<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------
FORM 10-K/A
AMENDMENT TO FORM 10-K ANNUAL REPORT
Filed pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
------------------
MERCK & CO., INC.
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its annual report on Form 10-K for the
fiscal year ended December 31, 1998 as set forth below:
1. Add Exhibit Numbers 99(a), 99(b) and 99(c) as follows:
<TABLE>
<CAPTION>
EXHIBIT METHOD OF
NUMBER DESCRIPTION FILING
<C> <S> <C>
99(a) -- Financial statements and exhibits Filed with this Form 10-K/A Amendment
required by Form 11-K Annual Report
pursuant to Section 15(d) of the
Securities Exchange Act of 1934 for
the Merck & Co., Inc. Employee
Savings and Security Plan for the
fiscal year ended December 31, 1998
99(b) -- Financial statements and exhibits Filed with this Form 10-K/A Amendment
required by Form 11-K Annual Report
pursuant to Section 15(d) of the
Securities Exchange Act of 1934 for
the Merck & Co., Inc. Employee Stock
Purchase and Savings Plan for the
fiscal year ended December 31, 1998
99(c) -- Financial statements and exhibits Filed with this Form 10-K/A Amendment
required by Form 11-K Annual Report
pursuant to Section 15(d) of the
Securities Exchange Act of 1934 for
the Merck Puerto Rico Employee
Savings and Security Plan for the
fiscal year ended December 31, 1998
</TABLE>
2
<PAGE> 3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
MERCK & CO., INC.
Dated: June 10, 1999
By RAYMOND V. GILMARTIN
(CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER)
By /s/CELIA A. COLBERT
CELIA A. COLBERT
(ATTORNEY-IN-FACT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
RAYMOND V. GILMARTIN Chairman of the Board,
President and Chief
Executive Officer;
Principal Executive
Officer; Director
JUDY C. LEWENT Senior Vice President
and Chief Financial
Officer; Principal
Financial Officer
RICHARD C. HENRIQUES, JR. Vice President, Controller; June 10, 1999
Principal Accounting
Officer
H. BREWSTER ATWATER, JR.
DEREK BIRKIN
LAWRENCE A. BOSSIDY
WILLIAM G. BOWEN Directors
JOHNNETTA B. COLE
CAROLYNE K. DAVIS
LLOYD C. ELAM
CHARLES E. EXLEY, JR.
WILLIAM N. KELLEY
EDWARD M. SCOLNICK
SAMUEL O. THIER
DENNIS WEATHERSTONE
</TABLE>
CELIA A. COLBERT, BY SIGNING HER NAME HERETO, DOES HEREBY SIGN THIS
DOCUMENT PURSUANT TO POWERS OF ATTORNEY DULY EXECUTED BY THE PERSONS NAMED,
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AS AN EXHIBIT TO FORM 10-K, ON
BEHALF OF SUCH PERSONS, ALL IN THE CAPACITIES AND ON THE DATE STATED, SUCH
PERSONS INCLUDING A MAJORITY OF THE DIRECTORS OF THE COMPANY.
By /s/CELIA A. COLBERT
CELIA A. COLBERT
(ATTORNEY-IN-FACT)
3
<PAGE> 1
EXHIBIT 99(A)
FINANCIAL STATEMENTS AND EXHIBITS
REQUIRED BY FORM 11-K ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-3305
---------------------
MERCK & CO., INC. EMPLOYEE SAVINGS AND SECURITY PLAN
(FULL TITLE OF THE PLAN)
MERCK & CO., INC.
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE
PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE)
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Merck & Co., Inc.:
We have audited the accompanying statements of net assets available for
benefits of the Merck & Co., Inc. Employee Savings and Security Plan (the
"Plan") as of December 31, 1998 and 1997, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1998. These
financial statements and the schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
May 7, 1999
1
<PAGE> 3
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
---------------------------------
(NON-PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY
DIRECTED; SEE DIRECTED; SEE BLUE CHIP EQUITY-
TOTAL NOTE 1) NOTE 1) GROWTH FUND INCOME FUND
----- ---------------- ------------- ------------- -----------
DECEMBER 31, 1998
- ----------------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value.................. $2,808,322,824 $381,511,822 $1,431,648,885 $258,360,153 $47,329,139
-------------- ------------ -------------- ------------ -----------
Receivables
Employer's contribution.................... 3,461,459 1,649,385 673,600 236,072 60,576
Participants' contributions................ 7,883,239 -- 4,716,802 851,204 155,933
Accrued interest and dividends............. 6,753,854 1,371,484 5,200,090 -- --
-------------- ------------ -------------- ------------ -----------
Total receivables........................ 18,098,552 3,020,869 10,590,492 1,087,276 216,509
-------------- ------------ -------------- ------------ -----------
Net assets available for benefits.............. $2,826,421,376 $384,532,691 $1,442,239,377 $259,447,429 $47,545,648
============== ============ ============== ============ ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
2
<PAGE> 4
<TABLE>
<CAPTION>
FIDELITY T. ROWE PRICE
VANGUARD GROWTH & T. ROWE PRICE MID-CAP EUROPACIFIC
U.S. GROWTH INCOME NEW INCOME GROWTH GROWTH
PORTFOLIO PORTFOLIO FUND FUND FUND
----------- --------- ------------- ------------- ---------
(PARTICIPANT DIRECTED; SEE NOTE 1)
--------------------------------------------------------------------------
DECEMBER 31, 1998
- -----------------------------------------------
<S> <S> <C> <C> <C> <C>
Assets:
Investments at market value.................. $99,320,583 $131,666,327 $35,018,892 $49,950,611 $36,734,926
---------- ----------- ----------- ----------- ----------
Receivables
Employer's contribution.................... 132,228 165,112 39,807 78,921 62,306
Participants' contributions................ 327,226 433,793 115,375 164,569 121,028
Accrued interest and dividends............. -- -- -- -- --
---------- ----------- ----------- ----------- ----------
Total receivables........................ 459,454 598,905 155,182 243,490 183,334
---------- ----------- ----------- ----------- ----------
Net assets available for benefits.............. $99,780,037 $132,265,232 $35,174,074 $50,194,101 $36,918,260
========== ============ =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
THE GEORGE FIDELITY SPARTAN FIDELITY
PUTNAM RETIREMENT U.S. EQUITY LOW-PRICED
FUND OF MONEY INDEX STOCK
BOSTON A MARKET FUND FUND
---------- ---------- ----------- -----------
(PARTICIPANT DIRECTED; SEE NOTE 1)
-----------------------------------------------------
DECEMBER 31, 1998
- -----------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at market value.................. $63,465,586 $117,289,314 $65,100,203 $12,095,805
---------- ----------- ---------- ----------
Receivables
Employer's contribution.................... 59,537 85,152 93,113 28,038
Participants' contributions................ 209,096 386,426 214,482 39,851
Accrued interest and dividends............. -- -- -- --
---------- ----------- ---------- ----------
Total receivables........................ 268,633 471,578 307,595 67,889
---------- ----------- ---------- ----------
Net assets available for benefits.............. $63,734,219 $117,760,892 $65,407,798 $12,163,694
========== =========== ========== ==========
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
TEMPLETON
FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE PARTICIPANTS'
SMALL CAP VOYAGER MARKETS DIVIDEND LOAN
GROWTH FUND I FUND A TRUST I GROWTH FUND ACCOUNT
------------- ------- ---------- ------------- -------------
-----------------------------------------------------------------------
DECEMBER 31, 1998
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value.................. $15,016,062 $12,728,332 $5,373,422 $11,637,914 $34,074,848
----------- ---------- --------- ----------- -----------
Receivables
Employer's contribution.................... 33,922 29,076 15,230 19,384 --
Participants' contributions................ 49,473 41,935 17,703 38,343 --
Accrued interest and dividends............. -- -- -- -- 182,280
----------- ---------- --------- ----------- -----------
Total receivables........................ 83,395 71,011 32,933 57,727 182,280
----------- ---------- --------- ----------- -----------
Net assets available for benefits.............. $15,099,457 $12,799,343 $5,406,355 $11,695,641 $34,257,128
=========== ========== ========= =========== ===========
</TABLE>
4
<PAGE> 6
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
----------------------------------
(NON-PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY
DIRECTED; SEE DIRECTED; SEE BLUE CHIP MAGELLAN
TOTAL NOTE 1) NOTE 1) GROWTH FUND FUND
----- ---------------- ------------- ------------- --------
DECEMBER 31, 1997
- ----------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...... $2,134,239,587 $272,483,529 $1,104,221,533 $198,764,539 $ --
-------------- ------------ -------------- ------------ ------------
Receivables
Employer's contribution........ 3,137,907 1,493,644 624,444 229,381 --
Participants' contributions.... 7,083,498 -- 4,281,527 770,693 --
Accrued interest and
dividends.................... 6,147,371 1,168,119 4,787,193 -- --
-------------- ------------ -------------- ------------ ------------
Total receivables............ 16,368,776 2,661,763 9,693,164 1,000,074 --
-------------- ------------ -------------- ------------ ------------
Net assets available for
benefits......................... $2,150,608,363 $275,145,292 $1,113,914,697 $199,764,613 $ --
============== ============ ============== ============ ============
<CAPTION>
FIDELITY VANGUARD
EQUITY- U.S. GROWTH
INCOME FUND PORTFOLIO
----------- -----------
- -----------------------------------
<S> <C> <C>
Assets:
Investments at market value...... $44,321,055 $58,316,674
----------- -----------
Receivables
Employer's contribution........ 61,817 105,747
Participants' contributions.... 171,851 226,118
Accrued interest and
dividends.................... -- --
----------- -----------
Total receivables............ 233,668 331,865
----------- -----------
Net assets available for
benefits......................... $44,554,723 $58,648,539
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
5
<PAGE> 7
<TABLE>
<CAPTION>
T. ROWE
FIDELITY FIDELITY FIDELITY PRICE
GROWTH GROWTH & T. ROWE PRICE FIDELITY RETIREMENT MID-CAP
COMPANY INCOME NEW INCOME INTERMEDIATE GROWTH GROWTH
FUND PORTFOLIO FUND BOND FUND FUND FUND
-------- --------- ------------- ------------ ---------- -------
(PARTICIPANT DIRECTED; SEE NOTE 1)
-----------------------------------------------------------------------------------------
DECEMBER 31, 1997
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value...... $ -- $98,415,031 $24,839,606 $ -- $ -- $38,576,112
---------- ---------- ----------- ----------- ---------- ----------
Receivables
Employer's contribution........ -- 156,268 33,889 -- -- 74,682
Participants' contributions.... -- 381,596 96,313 -- -- 149,576
Accrued interest and
dividends.................... -- -- -- -- -- --
---------- ---------- ----------- ----------- ---------- ----------
Total receivables............ -- 537,864 130,202 -- -- 224,258
---------- ---------- ----------- ----------- ---------- ----------
Net assets available for $ -- $98,952,895 $24,969,808 $ -- $ -- $38,800,370
benefits......................... ========== ========== =========== =========== ========== ==========
<CAPTION>
FIDELITY THE GEORGE
FIDELITY EUROPACIFIC GROWTH FIDELITY PUTNAM
OTC GROWTH COMPANY OVERSEAS FUND OF
PORTFOLIO FUND FUND FUND BOSTON A
--------- ----------- -------- -------- ----------
(PARTICIPANT DIRECTED; SEE NOTE 1)
--------------------------------------------------------------------
- -----------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...... $ -- $31,038,262 $ -- $ -- $58,439,910
---------- ---------- ---------- ---------- ----------
Receivables
Employer's contribution........ -- 65,502 -- -- 58,051
Participants' contributions.... -- 120,248 -- -- 226,596
Accrued interest and
dividends.................... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total receivables............ -- 183.930 -- 26.801 192.059
---------- ---------- ---------- ---------- ----------
Net assets available for
benefits......................... $ -- $31,224,192 $ -- $ -- $58,724,557
========== =========== ========== ========== ==========
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
FIDELITY FIDELITY SPARTAN FIDELITY
FIDELITY RETIREMENT RETIREMENT U.S. EQUITY LOW-PRICED FRANKLIN
BALANCED MONEY GOVERNMENT INDEX STOCK SMALL CAP
FUND MARKET MONEY MARKET FUND FUND GROWTH FUND I
-------- ---------- ------------ ----------- ---------- -------------
------------------------------------------------------------------------------------------
DECEMBER 31, 1997
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value...... $ -- $86,580,252 $ -- $44,776,486 $11,112,462 $12,159,638
---------- ---------- ----------- ---------- ---------- -----------
Receivables
Employer's contribution........ -- 75,937 -- 75,937 20,083 23,848
Participants' contributions.... -- 335,708 -- 173,617 43,088 47,148
Accrued interest and
dividends.................... -- -- -- -- -- --
---------- ---------- ----------- ---------- ---------- -----------
Total receivables............ -- 411,645 -- 249,554 63,171 70,996
---------- ---------- ----------- ---------- ---------- -----------
Net assets available for
benefits......................... $ -- $86,991,897 $ -- $45,026,040 $11,175,633 $12,230,634
========== ========== =========== ========== ========== ===========
<CAPTION>
TEMPLETON
PUTNAM DEVELOPING FIDELITY T. ROWE PRICE PARTICIPANTS'
VOYAGER MARKETS BALANCED DIVIDEND LOAN
FUND A TRUST I FUND GROWTH FUND ACCOUNT
------- ---------- -------- ------------- -------------
- -----------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...... $ 5,696,444 $ 4,713,493 -- $ 4,888,735 $34,895,826
---------- ---------- ---------- ----------- -----------
Receivables
Employer's contribution........ 15,690 15,062 -- 7,845 --
Participants' contributions.... 22,087 18,276 -- 18,956 --
Accrued interest and
dividends.................... -- -- -- 192,059
---------- ---------- ---------- ----------- -----------
Total receivables............ 37,777 33,338 -- 26,801 192,059
---------- ---------- ---------- ----------- -----------
Net assets available for
benefits......................... $ 5,734,221 $ 4,746,831 -- $ 4,915,536 $35,087,885
========== =========== ========== =========== ===========
</TABLE>
7
<PAGE> 9
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
-----------------------
(NON-
PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY VANGUARD
DIRECTED; SEE DIRECTED; SEE BLUE CHIP EQUITY- U.S. GROWTH
TOTAL NOTE 1) NOTE 1) GROWTH FUND INCOME FUND PORTFOLIO
-------------- ------------- ------------- ------------- ----------- -----------
YEAR ENDED DECEMBER 31, 1998
- ------------------------------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets attributed
to:
Investment income
Net appreciation (depreciation)
in
market value of investments... $ 631,799,708 $106,270,630 $ 408,504,841 $ 52,772,980 $ 2,530,053 $19,189,340
Interest........................ 3,016,847 79,023 1,545,728 382,928 69,568 130,557
Dividends....................... 64,621,385 5,998,910 18,308,196 4,153,247 2,697,677 6,146,982
-------------- ------------ -------------- ------------ ----------- -----------
Total investment income
(loss)...................... 699,437,940 112,348,563 428,358,765 57,309,155 5,297,298 25,466,879
-------------- ------------ -------------- ------------ ----------- -----------
Contributions to the Plan
By participants................. 115,124,066 -- 43,884,054 13,946,071 4,001,088 8,114,697
By the employer................. 43,546,282 20,646,232 8,499,733 3,060,773 814,150 1,564,420
-------------- ------------ -------------- ------------ ----------- -----------
Total contributions........... 158,670,348 20,646,232 52,383,787 17,006,844 4,815,238 9,679,117
-------------- ------------ -------------- ------------ ----------- -----------
Total additions............... 858,108,288 132,994,795 480,742,552 74,315,999 10,112,536 35,145,996
-------------- ------------ -------------- ------------ ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants..... (115,762,425) (14,832,225) (53,258,583) (7,482,088) (1,856,020) (2,567,789)
-------------- ------------ -------------- ------------ ----------- -----------
Transfers among funds and Plans:
Net reallocations................. (66,532,850) (8,613,566) (97,734,901) (7,212,339) (5,235,198) 8,648,714
Loans to participants............. -- (224,743) (7,781,191) (1,497,250) (311,442) (647,922)
Loan repayments by participants... -- 63,138 6,356,803 1,558,494 281,049 552,499
-------------- ------------ -------------- ------------ ----------- -----------
Net transfers among funds and
Plans....................... (66,532,850) (8,775,171) (99,159,289) (7,151,095) (5,265,591) 8,553,291
-------------- ------------ -------------- ------------ ----------- -----------
Total deductions and net
transfers
among funds and Plans....... (182,295,275) (23,607,396) (152,417,872) (14,633,183) (7,121,611) 5,985,502
-------------- ------------ -------------- ------------ ----------- -----------
Net increase (decrease)..... 675,813,013 109,387,399 328,324,680 59,682,816 2,990,925 41,131,498
Net assets available for benefits
Beginning of year........... 2,150,608,363 275,145,292 1,113,914,697 199,764,613 44,554,723 58,648,539
-------------- ------------ -------------- ------------ ----------- -----------
End of year................. $2,826,421,376 $384,532,691 $1,442,239,377 $259,447,429 $47,545,648 $99,780,037
============== ============ ============== ============ =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
8
<PAGE> 10
<TABLE>
<CAPTION>
FIDELITY FIDELITY
GROWTH & T. ROWE PRICE T. ROWE PRICE THE GEORGE RETIREMENT SPARTAN U.S.
INCOME NEW INCOME MID-CAP EUROPACIFIC PUTNAM FUND MONEY EQUITY INDEX
PORTFOLIO FUND GROWTH FUND GROWTH FUND OF BOSTON A MARKET FUND
--------- ------------- ------------- ----------- ----------- ---------- ------------
YEAR ENDED DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation) in
market value of
investments................ $ 21,198,292 $ (995,420) $ 7,482,070 $ 2,668,708 $ 193,858 $ -- $12,251,037
Interest..................... 191,951 42,290 83,747 76,989 106,066 131,579 89,423
Dividends.................... 6,899,853 2,346,887 1,041,930 1,974,488 5,885,452 5,288,736 1,158,513
------------ ----------- ----------- ----------- ------------ ------------ -----------
Total investment income
(loss)................... 28,290,096 1,393,757 8,607,747 4,720,185 6,185,376 5,420,315 13,498,973
------------ ----------- ----------- ----------- ------------ ------------ -----------
Contributions to the Plan
By participants.............. 10,308,118 2,481,714 4,949,702 4,080,173 3,545,168 5,236,280 5,954,830
By the employer.............. 2,136,285 480,900 1,010,937 831,454 780,827 1,037,547 1,139,885
------------ ----------- ----------- ----------- ------------ ------------ -----------
Total contributions........ 12,444,403 2,962,614 5,960,639 4,911,627 4,325,995 6,273,827 7,094,715
------------ ----------- ----------- ----------- ------------ ------------ -----------
Total additions............ 40,734,499 4,356,371 14,568,386 9,631,812 10,511,371 11,694,142 20,593,688
------------ ----------- ----------- ----------- ------------ ------------ -----------
Deductions from net assets
attributed to:
Benefits paid to participants.. (4,908,589) (1,197,574) (1,747,577) (966,416) (2,018,908) (19,189,103) (2,905,213)
------------ ----------- ----------- ----------- ------------ ------------ -----------
Transfers among funds and Plans:
Net reallocations.............. (2,542,045) 7,007,602 (1,486,641) (3,044,440) (3,543,399) 38,718,344 2,632,320
Loans to participants.......... (733,892) (140,418) (322,754) (301,010) (350,914) (1,078,285) (338,237)
Loan repayments by
participants................. 762,364 178,285 382,317 374,122 411,512 623,897 399,200
------------ ----------- ----------- ----------- ------------ ------------ -----------
Net transfers among funds
and Plans................ (2,513,573) 7,045,469 (1,427,078) (2,971,328) (3,482,801) 38,263,956 2,693,283
------------ ----------- ----------- ----------- ------------ ------------ -----------
Total deductions and net
transfers among funds
and Plans................ (7,422,162) 5,847,895 (3,174,655) (3,937,744) (5,501,709) 19,074,853 (211,930)
------------ ----------- ----------- ----------- ------------ ------------ -----------
Net increase (decrease).. 33,312,337 10,204,266 11,393,731 5,694,068 5,009,662 30,768,995 20,381,758
Net assets available for benefits
Beginning of year........ 98,952,895 24,969,808 38,800,370 31,224,192 58,724,557 86,991,897 45,026,040
------------ ----------- ----------- ----------- ------------ ------------ -----------
End of year.............. $132,265,232 $35,174,074 $50,194,101 $36,918,260 $ 63,734,219 $117,760,892 $65,407,798
============ =========== =========== =========== ============ ============ ===========
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
TEMPLETON
FIDELITY FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
LOW-PRICED SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
STOCK FUND GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
---------- ------------- ------- ---------- ------------- -------------
YEAR ENDED DECEMBER 31, 1998
- --------------------------------- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation) in
market value of
investments................ $(1,107,929) $ (35,688) $ 1,275,638 $(1,159,030) $ 760,328 $ --
Interest..................... 19,808 24,245 15,955 15,587 11,403 --
Dividends.................... 1,044,904 212,877 844,369 110,673 507,691 --
----------- ----------- ----------- ----------- ----------- -----------
Total investment income
(loss)................... (43,217) 201,434 2,135,962 (1,032,770) 1,279,422 --
----------- ----------- ----------- ----------- ----------- -----------
Contributions to the Plan
By participants.............. 1,979,735 2,346,667 1,925,634 1,084,568 1,285,567 --
By the employer.............. 352,930 430,889 328,447 206,254 224,619 --
----------- ----------- ----------- ----------- ----------- -----------
Total contributions........ 2,332,665 2,777,556 2,254,081 1,290,822 1,510,186 --
----------- ----------- ----------- ----------- ----------- -----------
Total additions............ 2,289,448 2,978,990 4,390,043 258,052 2,789,608 --
----------- ----------- ----------- ----------- ----------- -----------
Deductions from net assets
attributed to:
Benefits paid to participants.. (863,908) (342,473) (171,283) (88,732) (282,230) (1,083,714)
----------- ----------- ----------- ----------- ----------- -----------
Transfers among funds and Plans:
Net reallocations.............. (515,675) 156,714 2,837,066 437,984 4,234,546 (1,277,936)
Loans to participants.......... (81,121) (64,609) (76,991) (27,249) (31,772) 14,009,800
Loan repayments by
participants................. 159,317 140,201 86,287 79,469 69,953 (12,478,907)
----------- ----------- ----------- ----------- ----------- -----------
Net transfers among funds
and Plans................ (437,479) 232,306 2,846,362 490,204 4,272,727 252,957
----------- ----------- ----------- ----------- ----------- -----------
Total deductions and net
transfers among funds
and Plans................ (1,301,387) (110,167) 2,675,079 401,472 3,990,497 (830,757)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease).. 988,061 2,868,823 7,065,122 659,524 6,780,105 (830,757)
Net assets available for benefits
Beginning of year........ 11,175,633 12,230,634 5,734,221 4,746,831 4,915,536 35,087,885
----------- ----------- ----------- ----------- ----------- -----------
End of year.............. $12,163,694 $15,099,457 $12,799,343 $ 5,406,355 $11,695,641 $34,257,128
=========== =========== =========== =========== =========== ===========
</TABLE>
10
<PAGE> 12
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
The Merck & Co., Inc. Employee Savings and Security Plan (the "Plan") was
designed to provide an easy, economical way for employees to become stockholders
of Merck & Co., Inc. (the "Company" or "Merck") as well as a systematic means of
saving and investing for the future. Regular full-time, part-time, and temporary
employees of the Company and of certain wholly-owned subsidiaries as defined by
the Plan document who were not covered by a collective bargaining agreement are
eligible to enroll in the Plan as of the first day of the third month following
their date of hire.
The Plan is administered by a management committee appointed by the Chief
Executive Officer of the Company. All costs of administering the Plan are borne
by the Company.
Participants should refer to the Summary Plan Description for a complete
description of benefits provided.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may contribute from 2% up to 15% of their base pay. In
addition, the Company matches 75% of employee contributions up to 6% of base pay
per pay period. Company matching contributions are invested according to the
following age parameters:
Under age 50 -- 50% of Company matching contributions is invested in the
Merck Common Stock Fund (Non-participant directed) and 50% is invested in the
funds to which the participant is currently contributing (Participant directed).
Age 50 and above -- Participants have the option to invest all Company
matching contributions in any of the available fund options (Participant
directed).
INVESTMENT OPTIONS
Participants direct the investment of their contributions into any
investment option including the Merck Common Stock Fund (Participant directed).
Participants should refer to each investment fund's prospectus for a more
complete description of the risks and strategies associated with each fund.
Participants may change their investment options daily. The following is a brief
description of each option:
Merck Common Stock Fund
The Merck Common Stock Fund invests primarily in Merck common stock and a
small portion of money market instruments for liquidity. This liquidity allows
for daily trading in the fund. Ownership is measured in units rather than
shares. An investment in this option allows the participant to become a
stockholder and part owner of the Company. The value of the investment can go up
or down depending on general factors affecting the stock market and specific
factors affecting the Company's business. This is neither a mutual fund nor a
diversified or managed investment option. Investing in a non-diversified single
stock involves more investment risk than investing in a diversified fund.
T. Rowe Price Blue Chip Growth Fund
The T. Rowe Price Blue Chip Growth Fund seeks to provide long-term growth
of capital. The fund invests primarily (at least 65% of its assets) in common
stocks of large and medium-sized blue chip companies
11
<PAGE> 13
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
that have the potential for above-average earnings growth and are well
established in their respective industries. The fund may also invest in
convertible stocks and bonds, preferred stocks, bonds and warrants. Up to 20% of
assets (excluding reserves) may be invested in foreign securities, which may be
subject to currency risks and political and sovereign risks of the home country.
Fidelity Equity-Income Fund
Funds are invested in income-producing equity securities. Normally, at
least 65% of the fund's assets will be invested in income producing equity
securities. The fund has the flexibility to invest the balance in all types of
domestic and foreign securities, including bonds.
Vanguard U.S. Growth Portfolio
The Vanguard U.S. Growth Portfolio seeks to provide long-term capital
growth by investing in equity securities of large, established U.S. companies
that have good growth records, strong market positions and have exhibited
long-term financial strength to provide potential long-term growth.
Fidelity Growth & Income Portfolio
Funds are invested primarily in U.S. and foreign stocks, focusing on those
that pay current dividends and offer potential growth of earnings such as common
stocks, convertible securities, preferred stocks and warrants.
T. Rowe Price New Income Fund
The T. Rowe Price New Income Fund is a bond fund that seeks to provide the
highest level of income consistent with preservation of capital by purchasing
securities that have been rated as investment-grade by Standard & Poor's,
Moody's or Fitch Investor Services. The fund invests at least 80% of its assets
in income-producing investment-grade debt securities including U.S. government
and agency securities, corporate bonds, bank obligations and utilities. The
fund's dollar-weighted average maturity is generally expected to be between four
and fifteen years.
T. Rowe Price Mid-Cap Growth Fund
The T. Rowe Price Mid-Cap Growth Fund seeks to provide long-term capital
appreciation by investing primarily in the stock of medium-sized (mid-cap)
growth companies that offer the potential for above-average earnings growth. The
fund focuses on companies that are no longer considered new or emerging, but are
well-established. It may also invest in convertible securities, warrants and
foreign securities, which are subject to greater risks.
EuroPacific Growth Fund
This fund seeks long-term capital growth by investing primarily in
securities of companies outside the United States. Normally, at least 65% of the
fund's total assets will be invested in Europe or the Pacific Basin. The Pacific
Basin is generally defined as those countries bordering the Pacific Ocean and
includes, but is not limited to Australia, Canada, Japan, Malaysia and
Singapore. The fund may also invest in convertible securities, debt and
government securities and preferred stock. Foreign investments, especially in
developing countries, involve greater risks and may offer greater potential.
12
<PAGE> 14
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The George Putnam Fund of Boston A
This fund seeks to provide a balanced investment comprised of a
well-diversified portfolio of stocks and bonds that will produce both capital
growth and current income. Normally, no more than 75% of the fund's assets will
be invested in common stocks and convertible securities.
Fidelity Retirement Money Market
Funds are invested in high-quality U.S. dollar-denominated money market
instruments of U.S. and foreign issuers. Normally, the fund intends to invest
more than 25% of its total assets in obligations of institutions in the
financial services industry.
Spartan U.S. Equity Index Fund
This fund seeks to provide investment results that correspond to the total
return performance of common stocks traded in the United States. Funds are
primarily invested in securities of the companies which comprise the S&P 500
Index.
Fidelity Low-Priced Stock Fund
This fund seeks capital appreciation by investing mainly in low-priced
domestic and foreign common stocks ($35 or less at time of purchase). Foreign
securities may involve a higher degree of risk. This fund charges a redemption
fee to discourage short-term buying and selling of fund shares. If fund shares
are sold after being held for less than 90 days, the fund will deduct a
redemption fee from participants' accounts equal to 1.5% of the value of the
shares sold.
Franklin Small Cap Growth Fund I
This fund seeks long-term capital growth by investing primarily in stocks
of companies with market capitalization of less than $1.5 billion at the time of
the investment. Although the fund's assets are invested primarily in small
companies, it may invest up to 35% of its total assets in larger capitalized
companies with strong growth potential, in relatively well-known larger
companies in mature industries with potential for capital appreciation, and in
corporate debt securities, including bonds, notes and debentures if deemed
appropriate. The fund may also invest up to 25% of its total assets in foreign
securities, which may involve greater risks.
Effective January 1, 1999, the Franklin Small Cap Growth Fund I shares were
changed to Class A.
Putnam Voyager Fund A
This fund seeks capital appreciation by investing primarily in common
stocks of companies that have potential for capital appreciation which is
significantly greater than that of the market averages. The fund may also invest
in convertible bonds, convertible preferred stocks, warrants, preferred stocks,
money market instruments and debt securities. The fund may invest up to 20% of
its total assets in securities principally traded in foreign markets. Foreign
securities are subject to currency, political, financial or sovereign risks of
the issuer's home country.
Templeton Developing Markets Trust I
This fund seeks long-term capitalization by investing in equity securities
of emerging market countries. The fund may invest up to 35% of its total assets
in debt securities, including bonds, notes, debentures,
13
<PAGE> 15
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
commercial paper, certificates of deposit, time deposits and bankers'
acceptances. Foreign investments may involve greater risks.
Effective January 1, 1999, the Templeton Developing Markets Trust I shares
were changed to Class A.
T. Rowe Price Dividend Growth Fund
This fund seeks to provide increasing dividend income over time, long-term
capital appreciation and reasonable current income through investments primarily
in dividend-paying stocks. The fund may also invest in bonds and foreign
securities.
VESTING
Participants are immediately vested in their contributions, all Company
matching contributions, plus actual earnings thereon.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974.
PARTICIPANTS' LOAN ACCOUNT
Participants may borrow from their account balances with interest charged
at the prime rate plus 1%. Loan terms range from one to five years or up to
thirty years for the purchase of a primary residence. The minimum loan is $500
and the maximum loan is the lesser of $50,000 less the highest outstanding loan
balance during the one year period prior to the new loan application date, or
50% of the participant's account balance less any current outstanding loan
balance. Activity related to these borrowings is reflected in the Participants'
Loan Account column of the financial statements.
BENEFITS PAID TO PARTICIPANTS
In-service (which include hardship withdrawals) and termination
distributions are made throughout the year in accordance with applicable Plan
provisions. At December 31, 1998 and 1997, net assets available for benefits
included distributions in process of payment of $1,816,514 and $3,134,986,
respectively.
2. SUMMARY OF ACCOUNTING POLICIES:
The financial statements of the Plan have been prepared on the accrual
basis of accounting. The investments of the Plan are stated at quoted market
value. Dividend income is recorded on the ex-dividend date. The net appreciation
(depreciation) in market value of investments is based on the beginning of the
year market value or value at the time of purchase during the year and is
included in the statement of changes in net assets available for benefits.
USE OF ESTIMATES
The financial statements are prepared in conformity with generally accepted
accounting principles and, accordingly, include amounts that are based on
management's best estimates and judgments. Actual results could differ from
these estimates.
14
<PAGE> 16
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. INCOME TAXES:
The Plan obtained a tax determination letter from the Internal Revenue
Service on September 18, 1995 indicating that it had been designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan was most
recently amended in May 1998. The Plan sponsor believes that the Plan is
designed and currently operated in compliance with the IRC. Therefore, no
provision for income taxes has been made.
4. OTHER MATTERS:
Net reallocations and transfers in 1998 of ($66,532,850) consist of (a)
($67,808,073) for employees in Merck's AgVet division and associated operations
who were transferred on January 1, 1998 to Merial Limited, a stand-alone joint
venture that is 50% owned by Merck & Co., Inc. and 50% owned by Rhone-Poulenc
SA, and whose fund accounts were transferred to Merial's savings plan, (b)
$1,272,189 transferred between the Plan and the Merck & Co., Inc. Stock Purchase
and Savings Plan for employees who changed their status during the year, (c)
$622,160 for employees who transferred from Merck-Medco Managed Care, L.L.C.
during the year, (d) ($158,338) transferred from the Plan to the Merck Puerto
Rico Employee Savings and Security Plan for employees who changed their status
during the year and (e) the remaining amount relates to miscellaneous net
transfers.
5. PARTY-IN-INTEREST:
All party-in-interest transactions are set forth on the attached schedules.
6. PROHIBITED TRANSACTIONS:
There were no prohibited transactions during 1998.
15
<PAGE> 17
SCHEDULE I
EIN: 22-1109110
PLAN NO.: 001
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
ITEM 27a -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
UNITS/SHARES AT
NAME OF ISSUER AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE
--------------------------------- --------------- -------------- -------------
<S> <C> <C> <C>
Merck Common Stock Fund*.................................... 71,924,065 $ 561,326,840 $1,813,160,707
T. Rowe Price Blue Chip Growth Fund......................... 8,443,142 193,462,888 258,360,153
Fidelity Equity-Income Fund................................. 852,023 38,341,714 47,329,139
Vanguard U.S. Growth Portfolio.............................. 2,649,255 80,294,605 99,320,583
Fidelity Growth & Income Portfolio.......................... 2,872,334 92,148,917 131,666,327
T. Rowe Price New Income Fund............................... 3,974,903 35,614,416 35,018,892
T. Rowe Price Mid-Cap Growth Fund........................... 1,465,687 40,440,928 49,950,611
EuroPacific Growth Fund..................................... 1,293,483 36,951,335 36,734,926
The George Putnam Fund of Boston A.......................... 3,518,048 63,975,373 63,465,586
Fidelity Retirement Money Market............................ 117,261,392 117,261,392 117,289,314
Spartan U.S. Equity Index Fund.............................. 1,480,900 45,377,760 65,100,203
Fidelity Low-Priced Stock Fund.............................. 529,357 12,957,386 12,095,805
Franklin Small Cap Growth Fund I............................ 665,311 15,200,710 15,016,062
Putnam Voyager Fund A....................................... 580,672 11,595,372 12,728,332
Templeton Developing Markets Trust I........................ 521,691 7,437,819 5,373,422
T. Rowe Price Dividend Growth Fund.......................... 528,756 10,867,188 11,637,914
Participants' Loan Account (with interest rates ranging from
9.0% to 9.5%)............................................. -- 34,074,848 34,074,848
-------------- --------------
Total Investments................................... $1,397,329,491 $2,808,322,824
============== ==============
</TABLE>
- ---------------
* Denotes a party-in-interest to the Plan.
16
<PAGE> 18
SCHEDULE II
EIN: 22-1109110
PLAN NO.: 001
MERCK & CO., INC.
EMPLOYEE SAVINGS AND SECURITY PLAN
ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(A)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE
OF ASSETS ON
IDENTITY OF PARTY INVOLVED AND DESCRIPTION OF PURCHASE COST OF TRANSACTION
ASSETS PRICE SELLING PRICE ASSET DATE NET GAIN
- --------------------------------------------- ------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Merck Common Stock Fund*
253 Purchase Transactions.............. $254,494,278 $ -- $254,494,278 $254,494,278 $ --
253 Sales Transactions................. -- 332,804,323 174,829,803 332,804,323 157,974,520
Fidelity Retirement Money Market
256 Purchase Transactions.............. 216,372,786 -- 216,372,786 216,372,786 --
252 Sales Transactions................. -- 185,663,496 185,663,496 185,663,496 --
</TABLE>
- ---------------
(a) Reportable transactions are transactions that, individually or in the
aggregate, exceed 5% of the Plan's net assets as of the beginning of the
Plan year.
* Denotes a party-in-interest to the Plan.
17
<PAGE> 19
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated May 7, 1999 included in the financial
statements and exhibits required by Form 11-K Annual Report for the Merck & Co.,
Inc. Employee Savings and Security Plan into the Company's previously filed
Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101,
33-40177, 33-51235, 33-53463, 33-64273, 33-64665, 333-23293 and 333-23295), on
Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785,
33-57421, 333-17045, 333-36383 and 333-77569). It should be noted that we have
not audited any financial statements of the Plan subsequent to December 31, 1998
or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
New York, New York
June 10, 1999
<PAGE> 1
EXHIBIT 99(B)
FINANCIAL STATEMENTS AND EXHIBITS
REQUIRED BY FORM 11-K ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-3305
---------------------
MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
(Full title of the plan)
MERCK & CO., INC.
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
(Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office)
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Merck & Co., Inc.:
We have audited the accompanying statements of net assets available for
benefits of the Merck & Co., Inc. Employee Stock Purchase and Savings Plan (the
"Plan") as of December 31, 1998 and 1997, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1998. These
financial statements and the schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
May 7, 1999
1
<PAGE> 3
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
-----------------------------
(NON- T. ROWE FIDELITY
PARTICIPANT (PARTICIPANT PRICE EQUITY-
DIRECTED; SEE DIRECTED; SEE BLUE CHIP INCOME
TOTAL NOTE 1) NOTE 1) GROWTH FUND FUND
----- ------------- ------------- ----------- --------
DECEMBER 31, 1998
- -------------------------------------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value........................... $366,805,677 $52,208,941 $254,671,562 $14,973,705 $2,176,087
------------ ----------- ------------ ----------- ----------
Receivables
Employer's contribution............................. 66,729 35,945 22,381 2,095 360
Participants' contributions......................... 237,677 -- 197,392 11,606 1,687
Accrued interest and dividends...................... 1,102,289 187,665 905,266 -- --
------------ ----------- ------------ ----------- ----------
Total receivables................................. 1,406,695 223,610 1,125,039 13,701 2,047
------------ ----------- ------------ ----------- ----------
Net assets available for benefits....................... $368,212,372 $52,432,551 $255,796,601 $14,987,406 $2,178,134
============ =========== ============ =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
2
<PAGE> 4
<TABLE>
<CAPTION>
FIDELITY THE GEORGE
VANGUARD GROWTH & T. ROWE PRICE T. ROWE PRICE PUTNAM
U.S. GROWTH INCOME NEW INCOME MID-CAP EUROPACIFIC FUND OF
PORTFOLIO PORTFOLIO FUND GROWTH FUND GROWTH FUND BOSTON A
----------- --------- ------------- ------------- ----------- ----------
DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value............ $3,771,723 $5,366,261 $1,461,033 $1,827,382 $1,889,995 $5,652,596
---------- ---------- ---------- ---------- ---------- ----------
Receivables
Employer's contribution.............. 744 881 287 354 367 834
Participants' contributions.......... 2,923 4,159 1,132 1,416 1,465 4,381
Accrued interest and dividends....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total receivables.................. 3,667 5,040 1,419 1,770 1,832 5,215
---------- ---------- ---------- ---------- ---------- ----------
Net assets available for benefits........ $3,775,390 $5,371,301 $1,462,452 $1,829,152 $1,891,827 $5,657,811
========== ========== ========== ========== ========== ==========
<CAPTION>
FIDELITY
VANGUARD RETIREMENT SPARTAN U.S. FIDELITY
U.S. GROWTH MONEY EQUITY INDEX LOW-PRICED
PORTFOLIO MARKET FUND STOCK FUND
----------- ---------- ------------ ----------
DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at market value........... $3,771,723 $10,010,154 $1,868,618 $436,243
---------- ----------- ---------- --------
Receivables
Employer's contribution............. 744 1,448 334 140
Participants' contributions......... 2,923 7,759 1,448 338
Accrued interest and dividends...... -- -- -- --
---------- ----------- ---------- --------
Total receivables................. 3,667 9,207 1,782 478
---------- ----------- ---------- --------
Net assets available for benefits....... $3,775,390 $10,019,361 $1,870,400 $436,721
========== =========== ========== ========
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
TEMPLETON
FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
------------- ------- ---------- ------------- -------------
DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets: $550,170 $1,100,487 $204,899 $687,684 $7,948,137
Investments at market value........................... -------- ---------- -------- -------- ----------
Receivables
Employer's contribution............................. 173 180 93 113 --
Participants' contributions......................... 426 853 159 533 --
Accrued interest and dividends...................... -- -- -- -- 9,358
-------- ---------- -------- -------- ----------
Total receivables................................. 599 1,033 252 646 9,358
-------- ---------- -------- -------- ----------
Net assets available for benefits....................... $550,769 $1,101,520 $205,151 $688,330 $7,957,495
======== ========== ======== ======== ==========
</TABLE>
4
<PAGE> 6
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
-----------------------------
(NON- T. ROWE FIDELITY
PARTICIPANT (PARTICIPANT PRICE FIDELITY EQUITY-
DIRECTED; SEE DIRECTED; SEE BLUE CHIP MAGELLAN INCOME
TOTAL NOTE 1) NOTE 1) GROWTH FUND FUND FUND
----- ------------- ------------- ----------- -------- --------
DECEMBER 31, 1997
- ------------------------------------------ ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value............. $269,920,909 $49,466,644 $173,227,643 $11,198,335 $ -- $1,895,866
------------ ----------- ------------ ----------- ----------- ----------
Receivables
Employer's contribution............... 77,521 77,521 -- -- -- --
Participants' contributions........... 360,190 -- 292,723 18,923 -- 3,204
Accrued interest and dividends........ 962,735 211,323 735,968 -- -- --
------------ ----------- ------------ ----------- ----------- ----------
Total receivables................... 1,400,446 288,844 1,028,691 18,923 -- 3,204
------------ ----------- ------------ ----------- ----------- ----------
Net assets available for benefits......... $271,321,355 $49,755,488 $174,256,334 $11,217,258 $ -- $1,899,070
============ =========== ============ =========== =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
5
<PAGE> 7
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY
VANGUARD GROWTH GROWTH & T. ROWE PRICE FIDELITY RETIREMENT
U.S. GROWTH COMPANY INCOME NEW INCOME INTERMEDIATE GROWTH
PORTFOLIO FUND PORTFOLIO FUND BOND FUND FUND
----------- -------- --------- ------------- ------------ ----------
DECEMBER 31, 1997 (PARTICIPANT DIRECTED; SEE NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value............. $2,006,198 $ -- $3,664,353 $966,177 $ -- $ --
---------- -------- ---------- -------- -------- --------
Receivables
Employer's contribution............... -- -- -- -- -- --
Participants' contributions........... 3,390 -- 6,192 1,633 -- --
Accrued interest and dividends........ -- -- -- -- -- --
---------- -------- ---------- -------- -------- --------
Total receivables................... 3,390 -- 6,192 1,633 -- --
---------- -------- ---------- -------- -------- --------
Net assets available for benefits......... $2,009,588 $ -- $3,670,545 $967,810 $ -- $ --
========== ======== ========== ======== ======== ========
<CAPTION>
T. ROWE PRICE VANGUARD FIDELITY FIDELITY
MID-CAP U.S. GROWTH OTC EUROPACIFIC OVERSEAS
GROWTH FUND PORTFOLIO PORTFOLIO GROWTH FUND FUND
------------- ----------- --------- ----------- --------
DECEMBER 31, 1997 (PARTICIPANT DIRECTED; SEE NOTE 1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value............. $1,591,041 $2,006,198 $ -- $1,349,190 $ --
---------- ---------- -------- ---------- --------
Receivables
Employer's contribution............... -- -- -- -- --
Participants' contributions........... 2,689 3,390 -- 2,280 --
Accrued interest and dividends........ -- -- -- -- --
---------- ---------- -------- ---------- --------
Total receivables................... 2,689 3,390 -- 2,280 --
---------- ---------- -------- ---------- --------
Net assets available for benefits......... $1,593,730 $2,009,588 $ -- $1,351,470 $ --
========== ========== ======== ========== ========
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
THE GEORGE FIDELITY FIDELITY
PUTNAM FIDELITY RETIREMENT RETIREMENT SPARTAN FIDELITY
FUND OF BALANCED MONEY GOVERNMENT U.S. EQUITY LOW-PRICED
BOSTON A FUND MARKET MONEY MARKET INDEX FUND STOCK FUND
DECEMBER 31, 1997 ---------- -------- ---------- ------------ ----------- ----------
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at market value............. $4,889,792 $ -- $9,317,599 $ -- $1,076,594 $460,669
---------- -------- ---------- -------- ---------- --------
Receivables
Employer's contribution............... -- -- -- -- -- --
Participants' contributions........... 8,263 -- 15,745 -- 1,819 778
Accrued interest and dividends........ -- -- -- -- -- --
---------- -------- ---------- -------- ---------- --------
Total receivables................... 8,263 -- 15,745 -- 1,819 778
---------- -------- ---------- -------- ---------- --------
Net assets available for benefits......... $4,898,055 $ -- $9,333,344 $ -- $1,078,413 $461,447
========== ======== ========== ======== ========== ========
<CAPTION>
TEMPLETON THE GEORGE
FRANKLIN PUTNAM DEVELOPING PUTNAM T. ROWE PRICE
SMALL CAP VOYAGER MARKETS FUND OF DIVIDEND PARTICIPANTS'
GROWTH FUND I FUND A TRUST I BOSTON A GROWTH FUND LOAN ACCOUNT
DECEMBER 31, 1997 ------------- ------- ---------- ---------- -------------- -------------
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <S> <C> <C>
Assets:
Investments at market value............. $492,967 $463,264 $250,691 $4,889,792 $302,591 $7,301,295
-------- -------- -------- ---------- -------- ----------
Receivables
Employer's contribution............... -- -- -- -- -- --
Participants' contributions........... 833 783 424 8,263 511 --
Accrued interest and dividends........ -- -- -- -- -- 15,444
-------- -------- -------- ---------- -------- ----------
Total receivables................... 833 783 424 8,263 511 15,444
-------- -------- -------- ---------- -------- ----------
Net assets available for benefits......... $493,800 $464,047 $251,115 $4,898,055 $303,102 $7,316,739
======== ======== ======== ========== ======== ==========
</TABLE>
7
<PAGE> 9
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
-----------------------------
(NON-
PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY
DIRECTED; SEE DIRECTED; SEE BLUE CHIP EQUITY-
TOTAL NOTE 1) NOTE 1) GROWTH FUND INCOME FUND
----- ------------- ------------- ------------- -----------
YEAR ENDED DECEMBER 31, 1998
- --------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Net appreciation (depreciation) in market value
of investments................................. $ 90,404,944 $ 7,502,221 $ 77,336,318 $ 3,065,873 $ 117,433
Interest......................................... 680,316 83,269 459,741 43,489 4,545
Dividends........................................ 6,353,557 785,812 3,300,319 239,713 120,389
------------ ----------- ------------ ----------- ----------
Total investment income (loss)................. 97,438,817 8,371,302 81,096,378 3,349,075 242,367
------------ ----------- ------------ ----------- ----------
Contributions to the Plan
By participants.................................. 16,195,706 -- 10,776,108 1,270,416 252,057
By the employer.................................. 3,308,056 2,030,182 945,031 84,384 14,563
------------ ----------- ------------ ----------- ----------
Total contributions............................ 19,503,762 2,030,182 11,721,139 1,354,800 266,620
------------ ----------- ------------ ----------- ----------
Total additions................................ 116,942,579 10,401,484 92,817,517 4,703,875 508,987
------------ ----------- ------------ ----------- ----------
Deductions from net assets attributed to:
Benefits paid to participants...................... (18,779,373) (3,460,117) (10,504,664) (545,448) (109,094)
------------ ----------- ------------ ----------- ----------
Transfers among funds and Plans:
Net reallocations.................................. (1,272,189) (4,402,680) 29,322 (384,290) (111,900)
Loans to participants.............................. -- (222,872) (2,767,081) (176,340) (24,931)
Loan repayments by participants.................... -- 361,248 1,965,173 172,351 16,002
------------ ----------- ------------ ----------- ----------
Net transfers among funds and Plans............ (1,272,189) (4,264,304) (772,586) (388,279) (120,829)
------------ ----------- ------------ ----------- ----------
Total deductions and net transfers among funds
and Plans.................................... (20,051,562) (7,724,421) (11,277,250) (933,727) (229,923)
------------ ----------- ------------ ----------- ----------
Net increase (decrease)...................... 96,891,017 2,677,063 81,540,267 3,770,148 279,064
Net assets available for benefits
Beginning of year............................ 271,321,355 49,755,488 174,256,334 11,217,258 1,899,070
------------ ----------- ------------ ----------- ----------
End of year.................................. $368,212,372 $52,432,551 $255,796,601 $14,987,406 $2,178,134
============ =========== ============ =========== ==========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
8
<PAGE> 10
<TABLE>
<CAPTION>
FIDELITY THE GEORGE FIDELITY
VANGUARD GROWTH & T. ROWE PRICE T. ROWE PRICE EUROPACIFIC PUTNAM RETIREMENT
U.S. GROWTH INCOME NEW INCOME MID-CAP GROWTH FUND OF MONEY
PORTFOLIO PORTFOLIO FUND GROWTH FUND FUND BOSTON A MARKET
----------- --------- ------------- ------------- ----------- ----------- -----------
YEAR ENDED DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- ---------------------------- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation)
in market value of
investments............. $ 670,827 $ 890,582 $ (38,252) $ 273,536 $ 140,946 $ 18,498 $ --
Interest.................... 11,068 13,084 3,621 6,782 6,032 15,351 22,950
Dividends................... 233,851 275,020 97,329 37,887 97,579 511,805 469,628
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total investment income
(loss).................. 915,746 1,178,686 62,698 318,205 244,557 545,654 492,578
---------- ---------- ---------- ---------- ---------- ---------- -----------
Contributions to the Plan
By participants............. 573,324 689,069 224,952 264,321 296,175 400,805 760,678
By the employer............. 27,190 33,379 10,280 13,073 13,692 34,405 63,133
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total contributions........ 600,514 722,448 235,232 277,394 309,867 435,210 823,811
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total additions............ 1,516,260 1,901,134 297,930 595,599 554,424 980,864 1,316,389
---------- ---------- ---------- ---------- ---------- ---------- -----------
Deductions from net assets
attributed to:
Benefits paid to
participants................ (81,429) (269,218) (148,512) (32,802) (17,689) (252,623) (3,179,889)
---------- ---------- ---------- ---------- ---------- ---------- -----------
Transfers among funds and Plans:
Net reallocations............. 333,755 72,952 356,102 (335,106) 5,640 22,742 2,603,617
Loans to participants......... (42,528) (62,720) (21,773) (17,682) (29,721) (48,279) (140,446)
Loan repayments by
participants................ 39,744 58,608 10,895 25,413 27,703 57,052 86,346
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net transfers among funds
and Plans............... 330,971 68,840 345,224 (327,375) 3,622 31,515 2,549,517
---------- ---------- ---------- ---------- ---------- ---------- -----------
Total deductions and net
transfers among funds
and Plans................ 249,542 (200,378) 196,712 (360,177) (14,067) (221,108) (630,372)
---------- ---------- ---------- ---------- ---------- ---------- -----------
Net increase (decrease).. 1,765,802 1,700,756 494,642 235,422 540,357 759,756 686,017
Net assets available for
benefits
Beginning of year........ 2,009,588 3,670,545 967,810 1,593,730 1,351,470 4,898,055 9,333,344
---------- ---------- ---------- ---------- ---------- ---------- -----------
End of year.............. $3,775,390 $5,371,301 $1,462,452 $1,829,152 $1,891,827 $5,657,811 $10,019,361
========== ========== ========== ========== ========== ========== ===========
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
FIDELITY TEMPLETON
SPARTAN LOW-PRICED FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
U.S. EQUITY STOCK SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
INDEX FUND FUND GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
YEAR ENDED DECEMBER 31, 1998 ----------- ---------- ------------- ------- ---------- ------------- -------------
- ---------------------------- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income
Net appreciation
(depreciation)
in market value of
investments............. $ 329,934 $ (28,609) $ 12,977 $ 109,462 $(43,884) $ 47,082 $ --
Interest.................... 5,516 420 1,258 1,421 734 1,035 --
Dividends................... 31,778 34,748 7,777 73,542 4,571 31,809 --
---------- --------- -------- ---------- -------- -------- -----------
Total investment income
(loss).................. 367,228 6,559 22,012 184,425 (38,579) 79,926 --
---------- --------- -------- ---------- -------- -------- -----------
Contributions to the Plan
By participants............. 250,241 91,370 124,072 99,374 65,747 56,997 --
By the employer............. 12,994 5,048 6,042 6,764 3,718 4,178 --
---------- --------- -------- ---------- -------- -------- -----------
Total contributions........ 263,235 96,418 130,114 106,138 69,465 61,175 --
---------- --------- -------- ---------- -------- -------- -----------
Total additions............ 630,463 102,977 152,126 290,563 30,886 141,101 --
---------- --------- -------- ---------- -------- -------- -----------
Deductions from net assets
attributed to:
Benefits paid to
participants................ (32,988) (1,671) (15,437) (1,418) (696) (17,064) (108,614)
---------- --------- -------- ---------- -------- -------- -----------
Transfers among funds and Plans:
Net reallocations............. 202,779 (128,089) (72,321) 350,099 (71,583) 256,772 --
Loans to participants......... (25,827) (306) (12,885) (10,222) (6,869) (318) 3,610,800
Loan repayments by
participants................ 17,560 2,363 5,486 8,451 2,298 4,737 (2,861,430)
---------- --------- -------- ---------- -------- -------- -----------
Net transfers among funds
and Plans............... 194,512 (126,032) (79,720) 348,328 (76,154) 261,191 749,370
---------- --------- -------- ---------- -------- -------- -----------
Total deductions and net
transfers among funds
and Plans................ 161,524 (127,703) (95,157) 346,910 (76,850) 244,127 640,756
---------- --------- -------- ---------- -------- -------- -----------
Net increase (decrease).. 791,987 (24,726) 56,969 637,473 (45,964) 385,228 640,756
Net assets available for
benefits
Beginning of year........ 1,078,413 461,447 493,800 464,047 251,115 303,102 7,316,739
---------- --------- -------- ---------- -------- -------- -----------
End of year.............. $1,870,400 $ 436,721 $550,769 $1,101,520 $205,151 $688,330 $ 7,957,495
========== ========= ======== ========== ======== ======== ===========
</TABLE>
<PAGE> 12
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
The Merck & Co., Inc. Employee Stock Purchase and Savings Plan (the "Plan")
was designed to provide an easy, economical way for employees to become
stockholders of Merck & Co., Inc. (the "Company" or "Merck") as well as a
systematic means of saving and investing for the future. Generally, any regular
full-time, part-time, or temporary employee of the Company who is a U.S.
resident covered by a collective bargaining agreement providing for
participation in this Plan as defined by the Plan document, and has completed
one year of employment, is eligible to participate.
The Plan is administered by a management committee appointed by the Chief
Executive Officer of the Company. All costs of administering the Plan are borne
by the Company.
Participants should refer to the Summary Plan Description for a complete
description of benefits provided.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
CONTRIBUTIONS
Depending on the terms of the applicable collective bargaining agreements,
participants may contribute from 2% up to either 10% or 15% of their base pay
per pay period. In addition, the Company will match 50% of employee
contributions up to 6% of base pay per pay period, or contributions of a
predetermined dollar amount negotiated with each bargaining group, whichever is
less. Certain unions have negotiated to allow a percentage of Company matching
contributions to follow the direction of the participants' contributions.
INVESTMENT OPTIONS
Participants direct the investment of their contributions into any
investment option including the Merck Common Stock Fund (Participant directed).
Participants should refer to each investment fund's prospectus for a more
complete description of the risks and strategies associated with each fund.
Participants may change their investment options daily. The following is a brief
description of each option:
Merck Common Stock Fund
The Merck Common Stock Fund invests primarily in Merck common stock and a
small portion of money market instruments for liquidity. This liquidity allows
for daily trading in the fund. Ownership is measured in units rather than
shares. An investment in this option allows the participant to become a
stockholder and part owner of the Company. The value of the investment can go up
or down depending on general factors affecting the stock market and specific
factors affecting the Company's business. This is neither a mutual fund nor a
diversified or managed investment option. Investing in a non-diversified single
stock involves more investment risk than investing in a diversified fund.
T. Rowe Price Blue Chip Growth Fund
The T. Rowe Price Blue Chip Growth Fund seeks to provide long-term growth
of capital. The fund invests primarily (at least 65% of its assets) in common
stocks of large and medium-sized blue chip companies that have the potential for
above-average earnings growth and are well established in their respective
industries. The fund may also invest in convertible stocks and bonds, preferred
stocks, bonds and warrants. Up to 20% of assets (excluding reserves) may be
invested in foreign securities, which may be subject to currency risks and
political and sovereign risks of the home country.
11
<PAGE> 13
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Fidelity Equity-Income Fund
Funds are invested in income-producing equity securities. Normally, at
least 65% of the fund's assets will be invested in income producing equity
securities. The fund has the flexibility to invest the balance in all types of
domestic and foreign securities, including bonds.
Vanguard U.S. Growth Portfolio
The Vanguard U.S. Growth Portfolio seeks to provide long-term capital
growth by investing in equity securities of large, established U.S. companies
that have good growth records, strong market positions and have exhibited
long-term financial strength to provide potential long-term growth.
Fidelity Growth & Income Portfolio
Funds are invested primarily in U.S. and foreign stocks, focusing on those
that pay current dividends and offer potential growth of earnings such as common
stocks, convertible securities, preferred stocks and warrants.
T. Rowe Price New Income Fund
The T. Rowe Price New Income Fund is a bond fund that seeks to provide the
highest level of income consistent with preservation of capital by purchasing
securities that have been rated as investment-grade by Standard & Poor's,
Moody's or Fitch Investor Services. The fund invests at least 80% of its assets
in income-producing investment-grade debt securities including U.S. government
and agency securities, corporate bonds, bank obligations and utilities. The
fund's dollar-weighted average maturity is generally expected to be between four
and fifteen years.
T. Rowe Price Mid-Cap Growth Fund
The T. Rowe Price Mid-Cap Growth Fund seeks to provide long-term capital
appreciation by investing primarily in the stock of medium-sized (mid-cap)
growth companies that offer the potential for above-average earnings growth. The
fund focuses on companies that are no longer considered new or emerging, but are
well-established. It may also invest in convertible securities, warrants and
foreign securities, which are subject to greater risks.
EuroPacific Growth Fund
This fund seeks long-term capital growth by investing primarily in
securities of companies outside the United States. Normally, at least 65% of the
fund's total assets will be invested in Europe or the Pacific Basin. The Pacific
Basin is generally defined as those countries bordering the Pacific Ocean and
includes, but is not limited to Australia, Canada, Japan, Malaysia and
Singapore. The fund may also invest in convertible securities, debt and
government securities and preferred stock. Foreign investment, especially in
developing countries, involve greater risks and may offer greater potential.
The George Putnam Fund of Boston A
This fund seeks to provide a balanced investment comprised of a
well-diversified portfolio of stocks and bonds that will produce both capital
growth and current income. Normally, no more than 75% of the fund's assets will
be invested in common stocks and convertible securities.
12
<PAGE> 14
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Fidelity Retirement Money Market
Funds are invested in high-quality U.S. dollar-denominated money market
instruments of U.S. and foreign issuers. Normally, the fund intends to invest
more than 25% of its total assets in obligations of institutions in the
financial services industry.
Spartan U.S. Equity Index Fund
This fund seeks to provide investment results that correspond to the total
return performance of common stocks traded in the United States. Funds are
primarily invested in securities of the companies which comprise the S&P 500
Index.
Fidelity Low-Priced Stock Fund
This fund seeks capital appreciation by investing mainly in low-priced
domestic and foreign common stocks ($35 or less at time of purchase). Foreign
securities may involve a higher degree of risk. This fund charges a redemption
fee to discourage short-term buying and selling of fund shares. If fund shares
are sold after being held for less than 90 days, the fund will deduct a
redemption fee from participants' accounts equal to 1.5% of the value of the
shares sold.
Franklin Small Cap Growth Fund I
This fund seeks long-term capital growth by investing primarily in stocks
of companies with market capitalization of less than $1.5 billion at the time of
the investment. The fund tries to invest at least one-third of its assets in
stocks of companies with market capitalization of $550 million or less. Although
the fund's assets are invested primarily in small companies, it may invest up to
35% of its total assets in larger capitalized companies with strong growth
potential, in relatively well-known larger companies in mature industries with
potential for capital appreciation and in corporate debt securities, including
bonds, notes and debentures if deemed appropriate. The fund may also invest up
to 25% of its total assets in foreign securities, which may involve greater
risks.
Effective January 1, 1999, the Franklin Small Cap Growth Fund I shares were
changed to Class A.
Putnam Voyager Fund A
This fund seeks capital appreciation by investing primarily in common
stocks of companies that have potential for capital appreciation which is
significantly greater than that of the market averages. The fund may also invest
in convertible bonds, convertible preferred stocks, warrants, preferred stocks,
money market instruments and debt securities. The fund may invest up to 20% of
its total assets in securities principally traded in foreign markets. Foreign
securities are subject to currency, political, financial or sovereign risks of
the issuer's home country.
Templeton Developing Markets Trust I
This fund seeks long-term capitalization by investing in equity securities
of emerging market countries. The fund may invest up to 35% of its total assets
in debt securities, including bonds, notes, debentures, commercial paper,
certificates of deposit, time deposits and bankers' acceptances. Foreign
investments may involve greater risks.
Effective January 1, 1999, the Templeton Developing Markets Trust I shares
were changed to Class A.
13
<PAGE> 15
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
T. Rowe Price Dividend Growth Fund
This fund seeks to provide increasing dividend income over time, long-term
capital appreciation and reasonable current income through investments primarily
in dividend-paying stocks. The fund may also invest in bonds and foreign
securities.
VESTING
Participants are immediately vested in their contributions, all Company
matching contributions, plus actual earnings thereon.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974.
PARTICIPANTS' LOAN ACCOUNT
Participants may borrow from their account balances with interest charged
at the prime rate plus 1%. Loan terms range from one to five years or up to
thirty years for the purchase of a primary residence. The minimum loan is $500
and the maximum loan is the lesser of $50,000 less the highest outstanding loan
balance during the one year period prior to the new loan application date, or
50% of the participant's account balance less any current outstanding loan
balance. Activity related to these borrowings is reflected in the Participants'
Loan Account column of the financial statements.
BENEFITS PAID TO PARTICIPANTS
In-service (which include hardship withdrawals) and termination
distributions are made throughout the year in accordance with applicable Plan
provisions. At December 31, 1998 and 1997, net assets available for benefits
included distributions in process of payment of $835,834 and $698,384,
respectively.
2. SUMMARY OF ACCOUNTING POLICIES:
The financial statements of the Plan have been prepared on the accrual
basis of accounting. The investments of the Plan are stated at quoted market
value. Dividend income is recorded on the ex-dividend date. The net appreciation
(depreciation) in market value of investments is based on the beginning of the
year market value or value at the time of purchase during the year and is
included in the statement of changes in net assets available for benefits.
USE OF ESTIMATES
The financial statements are prepared in conformity with generally accepted
accounting principles and, accordingly, include amounts that are based on
management's best estimates and judgments. Actual results could differ from
these estimates.
3. INCOME TAXES:
The Plan obtained a tax determination letter from the Internal Revenue
Service on September 18, 1995 indicating that it had been designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan was most
recently amended in July 1998. The Plan sponsor believes that the Plan is
14
<PAGE> 16
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
designed and currently operated in compliance with the IRC. Therefore, no
provision for income taxes has been made.
4. OTHER MATTERS:
Net reallocations in 1998 of ($1,272,189) consist of transfers between the
Plan and the Merck & Co., Inc. Employee Savings and Security Plan for employees
who changed their status during the year.
5. PARTY-IN-INTEREST:
All party-in-interest transactions are set forth on the attached schedules.
6. PROHIBITED TRANSACTIONS:
There were no prohibited transactions during 1998.
7. SUBSEQUENT EVENTS:
Subsequent to year end, the Company match was increased from 50% of
employee contributions up to 5% of base pay, subject to a $60 monthly cap, to
50% of employee contributions up to 6% of base pay and the monthly cap of $60
for certain unions was eliminated. The Company also amended the investment for
Company matching contributions according to the following age parameters:
Under age 50 -- 50% of Company matching contributions is invested in the
Merck Common Stock Fund (Non-participant directed) and 50% is invested in the
funds to which the participant is currently contributing (Participant directed).
Age 50 and above -- Participants have the option to invest all Company
matching contributions in any of the available fund options (Participant
directed).
15
<PAGE> 17
SCHEDULE I
EIN: 22-1109110
PLAN NO.: 004
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
ITEM 27a -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
UNITS/SHARES AT
NAME OF ISSUER AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE
--------------------------------- --------------- ------------ -------------
<S> <C> <C> <C>
Merck Common Stock Fund*.................................... 12,173,650 $ 98,151,603 $306,880,503
T. Rowe Price Blue Chip Growth Fund......................... 489,337 11,338,153 14,973,705
Fidelity Equity-Income Fund................................. 39,174 1,786,245 2,176,087
Vanguard U.S. Growth Portfolio.............................. 100,606 3,124,410 3,771,723
Fidelity Growth & Income Portfolio.......................... 117,067 3,906,124 5,366,261
T. Rowe Price New Income Fund............................... 165,838 1,486,350 1,461,033
T. Rowe Price Mid-Cap Growth Fund........................... 53,620 1,505,814 1,827,382
EuroPacific Growth Fund..................................... 66,549 1,876,722 1,889,995
The George Putnam Fund of Boston A.......................... 313,337 5,696,707 5,652,596
Fidelity Retirement Money Market............................ 9,991,208 9,991,208 10,010,154
Spartan U.S. Equity Index Fund.............................. 42,507 1,349,043 1,868,618
Fidelity Low-Priced Stock Fund.............................. 19,092 466,768 436,243
Franklin Small Cap Growth Fund I............................ 24,376 557,244 550,170
Putnam Voyager Fund A....................................... 50,205 1,006,299 1,100,487
Templeton Developing Markets Trust I........................ 19,893 275,123 204,899
T. Rowe Price Dividend Growth Fund.......................... 31,244 637,885 687,684
Participants' Loan Account (with interest rates
ranging from 9.0% to 9.5%)................................ -- 7,948,137 7,948,137
------------ ------------
Total Investments................................... $151,103,835 $366,805,677
============ ============
</TABLE>
- ---------------
* Denotes a party-in-interest to the Plan.
16
<PAGE> 18
SCHEDULE II
EIN: 22-1109110
PLAN NO.: 004
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(a)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE
PURCHASE COST OF OF ASSETS ON
IDENTITY OF PARTY INVOLVED AND DESCRIPTION OF ASSETS PRICE SELLING PRICE ASSET TRANSACTION DATE NET GAIN
- ---------------------------------------------------- ---------- ------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Merck Common Stock Fund*
251 purchase transactions.................... $34,639,546 $ -- $34,639,546 $34,639,546 $ --
249 sales transactions....................... -- 35,288,818 18,162,832 35,288,818 17,125,986
Fidelity Retirement Money Market
208 purchase transactions.................... 15,609,271 -- 15,609,271 15,609,271 --
202 sales transactions....................... -- 14,916,715 14,916,715 14,916,715 --
</TABLE>
- ---------------
(a) Reportable transactions are transactions that, individually or in the
aggregate, exceed 5% of the Plan's net assets as of the beginning of the
Plan year.
* Denotes a party-in-interest to the Plan.
17
<PAGE> 19
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated May 7, 1999 included in the financial
statements and exhibits required by Form 11-K Annual Report for the Merck & Co.,
Inc. Employee Stock Purchase and Savings Plan into the Company's previously
filed Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101,
33-40177, 33-51235, 33-53463, 33-64273, 33-64665, 333-23293 and 333-23295), on
Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785,
33-57421, 333-17045, 333-36383 and 333-77569). It should be noted that we have
not audited any financial statements of the Plan subsequent to December 31, 1998
or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
New York, New York
June 10, 1999
<PAGE> 1
EXHIBIT 99(C)
FINANCIAL STATEMENTS AND EXHIBITS
REQUIRED BY FORM 11-K ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-3305
---------------------
MERCK PUERTO RICO EMPLOYEE SAVINGS AND SECURITY PLAN
(FULL TITLE OF THE PLAN)
MERCK & CO., INC.
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
(NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE
PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE)
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Merck Sharp & Dohme Quimica de Puerto Rico, Inc. and
Merck Sharp & Dohme (I.A.) Corp.:
We have audited the accompanying statements of net assets available for
benefits of the Merck Puerto Rico Employee Savings and Security Plan (the
"Plan") as of December 31, 1998 and 1997 and the related statement of changes in
net assets available for benefits for the year ended December 31, 1998. These
financial statements and the schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the year ended December 31, 1998, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
assets held for investment purposes and reportable transactions are presented
for purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statement of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
San Juan, Puerto Rico
May 9, 1999
1
<PAGE> 3
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
--------------------------------
(NON-PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY
DIRECTED: SEE DIRECTED: SEE BLUE CHIP EQUITY-
TOTAL NOTE 1) NOTE 1) GROWTH FUND INCOME FUND
----- ---------------- ------------- ------------- -----------
DECEMBER 31, 1998
- --------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...................... $33,769,371 $9,666,965 $19,533,155 $827,723 $ 42,001
----------- ---------- ----------- -------- -----------
Receivables
Employer's contribution........................ 24,537 5,420 15,492 741 130
Participants' contributions.................... 85,652 -- 74,861 3,173 161
Accrued interest and dividends................. 107,220 34,234 69,159 -- --
----------- ---------- ----------- -------- -----------
Total receivables............................ 217,409 39,654 159,512 3,914 291
----------- ---------- ----------- -------- -----------
Net assets available for benefits.................. $33,986,780 $9,706,619 $19,692,667 $831,637 $ 42,292
=========== ========== =========== ======== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
2
<PAGE> 4
<TABLE>
<CAPTION>
FIDELITY
VANGUARD GROWTH & T. ROWE PRICE T. ROWE PRICE EUROPACIFIC
U.S. GROWTH INCOME NEW INCOME MID-CAP GROWTH
PORTFOLIO PORTFOLIO FUND GROWTH FUND FUND
----------- --------- ------------- ------------- -----------
DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...................... $295,492 $539,595 $17,557 $171,008 $133,469
-------- -------- ------- -------- --------
Receivables
Employer's contribution........................ 280 424 29 292 233
Participants' contributions.................... 1,133 2,068 67 656 512
Accrued interest and dividends................. -- -- -- -- --
-------- -------- ------- -------- --------
Total receivables............................ 1,413 2,492 96 948 745
-------- -------- ------- -------- --------
Net assets available for benefits.................. $296,905 $542,087 $17,653 $171,956 $134,214
======== ======== ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
THE GEORGE FIDELITY SPARTAN FIDELITY
PUTNAM RETIREMENT U.S. EQUITY LOW-PRICED
FUND OF MONEY INDEX STOCK
BOSTON A MARKET FUND FUND
---------- ---------- ----------- ----------
DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at market value...................... $159,288 $380,176 $201,400 $11,966
-------- -------- -------- -------
Receivables
Employer's contribution........................ 184 927 132 56
Participants' contributions.................... 611 1,457 772 46
Accrued interest and dividends................. -- -- -- --
-------- -------- -------- -------
Total receivables............................ 795 2,384 904 102
-------- -------- -------- -------
Net assets available for benefits.................. $160,083 $382,560 $202,304 $12,068
======== ======== ======== =======
</TABLE>
3
<PAGE> 5
<TABLE>
<CAPTION>
TEMPLETON
FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
------------- ------- ---------- ------------- -------------
DECEMBER 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...................... $13,149 $12,196 $7,270 $2,729 $1,754,232
------- ------- ------ ------ ----------
Receivables
Employer's contribution........................ 74 71 27 25 --
Participants' contributions.................... 50 47 28 10 --
Accrued interest and dividends................. -- -- -- -- 3,827
------- ------- ------ ------ ----------
Total receivables............................ 124 118 55 35 3,827
------- ------- ------ ------ ----------
Net assets available for benefits.................. $13,273 $12,314 $7,325 $2,764 $1,758,059
======= ======= ====== ====== ==========
</TABLE>
4
<PAGE> 6
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK FUND
--------------------------------
(NON-PARTICIPANT (PARTICIPANT T. ROWE PRICE FIDELITY
DIRECTED: SEE DIRECTED: SEE BLUE CHIP EQUITY-
TOTAL NOTE 1) NOTE 1) GROWTH FUND INCOME FUND
----- ---------------- ------------- ------------- -----------
DECEMBER 31, 1997
- --------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...................... $24,835,401 $6,993,525 $13,976,782 $571,614 $ 273,159
----------- ---------- ----------- -------- -----------
Receivables
Employer's contribution........................ 8,576 1,921 5,299 300 43
Participants' contributions.................... 30,065 -- 26,206 1,072 512
Accrued interest and dividends................. 88,376 29,067 58,086 -- --
----------- ---------- ----------- -------- -----------
Total receivables............................ 127,017 30,988 89,591 1,372 555
----------- ---------- ----------- -------- -----------
Net assets available for benefits.................. $24,962,418 $7,024,513 $14,066,373 $572,986 $ 273,714
=========== ========== =========== ======== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
5
<PAGE> 7
<TABLE>
<CAPTION>
FIDELITY
VANGUARD GROWTH & T. ROWE PRICE T. ROWE PRICE EUROPACIFIC
U.S. GROWTH INCOME NEW INCOME MID-CAP GROWTH
PORTFOLIO PORTFOLIO FUND GROWTH FUND FUND
------------ --------- ------------- ------------- -----------
(PARTICIPANT DIRECTED; SEE NOTE 1)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value ...... $112,653 $318,090 $11,848 $125,293 $90,947
-------- -------- ------- -------- -------
Receivables
Employer's contribution ........ 77 163 9 111 86
Participants' contributions .... 211 596 22 235 171
Accrued interest and dividends.. -- -- -- -- --
-------- -------- ------- -------- -------
Total receivables ............ 288 759 31 346 257
-------- -------- ------- -------- -------
Net assets available for benefits .. $112,941 $318,849 $11,879 $125,639 $91,204
======== ======== ======= ======== =======
<CAPTION>
THE GEORGE FIDELITY FIDELITY SPARTAN FIDELITY
PUTNAM RETIREMENT RETIREMENT U.S. EQUITY LOW-PRICED
FUND OF MONEY GOVERNMENT INDEX STOCK
BOSTON A MARKET MONEY MARKET FUND FUND
----------- ---------- ------------ ----------- ----------
----------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value ...... $133,881 $353,066 $ -- $58,343 $5,626
-------- -------- ----- ------- ------
Receivables
Employer's contribution ........ 77 412 -- 51 9
Participants' contributions .... 251 662 -- 109 11
Accrued interest and dividends.. -- -- -- -- --
-------- -------- ----- ------- ------
Total receivables ........... 328 1,074 -- 160 20
-------- -------- ----- ------- ------
Net assets available for benefits... $134,209 $354,140 $ -- $58,503 $5,646
======== ======== ===== ======= ======
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
TEMPLETON
FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
------------- ------- ---------- ------------- -------------
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at market value...................... $1,245 $800 $1,641 $-- $1,806,888
------ ---- ------ --- ----------
Receivables
Employer's contribution........................ 9 9 -- -- --
Participants' contributions.................... 2 2 3 -- --
Accrued interest and dividends................. -- -- -- -- 1,223
------ ---- ------ --- ----------
Total receivables............................ 11 11 3 -- 1,223
------ ---- ------ --- ----------
Net assets available for benefits.................. $1,256 $811 $1,644 $-- $1,808,111
====== ==== ====== === ==========
</TABLE>
7
<PAGE> 9
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
MERCK COMMON STOCK
FUND
-----------------------------
(NON- FIDELITY
PARTICIPANT (PARTICIPANT T. ROWE PRICE EQUITY-
DIRECTED; SEE DIRECTED; SEE BLUE CHIP INCOME
TOTAL NOTE 1) NOTE 1) GROWTH FUND FUND
----------- ------------- ------------- ------------- -----------
YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------ -------------------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income (loss)
Net appreciation(depreciation)
in market value of investments.................. $ 8,347,916 $ 2,659,334 $ 5,333,097 $163,492 $ 14,471
Interest.......................................... 161,776 63,397 80,414 6,831 618
Dividends......................................... 489,996 127,134 250,333 13,124 8,021
----------- ----------- ----------- -------- --------
Total investment income(loss)................... 8,999,688 2,849,865 5,663,844 183,447 23,110
----------- ----------- ----------- -------- --------
Contributions to the Plan
By participants................................... 3,289,370 -- 2,654,100 130,452 20,633
By the employer................................... 934,413 918,911 10,193 1,153 710
----------- ----------- ----------- -------- --------
Total contributions............................. 4,223,783 918,911 2,664,293 131,605 21,343
----------- ----------- ----------- -------- --------
Total additions................................. 13,223,471 3,768,776 8,328,137 315,052 44,453
----------- ----------- ----------- -------- --------
Deductions from net assets attributed to:
Benefits paid to participants....................... (4,357,447) (1,155,046) (2,792,099) (47,016) (29,788)
----------- ----------- ----------- -------- --------
Transfers among funds and Plans:
Net reallocations................................... 158,338 27,963 179,373 (15,040) (246,175)
Loans to participants............................... -- (371,499) (520,607) (32,356) (3,682)
Loan repayments by participants..................... -- 411,912 431,490 38,011 3,770
----------- ----------- ----------- -------- --------
Net transfers among funds and Plans............. 158,338 68,376 90,256 (9,385) (246,087)
----------- ----------- ----------- -------- --------
Total deductions and net transfers
among funds and Plans......................... (4,199,109) (1,086,670) (2,701,843) (56,401) (275,875)
----------- ----------- ----------- -------- --------
Net increase(decrease)........................ 9,024,362 2,682,106 5,626,294 258,651 (231,422)
Net assets available for benefits
Beginning of year............................. 24,962,418 7,024,513 14,066,373 572,986 273,714
----------- ----------- ----------- -------- --------
End of year................................... $33,986,780 $ 9,706,619 $19,692,667 $831,637 $ 42,292
=========== =========== =========== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
8
<PAGE> 10
<TABLE>
<CAPTION>
FIDELITY
VANGUARD GROWTH & T. ROWE PRICE T. ROWE PRICE EUROPACIFIC
U.S. GROWTH INCOME NEW INCOME MID-CAP GROWTH
PORTFOLIO PORTFOLIO FUND GROWTH FUND FUND
----------- --------- ------------- ------------- -----------
YEAR ENDED DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income (loss)
Net appreciation(depreciation)
in market value of investments....... $ 40,564 $ 77,601 $ (476) $ 26,525 $ 8,931
Interest............................... 764 2,987 141 1,497 1,181
Dividends.............................. 18,090 24,768 1,174 3,620 6,724
-------- -------- ------- -------- --------
Total investment income(loss)........ 59,418 105,356 839 31,642 16,836
-------- -------- ------- -------- --------
Contributions to the Plan
By participants........................ 42,170 81,910 5,590 50,969 37,307
By the employer........................ 203 723 20 181 767
-------- -------- ------- -------- --------
Total contributions.................. 42,373 82,633 5,610 51,150 38,074
-------- -------- ------- -------- --------
Total additions...................... 101,791 187,989 6,449 82,792 54,910
-------- -------- ------- -------- --------
Deductions from net assets attributed to:
Benefits paid to participants............ (8,316) (59,106) (1,696) (25,663) (11,738)
-------- -------- ------- -------- --------
Transfers among funds and Plans:
Net reallocations........................ 89,657 80,154 452 (10,822) (4,743)
Loans to participants.................... (2,475) (10,507) -- (4,988) (992)
Loan repayments by participants.......... 3,307 24,708 569 4,998 5,573
-------- -------- ------- -------- --------
Net transfers among funds and Plans.. 90,489 94,355 1,021 (10,812) (162)
-------- -------- ------- -------- --------
Total deductions and net transfers
among funds and Plans.............. 82,173 35,249 (675) (36,475) (11,900)
-------- -------- ------- -------- --------
Net increase(decrease)............. 183,964 223,238 5,774 46,317 43,010
Net assets available for benefits
Beginning of year.................. 112,941 318,849 11,879 125,639 91,204
-------- -------- ------- -------- --------
End of year........................ $296,905 $542,087 $17,653 $171,956 $134,214
======== ======== ======= ======== ========
<CAPTION>
THE GEORGE FIDELITY SPARTAN FIDELITY
PUTNAM RETIREMENT U.S. EQUITY LOW-PRICED
FUND OF MONEY INDEX STOCK
BOSTON A MARKET FUND FUND
----------- ---------- ----------- ----------
YEAR ENDED DECEMBER 31, 1998 (PARTICIPANT DIRECTED; SEE NOTE 1)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income (loss)
Net appreciation(depreciation)
in market value of investments....... $ 111 $ -- $ 23,845 $ (555)
Interest............................... 1,308 2,213 198 17
Dividends.............................. 14,561 18,546 1,961 758
-------- -------- -------- -------
Total investment income(loss)........ 15,980 20,759 26,004 220
-------- -------- -------- -------
Contributions to the Plan
By participants........................ 29,698 174,666 25,701 7,141
By the employer........................ 107 515 704 47
-------- -------- -------- -------
Total contributions.................. 29,805 175,181 26,405 7,188
-------- -------- -------- -------
Total additions...................... 45,785 195,940 52,409 7,408
-------- -------- -------- -------
Deductions from net assets attributed to:
Benefits paid to participants............ (13,450) (137,470) (16,602) (1,175)
-------- -------- -------- -------
Transfers among funds and Plans:
Net reallocations........................ (6,696) (22,655) 106,895 $ --
Loans to participants.................... (4,011) (17,586) (433) (82)
Loan repayments by participants.......... 4,246 10,191 1,532 271
-------- -------- -------- -------
Net transfers among funds and Plans.. (6,461) (30,050) 107,994 189
-------- -------- -------- -------
Total deductions and net transfers
among funds and Plans.............. (19,911) (167,520) 91,392 (986)
-------- -------- -------- -------
Net increase(decrease)............. 25,874 28,420 143,801 6,422
Net assets available for benefits
Beginning of year.................. 134,209 354,140 58,503 5,646
-------- -------- -------- -------
End of year........................ $160,083 $382,560 $202,304 $12,068
======== ======== ======== =======
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
TEMPLETON
FRANKLIN PUTNAM DEVELOPING T. ROWE PRICE
SMALL CAP VOYAGER MARKETS DIVIDEND PARTICIPANTS'
GROWTH FUND I FUND A TRUST I GROWTH FUND LOAN ACCOUNT
YEAR ENDED DECEMBER 31, 1998 ------------- ------- ---------- ------------- -------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income (loss)
Net appreciation(depreciation)
in market value of investments....... $ 725 $ 928 $ (795) $ 118 $ --
Interest............................... 43 55 112 -- --
Dividends.............................. 186 808 109 79 --
------- ------- ------ ------ ----------
Total investment income(loss)........ 954 1,791 (574) 197 --
------- ------- ------ ------ ----------
Contributions to the Plan
By participants........................ 11,433 10,379 4,679 2,542 --
By the employer........................ 65 62 27 25 --
------- ------- ------ ------ ----------
Total contributions.................. 11,498 10,441 4,706 2,567 --
------- ------- ------ ------ ----------
Total additions...................... 12,452 12,232 4,132 2,764 --
------- ------- ------ ------ ----------
Deductions from net assets attributed to:
Benefits paid to participants............ (802) (931) (192) -- (56,357)
------- ------- ------ ------ ----------
Transfers among funds and Plans:
Net reallocations........................ 206 -- 1,080 -- (21,311)
Loans to participants.................... -- (170) (112) -- 969,500
Loan repayments by participants.......... 161 372 773 -- (941,884)
------- ------- ------ ------ ----------
Net transfers among funds and Plans.. 367 202 1,741 -- 6,305
------- ------- ------ ------ ----------
Total deductions and net transfers
among funds and Plans.............. (435) (729) 1,549 -- (50,052)
------- ------- ------ ------ ----------
Net increase(decrease)............. 12,017 11,503 5,681 2,764 (50,052)
Net assets available for benefits
Beginning of year.................. 1,256 811 1,644 -- 1,808,111
------- ------- ------ ------ ----------
End of year........................ $13,273 $12,314 $7,325 $2,764 $1,758,059
======= ======= ====== ====== ==========
</TABLE>
10
<PAGE> 12
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
The Merck Puerto Rico Employee Savings and Security Plan (the "Plan") is a
profit sharing plan designed to provide an opportunity for employees of Merck
Sharp & Dohme Quimica de Puerto Rico, Inc. and Merck Sharp & Dohme (I.A.) Corp.
(the "Companies") to become stockholders of Merck & Co., Inc. ("Merck") and to
encourage them to save on a regular basis by setting aside part of their
earnings. Regular full-time and part-time employees of the Companies, as defined
in the Plan document, who have completed at least one year of employment and are
not covered by a collective bargaining agreement, are eligible to enroll in the
Plan.
The Plan is administered by the Employee Benefits Committee appointed by
the President of the Companies. All costs of administering the Plan are borne by
the Companies.
Participants should refer to the Summary Plan Description for a complete
description of benefits provided.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may contribute from 2% up to 15% of their base pay, provided
that pre-tax contributions shall not exceed 10% of base compensation. In
addition, the Companies match 50% of employee contributions up to 5% of base pay
per pay period. The Companies' matching contributions are invested entirely in
the Merck Common Stock Fund (Non-participant directed) and may not be
reallocated into any other investment option.
INVESTMENT OPTIONS
Participants direct the investment of their contributions into any
investment option including the Merck Common Stock Fund (Participant directed).
Participants should refer to each investment fund's prospectus for a more
complete description of the risks and strategies associated with each fund.
Participants may change their investment options daily. The following is a brief
description of each option:
Merck Common Stock Fund
The Merck Common Stock Fund invests primarily in Merck common stock and a
small portion of money market instruments for liquidity. This liquidity allows
for daily trading in the fund. Ownership is measured in units rather than
shares. An investment in this option allows the participant to become a
stockholder and part owner of Merck. The value of the investment can go up or
down depending on general factors affecting the stock market and specific
factors affecting Merck's business. This is neither a mutual fund nor a
diversified or managed investment option. Investing in a non-diversified single
stock involves more investment risk than investing in a diversified fund.
T. Rowe Price Blue Chip Growth Fund
The T. Rowe Price Blue Chip Growth Fund seeks to provide long-term growth
of capital. The fund invests primarily (at least 65% of its assets) in common
stocks of large and medium-sized blue chip companies that have the potential for
above-average earnings growth and are well established in their respective
industries. The fund may also invest in convertible stocks and bonds, preferred
stocks, bonds and warrants. Up
11
<PAGE> 13
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
to 20% of assets (excluding reserves) may be invested in foreign securities,
which may be subject to currency risks and political and sovereign risks of the
home country.
Fidelity Equity-Income Fund
Funds are invested in income-producing equity securities. Normally, at
least 65% of the fund's assets will be invested in income producing equity
securities. The fund has the flexibility to invest the balance in all types of
domestic and foreign securities, including bonds.
Vanguard U.S. Growth Portfolio
The Vanguard U.S. Growth Portfolio seeks to provide long-term capital
growth by investing in equity securities of large, established U.S. companies
that have good growth records, strong market positions and have exhibited
long-term financial strength to provide potential long-term growth.
Fidelity Growth & Income Portfolio
Funds are invested primarily in U.S. and foreign stocks, focusing on those
that pay current dividends and offer potential growth of earnings such as common
stocks, convertible securities, preferred stocks and warrants.
T. Rowe Price New Income Fund
The T. Rowe Price New Income Fund is a bond fund that seeks to provide the
highest level of income consistent with preservation of capital by purchasing
securities that have been rated as investment-grade by Standard & Poor's,
Moody's or Fitch Investor Services. The fund invests at least 80% of its assets
in income-producing investment-grade debt securities including U.S. government
and agency securities, corporate bonds, bank obligations and utilities. The
fund's dollar-weighted average maturity is generally expected to be between four
and fifteen years.
T. Rowe Price Mid-Cap Growth Fund
The T. Rowe Price Mid-Cap Growth Fund seeks to provide long-term capital
appreciation by investing primarily in the stock of medium-sized (mid-cap)
growth companies that offer the potential for above-average earnings growth. The
fund focuses on companies that are no longer considered new or emerging, but are
well-established. It may also invest in convertible securities, warrants and
foreign securities, which are subject to greater risks.
EuroPacific Growth Fund
This fund seeks long-term capital growth by investing primarily in
securities of companies outside the United States. Normally, at least 65% of the
fund's total assets will be invested in Europe or the Pacific Basin. The Pacific
Basin is generally defined as those countries bordering the Pacific Ocean and
includes, but is not limited to Australia, Canada, Japan, Malaysia and
Singapore. The fund may also invest in convertible securities, debt and
government securities and preferred stock. Foreign investments, especially in
developing countries, involve greater risks and may offer greater potential.
12
<PAGE> 14
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The George Putnam Fund of Boston A
This fund seeks to provide a balanced investment comprised of a
well-diversified portfolio of stocks and bonds that will produce both capital
growth and current income. Normally, no more than 75% of the fund's assets will
be invested in common stocks and convertible securities.
Fidelity Retirement Money Market
Funds are invested in high-quality U.S. dollar-denominated money market
instruments of U.S. and foreign issuers. Normally, the fund intends to invest
more than 25% of its total assets in obligations of institutions in the
financial services industry.
Spartan U.S. Equity Index Fund
This fund seeks to provide results that correspond to the total return
performance of common stocks traded in the United States. Funds are primarily
invested in securities of the companies which comprise the S&P 500 Index.
Fidelity Low-Priced Stock Fund
This fund seeks capital appreciation by investing mainly in low-priced
domestic and foreign common stocks ($35 or less at time of purchase). Foreign
securities may involve a higher degree of risk. This fund charges a redemption
fee to discourage short-term buying and selling of fund shares. If fund shares
are sold after being held for less than 90 days, the fund will deduct a
redemption fee from participants' accounts equal to 1.5% of the value of the
shares sold.
Franklin Small Cap Growth Fund I
This fund seeks long-term capital growth by investing primarily in stocks
of companies with market capitalization of less than $1.5 billion at the time of
the investment. Although the fund's assets are invested primarily in small
companies, it may invest up to 35% of its total assets in larger capitalized
companies with strong growth potential, in relatively well-known larger
companies in mature industries with potential for capital appreciation, and in
corporate debt securities, including bonds, notes and debentures if deemed
appropriate. The fund may also invest up to 25% of its total assets in foreign
securities, which may involve greater risks.
Effective January 1, 1999, the Franklin Small Cap Growth Fund I shares were
changed to Class A.
Putnam Voyager Fund A
This fund seeks capital appreciation by investing primarily in common
stocks of companies that have potential for capital appreciation which is
significantly greater than that of the market averages. The fund may also invest
in convertible bonds, convertible preferred stocks, warrants, preferred stocks,
money market instruments and debt securities. The fund may invest up to 20% of
its total assets in securities principally traded in foreign markets. Foreign
securities are subject to currency, political, financial or sovereign risks of
the issuer's home country.
Templeton Developing Markets Trust I
This fund seeks long-term capitalization by investing in equity securities
of emerging market countries. The fund may invest up to 35% of its total assets
in debt securities, including bonds, notes, debentures,
13
<PAGE> 15
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
commercial paper, certificates of deposit, time deposits and bankers'
acceptances. Foreign investments may involve greater risks.
Effective January 1, 1999 the Templeton Developing Markets Trust I shares
were changed to Class A.
T. Rowe Price Dividend Growth Fund
This fund seeks to provide increasing dividend income over time, long-term
capital appreciation and reasonable current income through investments primarily
in dividend-paying stocks. The fund may also invest in bonds and foreign
securities.
VESTING
Participants are immediately vested in their contributions, all Companies'
matching contributions, plus actual earnings thereon.
PLAN TERMINATION
Although they have not expressed any intent to do so, the Companies have
the right under the Plan to discontinue contributions at any time and to
terminate the Plan subject to the provisions of the Employee Retirement Income
Security Act of 1974.
PARTICIPANTS' LOAN ACCOUNT
Participants may borrow from their account balances with interest charged
at the prime rate plus 1%. Loan terms range from one to five years or up to
thirty years for the purchase of a primary residence. The minimum loan is $500
and the maximum loan is the lesser of $50,000 less the highest outstanding loan
balance during the one year period prior to the new loan application date, or
50% of the participant's account balance less any current outstanding loan
balance. Activity related to these borrowings is reflected in the Participants'
Loan Account column of the financial statements.
BENEFITS
Participants are entitled to receive automatic, voluntary, in-service
(which include hardship withdrawals), or mandatory distributions as provided in
the applicable Plan provisions.
2. SUMMARY OF ACCOUNTING POLICIES:
The financial statements of the Plan have been prepared on the accrual
basis of accounting. The investments of the Plan are stated at quoted market
value. Dividend income is recorded on the ex-dividend date. The net appreciation
(depreciation) in market value of investments is based on the beginning of the
year market value or value at the time of purchase during the year and is
included in the statement of changes in net assets available for benefits.
USE OF ESTIMATES
The financial statements are prepared in conformity with generally accepted
accounting principles and, accordingly, include amounts that are based on
management's best estimates and judgments. Actual results could differ from
these estimates.
14
<PAGE> 16
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
3. INCOME TAXES:
The Plan obtained a tax determination letter from the Puerto Rico
Department of Treasury on February 18, 1998 indicating that it had been designed
in accordance with applicable sections of the Puerto Rico Internal Revenue Code
of 1994 ("PRIRC"). The Plan sponsors believe that the Plan is designed and
operated in compliance with the PRIRC. The Plan sponsors also believe that the
Plan is designed and currently operated as a qualified plan under the United
States Internal Revenue Code. The Plan has not been amended since its inception
on July 1, 1997. A favorable determination letter was received from the Internal
Revenue Service in November, 1998. Therefore, no provision for income taxes has
been made.
4. OTHER MATTERS:
Net reallocations in 1998 of $158,338 consist of transfers between the Plan
and the Merck & Co., Inc. Employee Savings and Security Plan for employees who
changed their status during the year.
5. PARTY-IN-INTEREST:
All party-in-interest transactions are set forth on the attached schedules.
6. PROHIBITED TRANSACTIONS:
There were no prohibited transactions during 1998.
15
<PAGE> 17
SCHEDULE I
EIN: 66-0288298
PLAN NO.: 061
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
ITEM 27A -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
UNITS/SHARES AT
NAME OF ISSUER AND TITLE OF ISSUE CLOSE OF PERIOD COST CURRENT VALUE
--------------------------------- --------------- ----------- -------------
<S> <C> <C> <C>
Merck Common Stock Fund*.................................... 1,160,425 $12,289,885 $29,200,120
T. Rowe Price Blue Chip Growth Fund......................... 27,050 633,492 827,723
Fidelity Equity Income Fund................................. 756 39,435 42,001
Vanguard U.S. Growth Portfolio.............................. 7,882 254,117 295,492
Fidelity Growth & Income Portfolio.......................... 11,771 458,751 539,595
T. Rowe Price New Income Fund............................... 1,993 17,803 17,557
T. Rowe Price Mid-Cap Growth Fund........................... 5,018 138,771 171,008
EuroPacific Growth Fund..................................... 4,700 133,508 133,469
The George Putnam Fund of Boston A.......................... 8,830 160,765 159,288
Fidelity Retirement Money Market............................ 380,175 380,175 380,176
Spartan U.S. Equity Index Fund.............................. 4,581 175,925 201,400
Fidelity Low-Priced Stock Fund.............................. 524 12,519 11,966
Franklin Small Cap Growth Fund 1............................ 583 12,602 13,149
Putnam Voyager Fund A....................................... 557 11,292 12,196
Templeton Developing Markets Trust 1........................ 706 8,415 7,270
T. Rowe Price Dividend Growth Fund.......................... 124 2,611 2,729
Participants' Loan Account (with interest rates ranging from
9.5% to 9.5%)............................................. -- 1,754,232 1,754,232
----------- -----------
Total Investments................................... $16,484,298 $33,769,371
=========== ===========
</TABLE>
- ---------------
* Denotes a party-in-interest to the Plan.
16
<PAGE> 18
SCHEDULE II
EIN: 66-0288298
PLAN NO.: 061
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
ITEM 27D -- SCHEDULE OF REPORTABLE TRANSACTIONS(A)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE
PURCHASE SELLING COST OF OF ASSETS ON
IDENTITY OF PARTY INVOLVED AND DESCRIPTION OF ASSETS PRICE PRICE ASSET TRANSACTION DATE NET GAIN
- ---------------------------------------------------- ---------- ---------- ---------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Merck Common Stock Fund*
135 purchase transactions..................... $5,103,922 $ -- $5,103,922 $5,103,922 $ --
64 sales transactions........................ -- 4,869,142 2,881,161 4,869,142 1,987,981
</TABLE>
- ---------------
(a) Reportable transactions are transactions that, individually or in the
aggregate, exceed 5% of the Plan's net assets as of the beginning of the
Plan year.
*Denotes a party-in-interest to the Plan.
>
17
<PAGE> 19
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated May 9, 1999 included in the financial
statements and exhibits required by Form 11-K Annual Report for the Merck Puerto
Rico Employee Savings and Security Plan into the previously filed Registration
Statements of Merck & Co., Inc. on Form S-8 (Nos. 33-21087, 33-21088, 33-36101,
33-40177, 33-51235, 33-53463, 33-64273, 33-64665, 333-23293 and 333-23295), on
Form S-4 (No. 33-50667) and on Form S-3 (Nos. 33-60322, 33-39349, 33-51785,
33-57421, 333-17045, 333-36383 and 333-77569). It should be noted that we have
not audited any financial statements of the Plan subsequent to December 31, 1998
or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
San Juan, Puerto Rico
June 10, 1999
