-----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, AsRRRznNUJ51dXTpTED4cFCoNUdmopAEUanPD+ydnd+q2C9P67AdzX5DNRNwdB4R 7PUtiFd9pnVzpF+72WiZrg== 0000950123-97-006776.txt : 19970814 0000950123-97-006776.hdr.sgml : 19970814 ACCESSION NUMBER: 0000950123-97-006776 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCK & CO INC CENTRAL INDEX KEY: 0000064978 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 221109110 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03305 FILM NUMBER: 97658020 BUSINESS ADDRESS: STREET 1: ONE MERCK DR STREET 2: P O BOX 100 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 BUSINESS PHONE: 9084234044 MAIL ADDRESS: STREET 1: ONE MERCK DR STREET 2: PO BOX 100 WS3AB-05 CITY: WHITEHOUSE STATION STATE: NJ ZIP: 08889-0100 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File No. 1-3305 MERCK & CO., INC. P. O. Box 100 One Merck Drive Whitehouse Station, N.J. 08889-0100 (908) 423-1000 Incorporated in New Jersey I.R.S. Employer Identification No. 22-1109110 The number of shares of common stock outstanding as of the close of business on July 31, 1997:
Class Number of Shares Outstanding ----- ---------------------------- Common Stock 1,207,875,027
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ 2 Part I - Financial Information MERCK & CO., INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF INCOME THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996 ($ in millions except per share amounts)
Three Months Six Months Ended June 30 Ended June 30 --------------------------- ---------------------------- 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Sales $ 5,909.2 $ 4,908.8 $ 11,477.1 $ 9,439.2 ---------- ---------- ---------- ---------- Costs, Expenses and Other Materials and production 2,944.3 2,283.8 5,730.6 4,516.9 Marketing and administrative 1,044.2 946.2 2,104.8 1,760.6 Research and development 396.4 347.7 765.0 697.2 Equity income from affiliates (122.8) (128.4) (273.8) (293.8) Other (income) expense, net 14.8 65.1 54.8 124.9 ---------- ---------- ---------- ---------- 4,276.9 3,514.4 8,381.4 6,805.8 ---------- ---------- ---------- ---------- Income Before Taxes 1,632.3 1,394.4 3,095.7 2,633.4 Taxes on Income 477.9 422.3 921.0 797.5 ---------- ---------- ---------- ---------- Net Income $ 1,154.4 $ 972.1 $ 2,174.7 $ 1,835.9 ========== ========== ========== ========== Per Share of Common Stock: Net Income $ .96 $ .80 $ 1.80 $ 1.50 Dividends Declared $ .42 $ .34 $ .84 $ .68 Average Number of Common Shares Outstanding (millions) 1,207.9 1,214.9 1,208.3 1,220.7
The accompanying notes are an integral part of this financial statement. - 1 - 3 MERCK & CO., INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET JUNE 30, 1997 AND DECEMBER 31, 1996 ($ in millions)
June 30 December 31 1997 1996 --------- --------- ASSETS Current Assets Cash and cash equivalents $ 1,587.0 $ 1,352.4 Short-term investments 1,129.4 829.2 Accounts receivable 2,697.0 2,655.9 Inventories 2,170.8 2,148.8 Prepaid expenses and taxes 834.8 740.3 --------- --------- Total current assets 8,419.0 7,726.6 --------- --------- Investments 2,584.0 2,499.4 Property, Plant and Equipment, at cost, net of allowance for depreciation of $3,134.4 in 1997 and $2,799.7 in 1996 6,135.3 5,926.7 Goodwill and Other Intangibles, net of accumulated amortization of $706.2 in 1997 and $606.5 in 1996 6,977.9 6,736.6 Other Assets 1,511.7 1,403.8 --------- --------- $25,627.9 $24,293.1 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 2,709.8 $ 2,937.8 Loans payable and current portion of long-term debt 496.8 606.1 Income taxes payable 889.4 802.6 Dividends payable 507.0 482.7 --------- --------- Total current liabilities 4,603.0 4,829.2 --------- --------- Long-Term Debt 1,726.8 1,155.9 --------- --------- Deferred Income Taxes and Noncurrent Liabilities 4,184.8 4,027.3 --------- --------- Minority Interests 2,292.2 2,310.2 --------- --------- Stockholders' Equity Common stock Authorized - 2,700,000,000 shares Issued - 1,483,821,758 shares - 1997 - 1,483,619,311 shares - 1996 5,115.6 4,967.5 Retained earnings 15,981.6 14,817.7 --------- --------- 21,097.2 19,785.2 Less treasury stock, at cost 275,489,891 shares - 1997 277,016,963 shares - 1996 8,276.1 7,814.7 --------- --------- Total stockholders' equity 12,821.1 11,970.5 --------- --------- $25,627.9 $24,293.1 ========= =========
The accompanying notes are an integral part of this financial statement. - 2 - 4 MERCK & CO., INC. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 ($ in millions)
Six Months Ended June 30 ------------------------ 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Income before taxes $3,095.7 $2,633.4 Adjustments to reconcile income before taxes to cash provided from operations before taxes: Other 569.7 216.7 Net changes in assets and liabilities (312.3) 33.7 -------- -------- CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 3,353.1 2,883.8 INCOME TAXES PAID (646.0) (598.5) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,707.1 2,285.3 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (573.7) (576.9) Purchase of securities, subsidiaries and other investments (9,733.4) (5,714.5) Proceeds from sale of securities, subsidiaries and other investments 8,963.3 6,192.8 Other (11.1) (31.3) -------- -------- NET CASH USED BY INVESTING ACTIVITIES (1,354.9) (129.9) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in short-term borrowings 21.7 11.6 Proceeds from issuance of debt 603.1 315.0 Payments on debt (146.3) (267.5) Purchase of treasury stock (748.2) (1,583.8) Dividends paid to stockholders (990.9) (835.5) Other 189.4 97.5 -------- -------- NET CASH USED BY FINANCING ACTIVITIES (1,071.2) (2,262.7) -------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (46.4) (53.3) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 234.6 (160.6) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,352.4 1,847.4 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,587.0 $1,686.8 ======== ========
The accompanying notes are an integral part of this financial statement. Notes to Financial Statements 1. The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by generally accepted accounting principles for complete financial statements are not included herein. The interim statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. Interim statements are subject to possible adjustments in connection with the annual audit of the Company's accounts for the full year 1997; in the Company's opinion, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. - 3 - 5 Notes to Financial Statements (continued) 2. Inventories consisted of:
($ in millions) ----------------------- June 30 December 31 1997 1996 -------- -------- Finished goods $1,261.6 $1,237.3 Raw materials and work in process 843.5 841.1 Supplies 65.7 70.4 -------- -------- Total (approximates current cost) 2,170.8 2,148.8 Reduction to LIFO cost -- -- -------- -------- $2,170.8 $2,148.8 ======== ========
3. In May 1997, Merck issued $500 million of debt under its 1993 shelf registration. The remaining capacity under the shelf is $170 million. The debt has a scheduled maturity of May 3, 2037 and pays interest semi-annually at a rate of 5.76%. 4. The Company, along with numerous other defendants, is a party in several antitrust actions brought by retail pharmacies and consumers, alleging conspiracies in restraint of trade and challenging pricing and/or purchasing practices, one of which has been certified as a Federal class action and a number of which have been certified as state class actions. In January 1996, the Company and several other defendants entered into an agreement, subject to court approval, to settle the Federal class action alleging conspiracy, which represents the single largest group of retail pharmacy claims, pursuant to which the Company is obligated to pay $51.8 million, payable in four equal annual installments. In April 1996, the court declined to approve the settlement. Subsequently, the Company and several other defendants entered into an amended settlement agreement, which provides for the same monetary payment and addresses the court's concerns as expressed in its April 1996 opinion. In June 1996, the Court granted approval of the amended settlement agreement, to which objecting retail class members filed appeals in July 1996. The Company has not engaged in any conspiracy and no admission of wrongdoing has been made or is included in the amended agreement, which was entered into in order to avoid the cost of litigation and the risk of an inaccurate adverse verdict by a jury presented with a case of this size and complexity. While it is not feasible to predict or determine the final outcome of these proceedings, management does not believe that they should result in a materially adverse effect on the Company's financial position, results of operations or liquidity. 5. Sales consisted of:
($ in millions) ------------------------------------------------------- Three Months Six Months Ended June 30 Ended June 30 ------------------------- ------------------------ 1997 1996 1997 1996 --------- --------- --------- --------- Elevated cholesterol $ 1,150.4 $ 1,008.4 $ 2,233.5 $ 1,817.2 Hypertension/heart failure 992.9 936.4 1,914.8 1,758.9 Anti-ulcerants 322.3 254.9 630.8 535.8 Antibiotics 183.7 197.9 390.3 413.3 Ophthalmologicals 184.7 171.7 360.3 321.5 Vaccines/biologicals 183.1 137.6 334.1 249.7 Osteoporosis 127.4 66.2 229.2 110.3 Benign prostatic hyperplasia 99.9 110.0 199.2 230.2 Other Merck human health 75.9 23.8 147.9 28.4 Other human health 2,324.9 1,749.6 4,554.3 3,501.2 Animal health/crop protection 264.0 252.3 482.7 472.7 --------- --------- --------- --------- $ 5,909.2 $ 4,908.8 $11,477.1 $ 9,439.2 ========= ========= ========= =========
Sales by therapeutic class include Merck-Medco Managed Care (Merck-Medco) sales of Merck products. Other human health primarily includes Merck-Medco sales of non-Merck products and Merck-Medco human health services, principally managed prescription drug programs. - 4 - 6 Notes to Financial Statements (continued) 6. Other (income) expense, net, consisted of:
($ in millions) ---------------------------------------------------- Three Months Six Months Ended June 30 Ended June 30 ---------------------- ---------------------- 1997 1996 1997 1996 ------- ------- ------- ------- Interest income $ (54.1) $ (49.2) $(105.4) $(109.4) Interest expense 30.9 32.8 56.0 67.3 Exchange gains (7.5) (5.6) (13.1) (13.1) Minority interests 29.9 42.5 72.6 71.9 Amortization of goodwill and other intangibles 48.3 47.2 96.1 94.2 Other, net (32.7) (2.6) (51.4) 14.0 ------- ------- ------- ------- $ 14.8 $ 65.1 $ 54.8 $ 124.9 ======= ======= ======= =======
Minority interests include third parties' share of exchange gains and losses arising from translation of the financial statements into U.S. dollars. Interest paid for the six-month periods ended June 30, 1997 and 1996 was $34.3 million and $35.5 million, respectively. 7. Income taxes paid for the six-month periods ended June 30, 1997 and 1996 were $646.0 million and $598.5 million, respectively. 8. Legal proceedings to which the Company is a party are discussed in Part I Item 3, Legal Proceedings, in the Annual Report on Form 10-K. There were no material developments in the three-month period ended June 30, 1997. - 5 - 7 MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION Earnings per share for the second quarter of 1997 were $0.96, an increase of 20% over the second quarter of 1996. Second quarter net income increased 19% to $1,154.4 million. Sales for the quarter were $5.9 billion, up 20% from the same period last year. For the first six months, earnings per share were $1.80, an increase of 20% from the first six months of 1996. Net income was $2,174.7 million for the first six months of 1997, an increase of 18% from the first six months of 1996. Sales rose 22% to $11.5 billion. Sales growth for the quarter and the first half of 1997 continued to be led by established major products, recent product introductions and the Merck-Medco Managed Care business. Both domestic and international operations reported strong unit volume gains. Foreign exchange reduced the second quarter sales growth by one percentage point, the same effect as reported in the first quarter of 1997. Excluding exchange, sales of Merck human and animal health products increased 15% and 18% for the second quarter and six months, respectively. Sales outside the United States accounted for 28% of the first half of 1997 sales, compared with 30% for the same period last year. Income growth for the first six months was driven by strong unit volume gains. The unfavorable effects of inflation, net of price, and exchange were partially offset by cost controls and productivity improvements in manufacturing, selling and general and administrative expenses. The growth in pretax income for the second quarter was reduced by the Company's share of the increase in taxes related to the Astra Merck joint venture and the European vaccine joint venture with Pasteur Merieux Serums et Vaccins. The reduction in pretax growth, however, was offset by a corresponding reduction in the Company's tax rate in 1997, resulting in no effect on net income growth. Results for the first six months were paced by sales volume gains of established major products, including 'Zocor', 'Pepcid', 'Prinivil' and 'Recombivax HB', and by the newer product introductions, 'Crixivan', 'Cozaar'*, 'Hyzaar'*, 'Fosamax', 'Trusopt' and 'Varivax'. Significant prescription volume growth in the Merck-Medco Managed Care business also contributed to the sales increase for the first six months. 'Zocor' continues to grow strongly and to command the leading share of total and new prescriptions worldwide among cholesterol-lowering medicines. The number of patients taking 'Zocor' has nearly doubled to almost 7 million worldwide since the landmark Scandinavian Simvastatin Survival Study (4S) showed that 'Zocor' saves lives and prevents heart attacks in people with high cholesterol and coronary heart disease. A 4S subanalysis published this April in DIABETES CARE showed that major coronary events, including heart attacks, were reduced by 55 percent in people with diabetes who take 'Zocor', compared to those on placebo. In June, the U.S. Food and Drug Administration (FDA) cleared new recommendations reducing the frequency of liver function testing for patients on therapy with 'Zocor'. Despite new competition, 'Mevacor' and 'Zocor' together hold more than a 40 percent share worldwide. The cholesterol-lowering market continues to grow at a rate of more than 20 percent a year in major markets - driven primarily by an annual 35 percent growth in the "statin" category - as doctors increasingly recognize the health benefits of lipid-lowering therapy. Still, only about 30 percent of patients with coronary heart disease and high cholesterol currently take cholesterol-lowering medicines. U.S. prescription sales remain strong for 'Pepcid', an H2-receptor antagonist for the treatment of duodenal ulcers and the short-term treatment of gastric ulcers and gastroesophageal reflux disease (GERD). 'Pepcid' is now the second most-prescribed prescription H2-receptor antagonist in the United States. In the U.S. over-the-counter market, 'Pepcid AC' Acid Controller, sold by Johnson & Johnson o Merck Consumer Pharmaceuticals Co., continues to lead the growing and highly competitive acid indigestion market. Together, 'Prinivil' and 'Vasotec' are the most widely prescribed angiotensin converting enzyme (ACE) inhibitors in the United States. They hold about 40 percent of the U.S. ACE inhibitor market. For two years in a row, new and total prescription growth for 'Prinivil', which treats high blood pressure and heart failure, exceeded that of the competing lisinopril product. 'Vasotec', the most widely prescribed branded antihypertensive medicine in the world, is the only ACE inhibitor indicated for treatment of three conditions: high blood pressure, asymptomatic left ventricular dysfunction and heart failure. *'Cozaar' and 'Hyzaar' are registered trademarks of E.I. du Pont de Nemours and Company, Wilmington, DE, USA. - 6 - 8 MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued) The worldwide market for 'Recombivax HB', the first recombinant vaccine for immunization against hepatitis B infection, continues to grow more than 10 years after it was launched in the U.S. Contributing to growth were increased public awareness of hepatitis B, legislation in some states requiring hepatitis B immunization for school entry, and the December 1996 publication by the Centers for Disease Control recommending hepatitis B immunization for adolescents. 'Crixivan', Merck's protease inhibitor for the treatment of HIV infection in adults, has achieved broad acceptance by physicians and patients, and is the world's most widely prescribed protease inhibitor. Within a year of its record-breaking 42-day clearance in the United States, it has been cleared for marketing in more than 60 additional countries. 'Crixivan' now holds about half of the U.S. market. Two clinical endpoint studies with 'Crixivan', announced in February and March, demonstrated that 'Crixivan' reduced the incidence of AIDS-related infections, cancers and deaths by as much as 60 percent. Merck researchers, in an update of an earlier study, reported that 'Crixivan', when used with two other anti-HIV drugs, sustained viral suppression for up to 18 months in 90 percent of patients. The virus in the bloodstream of those patients had been lowered below the limit of detection in the assay used. Physicians continue to adopt 'Cozaar' and 'Hyzaar' (a combination of 'Cozaar' and the diuretic hydrochlorothiazide) faster than any new antihypertensive product launched in this decade. The products are now marketed in 71 countries. 'Cozaar' and 'Hyzaar', the first in a new class of anti-hypertensive drugs called angiotensin-II (A-II) receptor antagonists, are highly efficacious and are exceptionally well tolerated. 'Cozaar' and 'Hyzaar' were developed in collaboration with the DuPont Merck Pharmaceutical Company. In April, the FDA cleared 'Fosamax' to prevent osteoporosis in postmenopausal women and to prevent fractures in postmenopausal women with osteoporosis. 'Fosamax' was first cleared for marketing in September 1995 for the treatment of osteoporosis in postmenopausal women. The expanded use of 'Fosamax' for prevention increases the number of postmenopausal women in the United States who can benefit from the use of the product from 20 million to 39 million. Of the 20 million American women with osteoporosis, 80 percent are undiagnosed. Efforts to increase the rate of diagnosis of the disease are accelerating. In 1995, there were only 1,000 diagnostic sites in the United States with machines for measuring bone density. This year, the number of sites is expected to increase to more than 4,000, expanding access to millions of undiagnosed women. Merck continues to educate women about postmenopausal osteoporosis and treatment with 'Fosamax' through major consumer campaigns. In May, the Company launched a new U.S. direct-to-consumer campaign in magazines and on television aimed at women with the bone-thinning disease. Sales of 'Trusopt', the first carbonic anhydrase inhibitor made in a topical (eyedrop) formulation, continue to grow since it was first introduced in the United States in May 1995. 'Trusopt' is now the most widely prescribed anti-glaucoma medicine in the United States and in several countries in Europe. The product is indicated for the treatment of elevated intraocular pressure in patients with ocular hypertension or open-angle glaucoma. 'Varivax', the first and only chickenpox vaccine available in the United States, continues to grow in acceptance. Since FDA clearance in March 1995, more than 6 million doses of the vaccine have been distributed. In February, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which requires adoption in 1997. This Statement generally requires the presentation of basic and diluted earnings per share on the face of the statement of income. The amount of basic earnings per share will not differ from the earnings per share currently reported on the face of the statement of income and the diluted earnings per share will not be materially different. On May 28, 1997, the Board of Directors declared a quarterly dividend of 42 cents per share of common stock for the third quarter of 1997. On July 22, 1997, the Board of Directors declared a quarterly dividend of 45 cents per share of common stock for the fourth quarter of 1997. The Company's total dividends paid during 1997 will be $1.69 per share, a 19% increase over the amount paid in 1996. On July 2, the Company completed the sale of its crop protection business to Novartis for $910 million in cash. The crop protection business was not significant to the Company's financial position or results of operations. On August 1, 1997, Merck and Rhone-Poulenc combined their respective animal health and poultry genetics businesses to form an equally owned joint venture called Merial. This transaction will not have a significant effect on the Company's financial position, liquidity or results of operations. - 7 - 9 Part II - Other Information Item 4. Submission of Matters to a Vote of Security-Holders The following matters were voted upon at the Annual Meeting of Stockholders held on April 23, 1997, and received the votes set forth below: 1. All of the following persons nominated were elected to serve as directors and received the number of votes set opposite their names:
For Withheld --- -------- Edward M. Scolnick 987,158,051 6,365,171 Lawrence A. Bossidy 987,117,045 6,406,177 Johnnetta B. Cole 986,859,270 6,663,952 Charles E. Exley, Jr. 987,081,408 6,441,814 William N. Kelley 987,129,871 6,393,351
2. A proposal to ratify the appointment of independent public accountants received 988,678,836 votes FOR and 1,943,583 votes AGAINST, with 2,900,803 abstentions. 3. A stockholder proposal concerning prior government/political service of certain employees and directors received 30,291,700 votes FOR and 731,239,204 votes AGAINST, with 33,756,019 abstentions and 198,236,299 broker non-votes. 4. A stockholder proposal concerning benefits for management and directors received 40,430,465 votes FOR and 734,014,702 votes AGAINST, with 20,829,765 abstentions and 198,248,290 broker non-votes. 5. A stockholder proposal concerning confidential voting received 340,462,839 votes FOR and 442,393,389 votes AGAINST, with 12,407,763 abstentions and 198,259,231 broker non-votes. 6. A stockholder proposal concerning providing shareholders with reports received 40,598,396 votes FOR and 726,123,407 votes AGAINST, with 28,565,014 abstentions and 198,236,405 broker non-votes. 7. A stockholder proposal concerning charitable contributions received 32,654,573 votes FOR and 726,126,655 votes AGAINST, with 36,503,715 abstentions and 198,238,279 broker non-votes. - 8 - 10 Part II - Other Information (continued) Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Number Description Method of Filing ------ ----------- ---------------- 3(a) Restated Certificate of Incorporation of Incorporated by reference to Form Merck & Co., Inc. (May 6, 1992) 10-K Annual Report for the fiscal year ended December 31, 1992 3(b) By-Laws of Merck & Co., Inc. (as amended Incorporated by reference to Form effective February 25, 1997) 10-Q Quarterly Report for the period ended March 31, 1997 11 Computation of Earnings Per Common Share Filed with this document 12 Computation of Ratios of Earnings to Filed with this document Fixed Charges 27 Financial Data Schedule Filed with this document
(b) Reports on Form 8-K During the three-month period ending June 30, 1997, one Current Report was filed on Form 8-K under Item 5 - Other Events concerning the Company's announcement of the signing of a definitive agreement for the sale of its crop protection business to Novartis for $910 million. This report was dated May 13, 1997 and filed May 15, 1997. - 9 - 11 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MERCK & CO., INC. Date: August 11, 1997 /s/ Mary M. McDonald ----------------------------------------- MARY M. MCDONALD Senior Vice President and General Counsel Date: August 11, 1997 /s/ Peter E. Nugent ----------------------------------------- PETER E. NUGENT Vice President, Controller - 10 - 12 EXHIBIT INDEX Exhibits
Number Description ------ ----------- 3(a) Restated Certificate of Incorporation of Merck & Co., Inc. (May 6, 1992) - Incorporated by reference to Form 10-K Annual Report for the fiscal year ended December 31, 1992 3(b) By-Laws of Merck & Co., Inc. (as amended effective February 25, 1997) - Incorporated by reference to Form 10-Q Quarterly Report for the period ended March 31, 1997 11 Computation of Earnings Per Common Share 12 Computation of Ratios of Earnings to Fixed Charges 27 Financial Data Schedule
EX-11 2 COMPUTATION OF EARNINGS PER COMMON SHARE 1 Exhibit 11 MERCK & CO., INC. AND SUBSIDIARIES Computation of Earnings Per Common Share (In millions except per share amounts)
Three Months Six Months Ended June 30 Ended June 30 ------------------------- ------------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Net Income and Adjusted Earnings: Net Income ............................................... $ 1,154.4 $ 972.1 $ 2,174.7 $ 1,835.9 Effect on Earnings of Compensation Expense Relating to Stock Option and Incentive Plans ....................... 2.7 2.2 6.5 4.2 --------- --------- --------- --------- Adjusted Earnings for Fully Diluted Earnings Per Share ... $ 1,157.1 $ 974.3 $ 2,181.2 $ 1,840.1 ========= ========= ========= ========= Weighted Average Shares and Share Equivalents Outstanding: Weighted Average Shares Outstanding (As Reported) ........ 1,207.9 1,214.9 1,208.3 1,220.7 Common Share Equivalents Issuable Under Stock Option and Incentive Plans ........................................ 32.6 29.7 32.6 29.7 Common Share Equivalents Issuable on Assumed Conversion of Debentures ............................................. .1 .3 .1 .3 --------- --------- --------- --------- Weighted Average Shares and Share Equivalents Outstanding 1,240.6 1,244.9 1,241.0 1,250.7 ========= ========= ========= ========= Earnings Per Share (As Reported) ......................... $ .96 $ .80 $ 1.80 $ 1.50 ========= ========= ========= ========= Fully Diluted Earnings Per Share (a) ..................... $ .93 $ .78 $ 1.76 $ 1.47 ========= ========= ========= =========
(a)This calculation is submitted in accordance with the regulations of the Securities and Exchange Commission although not required by APB Opinion No. 15 because it results in dilution of less than 3% on an unrounded basis. EX-12 3 COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES 1 Exhibit 12 MERCK & CO., INC. AND SUBSIDIARIES Computation Of Ratios Of Earnings To Fixed Charges (In millions except ratio data)
Six Months Ended Years Ended December 31 June 30 -------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- -------- Income Before Taxes and Cumulative Effect of Accounting Changes ... $3,095.7 $5,540.8 $4,797.2 $4,415.2 $3,102.7 $3,563.6 Add: One-third of rents ...... 21.5 41.0 28.1 36.0 35.0 34.0 Interest expense, net ... 44.6 103.2 60.3 96.0 48.0 23.6 Preferred stock dividends 34.0 70.0 2.1 -- -- -- -------- -------- -------- -------- -------- -------- Earnings ............... $3,195.8 $5,755.0 $4,887.7 $4,547.2 $3,185.7 $3,621.2 ======== ======== ======== ======== ======== ======== Fixed Charges One-third of rents ...... $ 21.5 $ 41.0 $ 28.1 $ 36.0 $ 35.0 $ 34.0 Interest expense ........ 56.0 138.6 98.7 124.4 84.7 72.7 Preferred stock dividends 34.0 70.0 2.1 -- -- -- -------- -------- -------- -------- -------- -------- Fixed Charges .......... $ 111.5 $ 249.6 $ 128.9 $ 160.4 $ 119.7 $ 106.7 ======== ======== ======== ======== ======== ======== Ratio of Earnings to Fixed Charges ........ 29 23 38 28 27 34 ======== ======== ======== ======== ======== ========
For purposes of computing these ratios, "earnings" consist of income before taxes, cumulative effect of accounting changes, one-third of rents (deemed by the Company to be representative of the interest factor inherent in rents), interest expense, net of amounts capitalized, and dividends on preferred stock of subsidiary companies. "Fixed charges" consist of one-third of rents, interest expense as reported in the Company's consolidated financial statements and dividends on preferred stock of subsidiary companies. EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND THE CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000,000 6-MOS DEC-31-1997 JUN-30-1997 1,587 1,129 2,697 0 2,171 8,419 9,270 (3,134) 25,628 4,603 1,727 0 0 5,116 7,706 25,628 11,477 11,477 5,731 5,731 765 0 56 3,096 921 2,175 0 0 0 2,175 1.80 1.76 NOT MATERIAL TO THE CONSOLIDATED FINANCIAL STATEMENTS.
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