<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 September 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
October 31, 1995.
Class Number of Shares Outstanding
----- ----------------------------
Common Stock 1,231,317,572
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 NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
--------------------------------------------------------------
($ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
----------------------- -------------------------
1995 1994 1995 1994
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Sales $4,171.1 $3,792.0 $12,124.1 $11,098.3
-------- -------- --------- ---------
Costs, Expenses and Other
Materials and production 1,858.2 1,451.9 5,330.4 4,436.1
Marketing and administrative 767.2 820.7 2,386.8 2,303.3
Research and development 332.5 308.4 950.4 865.6
Restructuring charge - - 175.0 -
Gains on sales of Specialty Chemical businesses - - (682.9) -
Other (income) expense, net (33.8) 39.3 380.1 163.8
-------- -------- --------- ---------
2,924.1 2,620.3 8,539.8 7,768.8
-------- -------- --------- ---------
Income Before Taxes 1,247.0 1,171.7 3,584.3 3,329.5
Taxes on Income 385.1 386.9 1,106.9 1,105.4
-------- -------- --------- ---------
Net Income $ 861.9 $ 784.8 $ 2,477.4 $ 2,224.1
======== ======== ========= =========
Per Share of Common Stock:
Net Income $.70 $.62 $2.00 $1.77
Dividends Declared $.34 $.30 $ .94 $.86
Average Number of Common
Shares Outstanding (millions) 1,234.2 1,260.9 1,238.0 1,257.9
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 1 -
<PAGE> 3
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
----------------------------------------
($ in millions)
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,906.1 $ 1,604.0
Short-term investments 1,011.1 665.7
Accounts receivable 2,242.1 2,351.5
Inventories 1,764.4 1,660.9
Prepaid expenses and taxes 830.7 639.6
--------- ---------
Total current assets 7,754.4 6,921.7
--------- ---------
Investments 1,480.2 1,416.9
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$2,433.3 in 1995 and $2,376.6 in 1994 5,113.3 5,296.3
Goodwill and Other Intangibles,
net of accumulated amortization of
$367.1 in 1995 and $291.1 in 1994 6,969.5 7,212.3
Other Assets 1,128.3 1,009.4
--------- ---------
$22,445.7 $21,856.6
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 3,064.8 $ 2,715.4
Loans payable and current portion of long-term debt 391.7 146.7
Income taxes payable 1,784.8 2,206.5
Dividends payable 419.4 380.0
--------- ---------
Total current liabilities 5,660.7 5,448.6
--------- ---------
Long-Term Debt 1,337.1 1,145.9
--------- ---------
Deferred Income Taxes and Noncurrent Liabilities 2,657.1 2,914.3
--------- ---------
Minority Interests 1,274.0 1,208.8
--------- ---------
Stockholders' Equity
Common stock
Authorized - 2,700,000,000 shares
Issued - 1,483,463,303 shares - 1995
- 1,483,167,594 shares - 1994 4,683.5 4,667.8
Retained earnings 12,282.3 10,942.0
--------- ---------
16,965.8 15,609.8
Less treasury stock, at cost
251,571,991 shares - 1995
235,341,571 shares - 1994 5,449.0 4,470.8
--------- ---------
Total stockholders' equity 11,516.8 11,139.0
--------- ---------
$22,445.7 $21,856.6
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
---------------------------------------------
($ in millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
---------------------------
1995 1994
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,477.4 $ 2,224.1
Adjustments to reconcile net income to net cash provided from operations:
Restructuring charge 175.0 -
Gains on sales of Specialty Chemical businesses (682.9) -
Other 527.0 610.4
Net changes in assets and liabilities (704.6) 301.9
--------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,791.9 3,136.4
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (664.4) (720.2)
Purchase of securities, subsidiaries and other investments (8,503.7) (10,940.9)
Proceeds from sale of securities, subsidiaries and other investments 8,120.4 10,700.4
Proceeds from sales of Specialty Chemical businesses, net of cash transferred 1,321.1 -
Other (105.5) (47.5)
--------- ----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 167.9 (1,008.2)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings (43.1) (779.4)
Proceeds from issuance of debt 512.2 179.1
Payments on debt (50.8) (131.0)
Purchase of treasury stock (1,205.9) (109.1)
Dividends paid to stockholders (1,120.4) (1,055.0)
Other 217.0 69.9
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (1,691.0) (1,825.5)
--------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 33.3 80.9
--------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 302.1 383.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,604.0 829.4
--------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,906.1 $ 1,213.0
========= ==========
</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)
------------------------------------
September 30 December 31
1995 1994
------------ -----------
<S> <C> <C>
Finished goods $ 974.6 $ 926.7
Raw materials and work in process 707.8 684.7
Supplies 82.1 65.6
-------- --------
Total (approximates current cost) 1,764.5 1,677.0
Reduction to LIFO cost .1 16.1
-------- --------
$1,764.4 $1,660.9
======== ========
</TABLE>
3. In September 1995, the Company issued $500 million of 6.75% ten-year
Euronotes. Proceeds from the sale of these securities will be used for
general corporate purposes.
4. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- ------------------------
1995 1994 1995 1994
-------- -------- --------- ----------
<S> <C> <C> <C> <C>
Cardiovasculars $1,512.0 $1,314.8 $ 4,464.6 $ 3,850.4
Anti-ulcerants 273.5 465.8 748.7 1,293.2
Antibiotics 210.6 202.0 643.4 603.3
Vaccines/biologicals 162.0 155.9 405.4 373.9
Ophthalmologicals 148.9 128.6 399.9 345.4
Anti-inflammatories/analgesics 42.2 64.2 122.5 192.8
Other Merck human health 121.6 85.0 388.0 321.7
Other human health 1,421.0 999.2 4,147.8 3,042.4
Animal health/crop protection 279.3 269.0 764.6 765.4
Specialty chemical - 107.5 39.2 309.8
-------- -------- --------- ---------
$4,171.1 $3,792.0 $12,124.1 $11,098.3
======== ======== ========= =========
</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.
5. 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)
- -----------------------------
6. 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
$682.9 million recorded in the first quarter. These Specialty Chemical
businesses were not significant to the Company's financial position,
liquidity or results of operations.
7. Other (income) expense, net, consisted of:
<TABLE>
<CAPTION>
($ in millions)
---------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
----------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Interest income $ (44.4) $ (37.0) $(141.0) $(111.0)
Interest expense 22.8 31.0 67.9 97.0
Exchange (gains)/losses (2.0) (6.1) (4.0) 26.9
Minority interests 25.7 19.1 78.6 72.5
Amortization of goodwill & other intangibles 47.6 44.7 142.9 131.9
Other, net (83.5) (12.4) 235.7 (53.5)
------- ------- ------- -------
$ (33.8) $ 39.3 $ 380.1 $ 163.8
======= ======= ======= =======
</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 nine-month period ended September 30, 1995 includes
$500.5 million of nonrecurring charges consisting of $278.5 million for
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 nine-month periods ended September 30, 1995 and
1994 was $51.6 million and $84.7 million, respectively.
8. Income taxes paid for the nine-month periods ended September 30, 1995 and
1994 were $1.675 billion and $624.0 million, respectively. The increase
in 1995 is principally due to taxes paid in 1995 on the 1994 gain on the
sale to Astra AB of an interest in a joint venture and 1995 gains on the
sales of the Specialty Chemical businesses.
9. 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 nine-month period ended September 30,
1995.
- 5 -
<PAGE> 7
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
------------------------------------------------------
Earnings per share for the third quarter of 1995 were $0.70, an increase of 13%
over the third quarter of 1994. Third quarter net income increased 10% to
$861.9 million. Sales for the quarter were $4.2 billion, up 10% from the same
period last year.
For the first nine months, earnings per share were $2.00, an increase of 13%
from the first nine months of 1994. Net income was $2,477.4 million for the
first nine months of 1995, an increase of 11% from the first nine months of
1994. Sales rose 9% to $12.1 billion.
Sales growth for the quarter and first nine 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 third quarter and first nine months increased 23% and
19%, respectively.
Sales growth for the quarter and the first nine months of 1995 was led by newer
products, recent product introductions and the continued growth of the
Merck-Medco Managed Care business. Both our domestic and international
operations reported solid unit volume gains. Foreign exchange contributed two
percentage points to the third quarter sales growth compared to a three
percentage point increase in the second quarter of 1995. Pricing actions had
essentially no effect on third quarter sales growth. However, the effect of
pricing actions over the past nine months reduced sales growth during that
period by one percentage point. Excluding exchange and adjusting for the
effect of the Astra Merck joint venture formation, sales of Merck human and
animal health products increased 11% and 9% for the third quarter and nine
months, respectively.
Sales outside the United States accounted for 33% of the first nine months of
1995 sales, compared with 32% for the same period last year.
Income growth for the first nine months resulted from strong unit volume gains,
favorable product mix in Merck's human and animal health business and a
favorable 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 third quarter and first nine 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.
Results for the first nine months were paced by unit sales gains by 'Vasotec',
'Vaseretic', 'Zocor', 'Pepcid', 'Primaxin' and 'Proscar'. The introduction of
'Varivax', 'Cozaar'*, Hyzaar(TM)* and 'Trusopt' in the U.S. in the second
quarter of 1995 also added to the first nine months' sales gain. Significant
volume growth in the Merck-Medco Managed Care business added to the first nine
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 nine 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 third quarter of 1995. Unit sales for 'Mevacor' were
down primarily in the U.S. due to strong competition. 'Mevacor' and 'Zocor'
are the number one and two cholesterol-lowering drugs, respectively, in total
purchases in the United States.
*'Cozaar' is a registered trademark and Hyzaar(TM) is a trademark of E.I. du
Pont de Nemours and Company, Wilmington, DE, USA.
- 6 -
<PAGE> 8
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
- ------------------------------------------------------
'Zocor' continues to demonstrate strong growth worldwide since the results of
the landmark Scandinavian Simvastatin Survival Study (4S) were presented at the
American Heart Association (AHA) last year. Several countries have approved a
new indication for 'Zocor' based on 4S, and 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. With less than one-third of patients with
existing coronary disease currently receiving cholesterol-lowering therapy,
there remains a potential for continued growth of 'Zocor'.
'Proscar', the only drug indicated to treat the symptoms of benign prostate
enlargement that also shrinks the prostate, continued strong volume growth.
Earlier this year, the FDA 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 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 was approved by the FDA in March 1995. Shortly thereafter, the
American Academy of Pediatrics recommended 'Varivax' for universal use in early
childhood, susceptible older children and adolescents. The Advisory Committee
on Immunization Practices of the Centers for Disease Control (CDC) issued a
similar recommendation for children, and added select at risk adults.
'Cozaar' and Hyzaar(TM), a combination of 'Cozaar' and hydrochlorothiazide (a
diuretic), were cleared for marketing in the United States by the FDA in April,
and these new antihypertensive products were launched in the U.S. in May.
'Cozaar' has also been launched in France, Denmark, Iceland, Norway, Sweden,
Switzerland, Holland and the United Kingdom. To date, 'Cozaar' and Hyzaar(TM)
have been well accepted. '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' and Hyzaar(TM) have 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. It
has also been launched in several European countries. Initial sales of
'Trusopt' are strong. 'Trusopt' 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.
'Pepcid', an H(2)-receptor antagonist for treatment of duodenal ulcers and the
short-term treatment of gastric ulcers and gastroesophageal reflux disease
(GERD), continues to demonstrate strong performance despite competition from
generic cimetidine, newer antisecretory agents and the introduction of
over-the-counter (OTC) H(2) antagonists.
Pepcid AC Acid Controller(TM), a non-prescription formulation of 'Pepcid', was
launched in May 1995 by Johnson & Johnson Merck Consumer Pharmaceuticals Co.
Pepcid AC Acid Controller(TM) is the only OTC product that has been shown to
both relieve and prevent heartburn and acid indigestion. Strong initial sales
can be attributed to consumer satisfaction and acceptance of the product by
doctors and pharmacists.
'Fosamax', a breakthrough prescription medicine to treat osteoporosis in women
after menopause, was cleared for marketing in the United States by the FDA in
late September and was launched in mid-October. 'Fosamax' builds healthy bone,
restoring some of the bone lost as a result of osteoporosis. 'Fosamax' is a
new treatment choice and the first nonhormonal medicine for women after
menopause who have this bone-weakening disease, which leads to osteoporotic
fractures in more than one in three women over the age of 50.
- 7 -
<PAGE> 9
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
- ------------------------------------------------------
Results from two three-year pivotal studies supported the conclusion that
'Fosamax' built healthy bone at the spine and hip and significantly increased
bone mineral density at other sites, suggesting that the gains in bone mineral
density at the spine and hip did not occur because of a loss of bone mineral
density elsewhere in the skeleton. While these studies were not designed to
detect fracture risk, further analysis showed that 'Fosamax' reduced by 48
percent the number of women who suffered new spinal fractures compared with
women treated with placebo.
The Merck-Medco Managed Care Division continues to increase its penetration
across all major market segments. Medco's service to the rapidly expanding
health maintenance organization market is increasing significantly, and a
number of major new accounts, such as Intermountain Health Care, Central Mass
Health Care, Companion Health Care, First Option Health Plan and Gateway Health
Plan have been gained.
In September 1995, the Company issued $500 million of ten-year Euronotes
bearing a coupon of 6.75% payable annually. Proceeds from the sale of these
securities will be used for general corporate purposes. Funds not immediately
required for such purposes may be invested temporarily in short-term
securities.
In October 1995, the Company sold its Medco Behavioral Care (MBC) business to
MBC management and Kohlberg Kravis Roberts & Co. for $340 million. The sale of
this business will not have a significant impact on the Company's financial
position and will not significantly impact ongoing results of operations.
- 8 -
<PAGE> 10
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 Merck & Co., Inc. Annual Report for the fiscal year ended
(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
11 Computation of Earnings Per Filed with this document
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 September 30, 1995, the following report
was filed on Form 8-K under Item 5, Other Events:
1. In a report dated July 11, 1995 and filed July 19, 1995, the Registrant
announced (a) the signing of a definitive agreement to divest its
ownership of Medco Behavioral Care Corporation (MBC) to MBC management and
Kohlberg Kravis Roberts & Co., and (b) the formation of a joint venture
company to develop, market and implement comprehensive disease management
and health management programs in several therapeutic categories, as
announced by Wyeth-Ayerst Laboratories, a division of American Home
Products Corporation, and Medco Containment Services, Inc., a subsidiary
of the Registrant.
- 9 -
<PAGE> 11
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: November 13, 1995 /s/ Mary M. McDonald
-----------------------------------------
Mary M. McDonald
Senior Vice President and General Counsel
Date: November 13, 1995 /s/ Peter E. Nugent
----------------------------------------
Peter E. Nugent
Vice President, Controller
- 10 -
<PAGE> 12
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
11 Computation of Earnings Per Common Share
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
<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 Nine Months
Ended September 30 Ended September 30
----------------------- -----------------------
1995 1994 1995 1994
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Income and Adjusted Earnings:
- ---------------------------------
Net Income.................................................. $ 861.9 $ 784.8 $2,477.4 $2,224.1
Effect on Earnings of Compensation Expense Relating to
Stock Option and Incentive Plans.......................... 3.7 2.6 10.8 3.6
Effect on Earnings of Interest on Debentures................ - (.1) - .1
-------- -------- -------- ---------
Adjusted Earnings for Fully Diluted Earnings Per Share...... $ 865.6 $ 787.3 $2,488.2 $2,227.8
======== ======== ======== =========
Weighted Average Shares and Share Equivalents Outstanding:
- ----------------------------------------------------------
Weighted Average Shares Outstanding (As Reported)........... 1,234.2 1,260.9 1,238.0 1,257.9
Common Share Equivalents Issuable Under Stock Option and
Incentive Plans .......................................... 28.0 18.8 28.0 18.7
Common Share Equivalents Issuable on Assumed Conversion of
Debentures................................................ .4 1.3 .4 1.3
-------- -------- -------- --------
Weighted Average Shares and Share Equivalents Outstanding... 1,262.6 1,281.0 1,266.4 1,277.9
======== ======== ======== ========
Earnings Per Share (As Reported)............................ $ .70 $ .62 $ 2.00 $ 1.77
======== ======== ======== ========
Fully Diluted Earnings Per Share (a)........................ $ .69 $ .61 $ 1.96 $ 1.74
======== ======== ======== ========
</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>
Nine Months
Ended Years Ended December 31
September 30 ---------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
------------ -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Income Before Taxes
and Cumulative Effect
of Accounting Changes $3,584.3 $4,415.2 $3,102.7 $3,563.6 $3,166.7 $2,698.8
Add:
One-third of rents 28.2 36.0 35.0 34.0 31.1 26.5
Interest expense, net 38.5 96.0 48.0 23.6 26.0 51.9
-------- -------- -------- -------- -------- --------
Earnings $3,651.0 $4,547.2 $3,185.7 $3,621.2 $3,223.8 $2,777.2
======== ======== ======== ======== ======== ========
One-third of rents $28.2 $ 36.0 $ 35.0 $ 34.0 $31.1 $26.5
Interest expense 67.9 124.4 84.7 72.7 68.7 69.8
----- ------ ------ ------ ----- -----
Fixed Charges $96.1 $160.4 $119.7 $106.7 $99.8 $96.3
===== ====== ====== ====== ===== =====
Ratio of Earnings
to Fixed Charges 38 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 rents 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 NINE MONTHS ENDED SEPTEMBER 30, 1995
AND THE CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,906
<SECURITIES> 1,011
<RECEIVABLES> 2,242
<ALLOWANCES> 0<F1>
<INVENTORY> 1,764
<CURRENT-ASSETS> 7,661
<PP&E> 7,546
<DEPRECIATION> (2,433)
<TOTAL-ASSETS> 22,352
<CURRENT-LIABILITIES> 5,721
<BONDS> 1,337
<COMMON> 4,684
0
0
<OTHER-SE> 6,833
<TOTAL-LIABILITY-AND-EQUITY> 22,352
<SALES> 12,124
<TOTAL-REVENUES> 12,124
<CGS> 5,330
<TOTAL-COSTS> 5,330
<OTHER-EXPENSES> 950
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 68
<INCOME-PRETAX> 3,584
<INCOME-TAX> 1,107
<INCOME-CONTINUING> 2,477
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,477
<EPS-PRIMARY> 2.00
<EPS-DILUTED> 1.96
<FN>
<F1>NOT MATERIAL TO THE CONSOLIDATED FINANCIAL STATEMENTS.
</FN>
</TABLE>
