<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 statement of net assets available for
benefits of the Merck Puerto Rico Employee Savings and Security Plan (the
"Plan") as of December 31, 1999 and 1998 and the related statement of changes in
net assets available for benefits for the year ended December 31, 1999. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule of assets
held for investment purposes is presented for purposes of additional analysis
and is not a required part of the basic financial statements but is
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 supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is 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 12, 2000
1
<PAGE> 3
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Assets:
Investments at market value............................... $32,764,583 $33,769,371
----------- -----------
Receivables:
Employer's contribution................................. 26,699 24,537
Participants' contributions............................. 61,829 85,652
Accrued interest and dividends.......................... 116,837 107,220
----------- -----------
Total receivables..................................... 205,365 217,409
----------- -----------
Net assets available for benefits........................... $32,969,948 $33,986,780
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
2
<PAGE> 4
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Additions to net assets attributed to:
Investment income (loss):
Net depreciation in market value of investments......... $ (2,225,927)
Interest................................................ 154,595
Dividends............................................... 574,373
-----------------
Total investment loss................................. (1,496,959)
-----------------
Contributions to the Plan:
By participants......................................... 3,678,916
By the employer......................................... 1,046,158
-----------------
Total contributions................................... 4,725,074
-----------------
Total additions....................................... 3,228,115
-----------------
Deductions from net assets attributed to:
Benefits paid to participants............................. (4,175,027)
-----------------
Net reallocations........................................... (69,920)
-----------------
Total deductions and net reallocations among Plans.... (4,244,947)
-----------------
Net decrease........................................ (1,016,832)
Net assets available for benefits
Beginning of year................................... 33,986,780
-----------------
End of year......................................... $ 32,969,948
=================
</TABLE>
The accompanying notes to financial statements are an integral part of this
financial statement.
3
<PAGE> 5
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
A. DESCRIPTION OF PLAN:
The following description of the Merck Puerto Rico Employee Savings and
Security Pan (the "Plan") provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
1. GENERAL
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.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
2. 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.
Participants direct the investment of their contributions into any
investment option including the Merck Common Stock Fund (Participant directed).
The Plan currently offers 15 mutual funds and the Merck Common Stock Fund.
3. PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution,
the Companies' matching contribution and allocation of Plan earnings. The
allocation is based on participants' account balances, as defined in the Plan
document.
4. VESTING
Participants are immediately vested in their contributions, all Companies'
matching contributions, plus actual earnings thereon.
5. PARTICIPANT LOANS
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.
4
<PAGE> 6
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. PAYMENT OF BENEFITS
Participants are entitled to receive automatic, voluntary, in-service
(which include hardship withdrawals), or mandatory distributions as provided in
the applicable Plan provisions.
B. SUMMARY OF ACCOUNTING POLICIES:
USE OF ESTIMATES
The financial statements are prepared in conformity with accounting
principles generally accepted in the United States and, accordingly, include
amounts that are based on management's best estimates and judgments. Actual
results could differ from these estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
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. Shares of mutual funds are valued at the net asset value of the shares
held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis.
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.
C. INVESTMENTS:
The following presents investments that represent 5% or more of the Plan's
net assets as of year-end.
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Merck Common Stock Fund, 397,535 and 197,967 units,
respectively..................................... $27,346,843* $29,200,120*
</TABLE>
---------------
* Includes non-participant directed portion
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated in
value by $(2,225,927) as follows:
<TABLE>
<S> <C>
Mutual Funds........................................... $ 373,969
Common Stock Fund...................................... (2,599,896)
-----------
$(2,225,927)
===========
</TABLE>
5
<PAGE> 7
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
D. NON-PARTICIPANT-DIRECTED INVESTMENTS:
Information about the net assets and the significant components of the
changes in net assets relating to the non-participant-directed investments is as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
Net Assets:
Merck Common Stock Fund......................... $8,962,988 $9,706,619
========== ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Changes in Net Assets
Contributions.................................. $ 1,061,970
Dividends...................................... 144,109
Interest....................................... 61,601
Net depreciation............................... (854,239)
Benefits paid to participants....................... (1,030,633)
Transfers to participant directed investments and
other Plans....................................... (126,439)
-----------
$ (743,631)
===========
</TABLE>
E. RELATED-PARTY TRANSACTIONS:
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company ("Fidelity"). Fidelity is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-interest
transactions.
Merck & Co., Inc. also is a party-in-interest to the Plan under the
definition provided in Section 3(14) of ERISA. Therefore, Merck Common Stock
Fund transactions qualify as party-in-interest transactions.
All party-in-interest transactions are set forth on the attached schedules.
F. PLAN TERMINATION:
Although they have not expressed any intent to do so, the Companies have
the right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
G. TAX STATUS:
The Plan obtained a tax determination letter from the Puerto Rico
Department of Treasury dated 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.
H. PROHIBITED TRANSACTIONS:
There were no prohibited transactions during 1999.
6
<PAGE> 8
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
I. OTHER MATTERS:
Net reallocations in 1999 of ($69,920) consist of miscellaneous adjustments
made during the year.
7
<PAGE> 9
SCHEDULE H
EIN: 66-0288298
PLAN NO.: 061
MERCK PUERTO RICO
EMPLOYEE SAVINGS AND SECURITY PLAN
LINE 4i -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
<TABLE>
<CAPTION>
(C) DESCRIPTION OF INVESTMENT INCLUDING
(B) IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, COLLATERAL, (E) CURRENT
(A) LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE (D) COST VALUE
------- -------------------------------- --------------------------------------------- ----------- -----------------
<C> <S> <C> <C> <C>
* Merck & Co., Inc. Merck Common Stock Fund
1,193,664 units $14,895,723 $27,346,843
* Fidelity Investments Fidelity Equity-Income Fund
1,062 units 57,529 56,817
Fidelity Growth & Income Portfolio
11,093 units 452,435 523,160
Fidelity Retirement Money Market Fund
441,550 units 441,551 441,551
Spartan U.S. Equity Index Fund
4,358 units 175,493 227,005
Fidelity Low-Priced Stock Fund
834 units 19,462 18,888
Putnam Investments The George Putnam Fund of Boston A
10,758 units 194,185 175,142
Putnam Voyager Fund A
1,027 units 24,163 31,797
T. Rowe Price T. Rowe Price Blue Chip Growth Fund
28,292 units 706,680 1,028,124
T. Rowe Price New Income Fund
2,735 units 23,993 22,318
T. Rowe Price Mid-Cap Growth Fund
5,798 units 173,988 232,655
T. Rowe Price Dividend Growth Fund
319 units 6,809 6,445
Franklin Templeton Franklin Small Cap Growth Fund A
989 units 23,561 43,662
Templeton Developing Markets Trust A
1,385 units 17,266 21,613
The Vanguard Group Vanguard U.S. Growth Portfolio
9,416 units 321,734 409,885
The American Funds Group EuroPacific Growth Fund
5,217 units 155,598 222,557
*Participants' Loan Account (with interest
rates ranging from 6.5% to 10.0% and with
maturities through 2029) 1,956,121 1,956,121
----------- -----------
Total $19,646,291 $32,764,583
=========== ===========
</TABLE>
---------------
* Denotes a party-in-interest to the Plan.
The accompanying notes to financial statements are an integral part of this
schedule.
8
<PAGE> 10
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated May 12, 2000 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, 333-23295,
333-91769, 333-30526 and 333-31762), 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, 1999 or performed any audit procedures
subsequent to the date of our report.
ARTHUR ANDERSEN LLP
San Juan, Puerto Rico
June 27, 2000
