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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 June 30, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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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
July 31, 2002:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock 2,249,574,463
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
----- -----
Part I - Financial Information
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited, $ in millions except per share amounts)
Three Months Six Months
Ended June 30 Ended June 30
------------------------------ ------------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Sales $ 12,809.7 $ 11,893.1 $ 24,979.0 $ 23,238.2
------------ ------------ ------------ ------------
Costs, Expenses and Other
Materials and production 8,292.6 7,204.8 16,273.4 14,251.3
Marketing and administrative 1,477.8 1,637.4 2,942.5 3,143.6
Research and development 631.2 602.4 1,161.4 1,149.8
Equity income from affiliates (190.2) (215.0) (362.0) (393.6)
Other (income) expense, net 97.3 70.0 141.2 126.1
------------ ------------ ------------ ------------
10,308.7 9,299.6 20,156.5 18,277.2
------------ ------------ ------------ ------------
Income Before Taxes 2,501.0 2,593.5 4,822.5 4,961.0
Taxes on Income 750.3 778.1 1,446.8 1,488.3
------------ ------------ ------------ ------------
Net Income $ 1,750.7 $ 1,815.4 $ 3,375.7 $ 3,472.7
============ ============ ============ ============
Basic Earnings per Common Share $.77 $.79 $1.49 $1.51
Earnings per Common Share Assuming Dilution $.77 $.78 $1.47 $1.49
Dividends Declared per Common Share $.35 $.34 $.70 $.68
The accompanying notes are an integral part of this
consolidated financial statement.
- 1 -
MERCK & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 2002 AND DECEMBER 31, 2001
(Unaudited, $ in millions)
June 30 December 31
2002 2001
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 1,318.9 $ 2,144.0
Short-term investments 1,790.6 1,142.6
Accounts receivable 5,786.8 5,215.4
Inventories 3,407.3 3,579.3
Prepaid expenses and taxes 1,001.3 880.3
----------- -----------
Total current assets 13,304.9 12,961.6
----------- -----------
Investments 7,956.1 6,983.5
Property, Plant and Equipment, at cost,
net of allowance for depreciation of
$6,237.3 in 2002 and $5,853.1 in 2001 13,610.0 13,103.4
Goodwill 4,127.0 4,127.0
Other Intangibles, net 3,240.0 3,364.0
Other Assets 3,722.4 3,481.7
----------- -----------
$ 45,960.4 $ 44,021.2
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 5,045.0 $ 5,108.4
Loans payable and current portion of long-term debt 4,878.0 4,066.7
Income taxes payable 1,729.9 1,573.3
Dividends payable 791.5 795.8
----------- -----------
Total current liabilities 12,444.4 11,544.2
----------- -----------
Long-Term Debt 4,833.8 4,798.6
----------- -----------
Deferred Income Taxes and Noncurrent Liabilities 6,939.8 6,790.8
----------- -----------
Minority Interests 4,965.3 4,837.5
----------- -----------
Stockholders' Equity
Common stock
Authorized- 5,400,000,000 shares
Issued- 2,976,180,551 shares - June 30, 2002
- 2,976,129,820 shares - December 31, 2001 29.8 29.8
Other paid-in capital 6,930.2 6,907.2
Retained earnings 33,278.9 31,489.6
Accumulated other comprehensive (loss) income 47.2 10.6
----------- -----------
40,286.1 38,437.2
Less treasury stock, at cost
720,690,562 shares - June 30, 2002
703,400,499 shares - December 31, 2001 23,509.0 22,387.1
----------- -----------
Total stockholders' equity 16,777.1 16,050.1
----------- -----------
$ 45,960.4 $ 44,021.2
=========== ===========
The accompanying notes are an integral part of this
consolidated financial statement.
- 2 -
MERCK & CO., INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Unaudited, $ in millions)
Six Months
Ended June 30
--------------------------
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Income before taxes $ 4,822.5 $ 4,961.0
Adjustments to reconcile income before taxes to cash provided from operations
before taxes:
Depreciation and amortization 727.2 723.6
Other (115.1) (220.7)
Net changes in assets and liabilities (665.8) (541.6)
----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES BEFORE TAXES 4,768.8 4,922.3
INCOME TAXES PAID (1,126.3) (1,555.2)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,642.5 3,367.1
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,116.6) (1,435.1)
Purchase of securities, subsidiaries and other investments (14,419.8) (15,518.5)
Proceeds from sale of securities, subsidiaries and other investments 12,930.7 14,474.1
Other 2.3 (44.1)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (2,603.4) (2,523.6)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term borrowings (1,672.9) 1,960.3
Proceeds from issuance of debt 2,500.9 566.2
Payments on debt (1.7) (11.1)
Purchase of treasury stock (1,324.0) (2,181.4)
Dividends paid to stockholders (1,590.7) (1,567.7)
Other 154.4 44.3
----------- -----------
NET CASH USED BY FINANCING ACTIVITIES (1,934.0) (1,189.4)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 69.8 (82.5)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (825.1) (428.4)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,144.0 2,536.8
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,318.9 $ 2,108.4
=========== ===========
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.
The results of operations of any interim period are not necessarily
indicative of the results of operations for the full year. 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 -
Notes to Consolidated Financial Statements (continued)
2. Inventories consisted of:
($ in millions)
----------------------------------
June 30 December 31
2002 2001
--------------- --------------
Finished goods $ 2,024.2 $ 2,155.7
Raw materials and work in process 1,304.1 1,340.7
Supplies 79.0 82.9
--------------- --------------
Total (approximates current cost) 3,407.3 3,579.3
Reduction to LIFO cost -- --
--------------- --------------
$ 3,407.3 $ 3,579.3
=============== ==============
3. Effective January 1, 2002, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets (FAS 142), which addresses the recognition and measurement of
goodwill and other intangible assets subsequent to a business combination.
Goodwill
In accordance with FAS 142, goodwill associated with acquisitions
subsequent to June 30, 2001 was not amortized. Effective January 1, 2002,
goodwill existing at June 30, 2001 was not amortized, but rather assigned
to reporting units within the Company's segments and evaluated for
impairment on at least an annual basis using a fair value based test. Had
amortization expense for goodwill not been recorded for the three and six
months ended June 30, 2001, reported net income would have increased $33.1
million ($.01 for both basic earnings per common share and earnings per
common share assuming dilution) and $66.3 million ($.03 for both basic
earnings per common share and earnings per common share assuming dilution),
respectively. In the second quarter of 2002, the Company completed its
transitional goodwill impairment test and determined that goodwill was not
impaired under the provisions of the new guidance.
Other Intangibles
Aggregate amortization expense for the three months ended June 30, 2002 and
2001 totaled $62.0 million and $58.4 million, respectively. Aggregate
amortization expense for the six months ended June 30, 2002 and 2001
totaled $124.4 million and $116.7 million, respectively. Amortization
expense is recorded in Materials and production expense and Other (income)
expense, net. The estimated aggregate amortization expense for each of the
next five years is as follows: 2002, $248.0 million; 2003, $245.0 million;
2004, $240.0 million; 2005, $211.0 million; and 2006, $190.0 million. Other
intangibles consisted of:
($ in millions)
---------------------------------
June 30 December 31
2002 2001
-------------- --------------
Customer relationships - Medco Health $ 3,172.2 $ 3,172.2
Patents and product rights 1,355.2 1,355.2
Other 123.3 122.9
-------------- --------------
Total acquired cost $ 4,650.7 $ 4,650.3
============== ==============
Customer relationships - Medco Health $ 714.9 $ 672.5
Patents and product rights 620.1 545.8
Other 75.7 68.0
-------------- --------------
Total accumulated amortization $ 1,410.7 $ 1,286.3
============== ==============
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. Since that time, the
Company has entered into other settlements on satisfactory terms. In
October 2001, the Judicial Panel on Multi-District Litigation (Panel)
determined that consolidated pretrial proceedings in federal district court
in Chicago were substantially completed. The Panel ordered that all of the
federal antitrust conspiracy cases, several of which have not been settled
by the Company, be returned to the federal district courts in which each
case was originally filed. The cases were returned to those courts, and
have since been transferred to the federal court in Brooklyn, New York for
further proceedings. The Company has not engaged in any conspiracy, and no
admission of wrongdoing was made nor was included in any settlement
agreements. While it is not feasible to predict or determine the final
outcome of the remaining 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.
- 4 -
Notes to Consolidated Financial Statements (continued)
5. Sales consisted of:
($ in millions)
----------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------------------- -------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
Atherosclerosis $ 1,697.5 $ 1,495.6 $ 3,368.1 $ 3,158.4
Hypertension/heart failure 1,110.3 1,128.4 2,095.7 2,145.9
Anti-inflammatory/analgesics 866.8 744.7 1,534.0 1,251.3
Osteoporosis 641.6 492.4 1,202.6 841.6
Vaccines/biologicals 320.4 250.0 477.3 488.7
Respiratory 251.2 378.9 719.3 676.6
Anti-bacterial/anti-fungal 208.3 202.0 383.1 395.3
Ophthalmologicals 171.3 170.3 309.2 333.1
Human immunodeficiency virus (HIV) 86.2 98.3 157.9 222.0
Anti-ulcerants 15.8 107.2 32.6 294.1
Other (179.9) 254.9 (226.5) 478.4
Medco Health 7,620.2 6,570.4 14,925.7 12,952.8
----------- ----------- ----------- -----------
$ 12,809.7 $ 11,893.1 $ 24,979.0 $ 23,238.2
=========== =========== =========== ===========
Other includes rebates and discounts on Merck pharmaceutical products,
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. Medco Health primarily
includes Medco Health sales of non-Merck products and Medco Health
pharmaceutical benefit services, principally sales of prescription drugs
through managed prescription drug programs, as well as services provided
through programs to manage patient health and drug utilization.
6. Other (income) expense, net, consisted of:
($ in millions)
-----------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Interest income $ (105.5) $ (129.6) $ (203.9) $ (265.7)
Interest expense 97.5 122.7 192.8 233.4
Exchange losses (gains) 5.3 (7.5) 2.6 (20.1)
Minority interests 59.9 60.7 110.6 146.0
Amortization of goodwill and other intangibles 51.0 80.5 102.4 161.1
Other, net (10.9) (56.8) (63.3) (128.6)
-------- -------- -------- --------
$ 97.3 $ 70.0 $ 141.2 $ 126.1
======== ======== ======== ========
Minority interests include third parties' share of exchange gains and
losses arising from translation of the financial statements into U.S.
dollars.
Decreased amortization of goodwill and other intangibles in the three and
six-month periods ended June 30, 2002 reflects the adoption of SFAS 142.
(See Note 3 for further information.)
Interest paid for the six-month periods ended June 30, 2002 and 2001 was
$177.7 million and $222.4 million, respectively.
7. The weighted average common shares used in the computations of basic
earnings per common share and earnings per common share assuming dilution
(shares in millions) are as follows:
Three Months Six Months
Ended June 30 Ended June 30
------------------ ------------------
2002 2001 2002 2001
------- ------- ------- -------
Average common shares outstanding 2,262.7 2,290.8 2,266.8 2,297.2
Common shares issuable(1) 20.1 37.4 21.8 39.8
------- ------- ------- -------
Average common shares outstanding assuming dilution 2,282.8 2,328.2 2,288.6 2,337.0
======= ======= ======= =======
(1) Issuable primarily under stock option plans.
- 5 -
Notes to Consolidated Financial Statements (continued)
8. Comprehensive income for the three months ended June 30, 2002 and 2001,
representing all changes in stockholders' equity during the period other
than changes resulting from the Company's stock, was $1,852.8 million and
$1,772.8 million, respectively. Comprehensive income for the six months
ended June 30, 2002 and 2001 was $3,412.3 and $3,506.3 million,
respectively.
9. The Company's operations are principally managed on a products and services
basis and are comprised of two reportable segments: Merck Pharmaceutical,
which includes products marketed either directly or through joint ventures,
and Medco Health. Merck Pharmaceutical products consist of therapeutic and
preventive agents, sold by prescription, for the treatment of human
disorders. Medco Health revenues consist principally of sales of
prescription drugs to members, either through Medco Health's home delivery
pharmacies or through Medco Health's network of contractually affiliated
pharmacies, as well as services provided through programs to manage patient
health and drug utilization. Medco Health revenues in the following table
reflect sales of prescription drugs on a drug spend basis, in accordance
with the Company's internal management system, including amounts not
reportable as revenues in the Consolidated Statement of Income (See page 10
of this report for Medco Health operating results on a stand-alone basis;
the revenues presented therein exclude such amounts). All Other includes
non-reportable human and animal health segments. Revenues and profits for
these segments are as follows:
($ in millions)
Three Months Six Months
Ended June 30 Ended June 30
2002 2001 2002 2001
----------- ----------- ----------- -----------
Segment revenues:
Merck Pharmaceutical $ 4,733.0 $ 4,918.1 $ 9,341.1 $ 9,478.2
Medco Health 8,463.6 7,380.4 16,652.6 14,592.5
All Other 377.7 313.3 589.5 615.6
----------- ----------- ----------- -----------
$ 13,574.3 $ 12,611.8 $ 26,583.2 $ 24,686.3
=========== =========== =========== ===========
Segment profits:
Merck Pharmaceutical $ 2,969.5 $ 2,950.2 $ 5,938.6 $ 5,804.7
Medco Health 209.4 180.9 342.1 323.0
All Other 350.8 248.4 529.0 476.8
----------- ----------- ----------- -----------
$ 3,529.7 $ 3,379.5 $ 6,809.7 $ 6,604.5
=========== =========== =========== ===========
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 affiliates 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 segment profits.
The vast majority of goodwill amortization in 2001, as well as other
intangibles amortization, predominantly related to the Medco Health
business, as well as the cost of financing capital employed, also are not
allocated internally and, therefore, are not included in segment profits.
A reconciliation of total segment profits to consolidated income before
taxes is as follows:
($ in millions)
-------------------------------------------------
Three Months Six Months
Ended June 30 Ended June 30
----------------------- -----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Segment profits $ 3,529.7 $ 3,379.5 $ 6,809.7 $ 6,604.5
Other profits 57.2 78.3 84.7 150.6
Adjustments 108.7 101.0 189.0 174.0
Unallocated:
Interest income 105.5 129.6 203.9 265.7
Interest expense (97.5) (122.7) (192.8) (233.4)
Equity income (loss) from affiliates 75.0 117.7 145.2 186.0
Depreciation and amortization (283.3) (288.2) (568.9) (573.6)
Research and development (631.2) (602.4) (1,161.4) (1,149.8)
Other expenses, net (363.1) (199.3) (686.9) (463.0)
---------- ---------- ---------- ----------
$ 2,501.0 $ 2,593.5 $ 4,822.5 $ 4,961.0
========== ========== ========== ==========
- 6-
Notes to Consolidated Financial Statements (continued)
Other profits are primarily comprised of miscellaneous corporate profits as
well as operating profits related to divested products or businesses and
other supply sales. Adjustments represent the elimination of the effect of
double counting certain items of income and expense. Equity income (loss)
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.
Merck's wholly owned subsidiary, Merck-Medco Managed Care, L.L.C.,
converted from a limited liability company to a Delaware corporation in May
2002 and subsequently changed its name to Medco Health Solutions, Inc.
(Medco Health). In July 2002, Merck announced that due solely to market
conditions it was postponing the initial public offering of shares of Medco
Health and it withdrew the associated equity registration statement. Merck
remains fully committed to the establishment of Medco Health as a separate,
publicly traded company and intends to complete the separation within 12
months of July 2002, subject to market conditions.
10. Legal proceedings to which the Company is a party are discussed in Part I
Item 3, Legal Proceedings, in the 2001 Annual Report on Form 10-K. Current
developments are addressed in Part II of this filing.
- 7 -
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION
Operating Results
Earnings per share for the second quarter of 2002 were $0.77, compared to $0.78
in the second quarter of 2001. Net income was $1,750.7 million, compared to
$1,815.4 million in the second quarter of last year. Sales were $12.8 billion
for the quarter, an increase of 8% compared to the same period last year.
For the first six months of 2002, earnings per share were $1.47, compared to
$1.49 in the first six months of 2001. Net income was $3,375.7 million, compared
to $3,472.7 million for the first six months of 2001. Sales grew 7% for the
period to $25.0 billion.
Merck's five key growth drivers - `Zocor', `Vioxx', `Fosamax', `Cozaar' and
`Hyzaar'*, and `Singulair'- collectively had increased sales of 14% for the
quarter and drove Merck's human health sales performance. Overall, Merck's human
health sales decreased 3% and 2% for the second quarter and first six months,
respectively. The human health sales performance includes a 4 point and 6 point
unfavorable effect for the second quarter and six months, respectively, from
products affected by patent expirations, including `Vasotec', `Vaseretic',
`Pepcid', `Mevacor' and `Prinivil'. Excluding the unfavorable effect from
foreign exchange, the Company's human health sales decreased by 2% for the
second quarter and were in line with the first six months. Sales outside of the
United States accounted for 38% of the Company's first six months of 2002 human
health sales. Supply sales to AstraZeneca LP (AZLP) were below 2001 for the
second quarter and first six months, reflecting lower `Prilosec' and `Nexium'
requirements from AZLP. Merck's overall sales growth also reflected the impact
of Medco Health Solutions, Inc.'s (Medco Health) sales, which increased this
quarter by 16% over the second quarter of 2001.
The Company's gross margin was 35.3% in the 2002 second quarter compared to
39.4% in the 2001 second quarter and 34.9% compared to 38.7% for the respective
six-month periods. Gross margin reductions in 2002 reflect the growth in the
lower-margin Medco Health business as well as effects from product mix. Full
year 2002 gross margin is expected to approximate 36%.
While Merck continues to invest in support of its key inline products and
product introductions, its Marketing and Administrative expenses decreased 10%
and 6% compared to the second quarter and first six months of 2001,
respectively. This decrease reflects accelerated operational-efficiency and work
redesign initiatives to reduce the Company's overall cost structure. Marketing
and Administrative expenses for the full year 2002 are anticipated to grow in
the low single digits over the full year 2001 expense, primarily due to spending
to support the launch of new claims on certain existing products and the
annualization effect from the addition of 500 new sales representatives in 2002,
which completes the U.S. sales force expansion of 1,500 representatives.
Research and development expenses increased 5% compared to the 2001 second
quarter and 1% on a year-to-date basis. R&D reflects increased investment in
later stage projects and continued significant investment in basic research,
which increased 14% in the 2002 second quarter. For the full year 2002, research
and development expenses are expected to be in the range of $2.7 to $2.8
billion, below the original guidance of $2.9 billion for 2002, reflecting the
timing of Phase III clinical trials as well as savings associated with
operational efficiency initiatives.
Results for the second quarter and first six months of 2002 reflect a 30.0%
effective income tax rate. The Company's effective income tax rate for the year
2002 is expected to approximate 30.0% to 30.5%, which is consistent with the
2001 rate of 30.0%.
`Zocor', Merck's cholesterol-modifying medicine, continued its strong
performance with second-quarter global sales of $1.6 billion, an increase of 19%
from the comparable prior year period. Six-month sales totaled $3.2 billion, an
increase of 12% from the first half of 2001. Wholesaler buying patterns
negatively impacted second quarter and year-to-date sales by approximately $260
million and $395 million, respectively. Results from the Heart Protection Study
(HPS), the largest-ever study using a cholesterol-modifying medicine, were
published earlier this month in The Lancet. According to the results, `Zocor' 40
mg helped save lives by reducing the risk of heart attack and stroke by
one-fourth in a broad range of patients with heart disease or at high risk for
heart disease. These results were consistent even in patients whose cholesterol
levels were not high enough to require drug treatment under current treatment
guidelines from around the world. The study, conducted by world-renowned Oxford
University, also demonstrated heart-disease reductions with `Zocor' 40 mg in all
patient populations studied, including women, the elderly and high-risk groups,
such as those with history of heart attacks, diabetes, hypertension or vascular
disease. The HPS also showed the safety and tolerability profile of `Zocor' 40
mg to be similar to placebo. Merck remains on track to file the results of the
HPS with the U.S. Food and Drug Administration (FDA) this year.
Global sales of `Fosamax', the leading product worldwide for the treatment of
postmenopausal, male and glucocorticoid-induced osteoporosis, were $640 million
in the second quarter of 2002, an increase of 31% over the 2001 second quarter.
Six-month sales of `Fosamax' totaled $1.2 billion, an increase of 43% over the
same period last year. Wholesaler buying
* `Cozaar' and `Hyzaar' are registered trademarks of E.I. DuPont de Nemours &
Company, Wilmington, DE, USA.
- 8 -
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
patterns favorably impacted second quarter and year-to-date sales by
approximately $65 million and $105 million, respectively. Patient acceptance of
`Fosamax' has been fueled by the Once Weekly formulation, which represents
nearly 90 percent of U.S. prescriptions and is available in more than 70
countries worldwide. Significant market potential remains for `Fosamax' because
less than 25 percent of the more than 50 million postmenopausal women with
osteoporosis worldwide are currently diagnosed and treated.
`Cozaar' and `Hyzaar', Merck's high-blood pressure medicines, together are the
No. 1 angiotensin II antagonists (AIIAs) worldwide. In the second quarter,
global sales for the two products reached $565 million, an 11% increase from the
2001 second quarter. Sales for the first six months of 2002 totaled $1.0
billion, up 15% from the comparable 2001 period. New indications have been
granted in 10 countries outside the United States as a result of the Reduction
of Endpoints in Non-Insulin Dependent Diabetes Mellitus with the Angiotensin II
Antagonist Losartan (RENAAL) study, which showed that `Cozaar' delayed the
progression of renal disease in patients with Type 2 diabetes and proteinuria.
In April, the Cardio-Renal Advisory Committee of the FDA recommended that the
FDA approve `Cozaar' to delay the progression of renal disease in patients with
Type 2 diabetes with proteinuria. The Advisory Committee's recommendation is not
binding on the FDA. Merck is currently in discussions with the FDA regarding
including the RENAAL study results in the `Cozaar' label.
Merck has filed the Losartan Intervention for Endpoint Reduction in Hypertension
(LIFE) study with the FDA for inclusion in the `Cozaar' label. This five-year
study in patients with hypertension and left ventricular hypertrophy (enlarged,
damaged hearts) compared `Cozaar' with the beta blocker atenolol, an established
antihypertensive treatment.
`Singulair', Merck's once-a-day leukotriene receptor antagonist, remains the No.
1 prescribed asthma controller in the United States. Recently, the FDA granted
approval for an update to the product label for `Singulair' to reference the
findings of exploratory efficacy evaluations from a safety and tolerability
study of patients 2 to 5 years old completed in 1999. The efficacy-evaluation
findings, along with extrapolation of efficacy data from another study with
older pediatric patients, support the overall conclusion that `Singulair' is
efficacious in the maintenance treatment of asthma in patients 2 to 5 years old.
Merck has also submitted an application for FDA approval for the use of
`Singulair' for allergic rhinitis, which affects more than 60 million people in
the United States alone. In addition, `Singulair' has been approved and launched
for the treatment of seasonal allergic rhinitis in Mexico. Global sales for
`Singulair' this quarter decreased 33% to $250 million. For the first six months
of 2002,`Singulair' sales were up 7% over the prior year period to $720 million.
While wholesaler buying patterns negatively impacted second quarter and
year-to-date sales by approximately $165 million and $65 million, respectively,
total prescription volume was up 22% in the second quarter.
Global sales of `Vioxx', the Company's second-largest selling medicine, were
$845 million this quarter, an increase of 17% over the 2001 second quarter. On a
year-to-date basis, `Vioxx' sales totaled $1.5 billion, an increase of 24% over
the first half of 2001. Wholesaler buying patterns favorably impacted second
quarter and year-to-date sales by approximately $155 million and $115 million,
respectively. In April, the FDA approved changes to the prescribing information
to include results from the landmark `Vioxx' Gastrointestinal Outcomes Research
(VIGOR) study and a new indication with `Vioxx' 25 mg for the relief of the
signs and symptoms of rheumatoid arthritis in adults. `Vioxx' now is the only
COX-2 specific inhibitor with a label demonstrating the proven risk reductions
in clinically important gastrointestinal events compared to the non-steroidal
anti-inflammatory drug (NSAID) naproxen and the only COX-2 specific inhibitor to
offer once-daily 24-hour relief for osteoarthritis, rheumatoid arthritis and
acute pain.
The Company announced in June plans to refile an expanded New Drug Application
for `Arcoxia' with the FDA in the second half of 2003. The Company plans to seek
indications for ankylosing spondylitis (a chronic, inflammatory disorder
primarily involving the spine), osteoarthritis, rheumatoid arthritis, chronic
pain, acute pain, dysmenorrhea (menstrual pain) and acute gouty arthritis.
To enhance its filing for the broad range of acute pain indications, including
gout, Merck will provide data to the FDA from several ongoing studies on
`Arcoxia' in acute pain. In response to the FDA's request for additional data on
the cardiovascular safety of `Arcoxia', Merck is enrolling patients in a large
clinical trial comparing `Arcoxia' to a non-naproxen non-steroidal
anti-inflammatory drug. Patient enrollment began in June. Both gastrointestinal
and cardiovascular safety data will be collected in this study.
Results from a study of `Arcoxia' in acute gouty arthritis - the largest ever
reported in patients with the disease - were published in the June 22 issue of
the British Medical Journal. The study showed that `Arcoxia' 120 mg once daily
provided the same degree of pain relief as indomethacin (50 mg three times
daily), which has been a widely used treatment for acute gouty arthritis for
more than three decades.
- 9 -
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
The worldwide regulatory process for `Arcoxia' continues. To date, it has been
approved and launched in the United Kingdom and several countries in Latin
America. The European regulatory review for `Arcoxia' has been completed with
approval in the European Union, with the exception of France and Germany, as a
once-a-day treatment for osteoarthritis, rheumatoid arthritis and acute gouty
arthritis. Merck has withdrawn the application from France and Germany to allow
for additional discussions in separate procedures in those countries. Merck
expects to receive regulatory approval of the drug in other countries over the
next few months.
France has referred all COX-2 specific medicines on the market or currently
under regulatory review to the CPMP, the European scientific regulatory agency,
to discuss the gastrointestinal and cardiovascular safety of the coxib class.
The Transparency Commission, responsible for pricing and reimbursement in
France, is seeking to evaluate the medical benefit of currently marketed COX-2
inhibitors versus traditional NSAIDs.
At the World Congress of Cardiology meeting in May, Merck/Schering-Plough
Pharmaceuticals reported results from two Phase III clinical trials that showed
that `Zetia' 10 mg provided additional reductions in LDL-C ("bad" cholesterol)
when co-administered with either pravastatin or lovastatin. The reductions in
these studies were similar to the reductions previously reported in
co-administration studies of `Zetia', an investigational cholesterol absorption
inhibitor, with simvastatin and atorvastatin.
Also in May, a study published in Circulation showed that `Zetia' provided
patients with homozygous familial hypercholesterolemia - a rare genetic disorder
that results in extremely high total cholesterol levels - with an additional 21
percent to 28 percent reduction in LDL-C when added to statin therapy, compared
to a 7 percent reduction observed when simvastatin or atorvastatin administered
alone were doubled to the maximum recommended dose of 80 mg.
In July 2002, Merck announced that due solely to market conditions it was
postponing the initial public offering of shares of its wholly owned subsidiary,
Medco Health, and it withdrew the associated equity registration statement.
Merck remains fully committed to the establishment of Medco Health as a
separate, publicly traded company and intends to complete the separation within
12 months of July 2002, subject to market conditions. Statement of Financial
Accounting Standards (FAS) No.144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which was effective for the Company on January 1, 2002,
precludes the reporting of a business to be distributed to stockholders as
discontinued operations until the disposal date. The following supplemental
information and discussion represents the stand-alone summarized operating
results of Merck excluding Medco Health and the stand-alone summarized operating
results of Medco Health. The combination of the historical stand-alone operating
results of Merck and Medco Health will not equal Merck's consolidated operating
results. Certain consolidating adjustments are necessary in the preparation of
such consolidated operating results, associated primarily with sales of Merck
products by Medco Health and related rebates received by Medco Health from
Merck. The financial information included herein may not be indicative of the
consolidated operating results of either Merck & Co., Inc. or Medco Health in
the future, or what they would have been had Medco Health been a separate
company during the periods presented.
Merck & Co., Inc. On a Stand-alone Basis
($ in millions) Quarter Ended June 30 Six Months Ended June 30
--------------------- ------------------------
2002 2001 2002 2001
---------- --------- ---------- ------------
Sales .................. $ 5,159.6 $ 5,287.8 $ 9,962.0 $ 10,183.6
Materials and production 942.1 886.0 1,806.3 1,748.8
Income before taxes .... 2,351.8 2,477.5 4,564.8 4,757.0
Net income ............. 1,655.7 1,756.5 3,213.6 3,372.7
Medco Health Solutions On a Stand-alone Basis
($ in millions) Quarter Ended June 30 Six Months Ended June 30
--------------------- ------------------------
2002 2001 2002 2001
---------- --------- ----------- -----------
Net revenues ...... $ 8,363.4 $ 7,229.0 $ 16,379.5 $ 14,271.1
Cost of revenues .. 8,024.7 6,910.7 15,782.5 13,673.2
Income before taxes 179.5 129.0 282.2 219.5
Net income ........ 104.6 63.9 164.2 108.7
- 10 -
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
Medco Health continued to deliver strong net revenues growth in the second
quarter and first six months, increasing over the prior year by 16 percent and
15 percent, respectively. The net revenues increase primarily reflects increased
prices charged by manufacturers and increased representation of new and higher
cost drugs in the brand name prescription base as well as higher prescription
drug utilization. Medco Health's home delivery pharmacy maintained its
leadership position, dispensing 20.6 million prescriptions out of its home
delivery pharmacies in the second quarter. Medco Health's home delivery
prescriptions grew by 12 percent over the second quarter 2001, and now represent
15 percent of Medco Health's total prescription business. Medco Health
administered 140 million prescriptions in total during the quarter. Continuing
as the world's largest Internet pharmacy, medcohealth.com processed 2.7 million
prescriptions in the second quarter, an approximate 59 percent increase over 1.7
million prescriptions processed in the second quarter of 2001.
Medco Health's gross margin was 4.0% and 4.4% for the second quarter of 2002 and
2001, respectively, and 3.6% and 4.2% for the first six months of 2002 and 2001,
respectively. The decrease in margin reflects the impact of competitive pricing
pressures, reduced discounting by pharmaceutical manufacturers, reduced rate of
retention of rebates received from pharmaceutical manufacturers and operating
costs resulting from new business initiated in the beginning of 2002. Included
in net revenues and cost of revenues are retail co-payments of approximately
$1,640.0 million and $1,342.0 million for the second quarter of 2002 and 2001,
respectively, and approximately $3,280.0 million and $2,720.0 million for the
first six months of 2002 and 2001, respectively.
Medco Health revenues are recognized when prescriptions are dispensed to members
of Medco Health clients through its home delivery pharmacies or retail
pharmacies in its contractually affiliated networks. Medco Health's
responsibilities under client contracts to adjudicate member claims properly and
control clients' drug spend, the separate contractual pricing relationships and
responsibilities to the retail pharmacies in the networks, and interaction with
members, among other indicators, qualify Medco Health as the principal under the
indicators set forth in EITF 99-19, Reporting Gross Revenue as a Principal vs.
Net as an Agent, in most of its transactions with customers. Revenues are
recognized from Medco Health's home delivery pharmacies and retail network
contracts where it is the principal, on a gross basis, in accordance with EITF
99-19 at the prescription price (ingredient cost plus dispensing fee) negotiated
with the clients, including the portion of the price to be settled directly by
the member (copayment) plus Medco Health's administrative fees. Although Medco
Health does not have credit risk with respect to retail copayments, all of the
above indicators of gross treatment are present. In addition, these copayments
are viewed as a mechanism that Medco Health negotiates with the clients to help
the clients manage their retained prescription drug spending costs, and the
level of copayments does not affect Medco Health's rebates or margin on the
transaction. Where the terms of the contracts and nature of Medco Health's
involvement in the prescription fulfillment process do not qualify it as a
principal under EITF 99-19, revenues on those transactions consist of the
administrative fee paid to Medco Health by the clients.
In June 2002, Medco Health entered into two swap-based rate lock agreements
which hedged the benchmark interest rates associated with its anticipated July
2002 issuances of $500 million each of 5-year and 10-year fixed rate notes. The
notes were to be issued concurrently or just subsequent to the completion of the
proposed initial public offering of Medco Health shares. The swap-based
contracts were designated as hedges of the variability in cash flows for the
future semiannual interest payments on the anticipated debt offerings due to
changes in the LIBOR swap benchmark interest rate during the period prior to the
expected issuances. Losses on the contracts upon maturity totaled approximately
$7.0 million. Because it is probable that the specific hedged forecasted
transactions will not occur within two months of the dates originally specified,
this amount was charged to Other (income) expense, net in the second quarter.
Outlook
The Company continues to anticipate earnings per share (EPS) for 2002, on an
as-reported basis, to be at the same level as 2001 results. The 2002 as-reported
EPS will be affected by the benefit from the implementation of FAS 142, Goodwill
and Other Intangible Assets, regarding goodwill amortization, most of which
relates to Merck's 1993 acquisition of Medco Health, and could be affected by
the timing of the completion of the previously announced separation of Medco
Health. The Company expects its core pharmaceutical business to deliver
double-digit earnings-per-share growth in 2003.
Liquidity and Capital Resources
- ---------------------------------------------------------------------------------------------
($ in millions) June 30, 2002 December 31, 2001
- ---------------------------------------------------------------------------------------------
Cash, cash equivalents and short-term
investments ............................ $ 3,109.5 $ 3,286.6
Working capital .......................... $ 860.5 $ 1,417.4
Total debt to total liabilities and equity 21.1% 20.1%
- 11 -
MANAGEMENT'S ANALYSIS OF INTERIM FINANCIAL INFORMATION (continued)
Cash provided by operations continues to be the Company's primary source of
funds to finance operating needs and capital expenditures. Net cash provided by
operating activities totaled $3.6 billion and $3.4 billion for the six months
ended June 30, 2002 and 2001, respectively. Income taxes paid totaled $1.1
billion and $1.6 billion for the six months ended June 30, 2002 and 2001,
respectively.
Capital expenditures for the six months totaled $1.1 billion and $1.4 billion in
2002 and 2001, respectively. Capital expenditures for the full year 2002 are
expected to approximate $2.6 billion.
In March 2002, the Company issued $2.5 billion of commercial paper (CP). The
proceeds from these borrowings were used to repay maturing shorter-dated CP and
for other corporate purposes.
On May 28, 2002, the Board of Directors declared a quarterly dividend of 35
cents per share on the Company's common stock for the third quarter of 2002,
which was paid on July 1, 2002 to stockholders of record at the close of
business on June 7, 2002. On July 23, 2002, the Board of Directors declared a
quarterly dividend of 36 cents per share on the Company's common stock for the
fourth quarter of 2002. The Company's total dividends paid during 2002 will be
$1.41 per share, a 3 percent increase over the amount paid during the same
period in 2001.
In July 2002, the Board of Directors also approved purchases over time of up to
an additional $10 billion of Merck shares. The Company is currently making
purchases under a February 2000, $10 billion authorization. Through June 30,
2002, the Company purchased 115.3 million treasury shares at an aggregate cost
of $7.7 billion under that program. Treasury stock purchases totaled $1.3
billion during the first six months of 2002 compared with $2.2 billion for the
first half of 2001.
Other Matters
The Company has been named as a defendant in a number of federal lawsuits, all
of which purport to be class actions, and in one state derivative action,
relating to the Company's practice of recognizing in the Company's revenue
retail co-payments paid by individuals to whom Medco Health provides
pharmaceutical benefits. Five current or former members of management and the
members of the board of directors have also been named as defendants in certain
of these lawsuits. The Company believes that these lawsuits are completely
without merit and will vigorously defend against them.
Plaintiffs claiming to represent six pharmaceutical benefit plans for which
Medco Health is the pharmaceutical benefit manager, have sued Medco Health and
the Company in federal court in New York. The suits, which are similar to claims
against other pharmaceutical benefit managers in other pending cases, allege
that Medco Health should be treated as a "fiduciary" under the provisions of the
Employee Retirement Income Security Act (ERISA). Plaintiffs have not yet
formally sought class-action status. The amended complaints in the lawsuits also
allege that the Company and Medco Health have violated ERISA by using Medco
Health to increase the Company's market share and by entering into certain
"prohibited transactions" with each other that favor the Company's products. The
plaintiffs have demanded that Medco Health and the Company turn over any
unlawfully obtained profits to a trust to be set up for the benefit plans. In
connection with recent settlement discussions, the plaintiffs have indicated
that they may amend their complaint against Medco Health and others to allege
violations of the Sherman Act, the Clayton Act and various states' antitrust
laws due to alleged conspiracies to suppress price competition and unlawful
combinations allegedly resulting in higher pharmaceutical prices. A motion for
summary judgment filed by Medco Health has been withdrawn. Complaints against
Medco Health and the Company also have been filed by one Northwest Airlines plan
participant and one DaimlerChrysler plan participant, purportedly on behalf of
the plans and similarly-situated self-funded plans. Class action status is being
sought in the case filed by the Northwest Airlines plan participant. Neither
Northwest Airlines nor DaimlerChrysler is a party to the lawsuit. The complaints
rely on many of the same theories as the litigation discussed above. An amended
complaint in the action brought by the DaimlerChrysler plan participant alleges
that various activities of the Company and Medco Health violate federal and
state racketeering laws. In addition, a lawsuit based on many of the same
factual allegations was recently filed against the Company and Medco Health in
California Superior Court. The theory of liability is based on a California
statute prohibiting unfair business practices. The plaintiff, who purports to
sue on behalf of the general public of California, seeks injunctive relief and
disgorgement of the revenues that were allegedly improperly received by the
Company and Medco Health. Medco Health and the Company believe that these cases
are without merit, Medco Health is not a "fiduciary" within the meaning of ERISA
and the Company has not violated ERISA or the California unfair business
practices law. Medco Health and the Company intend to vigorously defend against
them.
- 12 -
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
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, 2001, as filed on
March 21, 2002, 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.
- 13 -
Part II - Other Information
Item 1. Legal Proceedings
Information with respect to certain legal proceedings regarding alleged ERISA
violations and certain legal proceedings regarding revenue recognition of
co-payments is incorporated by reference from Management's Analysis of Interim
Financial Information contained in Part I of this report.
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were voted upon at the Annual Meeting of Stockholders held
on April 23, 2002, and received the votes set forth below:
1. All of the following persons nominated were elected to serve as
directors and received the number of votes set opposite their
respective names:
For Withheld
------------- -----------
William M. Daley 1,767,190,678 74,391,462
Raymond V. Gilmartin 1,513,082,025 328,500,116
Edward M. Scolnick, M.D. 1,520,806,393 320,775,748
Anne M. Tatlock 1,521,869,497 319,712,644
Samuel O. Thier, M.D. 1,522,213,125 319,369,016
2. A proposal to ratify the appointment of independent public accountants
received 1,802,123,975 votes FOR and 25,627,535 votes AGAINST, with
13,830,631 abstentions.
3. A stockholder proposal concerning annual election of directors received
843,947,121 votes FOR and 504,035,574 votes AGAINST, with 22,736,593
abstentions and 470,862,853 broker non-votes.
4. A stockholder proposal concerning voting "against" directors received
61,905,187 votes FOR and 1,273,928,192 votes AGAINST, with 35,057,084
abstentions and 470,691,678 broker non-votes.
5. A stockholder proposal concerning pharmaceutical pricing received
41,183,160 votes FOR and 1,290,910,465 votes AGAINST, with 38,801,508
abstentions and 470,687,008 broker non-votes.
6. A stockholder proposal concerning a "glass ceiling" review received
319,039,771 votes FOR and 997,284,975 votes AGAINST, with 54,587,986
abstentions and 470,669,409 broker non-votes.
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits
Number Description Method of Filing
------ ----------- ----------------
3(a) Restated Certificate of Incorporated by reference
Incorporation of Merck to Form 10-Q Quarterly Report
& Co., Inc. (September 1, 2000) for the period ended
September 30, 2000
3(b) By-Laws of Merck & Co., Inc. Incorporated by reference
(as amended effective to Form 10-Q Quarterly
February 25, 1997) Report for the period
ended March 31, 1997
10(a) 2001 Non-Employee Directors Filed with this document
Stock Option Plan (amended
April 19, 2002)
12 Computation of Ratios of Filed with this document
Earnings to Fixed Charges
- 14 -
Part II- Other Information (continued)
(a) Exhibits (continued)
Number Description Method of Filing
------ ----------- ----------------
99(a) Certification of Chief Executive Filed with this document
Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99(b) Certification of Chief Financial Filed with this document
Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
During the three-month period ending June 30, 2002, the Company
furnished one Current Report on Form 8-K under Item 9-Regulation FD
Disclosure: Report dated April 18, 2002 and furnished April 18, 2002,
regarding earnings for first quarter and certain supplemental
information.
- 15 -
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: August 9, 2002 /s/ Kenneth C. Frazier
----------------------------------
KENNETH C. FRAZIER
Senior Vice President and General
Counsel
Date: August 9, 2002 /s/ Richard C. Henriques
----------------------------------
RICHARD C. HENRIQUES
Vice President, Controller
- 16 -
EXHIBIT INDEX
Exhibits
Number Description
- ------ -----------
3(a) Restated Certificate of Incorporation of Merck & Co., Inc.
(September 1, 2000)
-Incorporated by reference to Form 10-Q Quarterly
Report for the period ended September 30, 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
10(a) 2001 Non-Employee Directors Stock Option Plan (amended April
19, 2002)
12 Computation of Ratios of Earnings to Fixed Charges
99(a) Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
99(b) Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002