<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, 1997
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, 1997:
<TABLE>
<CAPTION>
Class Number of Shares Outstanding
----- ----------------------------
<S> <C>
Common Stock 1,207,875,027
</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, 1997 AND 1996
($ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales $ 5,909.2 $ 4,908.8 $ 11,477.1 $ 9,439.2
---------- ---------- ---------- ----------
Costs, Expenses and Other
Materials and production 2,944.3 2,283.8 5,730.6 4,516.9
Marketing and administrative 1,044.2 946.2 2,104.8 1,760.6
Research and development 396.4 347.7 765.0 697.2
Equity income from affiliates (122.8) (128.4) (273.8) (293.8)
Other (income) expense, net 14.8 65.1 54.8 124.9
---------- ---------- ---------- ----------
4,276.9 3,514.4 8,381.4 6,805.8
---------- ---------- ---------- ----------
Income Before Taxes 1,632.3 1,394.4 3,095.7 2,633.4
Taxes on Income 477.9 422.3 921.0 797.5
---------- ---------- ---------- ----------
Net Income $ 1,154.4 $ 972.1 $ 2,174.7 $ 1,835.9
========== ========== ========== ==========
Per Share of Common Stock:
Net Income $ .96 $ .80 $ 1.80 $ 1.50
Dividends Declared $ .42 $ .34 $ .84 $ .68
Average Number of Common
Shares Outstanding (millions) 1,207.9 1,214.9 1,208.3 1,220.7
</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, 1997 AND DECEMBER 31, 1996
($ in millions)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
--------- ---------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,587.0 $ 1,352.4
Short-term investments 1,129.4 829.2
Accounts receivable 2,697.0 2,655.9
Inventories 2,170.8 2,148.8
Prepaid expenses and taxes 834.8 740.3
--------- ---------
Total current assets 8,419.0 7,726.6
--------- ---------
Investments 2,584.0 2,499.4
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$3,134.4 in 1997 and $2,799.7 in 1996 6,135.3 5,926.7
Goodwill and Other Intangibles,
net of accumulated amortization of
$706.2 in 1997 and $606.5 in 1996 6,977.9 6,736.6
Other Assets 1,511.7 1,403.8
--------- ---------
$25,627.9 $24,293.1
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,709.8 $ 2,937.8
Loans payable and current portion of long-term debt 496.8 606.1
Income taxes payable 889.4 802.6
Dividends payable 507.0 482.7
--------- ---------
Total current liabilities 4,603.0 4,829.2
--------- ---------
Long-Term Debt 1,726.8 1,155.9
--------- ---------
Deferred Income Taxes and Noncurrent Liabilities 4,184.8 4,027.3
--------- ---------
Minority Interests 2,292.2 2,310.2
--------- ---------
Stockholders' Equity
Common stock
Authorized - 2,700,000,000 shares
Issued - 1,483,821,758 shares - 1997
- 1,483,619,311 shares - 1996 5,115.6 4,967.5
Retained earnings 15,981.6 14,817.7
--------- ---------
21,097.2 19,785.2
Less treasury stock, at cost
275,489,891 shares - 1997
277,016,963 shares - 1996 8,276.1 7,814.7
--------- ---------
Total stockholders' equity 12,821.1 11,970.5
--------- ---------
$25,627.9 $24,293.1
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
($ in millions)
<TABLE>
<CAPTION>
Six Months
Ended June 30
------------------------
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before taxes $3,095.7 $2,633.4
Adjustments to reconcile income before taxes to cash provided from
operations before taxes:
Other 569.7 216.7
Net changes in assets and liabilities (312.3) 33.7
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 3,353.1 2,883.8
INCOME TAXES PAID (646.0) (598.5)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,707.1 2,285.3
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (573.7) (576.9)
Purchase of securities, subsidiaries and other investments (9,733.4) (5,714.5)
Proceeds from sale of securities, subsidiaries and other investments 8,963.3 6,192.8
Other (11.1) (31.3)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (1,354.9) (129.9)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings 21.7 11.6
Proceeds from issuance of debt 603.1 315.0
Payments on debt (146.3) (267.5)
Purchase of treasury stock (748.2) (1,583.8)
Dividends paid to stockholders (990.9) (835.5)
Other 189.4 97.5
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (1,071.2) (2,262.7)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (46.4) (53.3)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 234.6 (160.6)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,352.4 1,847.4
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,587.0 $1,686.8
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
Notes to Financial Statements
1. The accompanying unaudited interim financial statements have been prepared
pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and notes required by generally accepted
accounting principles for complete financial statements are not included
herein. The interim statements should be read in conjunction with the
financial statements and notes thereto included in the Company's latest
Annual Report on Form 10-K.
Interim statements are subject to possible adjustments in connection with the
annual audit of the Company's accounts for the full year 1997; in the
Company's opinion, all adjustments necessary for a fair presentation of these
interim statements have been included and are of a normal and recurring
nature.
- 3 -
<PAGE> 5
Notes to Financial Statements (continued)
2. Inventories consisted of:
<TABLE>
<CAPTION>
($ in millions)
-----------------------
June 30 December 31
1997 1996
-------- --------
<S> <C> <C>
Finished goods $1,261.6 $1,237.3
Raw materials and work in process 843.5 841.1
Supplies 65.7 70.4
-------- --------
Total (approximates current cost) 2,170.8 2,148.8
Reduction to LIFO cost -- --
-------- --------
$2,170.8 $2,148.8
======== ========
</TABLE>
3. In May 1997, Merck issued $500 million of debt under its 1993 shelf
registration. The remaining capacity under the shelf is $170 million. The
debt has a scheduled maturity of May 3, 2037 and pays interest semi-annually
at a rate of 5.76%.
4. The Company, along with numerous other defendants, is a party in several
antitrust actions brought by retail pharmacies and consumers, alleging
conspiracies in restraint of trade and challenging pricing and/or purchasing
practices, one of which has been certified as a Federal class action and a
number of which have been certified as state class actions. In January 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 is obligated to pay $51.8 million, payable in four equal
annual installments. In April 1996, the court declined to approve the
settlement. Subsequently, the Company and several other defendants entered
into an amended settlement agreement, which provides for the same monetary
payment and addresses the court's concerns as expressed in its April 1996
opinion. In June 1996, the Court granted approval of the amended settlement
agreement, to which objecting retail class members filed appeals in July
1996. The Company has not engaged in any conspiracy and no admission of
wrongdoing has been made or is included in the amended agreement, which was
entered into in order to avoid the cost of litigation and the risk of an
inaccurate adverse verdict by a jury presented with a case of this size and
complexity. While it is not feasible to predict or determine the final
outcome of these proceedings, management does not believe that they should
result in a materially adverse effect on the Company's financial position,
results of operations or liquidity.
5. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
-------------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------------------- ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Elevated cholesterol $ 1,150.4 $ 1,008.4 $ 2,233.5 $ 1,817.2
Hypertension/heart failure 992.9 936.4 1,914.8 1,758.9
Anti-ulcerants 322.3 254.9 630.8 535.8
Antibiotics 183.7 197.9 390.3 413.3
Ophthalmologicals 184.7 171.7 360.3 321.5
Vaccines/biologicals 183.1 137.6 334.1 249.7
Osteoporosis 127.4 66.2 229.2 110.3
Benign prostatic hyperplasia 99.9 110.0 199.2 230.2
Other Merck human health 75.9 23.8 147.9 28.4
Other human health 2,324.9 1,749.6 4,554.3 3,501.2
Animal health/crop protection 264.0 252.3 482.7 472.7
--------- --------- --------- ---------
$ 5,909.2 $ 4,908.8 $11,477.1 $ 9,439.2
========= ========= ========= =========
</TABLE>
Sales by therapeutic class include Merck-Medco Managed Care (Merck-Medco)
sales of Merck products. Other human health primarily includes Merck-Medco
sales of non-Merck products and Merck-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 Six Months
Ended June 30 Ended June 30
---------------------- ----------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest income $ (54.1) $ (49.2) $(105.4) $(109.4)
Interest expense 30.9 32.8 56.0 67.3
Exchange gains (7.5) (5.6) (13.1) (13.1)
Minority interests 29.9 42.5 72.6 71.9
Amortization of goodwill and other intangibles 48.3 47.2 96.1 94.2
Other, net (32.7) (2.6) (51.4) 14.0
------- ------- ------- -------
$ 14.8 $ 65.1 $ 54.8 $ 124.9
======= ======= ======= =======
</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 six-month periods ended June 30, 1997 and 1996 was
$34.3 million and $35.5 million, respectively.
7. Income taxes paid for the six-month periods ended June 30, 1997 and 1996 were
$646.0 million and $598.5 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, 1997.
- 5 -
<PAGE> 7
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Earnings per share for the second quarter of 1997 were $0.96, an increase of 20%
over the second quarter of 1996. Second quarter net income increased 19% to
$1,154.4 million. Sales for the quarter were $5.9 billion, up 20% from the same
period last year.
For the first six months, earnings per share were $1.80, an increase of 20% from
the first six months of 1996. Net income was $2,174.7 million for the first six
months of 1997, an increase of 18% from the first six months of 1996. Sales rose
22% to $11.5 billion.
Sales growth for the quarter and the first half of 1997 continued to be led by
established major products, recent product introductions and the Merck-Medco
Managed Care business. Both domestic and international operations reported
strong unit volume gains.
Foreign exchange reduced the second quarter sales growth by one percentage
point, the same effect as reported in the first quarter of 1997. Excluding
exchange, sales of Merck human and animal health products increased 15% and 18%
for the second quarter and six months, respectively. Sales outside the United
States accounted for 28% of the first half of 1997 sales, compared with 30% for
the same period last year.
Income growth for the first six months was driven by strong unit volume gains.
The unfavorable effects of inflation, net of price, and exchange were partially
offset by cost controls and productivity improvements in manufacturing, selling
and general and administrative expenses.
The growth in pretax income for the second quarter 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 1997, resulting in no effect on net income growth.
Results for the first six months were paced by sales volume gains of established
major products, including 'Zocor', 'Pepcid', 'Prinivil' and 'Recombivax HB', and
by the newer product introductions, 'Crixivan', 'Cozaar'*, 'Hyzaar'*, 'Fosamax',
'Trusopt' and 'Varivax'. Significant prescription volume growth in the
Merck-Medco Managed Care business also contributed to the sales increase for the
first six months.
'Zocor' continues to grow strongly and to command the leading share of total and
new prescriptions worldwide among cholesterol-lowering medicines. The number of
patients taking 'Zocor' has nearly doubled to almost 7 million worldwide since
the landmark Scandinavian Simvastatin Survival Study (4S) showed that 'Zocor'
saves lives and prevents heart attacks in people with high cholesterol and
coronary heart disease. A 4S subanalysis published this April in DIABETES CARE
showed that major coronary events, including heart attacks, were reduced by 55
percent in people with diabetes who take 'Zocor', compared to those on placebo.
In June, the U.S. Food and Drug Administration (FDA) cleared new recommendations
reducing the frequency of liver function testing for patients on therapy with
'Zocor'.
Despite new competition, 'Mevacor' and 'Zocor' together hold more than a 40
percent share worldwide. The cholesterol-lowering market continues to grow at a
rate of more than 20 percent a year in major markets - driven primarily by an
annual 35 percent growth in the "statin" category - as doctors increasingly
recognize the health benefits of lipid-lowering therapy. Still, only about 30
percent of patients with coronary heart disease and high cholesterol currently
take cholesterol-lowering medicines.
U.S. prescription sales remain strong for 'Pepcid', an H2-receptor antagonist
for the treatment of duodenal ulcers and the short-term treatment of gastric
ulcers and gastroesophageal reflux disease (GERD). 'Pepcid' is now the second
most-prescribed prescription H2-receptor antagonist in the United States.
In the U.S. over-the-counter market, 'Pepcid AC' Acid Controller, sold by
Johnson & Johnson o Merck Consumer Pharmaceuticals Co., continues to lead the
growing and highly competitive acid indigestion market.
Together, 'Prinivil' and 'Vasotec' are the most widely prescribed angiotensin
converting enzyme (ACE) inhibitors in the United States. They hold about 40
percent of the U.S. ACE inhibitor market. For two years in a row, new and total
prescription growth for 'Prinivil', which treats high blood pressure and heart
failure, exceeded that of the competing lisinopril product. 'Vasotec', the most
widely prescribed branded antihypertensive medicine in the world, is the only
ACE inhibitor indicated for treatment of three conditions: high blood pressure,
asymptomatic left ventricular dysfunction and heart failure.
*'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)
The worldwide market for 'Recombivax HB', the first recombinant vaccine for
immunization against hepatitis B infection, continues to grow more than 10 years
after it was launched in the U.S. Contributing to growth were increased public
awareness of hepatitis B, legislation in some states requiring hepatitis B
immunization for school entry, and the December 1996 publication by the Centers
for Disease Control recommending hepatitis B immunization for adolescents.
'Crixivan', Merck's protease inhibitor for the treatment of HIV infection in
adults, has achieved broad acceptance by physicians and patients, and is the
world's most widely prescribed protease inhibitor. Within a year of its
record-breaking 42-day clearance in the United States, it has been cleared for
marketing in more than 60 additional countries. 'Crixivan' now holds about half
of the U.S. market.
Two clinical endpoint studies with 'Crixivan', announced in February and March,
demonstrated that 'Crixivan' reduced the incidence of AIDS-related infections,
cancers and deaths by as much as 60 percent. Merck researchers, in an update of
an earlier study, reported that 'Crixivan', when used with two other anti-HIV
drugs, sustained viral suppression for up to 18 months in 90 percent of
patients. The virus in the bloodstream of those patients had been lowered below
the limit of detection in the assay used.
Physicians continue to adopt 'Cozaar' and 'Hyzaar' (a combination of 'Cozaar'
and the diuretic hydrochlorothiazide) faster than any new antihypertensive
product launched in this decade. The products are now marketed in 71 countries.
'Cozaar' and 'Hyzaar', the first in a new class of anti-hypertensive drugs
called angiotensin-II (A-II) receptor antagonists, are highly efficacious and
are exceptionally well tolerated. 'Cozaar' and 'Hyzaar' were developed in
collaboration with the DuPont Merck Pharmaceutical Company.
In April, the FDA cleared 'Fosamax' to prevent osteoporosis in postmenopausal
women and to prevent fractures in postmenopausal women with osteoporosis.
'Fosamax' was first cleared for marketing in September 1995 for the treatment of
osteoporosis in postmenopausal women. The expanded use of 'Fosamax' for
prevention increases the number of postmenopausal women in the United States who
can benefit from the use of the product from 20 million to 39 million.
Of the 20 million American women with osteoporosis, 80 percent are undiagnosed.
Efforts to increase the rate of diagnosis of the disease are accelerating. In
1995, there were only 1,000 diagnostic sites in the United States with machines
for measuring bone density. This year, the number of sites is expected to
increase to more than 4,000, expanding access to millions of undiagnosed women.
Merck continues to educate women about postmenopausal osteoporosis and treatment
with 'Fosamax' through major consumer campaigns. In May, the Company launched a
new U.S. direct-to-consumer campaign in magazines and on television aimed at
women with the bone-thinning disease.
Sales of 'Trusopt', the first carbonic anhydrase inhibitor made in a topical
(eyedrop) formulation, continue to grow since it was first introduced in the
United States in May 1995. 'Trusopt' is now the most widely prescribed
anti-glaucoma medicine in the United States and in several countries in Europe.
The product is indicated for the treatment of elevated intraocular pressure in
patients with ocular hypertension or open-angle glaucoma.
'Varivax', the first and only chickenpox vaccine available in the United States,
continues to grow in acceptance. Since FDA clearance in March 1995, more than 6
million doses of the vaccine have been distributed.
In February, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share, which requires adoption in 1997. This Statement generally
requires the presentation of basic and diluted earnings per share on the face of
the statement of income. The amount of basic earnings per share will not differ
from the earnings per share currently reported on the face of the statement of
income and the diluted earnings per share will not be materially different.
On May 28, 1997, the Board of Directors declared a quarterly dividend of 42
cents per share of common stock for the third quarter of 1997. On July 22, 1997,
the Board of Directors declared a quarterly dividend of 45 cents per share of
common stock for the fourth quarter of 1997. The Company's total dividends paid
during 1997 will be $1.69 per share, a 19% increase over the amount paid in
1996.
On July 2, the Company completed the sale of its crop protection business to
Novartis for $910 million in cash. The crop protection business was not
significant to the Company's financial position or results of operations.
On August 1, 1997, Merck and Rhone-Poulenc combined their respective animal
health and poultry genetics businesses to form an equally owned joint venture
called Merial. This transaction will not have a significant effect on the
Company's financial position, liquidity or results of operations.
- 7 -
<PAGE> 9
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 23, 1997, 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>
Edward M. Scolnick 987,158,051 6,365,171
Lawrence A. Bossidy 987,117,045 6,406,177
Johnnetta B. Cole 986,859,270 6,663,952
Charles E. Exley, Jr. 987,081,408 6,441,814
William N. Kelley 987,129,871 6,393,351
</TABLE>
2. A proposal to ratify the appointment of independent public accountants
received 988,678,836 votes FOR and 1,943,583 votes AGAINST, with 2,900,803
abstentions.
3. A stockholder proposal concerning prior government/political service of
certain employees and directors received 30,291,700 votes FOR and 731,239,204
votes AGAINST, with 33,756,019 abstentions and 198,236,299 broker non-votes.
4. A stockholder proposal concerning benefits for management and directors
received 40,430,465 votes FOR and 734,014,702 votes AGAINST, with 20,829,765
abstentions and 198,248,290 broker non-votes.
5. A stockholder proposal concerning confidential voting received 340,462,839
votes FOR and 442,393,389 votes AGAINST, with 12,407,763 abstentions and
198,259,231 broker non-votes.
6. A stockholder proposal concerning providing shareholders with reports
received 40,598,396 votes FOR and 726,123,407 votes AGAINST, with 28,565,014
abstentions and 198,236,405 broker non-votes.
7. A stockholder proposal concerning charitable contributions received
32,654,573 votes FOR and 726,126,655 votes AGAINST, with 36,503,715
abstentions and 198,238,279 broker non-votes.
- 8 -
<PAGE> 10
Part II - Other Information (continued)
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 Incorporation of Incorporated by reference to Form
Merck & Co., Inc. (May 6, 1992) 10-K Annual Report for the fiscal
year ended December 31, 1992
3(b) By-Laws of Merck & Co., Inc. (as amended Incorporated by reference to Form
effective February 25, 1997) 10-Q Quarterly Report for the
period ended March 31, 1997
11 Computation of Earnings Per Common Share Filed with this document
12 Computation of Ratios of Earnings to Filed with this document
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, 1997, one Current Report was
filed on Form 8-K under Item 5 - Other Events concerning the Company's
announcement of the signing of a definitive agreement for the sale of its
crop protection business to Novartis for $910 million. This report was
dated May 13, 1997 and filed May 15, 1997.
- 9 -
<PAGE> 11
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCK & CO., INC.
Date: August 11, 1997 /s/ Mary M. McDonald
-----------------------------------------
MARY M. MCDONALD
Senior Vice President and General Counsel
Date: August 11, 1997 /s/ Peter E. Nugent
-----------------------------------------
PETER E. NUGENT
Vice President, Controller
- 10 -
<PAGE> 12
EXHIBIT INDEX
Exhibits
<TABLE>
<CAPTION>
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 February 25, 1997)
- Incorporated by reference to Form 10-Q Quarterly Report for the period ended
March 31, 1997
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 Six Months
Ended June 30 Ended June 30
------------------------- -------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Income and Adjusted Earnings:
Net Income ............................................... $ 1,154.4 $ 972.1 $ 2,174.7 $ 1,835.9
Effect on Earnings of Compensation Expense Relating to
Stock Option and Incentive Plans ....................... 2.7 2.2 6.5 4.2
--------- --------- --------- ---------
Adjusted Earnings for Fully Diluted Earnings Per Share ... $ 1,157.1 $ 974.3 $ 2,181.2 $ 1,840.1
========= ========= ========= =========
Weighted Average Shares and Share Equivalents Outstanding:
Weighted Average Shares Outstanding (As Reported) ........ 1,207.9 1,214.9 1,208.3 1,220.7
Common Share Equivalents Issuable Under Stock Option and
Incentive Plans ........................................ 32.6 29.7 32.6 29.7
Common Share Equivalents Issuable on Assumed Conversion of
Debentures ............................................. .1 .3 .1 .3
--------- --------- --------- ---------
Weighted Average Shares and Share Equivalents Outstanding 1,240.6 1,244.9 1,241.0 1,250.7
========= ========= ========= =========
Earnings Per Share (As Reported) ......................... $ .96 $ .80 $ 1.80 $ 1.50
========= ========= ========= =========
Fully Diluted Earnings Per Share (a) ..................... $ .93 $ .78 $ 1.76 $ 1.47
========= ========= ========= =========
</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% on an unrounded basis.
<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 Years Ended December 31
June 30 --------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income Before Taxes
and Cumulative Effect
of Accounting Changes ... $3,095.7 $5,540.8 $4,797.2 $4,415.2 $3,102.7 $3,563.6
Add:
One-third of rents ...... 21.5 41.0 28.1 36.0 35.0 34.0
Interest expense, net ... 44.6 103.2 60.3 96.0 48.0 23.6
Preferred stock dividends 34.0 70.0 2.1 -- -- --
-------- -------- -------- -------- -------- --------
Earnings ............... $3,195.8 $5,755.0 $4,887.7 $4,547.2 $3,185.7 $3,621.2
======== ======== ======== ======== ======== ========
Fixed Charges
One-third of rents ...... $ 21.5 $ 41.0 $ 28.1 $ 36.0 $ 35.0 $ 34.0
Interest expense ........ 56.0 138.6 98.7 124.4 84.7 72.7
Preferred stock dividends 34.0 70.0 2.1 -- -- --
-------- -------- -------- -------- -------- --------
Fixed Charges .......... $ 111.5 $ 249.6 $ 128.9 $ 160.4 $ 119.7 $ 106.7
======== ======== ======== ======== ======== ========
Ratio of Earnings
to Fixed Charges ........ 29 23 38 28 27 34
======== ======== ======== ======== ======== ========
</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),
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 SIX MONTHS ENDED JUNE 30, 1997 AND THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,587
<SECURITIES> 1,129
<RECEIVABLES> 2,697
<ALLOWANCES> 0<F1>
<INVENTORY> 2,171
<CURRENT-ASSETS> 8,419
<PP&E> 9,270
<DEPRECIATION> (3,134)
<TOTAL-ASSETS> 25,628
<CURRENT-LIABILITIES> 4,603
<BONDS> 1,727
0
0
<COMMON> 5,116
<OTHER-SE> 7,706
<TOTAL-LIABILITY-AND-EQUITY> 25,628
<SALES> 11,477
<TOTAL-REVENUES> 11,477
<CGS> 5,731
<TOTAL-COSTS> 5,731
<OTHER-EXPENSES> 765
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> 3,096
<INCOME-TAX> 921
<INCOME-CONTINUING> 2,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,175
<EPS-PRIMARY> 1.80
<EPS-DILUTED> 1.76
<FN>
<F1>NOT MATERIAL TO THE CONSOLIDATED FINANCIAL STATEMENTS.
</FN>
</TABLE>
