996 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP New York, New York June 16, 1997 EX-99.C 4 FINAN. STMT. RE HUBBARD FARMS EMPLOYEE SAV. PLAN 1 EXHIBIT 99(c) FINANCIAL STATEMENTS AND EXHIBITS REQUIRED BY FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 1-3305 --------------------- HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN (FULL TITLE OF THE PLAN) MERCK & CO., INC. P.O. BOX 100 WHITEHOUSE STATION, NEW JERSEY 08889-0100 (NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE) 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Merck & Co., Inc.: We have audited the accompanying Statements of Net Assets Available for Benefits of the Hubbard Farms, Inc. Employee Savings Plan as of December 31, 1996 and 1995, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1996. These financial statements and the schedules referred to below are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and 1995, and the changes in its net assets available for benefits for the year ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP New York, New York May 21, 1997 1 3 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
FIDELITY MERCK FIDELITY FIDELITY FIDELITY GROWTH COMMON MAGELLAN BALANCED INTERMEDIATE FIDELITY DAILY COMPANY TOTAL STOCK FUND FUND BOND FUND INCOME TRUST FUND ---------- ---------- -------- -------- ------------ -------------- ------- DECEMBER 31, 1996 Assets: Investments at market value....... $3,669,124 $2,004,018 $763,082 $287,499 $195,624 $-- $29,154 ---------- ---------- -------- -------- -------- -------- ------- Receivables Employer's contribution......... 2,636 1,187 548 240 156 -- 94 Participants' contributions..... 8,390 3,702 1,819 835 458 -- 315 Dividends receivable............ 9,934 9,934 -- -- -- -- -- ---------- ---------- -------- -------- -------- -------- ------- Total receivables........... 20,960 14,823 2,367 1,075 614 -- 409 ---------- ---------- -------- -------- -------- -------- ------- Net assets available for benefits... $3,690,084 $2,018,841 $765,449 $288,574 $196,238 $-- $29,563 ========== ========== ======== ======== ======== ======== =======
The accompanying Notes to Financial Statements are an integral part of this financial statement. 2 4
FIDELITY FIDELITY GROWTH & FIDELITY FIDELITY RETIREMENT PARTICIPANTS' INCOME OTC OVERSEAS GOVERNMENT LOAN DECEMBER 31, 1996 PORTFOLIO PORTFOLIO FUND MONEY MARKET ACCOUNT - ----------------- -------- --------- -------- ------------ ----------- Assets: Investments at market value....... $44,415 $ 8,845 $4,059 $233,731 $ 98,697 ------- ------- ------ -------- -------- Receivables Employer's contribution......... 79 30 23 279 -- Participants' contributions..... 354 115 73 719 -- Dividends receivable............ Total receivables........... 433 145 96 998 -- -------- ------- ------- -------- -------- Net assets available for benefits... $44,848 $ 8,990 $4,155 $234,729 $ 98,697 ======== ======= ======= ======== ========
3 5 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
MERCK FIDELITY FIDELITY FIDELITY PARTICIPANTS' COMMON MAGELLAN BALANCED INTERMEDIATE FIDELITY DAILY LOAN TOTAL STOCK FUND FUND BOND FUND INCOME TRUST ACCOUNT ---------- ---------- -------- -------- ------------ -------------- ------------ DECEMBER 31, 1995 Assets: Investments at market value..... $2,553,713 $1,351,070 $592,921 $220,473 $160,011 $190,826 $ 38,412 ---------- ---------- -------- -------- ---------- ------------- ---------- Receivables Participants' contributions... 3,495 1,318 981 449 199 548 -- Dividends receivable.......... 6,937 6,937 -- -- -- -- -- ---------- ---------- -------- -------- ---------- ------------- ---------- Total receivables......... 10,432 8,255 981 449 199 548 -- ---------- ---------- -------- -------- ---------- ------------- ---------- Net assets available for benefits........................ $2,564,145 $1,359,325 $593,902 $220,922 $160,210 $191,374 $ 38,412 ========= ========= ======== ======== ========== =========== ==========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 4 6 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FIDELITY MERCK FIDELITY FIDELITY FIDELITY GROWTH COMMON MAGELLAN BALANCED INTERMEDIATE FIDELITY DAILY COMPANY TOTAL STOCK FUND FUND BOND FUND INCOME TRUST FUND ---------- ---------- -------- -------- ------------ -------------- ------- YEAR ENDED DECEMBER 31, 1996 Additions to net assets attributed to: Investment income Net appreciation (depreciation) in market value of investments......... $ 326,227 $ 340,947 $(24,779) $12,001 $ (5,228) $ -- $ 696 Interest.............................. 6,241 2,393 2,045 534 279 -- 34 Dividends............................. 174,721 34,644 101,564 12,317 11,921 58 1,081 ---------- ---------- -------- -------- ------------ -------------- ------- Total income on investments......... 507,189 377,984 78,830 24,852 6,972 58 1,811 ---------- ---------- -------- -------- ------------ -------------- ------- Contributions to the Plan By the employer....................... 185,467 83,271 43,015 19,251 11,295 77 5,159 By participants....................... 572,269 256,651 138,740 63,166 32,040 -- 16,458 ---------- ---------- -------- -------- ------------ -------------- ------- Total Contributions................... 757,736 339,922 181,755 82,417 43,335 77 21,617 ---------- ---------- -------- -------- ------------ -------------- ------- Total additions..................... 1,264,925 717,906 260,585 107,269 50,307 135 23,428 ---------- ---------- -------- -------- ------------ -------------- ------- Deductions from net assets attributed to: Benefits paid to participants........... (138,986) (70,054) (37,280) (27,042) -- -- (117) ---------- ---------- -------- -------- ------------ -------------- ------- Transfers among funds: Net reallocations..................... -- 22,495 (21,651) (3,695) (3,239) (191,509) 6,187 Loans to participants................. -- (23,927) (39,164) (10,998) (12,739) -- -- Loan repayments by participants....... -- 13,096 9,057 2,118 1,699 -- 65 ---------- ---------- -------- -------- ------------ -------------- ------- Net transfers among funds........... -- 11,664 (51,758) (12,575) (14,279) (191,509) 6,252 ---------- ---------- -------- -------- ------------ -------------- ------- Total deductions and net transfers among funds....................... (138,986) (58,390) (89,038) (39,617) (14,279) (191,509) 6,135 ---------- ---------- -------- -------- ------------ -------------- ------- Net increase (decrease)........... 1,125,939 659,516 171,547 67,652 36,028 (191,374) 29,563 Net assets available for benefits Beginning of year................. 2,564,145 1,359,325 593,902 220,922 160,210 191,374 -- ---------- ---------- -------- -------- ------------ -------------- ------- End of year....................... $3,690,084 $2,018,841 $765,449 $288,574 $196,238 $ -- $29,563 ========= ========= ======== ======== =========== ============ ========
The accompanying Notes to Financial Statements are an integral part of this financial statement. 5 7
FIDELITY GROWTH FIDELITY FIDELITY FIDELITY PARTICIPANTS' & INCOME OTC OVERSEAS REL GOV'T LOAN PORTFOLIO PORTFOLIO FUND MONEY MARKET ACCOUNT -------- --------- -------- ------------ ------------- YEAR ENDED DECEMBER 31, 1996 Additions to net assets attributed to: Investment income Net appreciation (depreciation) in market value of investments......... $ 2,391 $ 185 $ 14 $ -- $ -- Interest.............................. -- -- -- 956 -- Dividends............................. 1,537 815 222 10,562 -- ------- ------- ------ -------- --------- Total income on investments......... 3,928 1,000 236 11,518 -- ------- ------- ------ -------- --------- Contributions to the Plan By the employer....................... 4,542 1,584 913 16,360 -- By participants....................... 12,902 5,182 3,005 44,125 -- ------- ------- ------ -------- --------- Total Contributions................... 17,444 6,766 3,918 60,485 -- ------- ------- ------ -------- --------- Total additions..................... 21,372 7,766 4,154 72,003 -- ------- ------- ------ -------- --------- Deductions from net assets attributed to: Benefits paid to participants........... (56) -- (34) (3,996) (407) ------- ------- ------ -------- --------- Transfers among funds: Net reallocations..................... 23,532 1,224 35 166,621 -- Loans to participants................. -- -- -- (3,372) 90,200 Loan repayments by participants....... -- -- -- 3,473 (29,508) ------- ------- ------ -------- --------- Net transfers among funds........... 23,532 1,224 35 166,722 60,692 ------- ------- ------ -------- --------- Total deductions and net transfers among funds....................... 23,476 1,224 1 162,726 60,285 ------- ------- ------ -------- --------- Net increase (decrease)........... 44,848 8,990 4,155 234,729 60,285 Net assets available for benefits Beginning of year................. -- -- -- -- 38,412 ------- ------- ------ -------- --------- End of year....................... $44,848 $ 8,990 $4,155 $234,729 $ 98,697 ======= ====== ====== ======== =========
6 8 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF THE PLAN: The Hubbard Farms, Inc. (the "Company") Employee Savings Plan (the "Plan") was designed to provide an easy, economical way for employees to become stockholders of Merck & Co., Inc., the parent of the Company, as well as a systematic means of saving and investing for the future. Regular full-time and part-time employees of the Company and its domestic wholly-owned subsidiaries as defined by the Plan document are eligible to participate in the Plan the 1st of January or the 1st of July following their date of hire. The Plan is administered by a management committee appointed by the Board of Directors of the Company. All costs of administering the Plan are borne by the Company. CONTRIBUTIONS Participants may contribute from 2% up to 15% of their base pay. Effective January 1, 1996, a Company matching provision was added to the Plan which matches 50% of employee contributions up to 5% of base pay per pay period. INVESTMENT OPTIONS Participants direct the investment of their contributions in 10% increments into any investment option, including Merck Common Stock (Participant directed). The following is a brief description of the options available in 1996. Merck Common Stock This portfolio consists of shares of Merck Common Stock. The value of the investment can go up or down depending on general factors affecting the stock market and specific factors affecting the Company's business. This is neither a mutual fund nor a diversified or managed investment option. Investing in a non-diversified single stock involves more investment risk than investing in a diversified fund. Fidelity Magellan Fund Funds are invested primarily in domestic and foreign common stock and securities convertible into common stock. Up to 20% of assets may also be invested in debt securities of all types and qualities issued by foreign and domestic issuers if the fund manager believes they have potential for capital appreciation. Fidelity Balanced Fund Funds are invested in broadly diversified portfolio of high-yielding securities, including common stocks, preferred stocks and bonds. The objective is to provide a balanced investment in both stocks and bonds, thereby affording the opportunity for capital growth and current income; however, at least 25% of total assets will always be invested in fixed-income senior securities. Fidelity Intermediate Bond Fund This fund seeks high current income by investing in U.S. and foreign investment grade debt securities rated Baa or better by Moody's or BBB or better by Standard & Poor's. Investment securities include corporate bonds, mortgage securities, bank obligations and U.S. government and agency securities, as well as short-term investments. The fund's dollar-weighted average maturity will range between three and ten years under normal circumstances. Fidelity Daily Income Trust Funds are invested in a broad range of both government and private issuer short term U.S. dollar denominated money market instruments maturing in one year or less. This investment option was eliminated 7 9 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) from the Plan effective January 2, 1996 and the fund balance was transferred into a new fund, the Fidelity Retirement Government Money Market. The new fund is described below. Fidelity Growth Company Fund Funds are invested primarily in common stock, and securities convertible into common stock, of companies considered to have above-average growth characteristics. These characteristics are most often associated with companies in new and emerging areas of the economy, although the fund may also hold shares in larger, mature or declining industry firms which have been revitalized. THIS FUND WAS ADDED TO THE PLAN EFFECTIVE JANUARY 1, 1996. Fidelity Growth & Income Portfolio Funds are invested primarily in U.S. and foreign stocks, focusing on those that pay current dividends and offer potential growth of earnings such as common stocks, convertible securities, preferred stocks and warrants. THIS FUND WAS ADDED TO THE PLAN EFFECTIVE JANUARY 1, 1996. Fidelity OTC Portfolio Funds are invested primarily in securities traded on the over-the-counter (OTC) securities market. These are frequently the securities of smaller or newer companies whose instruments may have limited marketability and may be subject to more erratic market movement. THIS FUND WAS ADDED TO THE PLAN EFFECTIVE JANUARY 1, 1996. Fidelity Overseas Fund Funds are invested primarily in foreign securities. THIS FUND WAS ADDED TO THE PLAN EFFECTIVE JANUARY 1, 1996. Fidelity Retirement Government Money Market Funds are invested in obligations issued or guaranteed as to principal and interest by the U.S. government, its agencies or instrumentalities, and in repurchase agreements secured by these obligations. An investment in the portfolio is not insured or guaranteed by the U.S. government. THIS FUND WAS ADDED TO THE PLAN EFFECTIVE JANUARY 1, 1996. VESTING Participants are immediately vested in their contributions plus actual earnings thereon. Participants become vested in Company matching contributions after two years of service with the Company. FORFEITURES Any forfeitures by participants are used by the Company to reduce its future matching contributions. 8 10 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). In the event of Plan termination, participants will become fully vested in their account balances. PARTICIPANTS' LOAN ACCOUNT Participants may borrow against their account balances with interest charged at a rate of the prime rate plus 1%. Loan terms range from one to five years or up to thirty years for the purchase of a primary residence. The minimum loan is $1,000 and the maximum loan is the lesser of $50,000 less the highest outstanding loan balance during the one year period prior to the new loan application date, or 50% of the participant's account balance less any current outstanding loan. Activity related to these borrowings is reflected in the Participants' Loan Account column of the financial statements. BENEFITS PAID TO PARTICIPANTS In-service and termination distributions are made throughout the year in accordance with applicable Plan provisions. At December 31, 1996 and 1995, net assets available for benefits included distributions in process of payment of $874 and $27,437, respectively. 2. SUMMARY OF ACCOUNTING POLICIES: The financial statements of the Plan have been prepared on the accrual basis of accounting. The investments of the Plan are stated at quoted market value. Dividend income is recorded on the ex-dividend date. The appreciation in market value of investments is based on the beginning of the year market value or value at the time of purchase during the year and is included in the Statement of Changes in Net Assets Available for Benefits. USE OF ESTIMATES The financial statements are prepared in conformity with generally accepted accounting principles and, accordingly, include amounts that are based on management's best estimates and judgments. 3. INCOME TAXES: The Plan obtained a tax determination letter from the Internal Revenue Service on January 31, 1996 indicating that it had been designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan sponsor believes that the Plan is designed and operated in compliance with the IRC. 9 11 SCHEDULE I EIN: 02-0314630 PLAN NO.: 008 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1996
NUMBER OF NAME OF ISSUER SHARES AT AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE - ----------------------------------------------------------------------------------- ---------- ------------- Merck Common Stock*................................................. 25,168 $1,138,171 $ 2,004,018 Fidelity Magellan Fund.............................................. 9,462 691,697 763,082 Fidelity Balanced Fund.............................................. 20,419 263,218 287,499 Fidelity Intermediate Bond Fund..................................... 19,407 198,720 195,624 Fidelity Growth Company Fund........................................ 721 28,518 29,154 Fidelity Growth & Income Fund Portfolio............................. 1,445 42,028 44,415 Fidelity OTC Portfolio.............................................. 270 8,660 8,845 Fidelity Overseas Fund.............................................. 132 4,047 4,059 Fidelity Retirement Government Money Market......................... 233,731 233,731 233,731 Participants' Loan Account (With interest rates ranging from 6.5% to 10.0%)............................................................ -- 98,697 98,697 ---------- ------------ Total Investments........................................... $2,707,487 $ 3,669,124 ========= ============
- --------------- * Denotes a party-in-interest to the Plan. 10 12 SCHEDULE II EIN: 02-0314630 PLAN NO.: 008 HUBBARD FARMS, INC. EMPLOYEE SAVINGS PLAN ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(A) FOR THE YEAR ENDED DECEMBER 31, 1996
CURRENT VALUE IDENTITY OF PARTY INVOLVED PURCHASE SELLING COST OF OF ASSETS ON NET AND DESCRIPTION OF ASSET PRICE PRICE ASSET TRANSACTION DATE GAIN - ------------------------------------------------------- -------- -------- -------- ---------------- ------- Merck Common Stock 83 purchase transactions........................... $407,428 $ -- $407,428 $407,428 $ -- 19 sales transactions.............................. -- 95,427 57,809 95,427 37,618 Fidelity Magellan Fund 80 purchase transactions........................... 305,049 -- 305,049 305,049 -- 23 sales transactions.............................. -- 110,109 98,571 110,109 11,538 Fidelity Balanced Fund 71 purchase transactions........................... 98,279 -- 98,279 98,279 -- 17 sales transactions.............................. -- 43,255 40,934 43,255 2,321 Fidelity Daily Income Trust 18 purchase transactions........................... 135 -- 135 135 -- 1 sales transactions.............................. -- 190,754 190,754 190,754 -- Fidelity Retirement Government Money Market 80 purchase transactions........................... 266,489 -- 266,489 266,489 -- 17 sales transactions.............................. -- 32,863 32,863 32,863 --
- --------------- (a) Reportable transactions are transactions that, individually or in the aggregate, exceed 5% of the Plan's net assets as of the beginning of the Plan year. 11 13 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 21, 1997 included in the financial statements and exhibits required by Form 11-K Annual Report for the Hubbard Farms, Inc. Employee Savings Plan into Merck & Co., Inc.'s previously filed Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101, 33-40177, 33-51235, 33-53463, 33-64273 and 33-64665), and Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785, 33-57421 and 333-17045). It should be noted that we have not audited any financial statements of the Plan subsequent to December 31, 1996 or performed any audit procedures subsequent to the date of our report. ARTHUR ANDERSEN LLP New York, New York June 16, 1997 -----END PRIVACY-ENHANCED MESSAGE-----