<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 March 31, 1996
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
April 30, 1996:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock 1,216,545,822
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 ENDED MARCH 31, 1996 AND 1995
($ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31
----------------------------
1996 1995
--------- ---------
<S> <C> <C>
Sales $ 4,530.4 $ 3,817.3
--------- ---------
Costs, Expenses and Other
Materials and production 2,233.1 1,726.2
Marketing and administrative 814.3 770.0
Research and development 349.5 288.2
Gains on sales of specialty chemical businesses - (682.9)
Restructuring charge - 175.0
Other (income) expense, net (105.5) 445.0
--------- ---------
3,291.4 2,721.5
--------- ---------
Income Before Taxes 1,239.0 1,095.8
Taxes on Income 375.2 338.4
--------- ---------
Net Income $ 863.8 $ 757.4
========= =========
Per Share of Common Stock:
Net Income $.70 $.61
Dividends Declared $.34 $.30
Average Number of Common
Shares Outstanding (millions) 1,227.0 1,242.6
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 1 -
<PAGE> 3
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND DECEMBER 31, 1995
($ in millions)
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,753.4 $ 1,847.4
Short-term investments 1,712.2 1,502.4
Accounts receivable 2,432.2 2,495.7
Inventories 1,882.7 1,872.5
Prepaid expenses and taxes 830.4 899.5
--------- ---------
Total current assets 8,610.9 8,617.5
--------- ---------
Investments 2,027.7 1,969.6
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$2,565.6 in 1996 and $2,439.9 in 1995 5,401.4 5,269.1
Goodwill and Other Intangibles,
net of accumulated amortization of
$458.4 in 1996 and $411.5 in 1995 6,786.6 6,826.3
Other Assets 1,157.3 1,149.3
--------- ---------
$23,983.9 $23,831.8
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,897.9 $ 3,105.2
Loans payable and current portion of long-term debt 573.7 423.1
Income taxes payable 1,831.2 1,743.0
Dividends payable 417.4 418.2
--------- ---------
Total current liabilities 5,720.2 5,689.5
--------- ---------
Long-Term Debt 1,516.2 1,372.8
--------- ---------
Deferred Income Taxes and Noncurrent Liabilities 2,796.8 2,747.5
--------- ---------
Minority Interests 2,287.3 2,286.3
--------- ---------
Stockholders' Equity
Common stock
Authorized - 2,700,000,000 shares
Issued - 1,483,468,799 shares - 1996
- 1,483,463,327 shares - 1995 4,761.3 4,742.5
Retained earnings 13,161.3 12,740.6
--------- ---------
17,922.6 17,483.1
Less treasury stock, at cost
260,714,513 shares - 1996
254,614,794 shares - 1995 6,259.2 5,747.4
--------- ---------
Total stockholders' equity 11,663.4 11,735.7
--------- ---------
$23,983.9 $23,831.8
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
($ in millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
-----------------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before taxes $ 1,239.0 $ 1,095.8
Adjustments to reconcile income before taxes to cash provided from
operations before taxes:
Gains on sales of specialty chemical businesses - (682.9)
Restructuring charge - 175.0
Other 111.7 448.2
Net changes in assets and liabilities 1.3 13.2
--------- ---------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 1,352.0 1,049.3
INCOME TAXES PAID (168.4) (673.2)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,183.6 376.1
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (265.6) (162.6)
Purchase of securities, subsidiaries and other investments (1,860.0) (1,596.6)
Proceeds from sale of securities, subsidiaries and other investments 1,556.5 1,500.3
Proceeds from sales of specialty chemical businesses, net of cash transferred - 1,321.1
Other (16.4) (43.7)
--------- ---------
NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES (585.5) 1,018.5
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings (.3) (16.2)
Proceeds from issuance of debt 300.2 -
Payments on debt (2.0) (4.3)
Purchase of treasury stock (575.3) (530.9)
Dividends paid to stockholders (438.5) (379.9)
Other 50.5 53.3
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (665.4) (878.0)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (26.7) 100.5
--------- ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (94.0) 617.1
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,847.4 1,604.0
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,753.4 $ 2,221.1
========= =========
</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 1996; 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.
Certain reclassifications have been made to prior year amounts to conform
with current year presentation.
- 3 -
<PAGE> 5
Notes to Financial Statements (continued)
2. Inventories consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------------------
March 31 December 31
1996 1995
-------- -----------
<S> <C> <C>
Finished goods $1,082.3 $1,078.3
Raw materials and work in process 728.4 716.2
Supplies 72.1 78.0
-------- --------
Total (approximates current cost) 1,882.8 1,872.5
Reduction to LIFO cost .1 -
-------- --------
$1,882.7 $1,872.5
======== ========
</TABLE>
3. In January 1996, the Company issued $250.0 million of 30-year debentures
under its existing $1.0 billion shelf registration bearing a coupon of 6.3%
payable semi-annually.
4. The Company, including Merck-Medco Managed Care (Medco), is party to a
number of antitrust suits, four of which have been certified as class
actions (one at the Federal level and three at the state level), instituted
by most of the nation's retail pharmacies and consumers in several states,
alleging conspiracies in restraint of trade and challenging the pricing
and/or purchasing practices of the Company and Medco, respectively.
Effective January 31, 1996, the Company and several other defendants
entered into an agreement, subject to Court approval, to settle the Federal
class action alleging conspiracy, which represents the single largest group
of retail pharmacy claims, pursuant to which the Company would pay $51.8
million, payable in four equal annual installments. On April 4, 1996, the
Court declined to approve the settlement. Subsequently, the Company and
several other defendants entered into an amended settlement agreement,
subject to Court approval, which provides for the same monetary payment and
addresses the Court's concerns as expressed in its April 4, 1996 opinion.
On May 8, 1996, the Court granted preliminary approval of the amended
settlement. A hearing regarding final approval is scheduled for June 11,
1996. The Company has not engaged in any conspiracy and no admission of
wrongdoing has been made or is included in the agreement, which was entered
into in order to avoid the cost of litigation and the risk of an inaccurate
adverse verdict by a jury presented by a case of this size and complexity.
While it is not feasible to predict the final outcome of these proceedings,
in the opinion of management, such proceedings should not ultimately result
in any liability which would have a material adverse effect on the
financial position, results of operations or liquidity of the Company.
5. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
---------------------------
Three Months
Ended March 31
---------------------------
1996 1995
-------- --------
<S> <C> <C>
Cardiovasculars $1,631.3 $1,308.4
Anti-ulcerants 280.9 273.1
Antibiotics 215.4 229.4
Ophthalmologicals 149.8 110.8
Benign prostate hypertrophy 120.2 108.8
Vaccines/biologicals 112.1 96.7
Other Merck human health 48.7 93.7
Other human health 1,751.6 1,332.6
Animal health/crop protection 220.4 224.6
Specialty chemical - 39.2
-------- --------
$4,530.4 $3,817.3
======== ========
</TABLE>
Sales by therapeutic class include Medco sales of Merck products. Other
human health primarily includes Medco sales of non-Merck products and
Medco human health services, principally managed prescription drug
programs.
- 4 -
<PAGE> 6
Notes to Financial Statements (continued)
6. Other (income) expense, net, consisted of:
<TABLE>
<CAPTION>
($ in millions)
--------------------------
Three Months
Ended March 31
--------------------------
1996 1995
--------- --------
<S> <C> <C>
Interest income $ (60.2) $ (50.2)
Interest expense 34.5 22.1
Exchange (gains)/losses (7.5) 6.1
Minority interests 29.4 18.8
Equity pick-up (165.4) (92.0)
Amortization of goodwill and other intangibles 47.0 47.8
Other, net 16.7 492.4
-------- --------
$ (105.5) $ 445.0
======== ========
</TABLE>
Minority interests include third parties' share of exchange gains and
losses arising from translation of the financial statements into U.S.
dollars.
Interest paid for the three-month periods ended March 31, 1996 and 1995
was $10.3 million and $13.8 million, respectively.
7. Income taxes paid for the three-month periods ended March 31, 1996 and
1995 were $168.4 million and $673.2 million, respectively. The decrease in
1996 primarily reflects increased taxes paid in 1995 on the 1994 gain
resulting from the sale to Astra of an interest in a joint venture, the
1995 gains on sales of subsidiaries and a change in laws affecting the
calculation of Federal estimated payments.
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. Current
developments are discussed in Part II of this filing.
- 5 -
<PAGE> 7
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Earnings per share for the first quarter of 1996 were $0.70, an increase of 15%
over the first quarter of 1995. First quarter net income increased 14% to $863.8
million. Sales for the quarter were $4.5 billion, up 19% from the same period
last year.
Sales growth for the first quarter was affected by the divestiture of Kelco in
the first quarter of 1995 and Medco Behavioral Care Corp. in the fourth quarter
of 1995. Adjusting for these effects, sales were up 23% over the first quarter
of 1995.
Sales growth for the quarter was led by established major products, recent
product introductions and growth from the Merck-Medco Managed Care business.
Both domestic and international operations reported strong unit volume gains.
Foreign exchange had essentially no effect on the first quarter sales growth.
Sales of Merck human and animal health products increased 13% for the first
quarter. Sales outside the United States accounted for 31% of 1996 first quarter
sales, compared with 33% for the same period last year.
Income growth for the quarter was driven by strong unit volume gains. The
unfavorable effect of inflation, net of price, was partially offset by cost
controls and productivity improvements in manufacturing and selling, general and
administrative expenses.
The growth in pretax income was reduced by the Company's share of the increase
in taxes related to the Astra Merck joint venture and the European vaccine joint
venture with Pasteur Merieux Serums et Vaccins. The reduction in pretax growth,
however, was offset by a corresponding reduction in the Company's tax rate in
1996, resulting in no effect on net income growth.
Results for the first quarter were paced by unit sales gains for 'Zocor',
'Mevacor', 'Vasotec', 'Vaseretic', 'Prinivil' and 'Proscar'. The 1995
introductions of 'Cozaar'* and 'Hyzaar'* in the U.S. and most major European
markets and the launches of 'Fosamax', 'Trusopt' and 'Varivax' in the U.S. also
contributed to the first quarter sales gain. Significant prescription volume
growth in the Merck-Medco Managed Care business also contributed to the sales
increase for the quarter.
Together, Merck's cholesterol-lowering agents, 'Zocor' and 'Mevacor', hold about
40% of the worldwide cholesterol-lowering market, and combined sales continued
to show significant growth in the first quarter of 1996.
'Zocor' is now the leading cholesterol reducer worldwide. It has grown
significantly since the results of the landmark Scandinavian Simvastatin
Survival Study (4S) were reported in November 1994. The cholesterol-lowering
market continues to expand fueled by 4S and additional supportive data on the
benefits of using this class of products to lower cholesterol in high risk
patients. Several countries have approved a new indication for 'Zocor', based on
4S, as the only cholesterol-lowering medicine proven to save lives and prevent
heart attacks in people with heart disease and high cholesterol. With fewer than
one-third of patients who have coronary disease currently receiving
cholesterol-lowering therapy, there is a strong potential for the continued
growth of 'Zocor'.
'Mevacor' is the first cholesterol-lowering drug demonstrated in a study to
regress atherosclerotic plaques in the carotid arteries of patients without
coronary artery disease. This is the major finding of the three-year
Asymptomatic Carotid Artery Progression Study (ACAPS). The study found that
patients taking 'Mevacor' experienced significantly fewer major cardiac events
than patients treated with placebo. In February, the U.S. Food and Drug
Administration (F.D.A.) cleared addition of the study results to the clinical
pharmacology section of the labeling for 'Mevacor'.
'Vasotec', Merck's angiotensin converting enzyme (ACE) inhibitor for reducing
high blood pressure and treating heart failure, continued its solid growth. It
remains the leading branded product in the worldwide cardiovascular market.
*'Cozaar' and 'Hyzaar' are registered trademarks of E.I. du Pont de Nemours and
Company, Wilmington, DE, USA.
- 6 -
<PAGE> 8
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
Sales of 'Proscar' also increased in the first quarter of 1996. The growth is
attributed to the ongoing impact of the Scandinavian Reduction of the Prostate
Study (SCARP) and the growing acceptance by urologists.
'Varivax', Merck's vaccine for the prevention of chickenpox, was licensed by the
F.D.A. in March 1995. Since its introduction, more than 2.3 million doses of
'Varivax' have been sold to physicians, hospitals and clinics.
'Cozaar' and 'Hyzaar' (a combination of 'Cozaar' and the diuretic
hydrochlorothiazide) were introduced in the U.S. in May 1995. 'Cozaar' has also
been launched in 15 other countries including France, Germany, Spain, Brazil and
the United Kingdom. Both products have been exceptionally well accepted.
'Cozaar' is the first in a new class of anti-hypertensive drugs called
Angiotensin-II (A-II) receptor antagonists. In clinical studies 'Cozaar' and
'Hyzaar' had excellent tolerability profiles and were highly effective. Both
products were developed in collaboration with the DuPont Merck Pharmaceutical
Company.
Merck introduced 'Trusopt', the first carbonic anhydrase inhibitor made in a
topical (eyedrop) formulation, in the United States in May 1995. It also has
been introduced in several European countries. Sales are proceeding at a strong
pace. 'Trusopt' is indicated for the treatment of elevated intraocular pressure
in patients with ocular hypertension or open-angle glaucoma. 'Trusopt' has been
proven effective in the consistent lowering of intraocular pressure in most
patients and may be used both as monotherapy and adjunctive therapy.
Pepcid AC Acid Controller(TM), a non-prescription formulation of 'Pepcid', was
introduced in the U.S. in June 1995 by Johnson & Johnson o Merck Consumer
Pharmaceuticals Co. and quickly became the number one OTC acid relief product.
It is being met with high levels of consumer satisfaction and acceptance by
doctors and pharmacists. The OTC market for acid relief products continues to
expand and sales of Pepcid AC(TM) are growing significantly.
'Fosamax', a breakthrough in the treatment of osteoporosis in postmenopausal
women, already has been introduced in 25 countries including the United States
where it became available last October. Early prescription trends are strong. A
major consumer campaign - including full-page advertisements in major U.S.
newspapers and magazines - is underway to educate American women about the
consequences of osteoporosis, and the benefits of treatment with 'Fosamax'.
In clinical trials, 'Fosamax' was shown to restore healthy bone lost due to
osteoporosis. Even more important, the double-blind, placebo-controlled studies
showed that 'Fosamax' reduced by 48 percent the proportion of women suffering
new spinal fractures. 'Fosamax' is the first nonhormonal medicine for treating
osteoporosis, a disease that affects about one-in-three women over the age of
50.
On March 14, the F.D.A. gave Merck clearance to market 'Crixivan' (indinavir
sulfate), an HIV protease inhibitor, under the provisions of the F.D.A.'s
accelerated review process. It is indicated in the treatment of HIV infection in
adults when antiretroviral therapy is warranted. 'Crixivan', a potent inhibitor
of the HIV protease enzyme that is critical to replication of the virus that
causes AIDS, can be taken in combination with other anti-HIV therapies or alone.
On April 2, the F.D.A. licensed Merck to market 'Vaqta' (Hepatitis A Vaccine,
Inactivated), a new vaccine for the prevention of hepatitis A in persons two
years of age and older. Hepatitis A is a highly contagious virus that attacks
the liver and can cause victims to be ill for several weeks. Because there is no
treatment for hepatitis A and the medical and economic consequences of the
disease are substantial, immunization of high risk individuals is recommended by
the Centers for Disease Control and Prevention. The vaccine is now available.
- 7 -
<PAGE> 9
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
On April 15, Astra Merck Inc., a joint venture company owned equally by Merck
and Astra AB of Sweden, announced it has received clearance from the F.D.A. to
market its antisecretory medication 'Prilosec'* (omeprazole) in combination with
the antibiotic Biaxin* (clarithromycin). The combination therapy will be
indicated for the treatment of patients with H. pylori infection and duodenal
ulcer to eradicate H. pylori, the bacteria now believed to cause approximately
90 percent of peptic ulcers. Astra Merck has also received F.D.A. clearance to
market 'Prilosec' for the short-term treatment of active benign gastric ulcers.
The Federal Trade Commission (F.T.C.) has recently instituted an investigation
into whether pharmaceutical companies may have violated Federal antitrust laws
in connection with establishing pricing practices. On March 13, 1996, the
Company received a notice from the F.T.C. that it was included in this
investigation. Management believes that the Company is currently operating in
all material respects in accordance with applicable standards. While it is not
feasible to predict or determine the outcome of the investigation, management
does not believe that it should result in a materially adverse effect on the
Company's financial position, results of operations or liquidity.
*'Prilosec' is a registered trademark of Astra AB; Biaxin is a registered
trademark of Abbott Laboratories.
- 8-
<PAGE> 10
Part II - Other Information
Item 1. Legal Proceedings
The Company, including Medco, is party to a number of antitrust suits, four of
which have been certified as class actions (one at the Federal level and three
at the state level), instituted by most of the nation's retail pharmacies and
consumers in several states, alleging conspiracies in restraint of trade and
challenging the pricing and/or purchasing practices of the Company and Medco,
respectively. A significant number of other pharmaceutical companies and
wholesalers have also been sued in the same or similar litigation. These
actions, except for several actions pending in state courts, have been
consolidated for pre-trial purposes in the United States District Court for the
Northern District of Illinois. Effective January 31, 1996, the Company and
several other defendants entered into an agreement, subject to Court approval,
to settle the Federal class action alleging conspiracy, which represents the
single largest group of retail pharmacy claims, pursuant to which the Company
would pay $51.8 million, payable in four equal annual installments. On April 4,
1996, the Court declined to approve the settlement. Subsequently, the Company
and several other defendants entered into an amended settlement agreement,
subject to Court approval, which provides for the same monetary payment and
addresses the Court's concerns as expressed in its April 4, 1996 opinion. On
May 8, 1996, the Court granted preliminary approval of the amended settlement.
A hearing regarding final approval is scheduled for June 11, 1996. The
Company has not engaged in any conspiracy and no admission of wrongdoing has
been made or is included in the agreement, which was entered into in order to
avoid the cost of litigation and the risk of an inaccurate adverse verdict by a
jury presented by a case of this size and complexity. While it is not feasible
to predict the final outcome of these proceedings, in the opinion of management,
such proceedings should not ultimately result in any liability which would have
a material adverse effect on the financial position, results of operations or
liquidity of the Company.
The Federal Trade Commission (F.T.C.) has recently instituted an investigation
into whether pharmaceutical companies may have violated Federal antitrust laws
in connection with establishing pricing practices. On March 13, 1996, the
Company received a notice from the F.T.C. that the Company was included in this
investigation. Management believes that the Company is currently operating in
all material respects in accordance with applicable standards. Accordingly,
although management cannot predict the outcome of the investigation, it does not
believe that the result of the investigation will have a material adverse effect
on the financial position, results of operations or liquidity of the Company.
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 Annual Report for the fiscal year
& Co., Inc. (May 6, 1992) ended 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
June 9, 1994) ended December 31, 1994
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 March 31, 1996, no current
reports on Form 8-K were filed.
- 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.
/s/ Mary M. McDonald
-----------------------------------------
Date: May 10, 1996 MARY M. MCDONALD
Senior Vice President and General Counsel
/s/ Peter E. Nugent
-----------------------------------------
Date: May 10, 1996 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
Ended March 31
----------------------------
1996 1995
-------- --------
<S> <C> <C>
Net Income and Adjusted Earnings:
Net Income............................................................... $ 863.8 $ 757.4
Effect on Earnings of Compensation Expense Relating to Stock Option and
Incentive Plans........................................................ 2.0 2.8
-------- --------
Adjusted Earnings for Fully Diluted Earnings Per Share................... $ 865.8 $ 760.2
======== ========
Weighted Average Shares and Share Equivalents Outstanding:
Weighted Average Shares Outstanding (As Reported)........................ 1,227.0 1,242.6
Common Share Equivalents Issuable Under Stock Option and
Incentive Plans........................................................ 31.5 20.0
Common Share Equivalents Issuable on Assumed Conversion of Debentures.... .4 .6
-------- --------
Weighted Average Shares and Share Equivalents Outstanding................ 1,258.9 1,263.2
======== ========
Earnings Per Share (As Reported)......................................... $ .70 $ .61
======== ========
Fully Diluted Earnings Per Share (a)..................................... $ .69 $ .60
======== ========
</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>
Three Months
Ended
March 31 Years Ended December 31
------------ ----------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income Before Taxes
and Cumulative Effect
of Accounting Changes $ 1,239.0 $ 4,797.2 $ 4,415.2 $ 3,102.7 $ 3,563.6 $ 3,166.7
Add:
One-third of rents 7.4 28.1 36.0 35.0 34.0 31.1
Interest expense, net 28.1 60.3 96.0 48.0 23.6 26.0
Preferred stock dividends 17.4 2.1 - - - -
---------- ---------- ---------- ---------- ---------- ----------
Earnings $ 1,291.9 $ 4,887.7 $ 4,547.2 $ 3,185.7 $ 3,621.2 $ 3,223.8
========== ========== ========== ========== ========== ==========
Fixed Charges
One-third of rents $ 7.4 $ 28.1 $ 36.0 $ 35.0 $ 34.0 $ 31.1
Interest expense 34.5 98.7 124.4 84.7 72.7 68.7
Preferred stock dividends 17.4 2.1 - - - -
---------- ---------- ---------- ---------- ---------- ----------
Fixed Charges $ 59.3 $ 128.9 $ 160.4 $ 119.7 $ 106.7 $ 99.8
========== ========== ========== ========== ========== ==========
Ratio of Earnings
to Fixed Charges 22 38 28 27 34 32
========== ========== ========== ========== ========== ==========
</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 rent),
interest expense, net of amounts capitalized, and dividends on preferred stock
of subsidiary companies. "Fixed charges" consist of one-third of rents, interest
expense as reported in the Company's consolidated financial statements and
dividends on preferred stock of subsidiary companies.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND
THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,753
<SECURITIES> 1,712
<RECEIVABLES> 2,432
<ALLOWANCES> 0<F1>
<INVENTORY> 1,883
<CURRENT-ASSETS> 8,611
<PP&E> 7,967
<DEPRECIATION> (2,566)
<TOTAL-ASSETS> 23,984
<CURRENT-LIABILITIES> 5,720
<BONDS> 1,516
0
0
<COMMON> 4,761
<OTHER-SE> 6,902
<TOTAL-LIABILITY-AND-EQUITY> 23,984
<SALES> 4,530
<TOTAL-REVENUES> 4,530
<CGS> 2,233
<TOTAL-COSTS> 2,233
<OTHER-EXPENSES> 350
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 35
<INCOME-PRETAX> 1,239
<INCOME-TAX> 375
<INCOME-CONTINUING> 864
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 864
<EPS-PRIMARY> .70
<EPS-DILUTED> .69
<FN>
<F1>Not material to the Consolidated Financial Statements.
</FN>
</TABLE>
