-----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, VS79AWXh9LXyWE6sEELCjg5N/S6nKIij0Ltr1P9i8qfP/HjAodwcKHYroxgN7x27 YkKBkwdk/5HBarLQNRrEUA== 0000950123-04-007815.txt : 20040625 0000950123-04-007815.hdr.sgml : 20040625 20040625172259 ACCESSION NUMBER: 0000950123-04-007815 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040625 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: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03305 FILM NUMBER: 04882826 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 11-K 1 y98381ce11vk.txt 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to _____________ Commission File Number: 1-3305 Employer Identification Number: 66-0288298 Plan Number: 061 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN - -------------------------------------------------------------------------------- (Full title of the plan) MERCK & CO., INC. - -------------------------------------------------------------------------------- (Name of issuer of the securities held pursuant to the plan) P.O. Box 100 Whitehouse Station, New Jersey 08889-0100 - -------------------------------------------------------------------------------- (Address of principal executive office) MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
PAGE Report of Independent Registered Public Accounting Firm 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 2003 and 2002 2 Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2003 3 Notes to Financial Statements 4-8 Supplemental Schedule*: H - Line 4i - Schedule of Assets (Held at End of Year) 9 Signature 10 Exhibit Index 11 Exhibit 23 - Consent of Independent Registered Public Accounting Firm 12
* Other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not required. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Participants and Administrator of the Merck Puerto Rico Employee Savings and Security Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Merck Puerto Rico Employee Savings and Security Plan (the "Plan") at December 31, 2003 and 2002, and the changes in net assets available for benefits for the year ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at End of Year) as of December 31, 2003 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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 supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The Schedule of Assets (Held at End of Year) that accompanies the Plan's financial statements does not disclose the historical cost of certain non-participant directed plan assets held by the Plan's trustee. Disclosure of this information is required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. /s/PricewaterhouseCoopers LLP San Juan, Puerto Rico June 22, 2004 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 2002 ASSETS Investments at market value $ 31,759,750 $ 31,257,692 Participant loans at cost 1,858,151 2,135,301 ------------ ------------ Total investments 33,617,901 33,392,993 ------------ ------------ RECEIVABLES Employer contribution 44,540 44,076 Participant contributions 170,144 188,942 Accrued interest and dividends 186,713 167,959 ------------ ------------ Total receivables 401,397 400,977 ------------ ------------ Net assets available for benefits $ 34,019,298 $ 33,793,970 ============ ============
The accompanying notes are an integral part of these financial statements. 2 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003 ADDITIONS TO NET ASSETS ATTRIBUTED TO Investment loss Net depreciation in market value of investments $ (2,061,203) Dividends and interest 943,004 -------------- Net investment loss (1,118,199) Contributions to the Plan By participants 4,558,913 By employer 1,214,313 -------------- Total contributions 5,773,226 Total additions 4,655,027 -------------- DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO Benefits paid to participants (4,387,439) Transfers out (42,260) -------------- Total deductions (4,429,699) -------------- Net increase 225,328 NET ASSETS AVAILABLE FOR BENEFITS Beginning of year 33,793,970 -------------- End of year $ 34,019,298 ==============
The accompanying notes are an integral part of these financial statements. 3 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 1. DESCRIPTION OF THE PLAN The following description of the Merck Puerto Rico Employee Savings and Security Plan (the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. General The Plan is a profit sharing plan designed to provide an opportunity for employees of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. and Merck Sharp & Dohme (I.A.) Corp. (the "Companies") to become stockholders of Merck & Co., Inc. ("Merck") and to encourage them to save on a regular basis by setting aside part of their earnings. Regular full-time and part-time employees of the Companies, as defined in the Plan document, who have completed at least one year of employment and are not covered by a collective bargaining agreement, are eligible to enroll in the Plan. The Plan is administered by the Employee Benefits Committee appointed by the President of the Companies. All costs of administering the Plan are borne by the Companies. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions Participants may contribute from 2% up to 15% of their base pay, provided that pre-tax contributions shall not exceed 10% of base compensation or $8,000. In addition, the Companies match 50% of pre-tax and after-tax contributions up to 5% of each participant's base compensation applicable to the pay period in which the contribution is being made. The Companies' matching contributions are invested entirely in Merck Common Stock (non-participant directed) and may not be reallocated into any other investment option. Participants direct the investment of their contributions into any mutual fund investment option as well as the Merck Common Stock Fund (participant directed). During 2003, the Plan offered 20 investment options: 18 mutual funds, the Medco Health Common Stock Fund, and the Merck Common Stock Fund. Participant Accounts Each participant account is credited with the participant's contribution, the Companies' matching contribution, and allocation of Plan earnings. The allocation is based on participants' account balances, as defined in the Plan document. Vesting Participants are immediately vested in their contributions, all Companies' matching contributions, plus actual earnings thereon. Participant Loans Participants may borrow from their account balances with interest charged at 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 balance. 4 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 Payment of Benefits Participants are entitled to receive automatic, voluntary, in-service (which include hardship withdrawals), or mandatory distributions as provided in the applicable Plan provisions. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements are prepared on the accrual basis of accounting. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are adequate. Actual results could differ from those estimates. Investment Valuation and Income Recognition The investments of the Plan are stated at quoted market prices in an active market (except for participant loans which are presented at the outstanding balance). Shares of mutual funds are presented at quoted market prices which represent the net asset value of the shares held by the Plan at the reporting date. Purchases and sales of securities are recorded on a trade-date basis. Dividend income is recorded on the ex-dividend date. The Plan presents in the statement of changes in net assets available for benefits the net appreciation (depreciation) in the fair value of its investments which consists of the realized gains or losses and the unrealized appreciation (depreciation) on them. Interest income on participant loans is recorded on accrual basis. Contributions Employee and Companies matching contributions are recorded in the period in which the Companies make the payroll deductions from the participants' earnings. Payment of Benefits Benefits are recorded when paid. Transfer of Assets to Other Plans Companies employees or retirees may elect to transfer their savings to other plans qualified by the Puerto Rico Treasury Department (the "PRTD") or by the U.S. Internal Revenue Service (the "IRS"). 5 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 Risks and Uncertainties The Plan provides for various investment options in investment securities. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits. 3. INVESTMENTS The following presents investments that represent 5% or more of the Plan's net assets as of year-end.
2003 2002 Merck Common Stock $ 23,916,904 * $ 27,280,847 * Medco Health Common Stock 1,864,832 -
* Includes non-participant directed portion During 2003, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value by $2,061,203 as follows:
2003 Mutual Funds $ 1,048,984 Merck Common Stock (3,681,949) Medco Health Common Stock 571,762 ------------- $ (2,061,203) =============
4. NON-PARTICIPANT DIRECTED INVESTMENTS Information about the net assets and the significant components of the changes in net assets relating to non-participant directed investments is as follows:
DECEMBER 31, 2003 2002 Net assets - Merck Common Stock $ 8,379,158 $ 8,755,749 ============= =============
6 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002
YEAR ENDED DECEMBER 31, 2003 Changes in net assets: Contributions $ 1,260,905 Dividends and interest 269,153 Net depreciation (977,513) Benefits paid to participants (922,261) Transfers to participant loan accounts or other plans (6,875) ------------- $ (376,591) =============
5. RELATED PARTY TRANSACTIONS Certain Plan investments are shares of mutual funds managed by Fidelity Management Trust Company ("Fidelity"). Fidelity is the record keeper as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions. As of December 31, 2003, the total market value of investments in the mutual funds managed by Fidelity was $2,886,153. Merck & Co., Inc. also is a party-in-interest to the Plan under the definition provided in Section 3(14) of ERISA. Therefore, Merck Common Stock Fund transactions qualify as party-in-interest transactions. As of December 31, 2003, the total market value of investments in the Merck Common Stock Fund was $23,916,904. 6. PLAN TERMINATION Although they have not expressed any intent to do so, the Companies have the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. 7. TAX STATUS The Plan obtained a tax determination letter from the PRTD dated February 18, 1998 indicating that it had been designed in accordance with applicable sections of the Puerto Rico Internal Revenue Code of 1994 ("PRIRC") and is, therefore, exempt from Puerto Rico income taxes. On August 20, 2003, the Plan obtained a tax determination letter from the Internal Revenue Service indicating it has been designed in accordance with applicable sections of the Internal Revenue Code (IRC). However, the Plan has been amended since the receipt of the determination letter. The Plan sponsor and legal counsel believe that the Plan is designed and currently operated in compliance with the PRIRC and IRC. Therefore, no provision for income taxes has been made. 7 MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2003 AND 2002 8. OTHER MATTERS Transfers during 2003 consist of transfers of $42,260 for employees who transferred out to the Merck & Co., Inc. Employee Savings and Security Plan. As a result of the Medco Health Solutions' spin-off in 2003, the Plan's participants who were invested in the Merck Common Stock Fund on the distribution date received a pro rata distribution of 0.1206 unit of the Medco Health Common Stock Fund for each unit of the Merck Common Stock Fund. The Medco Health Common Stock Fund will expire two years from the distribution date. Participants have the option to transfer investments out of the Medco Health Common Stock Fund at any time prior to the expiration date. However, neither future contributions nor existing balances in other investment options can be invested in the Fund. Any remaining balances in this Fund will be transferred automatically to a money market or similar investment fund. * * * * * 8 SUPPLEMENTAL SCHEDULE SCHEDULE H MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN SCHEDULE OF ASSETS (HELD AT END OF YEAR) AT DECEMBER 31, 2003 (SCHEDULE H, PART IV, LINE 4i ON FORM 5500)
IDENTITY OF ISSUE, BORROWER, SHARE CURRENT LESSOR OR SIMILAR PARTY DESCRIPTION OF INVESTMENT BALANCE COST VALUE * Merck & Co. Inc. Merck Common Stock 1,493,872.822 ** $ 23,916,904 * Fidelity Investments Fidelity Equity-Income Fund 6,361.553 *** 316,486 Fidelity Retirement Money Market Fund 794,563.64 *** 794,564 Spartan U.S. Equity Index Fund 5,105.084 *** 201,191 Spartan Government Income Fund 3,185.752 *** 35,107 Fidelity Low-Priced Stock Fund 17,930.758 *** 627,218 Fidelity Dividend Growth Fund 21,847.468 *** 596,436 Fidelity Mid-Cap Stock Fund 14,610.607 *** 315,151 Medco Health Solutions, Inc. Medco Health Common Stock 159,660.284 *** 1,864,832 T. Rowe Price T. Rowe Price Blue Chip Growth Fund 36,472.067 *** 1,037,630 The Vanguard Group Vanguard Asset Allocation Fund 11,174.494 *** 252,097 The Capital Group Company American Funds Europacific Growth Fund A 11,045.931 *** 333,698 American Century Investment American Century Emerging Markets Services, Inc. Investment Fund - Institutional Class 22,136.91 *** 129,280 Franklin Templeton Franklin Small-Mid Cap Growth Fund A 9,834.367 *** 297,195 Columbia Columbia Acorn Fund Z 8,051.419 *** 181,640 Janus Janus Enterprises 393.407 *** 12,262 Janus Growth & Income 22,804.634 *** 659,282 PIMCO PIMCO Total Return Fund - Institutional Class 9,178.770 *** 98,305 PIMCO Long-term Government Fund - Institutional Class 7,715.102 *** 83,477 PIMCO Foreign Bond Fund - Institutional Class 673.256 *** 6,995 * Participant Loans Interest rates ranging from 5% to 10.5% and with maturities through 2033 1,858,151 -------------- Total $ 33,617,901 ==============
* Denotes a party-in-interest to the Plan ** Historical cost is not available from the Trustee *** Cost is not required for participant directed investment 9 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the undersigned plan administrator has duly caused this annual report to be signed on behalf of the Merck Puerto Rico Employee Savings and Security Plan by the undersigned hereunto duly authorized. Merck & Co., Inc., as plan administrator By: /s/ Caroline Dorsa ------------------------------------ Caroline Dorsa Vice President and Treasurer June 24, 2004 10 EXHIBIT INDEX
Exhibit Number Document Page - ------- -------- ---- 23 Consent of Independent Registered Public Accounting Firm 12
11 EX-23 2 y98381cexv23.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNT EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 (Nos. 33-21087, 33-21088, 33-40177, 33-51235, 33-53463, 33-64273, 33-64665, 333-91769, 333-30526, 333-31762, 333-40282, 333-53246, 333-56696, 333-72206, 333-65796, 333-101519 and 333-109296) of Merck & Co., Inc. of our report dated June 22, 2004 relating to the financial statements of the Merck Puerto Rico Employee Savings and Security Plan as of December 31, 2003 and 2002 and for the year ended December 31, 2003, which appears in this Form 11-K. /s/PRICEWATERHOUSECOOPERS LLP San Juan, Puerto Rico June 22, 2004 12 -----END PRIVACY-ENHANCED MESSAGE-----