<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission File No. 1-3305
MERCK & CO., INC.
P. O. Box 100
One Merck Drive
Whitehouse Station, N.J. 08889-0100
(908) 423-1000
Incorporated in New Jersey I.R.S. Employer Identification
No. 22-1109110
The number of shares of common stock outstanding as of the close of business
on October 31, 2000:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock 2,306,135,098
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE> 2
Part I - Financial Information
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited, $ in millions except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
------------------------------ ----------------------------
2000 1999 2000 1999
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Sales $ 10,567.5 $ 8,195.7 $ 28,895.9 $ 23,750.6
Costs, Expenses and Other
Materials and production 5,952.5 4,365.9 15,872.9 12,890.2
Marketing and administrative 1,512.8 1,272.7 4,393.5 3,611.3
Research and development 609.8 516.0 1,681.5 1,440.5
Acquired Research - 51.1 - 51.1
Equity income from affiliates (219.4) (227.1) (619.5) (581.5)
Other (income) expense, net 70.2 (17.6) 254.5 (69.1)
--------- -------- --------- ---------
7,925.9 5,961.0 21,582.9 17,342.5
--------- -------- --------- ---------
Income Before Taxes 2,641.6 2,234.7 7,313.0 6,408.1
Taxes on Income 805.7 695.1 2,255.7 2,090.8
--------- -------- --------- ---------
Net Income $ 1,835.9 $ 1,539.6 $ 5,057.3 $ 4,317.3
========= ======== ========= =========
Basic Earnings per Common Share $ .80 $ .65 $ 2.19 $ 1.83
Earnings per Common Share Assuming Dilution $ .78 $ .64 $ 2.15 $ 1.79
Dividends Declared per Common Share $ .34 $ .29 $ .92 $ .83
</TABLE>
The accompanying notes are an integral part of
this consolidated financial statement.
- 1 -
<PAGE> 3
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(Unaudited, $ in millions)
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
------------ -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,535.1 $ 2,021.9
Short-term investments 1,300.0 1,180.5
Accounts receivable 4,571.3 4,089.0
Inventories 3,099.9 2,846.9
Prepaid expenses and taxes 1,094.1 1,120.9
--------- ---------
Total current assets 11,600.4 11,259.2
--------- ---------
Investments 5,284.2 4,761.5
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$5,167.6 in 2000 and $4,670.3 in 1999 10,922.4 9,676.7
Goodwill and Other Intangibles,
net of accumulated amortization of
$1,759.7 in 2000 and $1,488.7 in 1999 7,458.4 7,584.2
Other Assets 2,742.2 2,353.3
--------- ---------
$38,007.6 $35,634.9
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 4,049.0 $ 4,158.7
Loans payable and current portion of long-term debt 3,174.5 2,859.0
Income taxes payable 914.0 1,064.1
Dividends payable 782.0 677.0
--------- ---------
Total current liabilities 8,919.5 8,758.8
--------- ---------
Long-Term Debt 3,437.6 3,143.9
--------- ---------
Deferred Income Taxes and Noncurrent Liabilities 7,115.3 7,030.1
--------- ---------
Minority Interests 5,015.2 3,460.5
--------- ---------
Stockholders' Equity
Common stock
Authorized - 5,400,000,000 shares
Issued - 2,968,224,837 shares - September 30, 2000
- 2,968,030,509 shares - December 31, 1999 29.7 29.7
Other paid-in capital 6,035.0 5,920.5
Retained earnings 26,384.2 23,447.9
Accumulated other comprehensive income 14.7 8.1
--------- ---------
32,463.6 29,406.2
Less treasury stock, at cost
670,499,132 shares - September 30, 2000
638,953,059 shares - December 31, 1999 18,943.6 16,164.6
--------- ---------
Total stockholders' equity 13,520.0 13,241.6
--------- ---------
$38,007.6 $35,634.9
========= =========
</TABLE>
The accompanying notes are an integral part of
this consolidated financial statement.
- 2 -
<PAGE> 4
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited, $ in millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30
------------------------------
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income before taxes $ 7,313.0 $ 6,408.1
Adjustments to reconcile income before taxes to cash provided from operations
before taxes:
Acquired research - 51.1
Depreciation and amortization 961.6 862.5
Other (130.2) (561.9)
Net changes in assets and liabilities (805.5) (300.5)
---------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 7,338.9 6,459.3
INCOME TAXES PAID (1,852.3) (1,669.0)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,486.6 4,790.3
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,910.3) (1,739.6)
Purchase of securities, subsidiaries and other investments (18,073.1) (31,198.7)
Proceeds from sale of securities, subsidiaries and other investments 17,126.2 29,395.2
Proceeds from relinquishment of certain AstraZeneca product rights 93.6 1,679.9
Other (20.8) (13.6)
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (2,784.4) (1,876.8)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings 599.5 979.1
Proceeds from issuance of debt 300.7 11.6
Payments on debt (442.8) (16.6)
Proceeds from issuance of preferred units of subsidiary 1,500.0 -
Purchase of treasury stock (3,263.9) (2,605.7)
Dividends paid to stockholders (2,016.0) (1,911.4)
Other 208.9 147.0
---------- ----------
NET CASH USED BY FINANCING ACTIVITIES (3,113.6) (3,396.0)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (75.4) (20.3)
---------- ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (486.8) (502.8)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,021.9 2,606.2
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,535.1 $ 2,103.4
========== ==========
</TABLE>
The accompanying notes are an integral part of
this consolidated financial statement.
Notes to Consolidated Financial Statements
1. The accompanying unaudited interim consolidated financial statements have
been prepared pursuant to the rules and regulations for reporting on Form
10-Q. Accordingly, certain information and disclosures required by
accounting principles generally accepted in the United States for
complete consolidated financial statements are not included herein. The
interim statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest Annual
Report on Form 10-K.
Interim statements are subject to possible adjustments in connection with
the annual audit of the Company's accounts for the full year 2000; in the
Company's opinion, all adjustments necessary for a fair presentation of
these interim statements have been included and are of a normal and
recurring nature.
Certain reclassifications have been made to prior year amounts to conform
with current year presentation.
- 3 -
<PAGE> 5
Notes to Consolidated Financial Statements (continued)
------------------------------------------
2. Inventories consisted of:
<TABLE>
<CAPTION>
($ in millions)
----------------------------------
September 30 December 31
2000 1999
-------------- --------------
<S> <C> <C>
Finished goods $1,976.2 $1,895.6
Raw materials and work in process 1,042.7 869.8
Supplies 81.0 81.5
-------- --------
Total (approximates current cost) 3,099.9 2,846.9
Reduction to LIFO cost - -
-------- --------
$3,099.9 $2,846.9
======== ========
</TABLE>
3. In March 2000, a wholly-owned subsidiary of the Company issued $1.5
billion par value of variable rate preferred units. The units are
redeemable at par value plus accrued dividends at the option of the
issuer at any time. They are also redeemable at the option of the holders
in March 2010, and at the end of each five-year interval, thereafter. The
preferred units are included in Minority interests in the consolidated
financial statements.
4. The Company, along with numerous other defendants, is a party in several
antitrust actions brought by retail pharmacies and consumers, alleging
conspiracies in restraint of trade and challenging pricing and/or
purchasing practices, one of which has been certified as a federal class
action and a number of which have been certified as state class actions.
In 1996, the Company and several other defendants finalized an agreement
to settle the federal class action alleging conspiracy, which represents
the single largest group of retail pharmacy claims, pursuant to which the
Company paid $51.8 million. Since that time, the Company has entered
into other settlements on satisfactory terms. The Company has not
engaged in any conspiracy, and no admission of wrongdoing was made nor
was included in the final agreements. While it is not feasible to
predict or determine the final outcome of these proceedings, management
does not believe that they should result in a materially adverse effect
on the Company's financial position, results of operations or liquidity.
5. Sales consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
--------------------- ---------------------
2000 1999 2000 1999
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Elevated cholesterol $ 1,493.4 $1,273.7 $ 4,216.8 $ 3,684.1
Hypertension/heart failure 1,175.3 1,070.3 3,515.5 3,362.6
Anti-inflammatory/analgesics 635.4 136.3 1,524.2 286.2
Osteoporosis 360.0 280.7 959.6 755.3
Vaccines/biologicals 283.1 252.9 730.7 645.8
Respiratory 234.7 129.8 614.8 330.4
Anti-ulcerants 190.8 224.3 612.9 676.4
Antibiotics 181.8 189.0 579.7 565.8
Ophthalmologicals 163.6 162.3 484.9 476.4
Human immunodeficiency virus (HIV) 139.3 169.8 411.3 495.6
Other Merck products 309.6 502.1 1,170.7 1,334.0
Merck-Medco 5,400.5 3,804.5 14,074.8 11,138.0
--------- -------- --------- ---------
$10,567.5 $8,195.7 $28,895.9 $23,750.6
========= ======== ========= =========
</TABLE>
Other Merck products include sales of other human pharmaceuticals,
continuing sales to divested businesses and pharmaceutical and animal
health supply sales to the Company's joint ventures and AstraZeneca LP.
- 4 -
<PAGE> 6
Notes to Consolidated Financial Statements (continued)
6. Other (income) expense, net, consisted of:
<TABLE>
<CAPTION>
($ in millions)
------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
----------------------- --------------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest income $(124.8) $ (95.2) $(326.4) $(264.1)
Interest expense 121.8 79.0 355.1 219.3
Exchange (gains) losses, net (14.3) (20.9) (31.8) (18.8)
Minority interests 74.8 61.8 230.8 168.5
Amortization of goodwill and other intangibles 80.8 77.8 238.2 239.0
Other, net (68.1) (120.1) (211.4) (413.0)
------- ------- ------- -------
$ 70.2 $ (17.6) $ 254.5 $ (69.1)
======= ======= ======= =======
</TABLE>
Minority interests include third parties' share of exchange gains and
losses arising from translation of the financial statements into U.S.
dollars.
Interest paid for the nine-month periods ended September 30, 2000 and
1999 was $361.9 million and $205.4 million, respectively.
7. Income taxes paid for the nine-month periods ended September 30, 2000 and
1999 were $1,852.3 million and $1,669.0 million, respectively.
8. The net income effect of dilutive securities was not significant to the
Company's calculation of Earnings per common share assuming dilution. A
reconciliation of weighted average common shares outstanding to weighted
average common shares outstanding assuming dilution follows:
<TABLE>
<CAPTION>
($ in millions)
------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
--------------------- ------------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Average common shares outstanding 2,299.4 2,343.0 2,306.7 2,353.6
Common shares issuable(1) 43.5 51.4 44.9 56.5
------- ------- ------- -------
Average common shares outstanding assuming dilution 2,342.9 2,394.4 2,351.6 2,410.1
======= ======= ======= =======
(1) Issuable primarily under stock option plans.
</TABLE>
9. Comprehensive income for the three months ended September 30, 2000 and
1999 was $1,856.8 million and $1,573.0 million, respectively.
Comprehensive income for the nine months ended September 30, 2000 and
1999 was $5,063.9 million and $4,348.4 million, respectively.
- 5 -
<PAGE> 7
Notes to Consolidated Financial Statements (continued)
10. The Company's operations are principally managed on a products and
services basis and are comprised of two reportable segments: Merck
Pharmaceutical and Merck-Medco. Merck Pharmaceutical products consist of
therapeutic agents, sold by prescription, for the treatment of human
disorders. Merck-Medco revenues are derived from the filling and
management of prescriptions and health management programs. All Other
includes non-reportable human and animal health segments. Revenues and
profits for these segments are as follows:
<TABLE>
<CAPTION>
($ in millions)
---------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
---------------------------- ---------------------------
2000 1999 2000 1999
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
Segment revenues:
Merck Pharmaceutical $ 4,183.1 $ 3,524.6 $ 11,987.6 $ 10,410.3
Merck-Medco 6,244.6 4,504.4 16,382.1 13,234.1
All Other 979.1 826.2 2,748.8 2,068.7
------------ ----------- ----------- ----------
$ 11,406.8 $ 8,855.2 $ 31,118.5 $ 25,713.1
============ =========== =========== ==========
Segment profits:
Merck Pharmaceutical $ 2,492.6 $ 2,111.6 $ 6,952.6 $ 6,306.7
Merck-Medco 179.0 146.0 471.5 397.4
All Other 918.7 800.2 2,564.1 1,933.6
------------ ----------- ----------- ----------
$ 3,590.3 $ 3,057.8 $ 9,988.2 $ 8,637.7
============ =========== =========== ==========
</TABLE>
Segment profits are comprised of segment revenues less certain elements
of materials and production costs and operating expenses, including
components of equity income (loss) from joint ventures and depreciation
and amortization expenses. The Company does not internally allocate the
vast majority of indirect production costs, research and development
expenses and general and administrative expenses, all predominantly
related to the Merck pharmaceutical business, as well as the cost of
financing these activities. Separate divisions maintain responsibility
for monitoring and managing these costs, including depreciation related
to fixed assets utilized by these divisions and, therefore, they are not
included in the marketing segment profits. The vast majority of goodwill
and other intangibles amortization, predominantly related to the
Merck-Medco business, as well as the cost of financing capital employed,
also are not allocated internally and, therefore, are not included in the
marketing segment profits.
A reconciliation of total segment profits to consolidated income before
taxes is as follows:
<TABLE>
<CAPTION>
($ in millions)
-------------------------------------------------------------------
Three Months Nine Months
Ended September 30 Ended September 30
------------------------------ --------------------------------
2000 1999 2000 1999
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
Segment profits $ 3,590.3 $ 3,057.8 $ 9,988.2 $ 8,637.7
Other profits (4.6) 17.8 25.7 63.2
Adjustments 143.3 57.5 392.7 146.2
Unallocated:
Interest income 124.8 95.2 326.4 264.1
Interest expense (121.8) (79.0) (355.1) (219.3)
Equity income from affiliates 70.2 59.9 219.4 205.5
Depreciation and amortization (244.6) (223.1) (743.3) (678.5)
Acquired research - (51.1) - (51.1)
Research and development (609.8) (516.0) (1,681.5) (1,440.5)
Other expenses, net (306.2) (184.3) (859.5) (519.2)
------------ ------------- ------------- --------------
$ 2,641.6 $ 2,234.7 $ 7,313.0 $ 6,408.1
============ ============= ============= ==============
</TABLE>
Other profits primarily represent operating income related to divested
products or businesses. Adjustments represent the elimination of the
effect of double counting certain items of income and expense. Equity
income from affiliates includes taxes paid at the joint venture level and
a portion of equity income that is not reported in segment profits. Other
expenses, net, include expenses from corporate and manufacturing cost
centers and other miscellaneous income (expense), net.
11. Legal proceedings to which the Company is a party are discussed in Part 1
Item 3, Legal Proceedings, in the 1999 Annual Report on Form 10-K. There
were no material developments in the nine-month period ended September
30, 2000.
- 6 -
<PAGE> 8
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Earnings per share for the third quarter of 2000 were $0.78, up 22% over the
third quarter of 1999. For the quarter, net income increased 19% to $1,835.9
million driven by sales of $10.6 billion, up 29% over the same period last
year.
For the first nine months, earnings per share were $2.15, an increase of 20%
over 1999. Net income grew 17% to $5,057.3 million, fueled by a 22% sales
increase to $28.9 billion for the first nine months of 2000.
Income growth for the quarter and first nine months reflects strong sales
volume gains in the U.S. and international markets, as well as manufacturing
productivity improvements. These gains helped fund research and development
and promotion programs in support of the Company's key products.
Sales volume growth was driven by the Company's human health products, which
increased 19% and 18% for the third quarter and nine months, respectively, and
the Merck-Medco Managed Care business. Sales outside of the United States
accounted for 37% of the Company's human health sales for the first nine
months. Foreign exchange reduced the human health sales growth for both the
third quarter and first nine months by one percentage point.
The Company's newest medicine, 'Vioxx', together with 'Zocor',
'Cozaar'/'Hyzaar'*, 'Fosamax', and 'Singulair' are driving Merck's strong
performance. These products accounted for 55% of Merck's worldwide human
health sales for the first nine months.
More than 15 million prescriptions in the United States alone have been
written for 'Vioxx', Merck's new medicine for osteoarthritis, since its
successful launch last year, and it continues as the world's fastest growing
prescription arthritis medicine. 'Vioxx' has now achieved nearly $1.5 billion
in sales so far this year - more than $600 million in this quarter alone. A
key reason for its success is that 'Vioxx' is the only COX-2 inhibitor
approved by the U.S. Food and Drug Administration (FDA) both for
osteoarthritis and acute pain.
A pilot study in osteoarthritis comparing 'Vioxx' and celecoxib, a competitive
product, presented at the European League Against Rheumatism in June, showed
that 'Vioxx' reduced osteoarthritis pain at night and at rest to a greater
degree than either celecoxib 200 mg or acetaminophen 4,000 mg.
In June, Merck submitted a Supplemental New Drug Application for 'Vioxx' to
the FDA to request labeling changes based on the results of the 8,000-patient
'Vioxx' Gastrointestinal Outcomes Research (VIGOR) study. In this study,
'Vioxx' reduced the incidence of serious gastrointestinal side effects, such
as ulcers and bleeding, by more than 50% compared to the nonsteroidal
anti-inflammatory drug naproxen.
Clinical programs are underway to explore other potential benefits for
'Vioxx', including the treatment of chronic pain, rheumatoid arthritis and in
the prevention and treatment of Alzheimer's disease. Merck has also begun
studies to investigate whether 'Vioxx' can reduce the number of colon polyps
in patients who suffer from them - a broad population at risk of developing
colon cancer.
Global sales of 'Zocor', Merck's cholesterol-modifying medicine, continue to
show strong growth. Worldwide sales reached nearly $1.4 billion for the third
quarter, up 18% over the same period in 1999. This performance continues to
reflect physician confidence in the product's ability to manage all key lipids
to save the lives of people with heart disease and high cholesterol.
In the United States, the market for "statin" medicines continues to expand at
about 20% a year. Opportunities for growth still remain because only about 40%
of Americans with heart disease take a prescription cholesterol-lowering
medicine.
'Cozaar' and 'Hyzaar' for high blood pressure are the world's most widely
prescribed medicines in the angiotensin II antagonist class. Growth continues
as physicians recognize the excellent efficacy and tolerability of these two
products. That fact is reflected in $405 million in sales for this quarter, a
16% increase over 1999 third quarter sales. The Company has a number of trials
underway to evaluate the medicines' effectiveness in improving survival and
reducing disability associated with hypertension, diabetic kidney disease and
recent heart attacks.
* 'Cozaar' and 'Hyzaar' are registered trademarks of E.I. du Pont de Nemours
and Company, Wilmington, DE, USA.
- 7 -
<PAGE> 9
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
'Fosamax', the leading product worldwide for treatment of postmenopausal
osteoporosis, is available in more than 100 countries and continues to show
outstanding growth. Sales totaled $360 million this quarter, 29% over the same
quarter in 1999. In response to customer preferences, the Company has
submitted applications to regulatory agencies worldwide seeking approval for
an innovative once-weekly formulation. This novel dosage form, which received
U.S. FDA approval in October, has already been launched in a number of smaller
markets around the world and has gained rapid acceptance by patients and
physicians. The Company also received FDA approval in September to market
'Fosamax' to increase bone mass in men with osteoporosis.
'Singulair', Merck's nonsteroidal oral asthma controller drug, had the most
successful launch of any asthma medicine in history and continues to show
strong growth in all markets in which it has been introduced. Sales for this
quarter were $235 million, up 81% compared to the same quarter in 1999.
'Singulair' is now the most prescribed asthma controller therapy among U.S.
pediatricians and allergists. 'Singulair' effectively helps control asthma and
is a convenient, nonsteroidal, once-a-day tablet. Regulatory approvals for use
of 'Singulair' in asthmatic children ages two to five have been received in
the United States and several countries in Latin America and approvals are
pending in countries worldwide. Therapeutic choices to treat asthma in this
difficult-to-treat age group have been limited in the past, due in part to the
difficulty of administering inhaled therapies to young children and parental
concerns about steroidal medications.
Merck-Medco Managed Care, L.L.C. (Merck-Medco), the nation's largest provider
of pharmacy services, continues to grow rapidly. More clients than ever are
ordering prescriptions through merckmedco.com, the world's leading online
pharmacy. The site processed a record 100,000 prescriptions per week in
September. Merckmedco.com now fills more prescriptions than all of the other
online pharmacies combined.
Merck-Medco has grown significantly this year, gaining new clients from two
important sources: five million people through the June acquisition of the
pharmacy benefits manager ProVantage, and nine million out of the ten million
people served by the UnitedHealth Group. Merck-Medco expects to integrate the
remaining one million UnitedHealth Group plan members in the near future.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS
133). The Statement established accounting and reporting standards requiring
that every derivative instrument be recorded in the balance sheet as either an
asset or liability measured at fair value and that changes in fair value be
recognized currently in earnings, unless specific hedge accounting criteria
are met. In June 1999, the FASB issued Statement No. 137, Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133, which delayed the Company's required adoption of
FAS 133 to January 1, 2001. The Company will adopt the Statement at that time.
In June 2000, the FASB issued Statement No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of FAS
133, which is effective concurrently with FAS 133. The Company continues to
perform extensive analysis of the Statements; however, the ultimate effect on
the Company's financial position or results of operations cannot yet be
determined.
- 8 -
<PAGE> 10
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
This report and other written reports and oral statements made from time to
time by the Company may contain so-called "forward-looking statements," all of
which are subject to risks and uncertainties. One can identify these
forward-looking statements by their use of words such as "expects," "plans,"
"will," "estimates," "forecasts," "projects" and other words of similar
meaning. One can also identify them by the fact that they do not relate
strictly to historical or current facts. These statements are likely to
address the Company's growth strategy, financial results, product approvals
and development programs. One must carefully consider any such statement and
should understand that many factors could cause actual results to differ from
the Company's forward-looking statements. These factors include inaccurate
assumptions and a broad variety of other risks and uncertainties, including
some that are known and some that are not. No forward-looking statement can be
guaranteed and actual future results may vary materially.
The Company does not assume the obligation to update any forward-looking
statement. One should carefully evaluate such statements in light of factors
described in the Company's filings with the Securities and Exchange
Commission, especially on Forms 10-K, 10-Q and 8-K (if any). In Item 1 of the
Company's Annual Report on Form 10-K for the year ended December 31, 1999, as
filed on March 22, 2000, the Company discusses in more detail various
important factors that could cause actual results to differ from expected or
historic results. The Company notes these factors for investors as permitted
by the Private Securities Litigation Reform Act of 1995. One should understand
that it is not possible to predict or identify all such factors. Consequently,
the reader should not consider any such list to be a complete statement of all
potential risks or uncertainties.
- 9 -
<PAGE> 11
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Number Description Method of Filing
------ ----------- -----------------
<S> <C> <C>
3(a) Restated Certificate of Filed with this document
Incorporation of Merck
& Co., Inc. (September 1, 2000)
3(b) By-Laws of Merck & Co., Inc. Incorporated by reference to Form 10-Q
(as amended effective Quarterly Report for the period ended
February 25, 1997) March 31, 1997
12 Computation of Ratios of Filed with this document
Earnings to Fixed Charges
27 Financial Data Schedule Filed with this document
</TABLE>
(b) Reports on Form 8-K
During the three-month period ending September 30, 2000, no current
reports on Form 8-K were filed.
- 10 -
<PAGE> 12
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCK & CO., INC.
Date: November 9, 2000 /s/ Kenneth C. Frazier
----------------------
KENNETH C. FRAZIER
Senior Vice President and General Counsel
Date: November 9, 2000 /s/ Richard C. Henriques
------------------------
RICHARD C. HENRIQUES
Vice President, Controller
- 11 -
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits
--------
Number Description
------ -----------
<S> <C>
3(a) Restated Certificate of Incorporation of Merck & Co., Inc. (September 1, 2000)
3(b) By-Laws of Merck & Co., Inc. (as amended effective February 25, 1997)
- Incorporated by reference to Form 10-Q Quarterly Report for the period ended
March 31, 1997
12 Computation of Ratios of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
