<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, 1998
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, 1998:
<TABLE>
<CAPTION>
Class Number of Shares Outstanding
----- ----------------------------
<S> <C>
Common Stock 1,195,259,337
</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 ENDED MARCH 31, 1998 AND 1997
($ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended March 31
------------------------
1998 1997
---------- ----------
Sales $6,058.8 $5,567.9
---------- ----------
<S> <C> <C>
Costs, Expenses and Other
Materials and production 3,235.6 2,786.3
Marketing and administrative 995.1 1,060.6
Research and development 388.5 368.7
Equity income from affiliates (226.1) (151.0)
Other (income) expense, net 30.5 39.9
---------- ----------
4,423.6 4,104.5
---------- ----------
Income Before Taxes 1,635.2 1,463.4
Taxes on Income 470.8 443.1
---------- ----------
Net Income $1,164.4 $1,020.3
========== ==========
Basic Earnings per Common Share $.97 $.84
Earnings per Common Share Assuming Dilution $.95 $.82
Dividends Declared per Common Share $.45 $.42
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
- 1 -
<PAGE> 3
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998 AND DECEMBER 31, 1997
($ in millions)
<TABLE>
<CAPTION>
March 31 December 31
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,596.6 $ 1,125.1
Short-term investments 1,212.8 1,184.2
Accounts receivable 2,574.3 2,876.7
Inventories 2,078.8 2,145.1
Prepaid expenses and taxes 924.2 881.9
---------- ----------
Total current assets 8,386.7 8,213.0
---------- ----------
Investments 2,819.0 2,533.4
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$3,584.4 in 1998 and $3,423.2 in 1997 6,744.4 6,609.4
Goodwill and Other Intangibles,
net of accumulated amortization of
$875.0 in 1998 and $815.8 in 1997 6,722.5 6,780.5
Other Assets 1,727.3 1,675.6
---------- ----------
$ 26,399.9 $ 25,811.9
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 2,979.9 $ 3,268.9
Loans payable and current portion of long-term debt 658.2 902.5
Income taxes payable 702.0 859.6
Dividends payable 538.4 537.6
---------- ----------
Total current liabilities 4,878.5 5,568.6
---------- ----------
Long-Term Debt 1,844.6 1,346.5
---------- ----------
Deferred Income Taxes and Noncurrent Liabilities 5,305.5 5,098.9
---------- ----------
Minority Interests 1,225.0 1,184.4
---------- ----------
Stockholders' Equity
Common stock
Authorized - 2,700,000,000 shares
Issued - 1,483,925,990 shares 5,316.2 5,254.0
Retained earnings 17,917.6 17,291.5
Accumulated other comprehensive income 29.6 27.9
---------- ----------
23,263.4 22,573.4
Less treasury stock, at cost
288,115,308 shares - 1998
290,277,526 shares - 1997 10,117.1 9,959.9
---------- ----------
Total stockholders' equity 13,146.3 12,613.5
---------- ----------
$ 26,399.9 $ 25,811.9
========== ==========
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
($ in millions)
<TABLE>
<CAPTION>
Three Months
Ended March 31
----------------------
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before taxes $ 1,635.2 $ 1,463.4
Adjustments to reconcile income before taxes to cash provided from
operations before taxes:
Other 252.7 299.7
Net changes in assets and liabilities (70.4) (102.8)
---------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 1,817.5 1,660.3
INCOME TAXES PAID (292.7) (167.3)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,524.8 1,493.0
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (315.4) (261.6)
Purchase of securities, subsidiaries and other investments (6,165.9) (4,047.3)
Proceeds from sale of securities, subsidiaries and other investments 5,926.5 3,980.7
Other (14.2) (14.1)
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (569.0) (342.3)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings (164.5) 13.9
Proceeds from issuance of debt 499.1 87.3
Payments on debt (85.8) (134.5)
Purchase of treasury stock (328.9) (245.3)
Dividends paid to stockholders (537.5) (482.7)
Other 143.7 75.5
---------- ----------
NET CASH USED BY FINANCING ACTIVITIES (473.9) (685.8)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (10.4) (80.7)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 471.5 384.2
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,125.1 1,352.4
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,596.6 $ 1,736.6
========== ==========
</TABLE>
The accompanying notes are an integral part of this consolidated financial
statement.
Notes to Consolidated Financial Statements
1. The accompanying unaudited interim consolidated financial statements
have been prepared pursuant to the rules and regulations for reporting
on Form 10-Q. Accordingly, certain information and disclosures 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 1998; 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 Consolidated Financial Statements (continued)
2. Inventories consisted of:
<TABLE>
<CAPTION>
($ in millions)
---------------------
March 31 December 31
1998 1997
-------- --------
<S> <C> <C>
Finished goods $1,155.4 $1,230.6
Raw materials and work in process 863.4 849.7
Supplies 60.0 64.8
-------- --------
Total (approximates current cost) 2,078.8 2,145.1
Reduction to LIFO cost -- --
-------- --------
$2,078.8 $2,145.1
======== ========
</TABLE>
3. In February 1998, the Company issued $500.0 million of 30-year senior
notes under the 1997 shelf registration, bearing a coupon of 6.4% payable
semiannually. The remaining capacity under the shelf is $1.2 billion.
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 would pay $51.8 million,
payable in four equal annual installments. The court approved an amended
version of the settlement agreement, which incorporated revisions,
unrelated to the monetary payment, to address concerns specified by the
court. Following the dismissal of appeals brought by objectors, the
approval became final in October 1997. The Company has not engaged in any
conspiracy, and no admission of wrongdoing has been made or is included in
the amended agreement, which was entered into in order to avoid the cost
of litigation and the risk of an inaccurate adverse verdict by a jury
presented with a case of this size and complexity. While it is not
feasible to predict or determine the final outcome of these proceedings,
management does not believe that they should result in a materially
adverse effect on the Company's financial position, results of operations
or liquidity.
5. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
-------------------
Three Months
Ended March 31
-------------------
1998 1997
-------- --------
<S> <C> <C>
Elevated cholesterol $1,049.0 $1,083.1
Hypertension/heart failure 1,013.9 921.9
Anti-ulcerants 370.8 308.5
Antibiotics 201.5 206.6
Ophthalmologicals 150.2 155.7
Vaccines/biologicals 185.4 151.0
Osteoporosis 181.8 101.8
Human immunodeficiency virus (HIV) 151.3 123.3
Other Merck products 99.2 69.9
Merck-Medco 2,655.7 2,227.4
Animal health/crop protection -- 218.7
-------- --------
$6,058.8 $5,567.9
======== ========
</TABLE>
In July 1997, the Company sold its crop protection business to Novartis.
In August 1997, the Company and Rhone-Poulenc combined their animal
health and poultry genetics businesses to form Merial Limited (Merial), a
fully integrated, stand-alone joint venture, equally owned by each party.
Other Merck products include sales of other human pharmaceuticals,
continuing sales to divested businesses and, in 1998, supply sales to the
Merial joint venture.
- 4 -
<PAGE> 6
Notes to Consolidated Financial Statements (continued)
6. Other (income) expense, net, consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------
Three Months
Ended March 31
------------------
1998 1997
------- -------
<S> <C> <C>
Interest income $ (61.7) $ (51.2)
Interest expense 39.2 25.0
Exchange gains (5.9) (5.5)
Minority interests 42.5 42.6
Amortization of goodwill and other intangibles 48.3 47.8
Other, net (31.9) (18.8)
------- -------
$ 30.5 $ 39.9
======= =======
</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 three-month periods ended March 31, 1998 and 1997
was $18.5 million and $20.9 million, respectively.
7. Income taxes paid for the three-month periods ended March 31, 1998 and
1997 were $292.7 million and $167.3 million, respectively.
8. The net income effect of dilutive securities was not significant to the
Company's calculation of Earnings per common share assuming dilution. A
reconciliation of weighted average common shares outstanding to weighted
average common shares outstanding assuming dilution follows:
<TABLE>
<CAPTION>
($ in millions)
-----------------
Three Months
Ended March 31
-----------------
1998 1997
------- -------
<S> <C> <C>
Average common shares outstanding 1,195.1 1,208.9
Common shares issuable(1) 31.9 32.3
------- -------
Average common shares outstanding assuming dilution 1,227.0 1,241.2
======= =======
</TABLE>
(1) Issuable primarily under stock option plans.
Stock options outstanding at March 31, 1998 to purchase 13.3 million
shares of common stock were not included in the computation of Earnings
per common share assuming dilution because the options' exercise prices
were greater than the average market price of the common shares.
9. Effective January 1, 1998, the Company adopted the provisions of Statement
No. 130, Reporting Comprehensive Income, which modifies the financial
statement presentation of comprehensive income and its components. Upon
adoption of this Statement, the accumulated net unrealized gain on the
Company's available-for-sale investments of $27.9 million at December 31,
1997 was reclassified from Retained earnings to a separate component of
Stockholders' equity. Adoption of this Statement had no effect on the
Company's financial position or operating results.
Comprehensive income for the three months ended March 31, 1998 and 1997,
representing all changes in Stockholders' equity during the period other
than changes resulting from the Company's stock, was $1,166.1 million and
$1,007.2 million, respectively.
10. Legal proceedings to which the Company is a party are discussed in Part 1
Item 3, Legal Proceedings, in the Annual Report on Form 10-K. There were
no material developments in the three-month period ended March 31, 1998.
- 5 -
<PAGE> 7
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Earnings per share (assuming dilution*) for the first quarter of 1998 were
$0.95, an increase of 16% over the first quarter of 1997. First quarter net
income increased 14% to $1,164.4 million. Sales for the quarter were $6.1
billion, up 9% from the same period last year.
Sales growth for the quarter was affected by the divestiture of the crop
protection business and the formation of the Merial joint venture in the third
quarter of 1997. Adjusting for these effects, sales for the first quarter
increased 12%.
Sales growth for the quarter was led by the established major products and newer
products, including those launched this year, as well as growth from the
Merck-Medco Managed Care business. Both domestic and international operations
reported solid unit volume gains.
Foreign exchange reduced the first quarter sales growth by two percentage
points. Excluding exchange, sales of Merck human health products increased 10%
for the first quarter. Sales outside the United States accounted for 25% of 1998
first quarter sales, compared with 29% for the same period last year.
Income growth for the quarter was driven by strong overall 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 first quarter was reduced by the Company's
share of the increase in taxes related to the Astra Merck joint venture, the
European vaccine joint venture with Pasteur Merieux Connaught and the
international operations of the Merial joint venture. The reduction in pretax
growth, however, was offset by a corresponding reduction in the Company's tax
rate in 1998, resulting in no effect on net income growth.
Results for the first quarter were paced by sales volume gains of established
products, including 'Zocor', 'Vasotec', 'Vaseretic', 'Prinivil', 'Pepcid' and
'Proscar', and the newer products 'Fosamax', 'Cozaar'**, 'Hyzaar'**, 'Crixivan',
'Trusopt', 'Varivax' and 'Vaqta'. Also contributing to the volume growth were
the products launched in 1998, 'Singulair' and 'Propecia'. Prescription volume
growth in the Merck-Medco Managed Care business also contributed to the sales
increase for the quarter.
'Zocor' continues its strong volume growth and continues to be the most widely
used cholesterol-lowering medicine worldwide. 'Zocor' is available on more than
90 percent of managed-care formularies in the United States, reflecting its
standing as the only therapy in the "statin" class indicated to significantly
reduce LDL cholesterol (the so-called bad cholesterol), to significantly reduce
triglycerides and save lives in people with high cholesterol and coronary heart
disease.
The U.S. Food and Drug Administration (FDA) recently approved 'Zocor' to reduce
the risk of stroke or transient ischemic attacks (mini-strokes). The reduction
in strokes is consistent with the concept that atherosclerosis is a broad
vascular disease, which affects more than just the vessels in the heart.
Together, 'Zocor' and 'Mevacor', Merck's other cholesterol-lowering medicine,
hold more than a 40 percent share of the statin market worldwide. The
cholesterol-lowering market continues to grow at a rate of more than 20 percent
a year in major markets, driven primarily by growth of more than 30 percent
annually in the statin category. Yet today, even in the key U.S. market, only
about one-third of potential patients are receiving treatment.
'Pepcid', an H2-receptor antagonist for the treatment of gastroesophageal reflux
disease (GERD) and gastric and duodenal ulcers, also continues its strong volume
growth. The product is the most widely used and fastest-growing acid suppressor
in hospitals. The FDA is currently reviewing the Company's application to allow
prescription strength 'Pepcid' for use in children.
Merck's angiotensin converting enzyme (ACE) inhibitors, 'Vasotec' and
'Prinivil', continue to be among the world's most widely prescribed branded ACE
inhibitors. Together, they hold about 30 percent of the worldwide market for ACE
inhibitors. In the United States, 'Vasotec' is also the only ACE inhibitor
indicated for the treatment of high blood pressure, asymptomatic left
ventricular dysfunction and heart failure. In addition, 'Vasotec' is the only
ACE inhibitor indicated to reduce deaths due to symptomatic heart failure
regardless of underlying cause.
* The calculation of basic earnings per share, consistent with the calculation
of earnings per share reported in the first quarter of 1997, was $0.97, an
increase of 15%.
** `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', to treat benign prostate enlargement (BPH), showed solid
volume growth. In March, the FDA cleared 'Proscar' as the first and only
medicine to reduce the need for BPH prostate surgery and the risk of developing
acute urinary retention, a serious and painful complication of benign prostate
enlargement.
Prescriptions for 'Fosamax', to treat and prevent postmenopausal osteoporosis,
continue to grow. Almost 3 million women worldwide have taken the medicine.
Studies continue to demonstrate the value of 'Fosamax' in treating and
preventing osteoporosis and in reducing the risk of fractures due to the
bone-thinning disease. Two-year results from the six-year Early Postmenopausal
Interventional Cohort trial, published in the February 19 New England Journal of
Medicine, show that 'Fosamax' is an effective non-hormonal alternative to
hormone replacement therapy for stopping bone loss and building bone in
postmenopausal women at risk for osteoporosis.
Merck's oral angiotensin II antagonist, 'Cozaar', the first in this class of
antihypertensive drugs, is now approved in 75 countries. Physicians continue to
adopt 'Cozaar' faster than any new antihypertensive launched in this decade
because of its excellent tolerability and proven efficacy in treating high blood
pressure. 'Cozaar' and its companion agent, 'Hyzaar' ('Cozaar' in combination
with the diuretic hydrochlorothiazide), have been prescribed for more than 3
million patients.
'Cozaar' also has received a new indication for heart failure in Denmark,
Finland and Mexico and applications for this indication are pending in other
countries. 'Cozaar' is the only product in its class cleared for use in heart
failure in any market.
'Crixivan', Merck's protease inhibitor for the treatment of HIV infection,
remains the world's most widely prescribed protease inhibitor. It is sold in
more than 80 countries. In February, researchers reported progress on developing
simpler dosing to make effective treatment with 'Crixivan' easier for patients.
In a pilot study, researchers reported that combination HIV-therapy with
'Crixivan' in a more convenient twice-a-day regimen maintained strong antiviral
effect in 71 percent of patients after 32 weeks of treatment. This effect is
similar to that seen in the current three-times-a-day dosing regimen.
Sales of 'Trusopt', the first carbonic anhydrase inhibitor made in a topical
(eyedrop) formulation, have continued to grow due to its introduction in several
new markets, making it one of the most widely prescribed anti-glaucoma medicines
in the world.
In April, the FDA cleared Merck's combination product 'Cosopt' for the reduction
of elevated intraocular pressure in patients with open-angle glaucoma or ocular
hypertension who do not respond adequately to beta-blockers alone. 'Cosopt' is a
combination of 'Timoptic' and 'Trusopt'; both Merck medicines are leading
therapies in their product categories. The new medicine also is cleared for
marketing in Denmark and Mexico.
'Varivax', the first and only chickenpox vaccine available in the United States,
continued its strong growth. Expanded coverage under the Federal Vaccines for
Children Program and new requirements for school and daycare entry provide
continued opportunity for 'Varivax'. Sales of 'Vaqta', Merck's vaccine to
prevent hepatitis A, also continued to grow.
'Singulair', Merck's new once-a-day tablet for controlling chronic asthma in
adults and children aged six and older, was launched in the United States in
March. The medicine has received medical clearance in 23 countries since late
1997, including acceptance by 13 of the member states of the European Union
through the European mutual recognition procedure. In clinical studies,
'Singulair' improved asthma control in many patients by significantly decreasing
asthma attacks, preventing day- and night-time asthma symptoms, and reducing
reliance on other asthma medicines, such as bronchodilators.
'Propecia', the first and only tablet to treat male pattern baldness, was
launched in January in the United States. In clinical studies, 66 percent of men
treated with the new product showed an increase in hair growth compared to 7
percent on placebo. In addition, 83 percent of men on 'Propecia' maintained or
increased hair count. In contrast, 72 percent of the placebo group lost hair.
'Maxalt', Merck's new treatment for migraine, has been cleared for marketing in
the Netherlands and Mexico. In clinical studies, 'Maxalt' has provided fast,
effective relief of migraine headache.
On April 10, an advisory committee to the FDA recommended approval for
'Aggrastat', Merck's investigational platelet blocker to prevent cardiac
ischemic events in patients with unstable angina or non-Q-wave myocardial
infarction, including those patients who require subsequent procedures such as
balloon angioplasty, atherectomy or coronary bypass surgery. Clinical data show
that in combination with standard therapy, 'Aggrastat' reduced the risk of heart
attacks and death by 30 percent at 30 days, and reduced the overall risk of
heart attacks by 47 percent at seven days. Recommendations of FDA advisory
committees are not necessarily indicative of final FDA approval.
- 7 -
<PAGE> 9
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
On February 24, 1998, the Board of Directors declared a quarterly dividend of 45
cents a share on the Company's common stock which was paid April 1 to
stockholders of record at the close of business on March 6. The Company's total
dividend paid to date in 1998 is 90 cents per share, a 10 percent increase over
the amount paid during the same period in 1997.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
This report and other written reports and oral statements made from time to time
by the Company may contain so-called "forward-looking statements," all of which
are subject to risks and uncertainties. One can identify these forward-looking
statements by their use of words such as "expects," "plans," "will,"
"estimates," "forecasts," "projects" and other words of similar meaning. One
can also identify them by the fact that they do not relate strictly to
historical or current facts. These statements are likely to address the
Company's growth strategy, financial results, product approvals and
development programs. One must carefully consider any such statement and should
understand that many factors could cause actual results to differ from the
Company's forward-looking statements. These factors include inaccurate
assumptions and a broad variety of other risks and uncertainties, including
some that are known and some that are not. No forward-looking statement can be
guaranteed and actual future results may vary materially.
The Company does not assume the obligation to update any forward-looking
statement. One should carefully evaluate such statements in light of factors
described in the Company's filings with the Securities and Exchange Commission,
especially on Forms 10-K, 10-Q and 8-K (if any). In Item 1 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, as filed on
March 25, 1998, the Company discusses in more detail various important factors
that could cause actual results to differ from expected or historic results. The
Company notes these factors for investors as permitted by the Private Securities
Litigation Reform Act of 1995. One should understand that it is not possible to
predict or identify all such factors. Consequently, the reader should not
consider any such list to be a complete statement of all potential risks or
uncertainties.
- 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 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
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 March 31, 1998, no current reports
on Form 8-K were filed.
- 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: May 12, 1998 /s/ Mary M. McDonald
--------------------
MARY M. MCDONALD
Senior Vice President and General Counsel
Date: May 12, 1998 /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
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
<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 Years Ended December 31
March 31 ----------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Income Before Taxes $1,635.2 $6,462.3 $5,540.8 $4,797.2 $4,415.2 $3,102.7
Add:
One-third of rents 11.8 47.0 41.0 28.1 36.0 35.0
Interest expense, net 28.9 98.2 103.2 60.3 96.0 48.0
Preferred stock dividends .4 49.6 70.0 2.1 -- --
-------- -------- -------- -------- -------- --------
Earnings $1,676.3 $6,657.1 $5,755.0 $4,887.7 $4,547.2 $3,185.7
======== ======== ======== ======== ======== ========
One-third of rents $11.8 $ 47.0 $ 41.0 $ 28.1 $ 36.0 $ 35.0
Interest expense 39.2 129.5 138.6 98.7 124.4 84.7
Preferred stock dividends .4 49.6 70.0 2.1 -- --
-------- -------- -------- -------- -------- --------
Fixed Charges $51.4 $226.1 $249.6 $128.9 $160.4 $119.7
======== ======== ======== ======== ======== ========
Ratio of Earnings
to Fixed Charges 33 29 23 38 28 27
== == == == == ==
</TABLE>
For purposes of computing these ratios, "earnings" consist of income before
taxes, 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
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
THE CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 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-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,597
<SECURITIES> 1,213
<RECEIVABLES> 2,574
<ALLOWANCES> 0<F1>
<INVENTORY> 2,079
<CURRENT-ASSETS> 8,387
<PP&E> 10,329
<DEPRECIATION> (3,584)
<TOTAL-ASSETS> 26,400
<CURRENT-LIABILITIES> 4,879
<BONDS> 1,845
0
0
<COMMON> 5,316
<OTHER-SE> 7,830
<TOTAL-LIABILITY-AND-EQUITY> 26,400
<SALES> 6,059
<TOTAL-REVENUES> 6,059
<CGS> 3,236
<TOTAL-COSTS> 3,236
<OTHER-EXPENSES> 389
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 1,635
<INCOME-TAX> 471
<INCOME-CONTINUING> 1,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,164
<EPS-PRIMARY> .97
<EPS-DILUTED> .95
<FN>
<F1>NOT MATERIAL TO THE CONSOLIDATED FINANCIAL STATEMENTS.
</FN>
</TABLE>
