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EX-99.1 - EX-99.1 - Merck & Co., Inc.a18-12417_1ex99d1.htm
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Exhibit 99.2

 

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME - GAAP

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 1a

 

 

 

2018

 

2017

 

% Change

 

 

 

1Q

 

1Q

 

2Q

 

3Q

 

4Q

 

Full Year

 

1Q

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

10,037

 

$

9,434

 

$

9,930

 

$

10,325

 

$

10,433

 

$

40,122

 

6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs, Expenses and Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials and production

 

3,184

 

3,049

 

3,116

 

3,307

 

3,440

 

12,912

 

4

%

Marketing and administrative

 

2,508

 

2,472

 

2,500

 

2,459

 

2,643

 

10,074

 

1

%

Research and development

 

3,196

 

1,830

 

1,782

 

4,413

 

2,314

 

10,339

 

75

%

Restructuring costs

 

95

 

151

 

166

 

153

 

306

 

776

 

-37

%

Other (income) expense, net

 

(291

)

(71

)

(73

)

(207

)

(149

)

(500

)

*

 

Income Before Taxes

 

1,345

 

2,003

 

2,439

 

200

 

1,879

 

6,521

 

-33

%

Taxes on Income

 

604

 

447

 

488

 

251

 

2,917

 

4,103

 

 

 

Net Income (Loss)

 

741

 

1,556

 

1,951

 

(51

)

(1,038

)

2,418

 

-52

%

Less: Net Income Attributable to Noncontrolling Interests

 

5

 

5

 

5

 

5

 

8

 

24

 

 

 

Net Income (Loss) Attributable to Merck & Co., Inc.

 

$

736

 

$

1,551

 

$

1,946

 

$

(56

)

$

(1,046

)

$

2,394

 

-53

%

Earnings (Loss) per Common Share Assuming Dilution (1)

 

$

0.27

 

$

0.56

 

$

0.71

 

$

(0.02

)

$

(0.39

)

$

0.87

 

-52

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Shares Outstanding Assuming Dilution (1)

 

2,710

 

2,766

 

2,752

 

2,727

 

2,715

 

2,748

 

 

 

Tax Rate

 

44.9

%

22.3

%

20.0

%

125.5

%

155.2

%

62.9

%

 

 

 

* 100% or greater

 

Sum of quarterly amounts may not equal year-to-date amounts due to rounding.

 

On January 1, 2018, the company adopted a new accounting standard related to defined benefit plans that requires the components of net benefit cost/credit (other than service costs) be presented in the statement of income outside of operating expenses. Upon adoption, net periodic benefit cost/credit other than service cost was reclassified to Other (income) expense, net from the previous classifications within Materials and production costs, Marketing and administrative expenses and Research and development costs.  Previously reported amounts have been reclassified to conform to the new presentation. There was no impact to net income as a result of adopting the new standard.

 

(1) Because the company recorded a net loss in the third and fourth quarters of 2017, no potential dilutive common shares were used in the computations of loss per common share assuming dilution as the effects would have been anti-dilutive.

 



 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

FIRST QUARTER 2017

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

 

 

 

GAAP

 

Acquisition and
Divestiture-Related
Costs 
(1)

 

Restructuring
Costs 
(2)

 

Certain Other
Items

 

Adjustment
Subtotal

 

Non-GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials and production

 

$

3,049

 

855

 

63

 

 

 

918

 

$

2,131

 

Marketing and administrative

 

2,472

 

20

 

1

 

 

 

21

 

2,451

 

Research and development

 

1,830

 

11

 

 

 

 

 

11

 

1,819

 

Restructuring costs

 

151

 

 

 

151

 

 

 

151

 

 

Other (income) expense, net

 

(71

)

(3

)

 

 

(9

)

(12

)

(59

)

Income Before Taxes

 

2,003

 

(883

)

(215

)

9

 

(1,089

)

3,092

 

Income Tax Provision (Benefit)

 

447

 

(158

)(3)

(48

)(3)

3

(3)

(203

)

650

 

Net Income

 

1,556

 

(725

)

(167

)

6

 

(886

)

2,442

 

Net Income Attributable to Merck & Co., Inc.

 

1,551

 

(725

)

(167

)

6

 

(886

)

2,437

 

Earnings per Common Share Assuming Dilution

 

$

0.56

 

(0.26

)

(0.06

)

 

(0.32

)

$

0.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Rate

 

22.3

%

 

 

 

 

 

 

 

 

21.0

%

 

Only the line items that are affected by non-GAAP adjustments are shown.

 

Merck is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors’ understanding of the company’s results as it permits investors to understand how management assesses performance. Management uses these measures internally for planning and forecasting purposes and to measure the performance of the company along with other metrics. Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 


(1) Amounts included in materials and production costs primarily reflect $773 million of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as intangible asset impairment charges of $76 million. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions and divestitures. Amounts included in research and development expenses primarily reflect changes in the estimated fair value measurement of liabilities for contingent consideration.

 

(2) Amounts primarily include employee separation costs and accelerated depreciation associated with facilities to be closed or divested related to activities under the company’s formal restructuring programs.

 

(3) Represents the estimated tax impact on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments.

 



 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

FIRST QUARTER 2018

(AMOUNTS IN MILLIONS)

Table 3a

 

 

 

Global

 

U.S.

 

International

 

 

 

1Q 2018

 

1Q 2017

 

% Change

 

1Q 2018

 

1Q 2017

 

% Change

 

1Q 2018

 

1Q 2017

 

% Change

 

TOTAL SALES (1)

 

$

10,037

 

$

9,434

 

6

 

$

4,133

 

$

4,195

 

-1

 

$

5,904

 

$

5,239

 

13

 

PHARMACEUTICAL

 

8,919

 

8,185

 

9

 

3,716

 

3,761

 

-1

 

5,202

 

4,424

 

18

 

Oncology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Keytruda

 

1,464

 

584

 

151

 

838

 

361

 

132

 

626

 

223

 

181

 

Emend

 

125

 

133

 

-5

 

79

 

86

 

-8

 

46

 

47

 

-1

 

Temodar

 

57

 

66

 

-13

 

1

 

1

 

23

 

56

 

65

 

-14

 

Alliance Revenue - Lynparza

 

33

 

 

 

 

 

24

 

 

 

 

 

9

 

 

 

 

 

Vaccines (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gardasil / Gardasil 9

 

660

 

532

 

24

 

380

 

398

 

-4

 

280

 

134

 

109

 

ProQuad / M-M-R II / Varivax

 

392

 

355

 

10

 

312

 

298

 

5

 

80

 

57

 

41

 

RotaTeq

 

193

 

224

 

-14

 

151

 

178

 

-16

 

42

 

45

 

-7

 

Pneumovax 23

 

179

 

163

 

9

 

112

 

114

 

-1

 

66

 

49

 

35

 

Zostavax

 

65

 

154

 

-58

 

16

 

109

 

-85

 

48

 

45

 

9

 

Hospital Acute Care

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridion

 

204

 

148

 

38

 

80

 

45

 

76

 

124

 

102

 

21

 

Noxafil

 

176

 

141

 

24

 

81

 

65

 

25

 

94

 

76

 

24

 

Invanz

 

151

 

136

 

11

 

91

 

82

 

10

 

60

 

54

 

11

 

Cubicin

 

98

 

96

 

2

 

47

 

54

 

-14

 

51

 

41

 

23

 

Cancidas

 

91

 

121

 

-25

 

3

 

5

 

-33

 

88

 

116

 

-25

 

Primaxin

 

72

 

62

 

15

 

5

 

 

 

*

 

67

 

62

 

8

 

Immunology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Simponi

 

231

 

184

 

26

 

 

 

 

 

 

 

231

 

184

 

26

 

Remicade

 

167

 

229

 

-27

 

 

 

 

 

 

 

167

 

229

 

-27

 

Neuroscience

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Belsomra

 

54

 

42

 

31

 

23

 

20

 

14

 

31

 

21

 

47

 

Virology

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Isentress / Isentress HD

 

281

 

305

 

-8

 

128

 

143

 

-10

 

152

 

162

 

-6

 

Zepatier

 

131

 

378

 

-65

 

 

 

200

 

-100

 

131

 

178

 

-27

 

Cardiovascular

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zetia

 

305

 

334

 

-9

 

17

 

111

 

-84

 

287

 

222

 

29

 

Vytorin

 

167

 

241

 

-31

 

8

 

90

 

-91

 

158

 

151

 

5

 

Atozet

 

73

 

49

 

47

 

 

 

 

 

 

 

73

 

49

 

47

 

Adempas

 

68

 

84

 

-19

 

 

 

 

 

 

 

68

 

84

 

-19

 

Diabetes (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Januvia

 

880

 

839

 

5

 

465

 

507

 

-8

 

416

 

332

 

25

 

Janumet

 

544

 

496

 

10

 

192

 

195

 

-1

 

352

 

302

 

17

 

Women’s Health

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NuvaRing

 

216

 

160

 

36

 

171

 

113

 

52

 

46

 

47

 

-3

 

Implanon / Nexplanon

 

174

 

170

 

2

 

128

 

132

 

-2

 

46

 

39

 

19

 

Diversified Brands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Singulair

 

175

 

186

 

-6

 

6

 

6

 

-1

 

170

 

180

 

-6

 

Nasonex

 

122

 

139

 

-12

 

1

 

18

 

-92

 

121

 

121

 

 

 

Cozaar / Hyzaar

 

120

 

112

 

7

 

7

 

3

 

132

 

113

 

109

 

4

 

Arcoxia

 

83

 

103

 

-20

 

 

 

 

 

 

 

83

 

103

 

-20

 

Follistim AQ

 

67

 

81

 

-17

 

29

 

42

 

-30

 

39

 

40

 

-3

 

Dulera

 

57

 

82

 

-31

 

50

 

75

 

-34

 

7

 

7

 

3

 

Fosamax

 

55

 

61

 

-9

 

(2

)

1

 

*

 

57

 

60

 

-5

 

Other Pharmaceutical (4)

 

989

 

995

 

-1

 

273

 

309

 

-12

 

717

 

688

 

4

 

ANIMAL HEALTH

 

1,065

 

939

 

13

 

307

 

283

 

9

 

758

 

656

 

16

 

Livestock

 

652

 

578

 

13

 

124

 

119

 

4

 

529

 

459

 

15

 

Companion Animals

 

413

 

361

 

14

 

183

 

164

 

12

 

229

 

197

 

16

 

Other Revenues (5)

 

53

 

310

 

-83

 

110

 

151

 

-27

 

(56

)

159

 

-135

 

 


* 200% or greater

 

(1) Only select products are shown.

 

(2) Total Vaccines sales were $1,561 million and $1,516 million on a global basis for first quarter 2018 and 2017, respectively.

 

(3) Total Diabetes sales were $1,433 million and $1,338 million on a global basis for first quarter 2018 and 2017, respectively.

 

(4) Includes Pharmaceutical products not individually shown above.

 

(5) Other Revenues are comprised primarily of Healthcare Services segment revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

 



 

MERCK & CO., INC.

PHARMACEUTICAL GEOGRAPHIC SALES

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 3b

 

 

 

2018

 

2017

 

% Change

 

 

 

1Q

 

1Q

 

2Q

 

3Q

 

4Q

 

Full Year

 

1Q

 

TOTAL PHARMACEUTICAL

 

$

8,919

 

$

8,185

 

$

8,759

 

$

9,156

 

$

9,290

 

$

35,390

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

3,716

 

3,761

 

3,929

 

4,197

 

3,967

 

15,854

 

-1

 

% Pharmaceutical Sales

 

41.7

%

45.9

%

44.9

%

45.8

%

42.7

%

44.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe (1)

 

2,402

 

1,977

 

2,082

 

2,174

 

2,290

 

8,522

 

21

 

% Pharmaceutical Sales

 

26.9

%

24.2

%

23.8

%

23.7

%

24.7

%

24.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Japan

 

718

 

688

 

818

 

756

 

780

 

3,043

 

4

 

% Pharmaceutical Sales

 

8.1

%

8.4

%

9.3

%

8.3

%

8.4

%

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia Pacific

 

1,112

 

889

 

946

 

994

 

1,054

 

3,883

 

25

 

% Pharmaceutical Sales

 

12.5

%

10.9

%

10.8

%

10.9

%

11.3

%

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China

 

459

 

328

 

353

 

377

 

439

 

1,497

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Latin America

 

398

 

375

 

462

 

451

 

547

 

1,836

 

6

 

% Pharmaceutical Sales

 

4.5

%

4.6

%

5.3

%

4.9

%

5.9

%

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eastern Europe/Middle East Africa

 

335

 

255

 

314

 

349

 

397

 

1,314

 

31

 

% Pharmaceutical Sales

 

3.8

%

3.1

%

3.6

%

3.8

%

4.3

%

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

196

 

182

 

171

 

193

 

193

 

739

 

8

 

% Pharmaceutical Sales

 

2.2

%

2.2

%

2.0

%

2.1

%

2.1

%

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

42

 

58

 

37

 

42

 

62

 

199

 

-28

 

% Pharmaceutical Sales

 

0.5

%

0.7

%

0.4

%

0.5

%

0.7

%

0.6

%

 

 

 


(1) Europe primarily represents all European Union countries and the European Union accession markets.

 



 

MERCK & CO., INC.

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)
Table 4

 

OTHER (INCOME) EXPENSE, NET

 

 

 

1Q18

 

1Q17

 

Interest income

 

$

(85

)

$

(97

)

Interest expense

 

185

 

182

 

Exchange losses (gains)

 

7

 

(8

)

Equity losses from affiliates

 

52

 

13

 

Net periodic defined benefit plan (credit) cost other than service cost

 

(135

)

(129

)

Other, net

 

(315

)

(32

)

Total

 

$

(291

)

$

(71

)

 

On January 1, 2018, the company adopted a new accounting standard related to defined benefit plans that requires the components of net benefit cost/credit (other than service costs) be presented in the statement of income outside of operating expenses. Upon adoption, net periodic benefit cost/credit other than service cost was reclassified to Other (income) expense, net from the previous classifications within Materials and production costs, Marketing and administrative expenses and Research and development costs. Previously reported amounts have been reclassified to conform to the new presentation. There was no impact to net income as a result of adopting the new standard.