EX-99 3 y89660exv99.txt UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFO EXHIBIT 99 UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS The unaudited consolidated pro forma financial statements set forth below for Merck give effect to the spin-off of Medco Health as if such spin-off had been completed on January 1, 2000 for income statement purposes, and at June 30, 2003 for balance sheet purposes, subject to the assumptions and adjustments in the accompanying notes to the pro forma financial statements. The pro forma adjustments included herein are based on available information and certain assumptions that management believes are reasonable and are described in the accompanying notes to the pro forma financial statements. The unaudited consolidated pro forma financial statements do not necessarily represent what Merck's financial position or results of operations would have been had the spin-off of Medco Health occurred on such dates or to project Merck's financial position or results of operations at or for any future date or period. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial information have been made. The unaudited consolidated pro forma financial statements should be read in conjunction with the historical financial statements of Merck and Medco Health. Merck & Co., Inc. Unaudited Consolidated Pro Forma Balance Sheet June 30, 2003 ---------------------------------------------- ($ in millions)
Merck & Co., Inc. Medco Other Merck & Co., Inc. Historical (1) Health (2) Adjustments (3) Pro Forma ----------------- ------------ --------------- ---------------- ASSETS Current Assets Cash and cash equivalents $ 1,664.7 $ (6.6) $ 1,347.6 $ 3,005.7 Short-term investments 4,050.8 (70.6) -- 3,980.2 Accounts receivable 5,901.6 (1,533.6) -- 4,368.0 Inventories 3,630.4 (925.9) 90.1 2,794.6 Net Receivable from Merck -- (652.4) 652.4 -- Prepaid expenses and taxes 1,055.5 (292.0) -- 763.5 ----------- ----------- ----------- ----------- Total current assets 16,303.0 (3,481.1) 2,090.1 14,912.0 ----------- ----------- ----------- ----------- Investments 7,250.2 (11.5) -- 7,238.7 Property, Plant and Equipment 14,569.3 (825.7) -- 13,743.6 Goodwill 4,344.0 (3,310.2) -- 1,033.8 Other Intangibles, net 3,284.1 (2,367.7) -- 916.4 Other Assets 4,257.5 (110.0) -- 4,147.5 ----------- ----------- ----------- ----------- $ 50,008.1 $ (10,106.2) $ 2,090.1 $ 41,992.0 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Loans payable and current portion of long-term debt $ 4,769.6 $ -- $ -- $ 4,769.6 Trade accounts payable 2,169.6 (1,546.8) -- 622.8 Accrued and other current liabilities 3,306.4 (409.9) 43.0 2,939.5 Income taxes payable 2,697.5 (43.9) -- 2,653.6 Dividends payable 806.3 -- -- 806.3 ----------- ----------- ----------- ----------- Total current liabilities 13,749.4 (2,000.6) 43.0 11,791.8 ----------- ----------- ----------- ----------- Long-Term Debt 5,393.6 -- -- 5,393.6 ----------- ----------- ----------- ----------- Deferred Income Taxes and Noncurrent Liabilities 7,216.3 (1,234.8) -- 5,981.5 ----------- ----------- ----------- ----------- Minority Interests 4,041.6 -- -- 4,041.6 ----------- ----------- ----------- ----------- Stockholders' Equity Common stock 29.8 -- -- 29.8 Other paid-in capital 6,931.5 -- -- 6,931.5 Retained earnings 37,398.0 (6,870.8) 2,047.1 32,574.3 Accumulated other comprehensive loss (171.4) -- -- (171.4) ----------- ----------- ----------- ----------- 44,187.9 (6,870.8) 2,047.1 39,364.2 ----------- ----------- ----------- ----------- Less treasury stock, at cost 24,580.7 -- -- 24,580.7 ----------- ----------- ----------- ----------- Total stockholders' equity 19,607.2 (6,870.8) 2,047.1 14,783.5 ----------- ----------- ----------- ----------- $ 50,008.1 $ (10,106.2) $ 2,090.1 $ 41,992.0 =========== =========== =========== ===========
See notes to the unaudited consolidated pro forma financial statements. Merck & Co., Inc. Unaudited Interim Consolidated Pro Forma Statement of Income Six Months Ended June 30, 2003 (In Millions Except Earnings per Common Share from Continuing Operations)
Merck & Co., Inc. Other Merck & Co., Inc. Historical (1) Medco Health (4) Adjustments (5) Pro Forma ----------------- ---------------- --------------- ----------------- Sales $ 26,669.7 $ (16,738.6) $ 1,165.7 $ 11,096.8 Costs, Expenses and Other Materials & Production 16,887.4 (16,018.3) 1,166.2 2,035.3 Marketing & Administrative 3,448.5 (330.7) 19.4 3,137.2 Research & Development 1,506.7 -- -- 1,506.7 Acquired Research 90.4 -- -- 90.4 Equity Income (284.7) -- -- (284.7) Other (Income)/Expense, net (39.3) (35.0) 0.3 (74.0) ----------- ----------- ---------- ----------- 21,609.0 (16,384.0) 1,185.9 6,410.9 ----------- ----------- ---------- ----------- Income from Continuing Operations before Taxes 5,060.7 (354.6) (20.2) 4,685.9 Taxes on Income from Continuing Operations 1,483.3 (147.4) 20.6 1,356.5 ----------- ----------- ---------- ----------- Income from Continuing Operations $ 3,577.4 $ (207.2) $ (40.8) $ 3,329.4 =========== =========== ========== =========== Average Common Shares Outstanding Basic 2,241.4 2,241.4 Assuming Dilution 2,261.6 2,261.6 Earnings Per Common Share from Continuing Operations Basic $1.60 $1.49 Assuming Dilution 1.58 1.47
See notes to the unaudited consolidated pro forma financial statements. Merck & Co., Inc. Unaudited Consolidated Pro Forma Statement of Income Twelve Months Ended December 31, 2002 (In Millions Except Earnings per Common Share from Continuing Operations)
Merck & Co., Inc. Other Merck & Co., Inc. Historical (1) Medco Health (4) Adjustments (5) Pro Forma ----------------- ---------------- --------------- ----------------- Sales $ 51,790.3 $ (32,958.5) $ 2,614.0 $ 21,445.8 Costs, Expenses and Other Materials & Production 33,053.6 (31,657.7) 2,511.2 3,907.1 Marketing & Administrative 6,186.8 (587.7) 53.1 5,652.2 Research & Development 2,677.2 -- -- 2,677.2 Equity Income (644.7) -- -- (644.7) Other (Income)/Expense, net 303.8 (92.8) (8.7) 202.3 ----------- ----------- ----------- ----------- 41,576.7 (32,338.2) 2,555.6 11,794.1 ----------- ----------- ----------- ----------- Income from Continuing Operations before Taxes 10,213.6 (620.3) 58.4 9,651.7 Taxes on Income from Continuing Operations 3,064.1 (258.7) 51.5 2,856.9 ----------- ----------- ----------- ----------- Income from Continuing Operations $ 7,149.5 $ (361.6) $ 6.9 $ 6,794.8 =========== =========== =========== =========== Average Common Shares Outstanding Basic 2,257.5 2,257.5 Assuming Dilution 2,277.0 2,277.0 Earnings Per Common Share from Continuing Operations Basic $3.17 $3.01 Assuming Dilution 3.14 2.98
See notes to the unaudited consolidated pro forma financial statements. Merck & Co., Inc. Unaudited Consolidated Pro Forma Statement of Income Twelve Months Ended December 31, 2001 (In Millions Except Earnings per Common Share from Continuing Operations)
Merck & Co., Inc. Other Merck & Co., Inc. Historical (1) Medco Health (4) Adjustments (5) Pro Forma ----------------- ---------------- --------------- ----------------- Sales $47,715.7 $(29,070.6) $ 2,553.9 $21,199.0 Costs, Expenses and Other Materials & Production 28,976.5 (27,786.7) 2,435.1 3,624.9 Marketing & Administrative 6,224.4 (578.4) 54.6 5,700.6 Research & Development 2,456.4 -- -- 2,456.4 Equity Income (685.9) -- -- (685.9) Other (Income)/Expense, net 341.7 (187.2) 0.4 154.9 ------------ ------------ ------------ ------------ 37,313.1 (28,552.3) 2,490.1 11,250.9 ------------ ------------ ------------ ------------ Income from Continuing Operations before Taxes 10,402.6 (518.3) 63.8 9,948.1 Taxes on Income from Continuing Operations 3,120.8 (261.7) 35.8 2,894.9 ----------- ----------- ------------ ----------- Income from Continuing Operations $ 7,281.8 $ (256.6) $ 28.0 $ 7,053.2 =========== =========== ============ =========== Average Common Shares Outstanding Basic 2,288.3 2,288.3 Assuming Dilution 2,322.3 2,322.3 Earnings Per Common Share from Continuing Operations Basic $3.18 $3.08 Assuming Dilution 3.14 3.04
See notes to the unaudited consolidated pro forma financial statements. Merck & Co., Inc. Unaudited Consolidated Pro Forma Statement of Income Twelve Months Ended December 31, 2000 (In Millions Except Earnings per Common Share from Continuing Operations)
Merck & Co., Inc. Other Merck & Co., Inc. Historical (1) Medco Health (4) Adjustments (5) Pro Forma ----------------- ---------------- --------------- ----------------- Sales $ 40,363.2 $ (22,266.3) $ 1,912.6 $ 20,009.5 Costs, Expenses and Other Materials & Production 22,443.5 (21,154.2) 1,885.9 3,175.2 Marketing & Administrative 6,167.7 (483.1) 41.0 5,725.6 Research & Development 2,343.8 -- -- 2,343.8 Equity Income (764.9) -- -- (764.9) Other (Income)/Expense, net 349.0 (181.5) -- 167.5 ----------- ----------- ------------ ----------- 30,539.1 (21,818.8) 1,926.9 10,647.2 ----------- ----------- ------------ ----------- Income from Continuing Operations before Taxes 9,824.1 (447.5) (14.3) 9,362.3 Taxes on Income from Continuing Operations 3,002.4 (230.7) 52.1 2,823.8 ----------- ----------- ------------ ----------- Income from Continuing Operations $ 6,821.7 $ (216.8) $ (66.4) $ 6,538.5 =========== =========== =========== =========== Average Common Shares Outstanding Basic 2,306.9 2,306.9 Assuming Dilution 2,353.2 2,353.2 Earnings Per Common Share from Continuing Operations Basic $2.96 $2.83 Assuming Dilution 2.90 2.78
See notes to the unaudited consolidated pro forma financial statements. Merck & Co., Inc. Notes to Unaudited Consolidated Pro Forma Financial Statements 1. These columns reflect the historical consolidated results of operations and financial position of Merck. 2. This column reflects the removal of Medco Health's respective asset and liability account components from the consolidated accounts of Merck. 3. This column reflects the following adjustments: (a) Merck's receipt of $2.0 billion of dividends from Medco Health prior to the spin-off; (b) settlement of Merck's intercompany payable to Medco Health, which at June 30, 2003 was $652.4 million; (c) Merck's recognition of intercompany profit on sales to Medco for which the related product has not yet been sold by Medco and therefore is still in Medco's June 30, 2003 inventory; (d) accruals for costs incurred in connection with the spin-off and for rebates associated with the Merck sales to Medco noted in (c) above. 4. These columns reflect the historical results of operations of Medco Health on a stand-alone basis. 5. This column represents additional adjustments necessary to reconcile from Merck's historical results of operations to the pro forma results of operations assuming the spin-off of Medco Health had occurred on January 1, 2000. These adjustments primarily relate to revenues and cost of sales associated with sales of Merck products through Medco Health that are included in both the Merck pro forma operating results and Medco Health stand-alone operating results. The adjustments also reflect revenues and expenses relating to services provided to Merck by Medco Health and, in 2000, 2001 and 2002 add-back of expenses for certain shared services (such as accounting, treasury, legal, and human resources) that are included in both the Merck pro forma operating results and Medco Health stand-alone operating results. Additionally, an adjustment has been made to reflect the appropriate effective income tax rate on a pro forma basis.