<PAGE> 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, 1995
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, 1995:
<TABLE>
<CAPTION>
Class Number of Shares Outstanding
----- ----------------------------
<S> <C>
Common Stock 1,235,488,646
</TABLE>
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
---- ----
<PAGE> 2
Part I - Financial Information
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
($ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $4,135.7 $3,792.0 $7,953.0 $7,306.3
-------- -------- -------- --------
Costs, Expenses and Other
Materials and production 1,746.0 1,528.7 3,472.2 2,984.3
Marketing and administrative 849.6 726.7 1,619.6 1,482.6
Research and development 329.7 290.9 617.8 557.2
Restructuring charge - - 175.0 -
Gains on sales of Specialty Chemical businesses - - (682.9) -
Other (income) expense, net (31.1) 100.2 414.0 124.5
-------- -------- -------- ---------
2,894.2 2,646.5 5,615.7 5,148.6
-------- -------- -------- --------
Income Before Taxes 1,241.5 1,145.5 2,337.3 2,157.7
Taxes on Income 383.4 381.4 721.8 718.5
-------- -------- -------- --------
Net Income $ 858.1 $ 764.1 $1,615.5 $1,439.2
======== ======== ======== ========
Per Share of Common Stock:
Net Income $.69 $.61 $1.30 $1.15
Dividends Declared $.30 $.28 $ .60 $.56
Average Number of Common
Shares Outstanding (millions) 1,236.8 1,257.6 1,239.9 1,256.4
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 1 -
<PAGE> 3
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31, 1994
($ in millions)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
--------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,664.1 $ 1,604.0
Short-term investments 936.5 665.7
Accounts receivable 2,223.7 2,351.5
Inventories 1,787.4 1,660.9
Prepaid expenses and taxes 765.4 639.6
--------- ---------
Total current assets 7,377.1 6,921.7
--------- ---------
Investments 1,457.9 1,416.9
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$2,342.3 in 1995 and $2,376.6 in 1994 4,948.8 5,296.3
Goodwill and Other Intangibles,
net of accumulated amortization of
$319.5 in 1995 and $291.1 in 1994 7,027.0 7,212.3
Other Assets 1,015.9 1,009.4
--------- ---------
$21,826.7 $21,856.6
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,833.7 $ 2,715.4
Loans payable 358.1 146.7
Income taxes payable 1,814.4 2,206.5
Dividends payable 371.0 380.0
--------- ---------
Total current liabilities 5,377.2 5,448.6
--------- ---------
Long-Term Debt 916.1 1,145.9
Deferred Income Taxes and Noncurrent Liabilities 2,814.4 2,914.3
Minority Interests 1,357.7 1,208.8
Stockholders' Equity
Common stock
Authorized - 2,700,000,000 shares
Issued - 1,483,459,199 shares - 1995
- 1,483,167,594 shares - 1994 4,658.2 4,667.8
Retained earnings 11,822.6 10,942.0
--------- ---------
16,480.8 15,609.8
Less treasury stock, at cost
247,122,931 shares - 1995
235,341,571 shares - 1994 5,119.5 4,470.8
--------- ---------
Total stockholders' equity 11,361.3 11,139.0
--------- ---------
$21,826.7 $21,856.6
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
($ in millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30
-------------------------
1995 1994
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,615.5 $ 1,439.2
Adjustments to reconcile net income to net cash provided from operations:
Restructuring charge 175.5 -
Gains on sales of Specialty Chemical businesses (682.9) -
Other 287.9 411.7
Net changes in assets and liabilities (581.5) (36.1)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 814.5 1,814.8
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (379.6) (456.4)
Purchase of securities, subsidiaries and other investments (5,092.6) (7,504.8)
Proceeds from sale of securities, subsidiaries and other investments 4,846.1 7,486.0
Proceeds from sales of Specialty Chemical businesses, net of cash transferred 1,321.1 -
Other (141.5) (27.9)
--------- ---------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 553.5 (503.1)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings (45.0) (230.8)
Proceeds from issuance of debt 13.6 10.3
Payments on debt (14.2) (83.1)
Purchase of treasury stock (804.1) -
Dividends paid to stockholders (749.5) (702.6)
Other 135.7 20.3
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (1,463.5) (985.9)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 155.6 64.5
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 60.1 390.3
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,604.0 829.4
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,664.1 $ 1,219.7
========= =========
</TABLE>
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 1995;
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 -
<PAGE> 5
Notes to Financial Statements (continued)
2. Inventories consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------------------------
June 30 December 31
1995 1994
-------- -----------
<S> <C> <C>
Finished goods $ 989.8 $ 926.7
Raw materials and work in process 718.7 684.7
Supplies 79.4 65.6
-------- --------
Total (approximates current cost) 1,787.9 1,677.0
Reduction to LIFO cost .5 16.1
-------- --------
$1,787.4 $1,660.9
======== ========
</TABLE>
3. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
-------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------------- ----------------------
1995 1994 1995 1994
------- -------- -------- --------
<S> <C> <C> <C> <C>
Cardiovasculars $1,644.2 $1,301.9 $2,952.6 $2,535.6
Anti-ulcerants 202.1 448.7 475.2 827.4
Antibiotics 203.3 215.5 432.8 401.3
Vaccines/biologicals 146.7 114.4 243.4 218.0
Ophthalmologicals 140.2 119.5 251.0 216.8
Anti-inflammatories/analgesics 40.5 72.3 80.3 128.6
Other Merck human health 103.8 134.5 266.4 236.7
Other human health 1,394.2 1,034.7 2,726.8 2,043.2
Animal health/crop protection 260.7 247.5 485.3 496.4
Specialty chemical - 103.0 39.2 202.3
-------- -------- -------- --------
$4,135.7 $3,792.0 $7,953.0 $7,306.3
======== ======== ======== ========
</TABLE>
Sales by therapeutic class include Medco sales of Merck products. Medco
sales of non-Merck products are included in Other human health. In
1995, Medco sales of Astra Merck products are included in Other human
health due to the formation of the Astra Merck joint venture.
4. In the first quarter of 1995, the Company recorded a nonrecurring pretax
restructuring charge of $175.0 million, or $.09 per share (after-tax).
The restructuring actions will involve manufacturing facility
consolidation, rationalization and workforce reduction in Europe and the
United States. The consolidation and rationalization actions, which
will be completed by 1999, involve fixed asset write-off and closure
costs. The restructuring charge includes $31.0 million directly related
to the elimination of approximately 450 positions. This workforce
reduction is expected to reduce annual employment costs by approximately
$29.0 million. The total initiative is expected to result in
substantial additional production related savings and will not
materially impact the Company's liquidity.
- 4 -
<PAGE> 6
Notes to Financial Statements (continued)
5. In the first quarter of 1995, the Company sold its Calgon Vestal
Laboratories business to Bristol-Myers Squibb for $261.5 million and its
Kelco business to Monsanto for $1.075 billion. The sale of Calgon
Vestal Laboratories was completed on January 3, and the sale of Kelco
was completed on February 17. These divestitures resulted in pretax
gains of $682.9 million recorded in the first quarter. The sale of
these Specialty Chemical businesses did not have a significant impact on
the Company's financial position and will not significantly impact
ongoing results of operations.
6. Other (income) expense, net, consisted of:
<TABLE>
<CAPTION>
($ in millions)
---------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
--------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income $(46.4) $(38.8) $(96.6) $(74.0)
Interest expense 23.0 35.0 45.1 65.9
Exchange (gains)/losses (8.2) 15.8 (2.1) 33.0
Minority interests 34.1 40.9 52.9 53.5
Amortization of goodwill & other intangibles 47.4 43.9 95.2 87.2
Other, net (81.0) 3.4 319.5 (41.1)
------ ------ ------ ------
$(31.1) $100.2 $414.0 $124.5
====== ====== ====== ======
</TABLE>
Minority interests include third parties' share of exchange gains and
losses arising from translation of the financial statements into U.S.
dollars.
Other, net for the six-month period ended June 30, 1995 includes $500.5
million of nonrecurring charges consisting of $278.5 million for
estimated losses on sales of assets, $161.2 million for endowment of The
Merck Company Foundation and $60.8 million for settlement of claims.
Interest paid for the six-month periods ended June 30, 1995 and 1994 was
$39.1 million and $57.8 million, respectively.
7. Income taxes paid for the six-month periods ended June 30, 1995 and 1994
were $1,439.2 million and $512.8 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, 1995.
- 5 -
<PAGE> 7
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Earnings per share for the second quarter of 1995 were $0.69, an increase of
13% over the second quarter of 1994. Second quarter net income increased 12%
to $858.1 million. Sales for the quarter were $4.1 billion, up 9% from the
same period last year.
For the first six months, earnings per share were $1.30, an increase of 13%
from the first six months of 1994. Net income was $1,615.5 million for the
first six months of 1995, an increase of 12% from the first six months of 1994.
Sales rose 9% to $8.0 billion.
Sales growth for the quarter and the first six months was affected by the
formation of the Astra Merck joint venture and the sale of Synetic, a Medco
subsidiary, in the fourth quarter of 1994 and the sales of Calgon Vestal
Laboratories and Kelco in the first quarter of 1995. Adjusting for these
effects, sales for the second quarter and first six months increased 19% and
18%, respectively.
Sales growth for the quarter and the first half of 1995 was led by newer
products and the continued growth of the Merck-Medco Managed Care business.
Both domestic and international operations reported solid unit volume gains.
Foreign exchange increased second quarter sales by three percentage points
compared to a two percentage point increase in the first quarter of 1995. The
effect of pricing actions reduced the second quarter and six months' sales
growth by one and two percentage points, respectively, primarily as a result of
sales of human and animal health products in certain international markets and
competitive pressures in the United States. Excluding exchange and adjusting
for the effect of the Astra Merck joint venture formation, sales of Merck human
and animal health products increased 7% for both the second quarter and six
months.
Sales outside the United States accounted for 33% of the first half 1995 sales,
compared with 31% for the same period last year.
Income growth for the first six months resulted from strong unit volume gains,
favorable product mix in Merck's human and animal health business and a
positive effect from exchange. The unfavorable effects of price and inflation
were partially offset by cost controls and productivity improvements.
The growth in pretax income for the second quarter and first six months was
reduced by the inclusion of the Company's share of taxes related to the Astra
Merck joint venture and the European vaccine joint venture with Pasteur Merieux
Serums & Vaccins, both formed in the fourth quarter of 1994. Prior to the
formation of these joint ventures, the taxes related to these businesses were
included in the Company's tax provision. The reduction in pretax growth,
however, is offset by a corresponding reduction in the Company's tax rate in
1995, resulting in no effect on net income growth.
In the first quarter, the Company sold its Calgon Vestal Laboratories business
to Bristol-Myers Squibb for $261.5 million and its Kelco business to Monsanto
for $1.075 billion. The sale of Calgon Vestal Laboratories was completed on
January 3, and the sale of Kelco was completed on February 17. These
divestitures resulted in pretax gains of $682.9 million recorded in the first
quarter. The sale of these Specialty Chemical businesses did not have a
significant impact on the Company's financial position and will not
significantly impact ongoing results of operations.
The gains on the Kelco and Calgon Vestal Laboratories divestitures were largely
offset by a $175.0 million nonrecurring pretax restructuring charge, $278.5
million for estimated losses on sale of assets, $161.2 million for endowment of
The Merck Company Foundation and $60.8 million for settlement of claims. The
restructuring actions will involve manufacturing facility consolidation,
rationalization and workforce reduction in Europe and the United States. The
workforce reduction is expected to reduce annual employment costs by
approximately $29.0 million. Near-term workforce reductions will occur
primarily outside the United States. The consolidation and rationalization
actions, which are an extension of initiatives from the 1993 restructuring
program to additional locations, will be completed by 1999 and involve fixed
asset write-off and closure costs. The total initiative is expected to result
in substantial additional production related savings and will not materially
impact the Company's liquidity.
- 6 -
<PAGE> 8
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
Results for the first six months were paced by unit sales gains by 'Vasotec',
'Vaseretic', 'Zocor', 'Primaxin' and 'Proscar'. The introduction of 'Varivax',
'Cozaar', Hyzaar(TM) and 'Trusopt' in the U.S. in the second quarter also added
to the first half sales gain. Significant volume growth in the Merck-Medco
Managed Care business added to the first six months' sales increase as well.
'Vasotec', Merck's angiotensin converting enzyme (ACE) inhibitor for reducing
high blood pressure and treating heart failure, continued its strong growth for
the first six months of 1995. It continues to be the leading branded product
in the worldwide cardiovascular market.
Together, Merck's cholesterol-lowering agents, 'Mevacor' and 'Zocor', hold 40%
of the worldwide cholesterol-lowering market, and combined, continued strong
sales growth during the second quarter of 1995. 'Mevacor' and 'Zocor' are the
number one and two cholesterol-lowering drugs, respectively, in total purchases
in the United States.
In late June, the U.S. Food and Drug Administration (FDA) cleared 'Zocor' as
the first and only cholesterol-lowering medication indicated to save lives and
prevent heart attacks in people with heart disease and high cholesterol. This
new indication is based on results from the landmark Scandinavian Simvastatin
('Zocor') Survival Study (4S) that showed 'Zocor' reduced the overall risk of
death by 30% and the risk of coronary death by 42%.
Unit sales for 'Mevacor' were down primarily in the U.S. due to strong
competition. 'Mevacor' is the most widely prescribed cholesterol-lowering
agent in the United States for the treatment of patients with elevated
cholesterol. In early 1995, Merck received clearance from the FDA to market
'Mevacor' as the only lipid-lowering drug indicated to slow the progression of
atherosclerosis (clogging of the arteries) in patients with coronary artery
disease and elevated cholesterol as part of a treatment plan to reduce elevated
cholesterol levels.
'Proscar', the only drug indicated to treat the symptoms of benign prostate
enlargement that also shrinks the prostate, continued strong volume growth.
The FDA has granted clearance for revised prescribing information for
'Proscar', citing clinical evidence that the majority of men taking 'Proscar'
experience statistically significant improvement in urinary symptoms as
measured by total symptom score, some in as little as two weeks after beginning
therapy.
In early May, Merck began shipping 'Varivax', a live virus vaccine for the
prevention of chickenpox in healthy children (12 months or older), adolescents
and adults. The vaccine, which was approved by the FDA in March 1995, recently
received positive recommendations from the American Academy of Pediatrics and
the Advisory Committee on Immunization Practices of the Centers for Disease
Control (CDC).
'Cozaar'*, Merck's new antihypertensive product, was cleared for marketing in
the United States by the FDA in mid-April, and the product was launched in the
U.S. in May. 'Cozaar' has also been launched in France, Italy, Denmark,
Iceland, Norway, Sweden and the United Kingdom. In late April, Hyzaar(TM) a
combination of 'Cozaar' and hydrochlorothiazide (a diuretic), was cleared for
marketing in the United States and was introduced at the same time as 'Cozaar'.
'Cozaar' is the first in a new class of drugs called Angiotensin-II (A-II)
receptor blockers. In clinical studies, 'Cozaar' and Hyzaar(TM) had excellent
tolerability profiles and were highly effective. 'Cozaar' has been developed in
collaboration with the DuPont Merck Pharmaceutical Company.
'Trusopt', the first carbonic anhydrase inhibitor made in a topical, or
eyedrop, formulation was launched by Merck in mid-May in the United States.
The product is indicated for the treatment of elevated intraocular pressure in
patients with ocular hypertension or open-angle glaucoma. 'Trusopt' has proven
effective in the consistent lowering of intraocular pressure in most patients
and may be used both as monotherapy and adjunctive therapy.
*'Cozaar' is a registered trademark and Hyzaar(TM) is a trademark of E.I. du
Pont de Nemours and Company, Wilmington, DE, USA.
- 7 -
<PAGE> 9
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
In April, the FDA cleared for marketing 'Pepcid AC' Acid Controller(TM), a
non-prescription formulation of 'Pepcid', Merck's prescription H(2)-receptor
antagonist. 'Pepcid AC' Acid Controller(TM) is the first and only
over-the-counter (OTC) product that has been shown to both relieve and prevent
heartburn and acid indigestion. In addition, 'Pepcid AC' Acid Controller(TM),
a product of the Johnson & Johnson and Merck joint venture, is the largest
selling medicine in history to switch from prescription to OTC status.
In mid-July, an advisory committee of the U.S. Food and Drug Administration
unanimously recommended that the FDA clear for marketing 'Fosamax' for the
treatment of osteoporosis in post menopausal women. In June, new data were
released which demonstrated that 'Fosamax' increased bone mass and reduced by
nearly half the risk of vertebral fractures in post menopausal women who have
osteoporosis. While other studies have shown 'Fosamax' builds normal bone,
this study showed that, compared to placebo, treatment with 'Fosamax' reduced
the number of patients with new vertebral fractures, reduced the number of
vertebral fractures per patient and reduced the apparent severity of vertebral
fractures.
The Merck-Medco Managed Care Division continued its strong growth in the first
six months. Building on its success in demonstrating to health plan sponsors
the value of integrated disease management programs, Merck-Medco recently
entered into a joint venture with the Wyeth-Ayerst Division of American Home
Products Corporation to develop, market and implement disease management
programs for women's health and certain other important therapeutic areas. The
joint venture company will be operational later this year, and will introduce
its first disease management programs in 1996. The formation of this joint
venture is not expected to have a significant impact on the Company's financial
position, liquidity or results of operations.
In April, Merck-Medco demonstrated its continued leadership in developing
integrated, cost-saving, health-care solutions by nationally launching the
first comprehensive program to encourage safer and more effective use of
prescription drugs by older Americans. Called Partners for Healthy Aging(TM),
the program now serves 14 million retirees by coordinating the efforts of
physicians and pharmacists in treating conditions common among older men and
women.
In July, Merck announced the signing of a definitive agreement to divest its
ownership of Medco Behavioral Care Corporation (MBC) to MBC management and
Kohlberg Kravis Roberts & Co. (KKR), for $340 million, of which approximately
$315 million will be in cash. The sale which is expected to be completed in
the third quarter will not have a significant impact on the Company's financial
position, liquidity or results of operations.
On July 25, 1995, the Board of Directors declared a quarterly dividend of 34
cents a share on the Company's common stock for the fourth quarter of 1995
versus the 30 cents a share dividend paid in the third quarter of 1995. The 34
cent dividend is payable October 2, 1995 to stockholders of record at the close
of business on September 7, 1995. The Company's total dividend paid during
1995 will be $1.24 per share, a 9 percent increase over the amount in 1994.
- 8 -
<PAGE> 10
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 25, 1995, 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:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Raymond V. Gilmartin 969,163,913 7,910,697
Samuel O. Thier, M.D. 968,120,206 8,954,404
Johnnetta B. Cole, Ph.D. 967,656,551 9,418,059
Sir Derek Birkin 968,866,255 8,208,355
William G. Bowen, Ph.D. 968,557,849 8,516,761
Carolyne K. Davis, Ph.D. 968,646,500 8,428,110
Lloyd C. Elam, M.D. 968,373,326 8,701,284
</TABLE>
2. A proposal to ratify the appointment of independent public accountants
received 971,781,443 votes for and 2,239,724 votes against, with
3,053,443 abstentions.
3. A proposal to adopt the 1996 Incentive Stock Plan received 687,968,302
votes for and 72,167,016 votes against, with 8,513,409 abstentions and
208,425,883 broker non-votes.
4. A proposal to amend the Employee Savings and Security Plan received
705,060,449 votes for and 55,248,812 votes against, with 8,339,578
abstentions and 208,425,771 broker non-votes.
5. A proposal to amend the Employee Stock Purchase and Savings Plan received
708,087,621 votes for and 51,842,180 votes against, with 8,719,026
abstentions and 208,425,783 broker non-votes.
6. A stockholder proposal concerning non-employee director pension benefits
received 192,086,837 votes for and 551,496,178 votes against, with
25,065,913 abstentions and 208,425,682 broker non-votes.
7. A stockholder proposal concerning the annual election of directors
received 269,317,348 votes for and 483,300,672 votes against, with
16,030,907 abstentions and 208,425,683 broker non-votes.
8. A stockholder proposal concerning executive compensation received
42,782,743 votes for and 706,419,811 votes against, with 19,446,374
abstentions and 208,425,682 broker non-votes.
- 9 -
<PAGE> 11
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Number Description Method of Filing
------ ----------- ----------------
<S> <C> <C>
3(a) Restated Certificate of Incorporated by reference to Form 10-K
Incorporation of Annual Report for the fiscal year ended
Merck & Co., Inc. May 6, 1992 December 31, 1992
3(b) By-Laws of Merck & Co., Inc. Incorporated by reference to Form 10-K
(as amended effective Annual Report for the fiscal year ended
June 9, 1994) December 31, 1994
10 1996 Incentive Stock Plan Filed with this document
(as adopted on 4/25/95;
effective 1/1/96)
11 Computation of Earnings Filed with this document
Per Common Share
12 Computation of Ratios of Filed with this document
Earnings to Fixed Charges
27 Financial Data Schedule Filed with this document
</TABLE>
(b) Reports on Form 8-K
During the three-month period ending June 30, 1995, no current reports on
Form 8-K were filed.
- 10 -
<PAGE> 12
Signatures
Pursuant to the requirements of the Securities Exchange Act of l934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCK & CO., INC.
Date: August 9, 1995 /s/ Mary M. McDonald
------------------------------------------
MARY M. MCDONALD
Senior Vice President and General Counsel
Date: August 9, 1995 /s/ Peter E. Nugent
------------------------------------------
PETER E. NUGENT
Vice President, Controller
- 11 -
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
3(a) Restated Certificate of Incorporation of Merck & Co., Inc. May 6, 1992
- Incorporated by reference to Form 10-K Annual Report for the fiscal
year ended December 31, 1992
3(b) By-Laws of Merck & Co., Inc. (as amended effective June 9, 1994)
- Incorporated by reference to Form 10-K Annual Report for the fiscal
year ended December 31, 1994
10 1996 Incentive Stock Plan (as adopted on 4/25/95; effective 1/1/96)
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
<PAGE> 1
================================================================================
Exhibit 10
MERCK & CO., INC.
1996 INCENTIVE STOCK PLAN
(AS ADOPTED ON 4/25/95, EFFECTIVE JANUARY 1, 1996)
================================================================================
<PAGE> 2
1996 INCENTIVE STOCK PLAN
The 1996 Incentive Stock Plan ("ISP"), effective January 1, 1996, is
established to encourage employees of Merck & Co., Inc. (the "Company"), its
subsidiaries, its affiliates, its joint ventures and the Merck Institute for
Therapeutic Research to acquire Common Stock in the Company. It is believed
that the ISP will stimulate employees' efforts on the Company's behalf, will
tend to maintain and strengthen their desire to remain with the Company, will
be in the interest of the Company and its Stockholders, and will encourage such
employees to have a greater personal financial investment in the Company
through ownership of its Common Stock.
1. ADMINISTRATION
The ISP shall be administered by the Compensation and Benefits
Committee of the Board of Directors of the Company (the "Committee"). The
Committee is authorized, subject to the provisions of the ISP, to establish
such rules and regulations as it deems necessary for the proper administration
of the ISP, and to make such determinations and to take such action in
connection therewith or in relation to the ISP as it deems necessary or
advisable, consistent with the ISP. The Committee may delegate some or all of
its power and authority hereunder to the Chief Executive Officer or other
senior member of management as the Committee deems appropriate; provided,
however, that the Committee may not delegate its authority with regard to any
matter or action affecting an officer subject to Section 16 of the Securities
Exchange Act of 1934.
For the purpose of this section and all subsequent sections, the ISP
shall be deemed to include this plan and any comparable sub-plans established
by subsidiaries which, in the aggregate, shall constitute one plan governed by
the terms set forth herein.
2. ELIGIBILITY
Regular full-time and part-time employees of the Company, its
subsidiaries, its affiliates, its joint ventures and the Merck Institute for
Therapeutic Research, including officers, whether or not directors of the
Company, shall be eligible to participate in the ISP ("Eligible Employees") if
designated by the Committee or its delegate. Those directors who are not
regular employees are not eligible.
3. INCENTIVES
Incentives under the ISP may be granted in any one or a combination of
(a) Incentive Stock Options (or other statutory stock option); (b) Nonqualified
Stock Options; (c) Stock Appreciation Rights; (d) Restricted Stock Grants and
(e) Performance Shares (together "Incentives"). All Incentives shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions as may be established by the Committee. Determinations by the
Committee under the ISP including without limitation, determinations of the
Eligible Employees, the form, amount and timing of Incentives, the terms and
provisions of Incentives, and the agreements evidencing Incentives, need not be
uniform and may be made selectively among Eligible Employees who receive, or
are eligible to receive, Incentives hereunder, whether or not such Eligible
Employees are similarly situated.
1
<PAGE> 3
4. SHARES AVAILABLE FOR INCENTIVES
(a) SHARES SUBJECT TO ISSUANCE OR TRANSFER. Subject to adjustment as
provided in Section 4(c) hereof, there is hereby reserved for issuance under
the ISP 65 million shares of the Company's Common Stock ("Common Stock"). The
shares available for granting awards shall be increased by the number of shares
as to which options or other benefits granted under the Plan have lapsed,
expired, terminated or been canceled. In addition, any shares reserved for
issuance under the Company's 1991 Incentive Stock Plan and 1987 Incentive Stock
Plan ("Prior Plans") in excess of the number of shares as to which options or
other benefits have been awarded thereunder, plus any such shares as to which
options or other benefits granted under the Prior Plans may lapse, expire,
terminate or be canceled, shall also be reserved and available for issuance or
reissuance under the ISP. Shares under this Plan may be delivered by the
Company from its authorized but unissued shares of Common Stock or from Common
Stock held in the Treasury.
(b) LIMIT ON AN INDIVIDUAL'S INCENTIVES. In any given year, no
Eligible Employee may receive Incentives covering more than three million
shares of the Company's Common Stock (such number of shares may be adjusted in
accordance with Section 4(c)).
(c) RECAPITALIZATION ADJUSTMENT. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Company, the Committee shall make such adjustment, if any, as
it may deem appropriate in the number and kind of shares authorized by the ISP,
in the number and kind of shares covered by Incentives granted, in the case of
Stock Options, in the option price, and in the case of stock appreciation
rights, in the fair market value.
5. STOCK OPTIONS
The Committee may grant options qualifying as Incentive Stock Options
under the Internal Revenue Code of 1986, as amended, or any successor code
thereto (the "Code"), other statutory options under the Code, and Nonqualified
Options (collectively "Stock Options"). Such Stock Options shall be subject to
the following terms and conditions and such other terms and conditions as the
Committee may prescribe:
(a) OPTION PRICE. The option price per share with respect to each
Stock Option shall be determined by the Committee, but shall not be less than
100% of the fair market value of the Common Stock on the date the Stock Option
is granted, as determined by the Committee.
(b) PERIOD OF OPTION. The period of each Stock Option shall be fixed
by the Committee but shall not exceed ten (10) years.
(c) PAYMENT. The option price shall be payable in cash at the time the
Stock Option is exercised. No shares shall be issued until full payment
therefor has been made. A grantee of a Stock Option shall have none of the
rights of a stockholder until the shares are issued.
(d) EXERCISE OF OPTION. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee or
its delegate may determine. Any shares not purchased on the applicable exercise
date may be purchased thereafter at any time prior to the final expiration of
the Stock Option. In no event (including those specified in paragraphs (e), (f)
and (g) of this section) shall any Stock Option be exercisable after its
specified expiration period.
(e) TERMINATION OF EMPLOYMENT. Upon the termination of a Stock Option
grantee's employment (for any reason other than retirement, death or
termination for deliberate, willful or gross misconduct), Stock Option
privileges shall be limited to the shares which were immediately exercisable at
the date of such termination. The Committee, however, in its discretion, may
provide
2
<PAGE> 4
that any Stock Options outstanding but not yet exercisable upon the termination
of a Stock Option grantee's employment may become exercisable in accordance
with a schedule to be determined by the Committee. Such Stock Option privileges
shall expire unless exercised or surrendered under a Stock Appreciation Right
within such period of time after the date of termination of employment as may
be established by the Committee, but in no event later than the expiration date
of the Stock Option. If a Stock Option grantee's employment is terminated for
deliberate, willful or gross misconduct, as determined by the Company, all
rights under the Stock Option shall expire upon receipt of the notice of such
termination.
(f) RETIREMENT. Upon retirement of a Stock Option grantee, Stock
Option privileges shall apply to those shares immediately exercisable at the
date of retirement. The Committee, however, in its discretion, may provide that
any Stock Options outstanding but not yet exercisable upon the retirement of a
Stock Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Stock Option privileges shall expire unless
exercised within such period of time as may be established by the Committee,
but in no event later than the expiration date of the Stock Option.
(g) DEATH. Upon the death of a Stock Option grantee, Stock Option
privileges shall apply to those shares which were immediately exercisable at
the time of death. The Committee, however, in its discretion, may provide that
any Stock Options outstanding but not yet exercisable upon the death of a Stock
Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Such privileges shall expire unless exercised by
legal representatives within a period of time as determined by the Committee
but in no event later than the expiration date of the Stock Option.
(h) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be
permitted by the Code, the Committee shall not grant to an Eligible Employee
Incentive Stock Options, that, in the aggregate, are first exercisable during
any one calendar year to the extent that the aggregate fair market value of the
Common Stock, at the time the Incentive Stock Options are granted, exceeds
$100,000.
6. STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, grant a right to receive the
appreciation in the fair market value of shares of Common Stock ("Stock
Appreciation Right") either singly or in combination with an underlying Stock
Option granted hereunder or under the Prior Plans. Such Stock Appreciation
Rights shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe:
(a) TIME AND PERIOD OF GRANT. If a Stock Appreciation Right is granted
with respect to an underlying Stock Option, it may be granted at the time of
the Stock Option Grant or at any time thereafter but prior to the expiration of
the Stock Option Grant. If a Stock Appreciation Right is granted with respect
to an underlying Stock Option, at the time the Stock Appreciation Right is
granted the Committee may limit the exercise period for such Stock Appreciation
Right, before and after which period no Stock Appreciation Right shall attach
to the underlying Stock Option. In no event shall the exercise period for a
Stock Appreciation Right granted with respect to an underlying Stock Option
exceed the exercise period for such Stock Option. If a Stock Appreciation Right
is granted without an underlying Stock Option, the period for exercise of the
Stock Appreciation Right shall be set by the Committee.
(b) VALUE OF STOCK APPRECIATION RIGHT. If a Stock Appreciation Right
is granted with respect to an underlying Stock Option, the grantee will be
entitled to surrender the Stock Option which is then exercisable and receive in
exchange therefor an amount equal to the excess of the fair
3
<PAGE> 5
market value of the Common Stock on the date the election to surrender is
received by the Company over the Stock Option price multiplied by the number of
shares covered by the Stock Option which are surrendered. If a Stock
Appreciation Right is granted without an underlying Stock Option, the grantee
will receive upon exercise of the Stock Appreciation Right an amount equal to
the excess of the fair market value of the Common Stock on the date the
election to surrender such Stock Appreciation Right is received by the Company
over the fair market value of the Common Stock on the date of grant multiplied
by the number of shares covered by the grant of the Stock Appreciation Right.
(c) PAYMENT OF STOCK APPRECIATION RIGHT. Payment of a Stock
Appreciation Right shall be in the form of shares of Common Stock, cash, or any
combination of shares and cash. The form of payment upon exercise of such a
right shall be determined by the Committee either at the time of grant of the
Stock Appreciation Right or at the time of exercise of the Stock Appreciation
Right.
7. PERFORMANCE SHARE AWARDS
The Committee may grant awards under which payment may be made in
shares of Common Stock, cash or any combination of shares and cash if the
performance of the Company or any subsidiary, division or affiliate of the
Company selected by the Committee during the Award Period meets certain goals
established by the Committee ("Performance Share Awards"). Such Performance
Share Awards shall be subject to the following terms and conditions and such
other terms and conditions as the Committee may prescribe:
(a) AWARD PERIOD AND PERFORMANCE GOALS. The Committee shall determine
and include in a Performance Share Award grant the period of time for which a
Performance Share Award is made ("Award Period"). The Committee shall also
establish performance objectives ("Performance Goals") to be met by the
Company, subsidiary or division during the Award Period as a condition to
payment of the Performance Share Award. The Performance Goals may include
earnings per share, return on stockholders' equity, return on assets, net
income, or any other financial or other measurement established by the
Committee. The Performance Goals may include minimum and optimum objectives or
a single set of objectives.
(b) PAYMENT OF PERFORMANCE SHARE AWARDS. The Committee shall establish
the method of calculating the amount of payment to be made under a Performance
Share Award if the Performance Goals are met, including the fixing of a maximum
payment. The Performance Share Award shall be expressed in terms of shares of
Common Stock and referred to as "Performance Shares." After the completion of
an Award Period, the performance of the Company, subsidiary or division shall
be measured against the Performance Goals, and the Committee shall determine
whether all, none or any portion of a Performance Share Award shall be paid.
The Committee, in its discretion, may elect to make payment in shares of Common
Stock, cash or a combination of shares and cash. Any cash payment shall be
based on the fair market value of Performance Shares on, or as soon as
practicable prior to, the date of payment.
(c) REVISION OF PERFORMANCE GOALS. At any time prior to the end of an
Award Period, the Committee may revise the Performance Goals and the
computation of payment if unforeseen events occur which have a substantial
effect on the performance of the Company, subsidiary or division and which in
the judgment of the Committee make the application of the Performance Goals
unfair unless a revision is made.
4
<PAGE> 6
(d) REQUIREMENT OF EMPLOYMENT. A grantee of a Performance Share Award
must remain in the employ of the Company until the completion of the Award
Period in order to be entitled to payment under the Performance Share Award;
provided that the Committee may, in its sole discretion, provide for a partial
payment where such an exception is deemed equitable.
(e) DIVIDENDS. The Committee may, in its discretion, at the time of
the granting of a Performance Share Award, provide that any dividends declared
on the Common Stock during the Award Period, and which would have been paid
with respect to Performance Shares had they been owned by a grantee, be (i)
paid to the grantee, or (ii) accumulated for the benefit of the grantee and
used to increase the number of Performance Shares of the grantee.
(f) LIMIT ON PERFORMANCE SHARE AWARDS. Incentives granted as
Performance Share Awards under this section and Restricted Stock Grants under
Section 8 shall not exceed, in the aggregate, six million shares of Common
Stock (such number of shares may be adjusted in accordance with Section 4(c)).
8. RESTRICTED STOCK GRANTS
The Committee may award shares of Common Stock to a grantee, which
shares shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe ("Restricted Stock Grant"):
(a) REQUIREMENT OF EMPLOYMENT. A grantee of a Restricted Stock Grant
must remain in the employment of the Company during a period designated by the
Committee ("Restriction Period") in order to retain the shares under the
Restricted Stock Grant. If the grantee leaves the employment of the Company
prior to the end of the Restriction Period, the Restricted Stock Grant shall
terminate and the shares of Common Stock shall be returned immediately to the
Company; provided that the Committee may, at the time of the grant, provide for
the employment restriction to lapse with respect to a portion or portions of
the Restricted Stock Grant at different times during the Restriction Period.
The Committee may, in its discretion, also provide for such complete or partial
exceptions to the employment restriction as it deems equitable.
(b) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATES. During
the Restriction Period, the grantee may not sell, assign, transfer, pledge, or
otherwise dispose of the shares of Common Stock except to a successor under
Section 10 hereof. Each certificate for shares of Common Stock issued hereunder
shall contain a legend giving appropriate notice of the restrictions in the
grant.
(c) ESCROW AGREEMENT. The Committee may require the grantee to enter
into an escrow agreement providing that the certificates representing the
Restricted Stock Grant will remain in the physical custody of an escrow holder
until all restrictions are removed or expire.
(d) LAPSE OF RESTRICTIONS. All restrictions imposed under the
Restricted Stock Grant shall lapse upon the expiration of the Restriction
Period if the conditions as to employment set forth above have been met. The
grantee shall then be entitled to have the legend removed from the
certificates.
(e) DIVIDENDS. The Committee shall, in its discretion, at the time of
the Restricted Stock Grant, provide that any dividends declared on the Common
Stock during the Restriction Period shall either be (i) paid to the grantee, or
(ii) accumulated for the benefit of the grantee and paid to the grantee only
after the expiration of the Restriction Period.
5
<PAGE> 7
(f) LIMIT ON RESTRICTED STOCK GRANT. Incentives granted as Restricted
Stock Grants under this section and Performance Share Awards under Section 7
shall not exceed, in the aggregate, six million shares of Common Stock (such
number of shares may be adjusted in accordance with Section 4(c)).
9. DISCONTINUANCE OR AMENDMENT OF THE PLAN
The Board of Directors may discontinue the ISP at any time and may
from time to time amend or revise the terms of the ISP as permitted by
applicable statutes, except that it may not revoke or alter, in a manner
unfavorable to the grantees of any Incentives hereunder, any Incentives then
outstanding, nor may the Board amend the ISP without stockholder approval where
the absence of such approval would cause the Plan to fail to comply with Rule
16b-3 under the Securities Exchange Act of 1934, or any other requirement of
applicable law or regulation. No Incentive shall be granted under the ISP after
December 31, 2000, but Incentives granted theretofore may extend beyond that
date.
10. NONTRANSFERABILITY
Each Incentive Stock Option granted under the ISP shall not be
transferable other than by will or the laws of descent and distribution; each
other Incentive granted under the ISP may be transferable subject to the terms
and conditions as may be established by the Committee in accordance with
regulations promulgated under the Securities Exchange Act of 1934, or any other
applicable law or regulation.
11. NO RIGHT OF EMPLOYMENT
The ISP and the Incentives granted hereunder shall not confer upon any
Eligible Employee the right to continued employment with the Company, its
subsidiaries, its affiliates, its joint ventures or the Merck Institute for
Therapeutic Research or affect in any way the right of such entities to
terminate the employment of an Eligible Employee at any time and for any
reason.
12. TAXES
The Company shall be entitled to withhold the amount of any tax
attributable to any option granted, any amount payable or shares deliverable
under the ISP after giving the person entitled to receive such amount or shares
notice as far in advance as practicable.
6
<PAGE> 1
Exhibit 11
MERCK & CO., INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(In millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Income and Adjusted Earnings:
Net Income.................................................. $ 858.1 $ 764.1 $1,615.5 $1,439.2
Effect on Earnings of Compensation Expense Relating to
Stock Option and Incentive Plans........................... 4.1 (1.5) 6.9 1.0
Effect on Earnings of Interest on Debentures................ - .1 - .2
-------- -------- -------- ---------
Adjusted Earnings for Fully Diluted Earnings Per Share...... $ 862.2 $ 762.7 $1,622.4 $1,440.4
======== ======== ======== ========
Weighted Average Shares and Share Equivalents Outstanding:
Weighted Average Shares Outstanding (As Reported)........... 1,236.8 1,257.6 1,239.9 1,256.4
Common Share Equivalents Issuable Under Stock Option and
Incentive Plans .......................................... 24.4 13.7 24.4 15.4
Common Share Equivalents Issuable on Assumed Conversion of
Debentures................................................ .4 2.7 .4 2.7
-------- -------- -------- --------
Weighted Average Shares and Share Equivalents Outstanding... 1,261.6 1,274.0 1,264.7 1,274.5
======== ======== ======== ========
Earnings Per Share (As Reported)............................ $ .69 $ .61 $ 1.30 $ 1.15
======== ======== ======== ========
Fully Diluted Earnings Per Share (a)........................ $ .68 $ .60 $ 1.28 $ 1.13
======== ======== ======== ========
</TABLE>
(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%.
<PAGE> 1
Exhibit 12
MERCK & CO., INC. AND SUBSIDIARIES
Computation Of Ratios Of Earnings To Fixed Charges
(In millions except ratio data)
<TABLE>
<CAPTION>
Six Months
Ended
June 30 Years Ended December 31
-----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income Before Taxes
and Cumulative Effect
of Accounting Changes $2,337.3 $4,415.2 $3,102.7 $3,563.6 $3,166.7 $2,698.8
Add:
One-third of rents 18.8 36.0 35.0 34.0 31.1 26.5
Interest expense, net 25.1 96.0 48.0 23.6 26.0 51.9
-------- -------- -------- -------- -------- --------
Earnings $2,381.2 $4,547.2 $3,185.7 $3,621.2 $3,223.8 $2,777.2
======== ======== ======== ======== ======== ========
One-third of rents $18.8 $ 36.0 $ 35.0 $ 34.0 $31.1 $26.5
Interest expense 45.1 124.4 84.7 72.7 68.7 69.8
----- ------ ------ ------ ----- -----
Fixed Charges $63.9 $160.4 $119.7 $106.7 $99.8 $96.3
===== ====== ====== ====== ===== =====
Ratio of Earnings
to Fixed Charges 37 28 27 34 32 29
== == == == == ==
</TABLE>
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), and
interest expense, net of amounts capitalized. "Fixed charges" consist of
one-third of rent and interest expense as reported in the Company's
consolidated financial statements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,664
<SECURITIES> 937
<RECEIVABLES> 2,224
<ALLOWANCES> 0<F1>
<INVENTORY> 1,787
<CURRENT-ASSETS> 7,377
<PP&E> 7,291
<DEPRECIATION> (2,342)
<TOTAL-ASSETS> 21,827
<CURRENT-LIABILITIES> 5,377
<BONDS> 916
<COMMON> 4,658
0
0
<OTHER-SE> 6,703
<TOTAL-LIABILITY-AND-EQUITY> 21,827
<SALES> 7,953
<TOTAL-REVENUES> 7,953
<CGS> 3,472
<TOTAL-COSTS> 3,472
<OTHER-EXPENSES> 618
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 45
<INCOME-PRETAX> 2,337
<INCOME-TAX> 722
<INCOME-CONTINUING> 1,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,616
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.28
<FN>
<F1>NOT MATERIAL TO THE CONSOLIDATED FINANCIAL STATEMENTS
</FN>
</TABLE>
