Merck & Co., Inc. - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - Merck & Co., Inc.	a16-10514_1ex99d1.htm
8-K - 8-K - Merck & Co., Inc.	a16-10514_18k.htm

Exhibit 99.2

MERCK & CO., INC.
CONSOLIDATED STATEMENT OF INCOME - GAAP
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)
(UNAUDITED)
Table 1a

	2016			2015															% Change
	1Q			1Q			2Q			3Q			4Q			Dec YTD			1Q

Sales	$	9,312		$	9,425		$	9,785		$	10,073		$	10,215		$	39,498		-1	%

Costs, Expenses and Other
Materials and production	3,572			3,569			3,754			3,761			3,850			14,934			—
Marketing and administrative	2,318			2,601			2,624			2,472			2,615			10,313			-11	%
Research and development	1,659			1,737			1,670			1,500			1,797			6,704			-4	%
Restructuring costs	91			82			191			113			233			619			11	%
Other (income) expense, net	48			55			739			(170		)	905			1,527			-13	%
Income Before Taxes	1,624			1,381			807			2,397			815			5,401			18	%
Income Tax Provision (Benefit)	494			423			119			566			(166		)	942
Net Income	1,130			958			688			1,831			981			4,459			18	%
Less: Net Income Attributable to Noncontrolling Interests	5			5			1			5			5			17
Net Income Attributable to Merck & Co., Inc.	$	1,125		$	953		$	687		$	1,826		$	976		$	4,442		18	%
Earnings per Common Share Assuming Dilution	$	0.40		$	0.33		$	0.24		$	0.64		$	0.35		$	1.56		21	%

Average Shares Outstanding Assuming Dilution	2,795			2,865			2,850			2,836			2,813			2,841
Tax Rate	30.4		%	30.6		%	14.7		%	23.6		%	-20.4		%	17.4		%

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

MERCK & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

GAAP TO NON-GAAP RECONCILIATION

FIRST QUARTER 2015

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2b

	GAAP			Acquisition and Divestiture- Related Costs (1)		Restructuring Costs (2)		Adjustment Subtotal		Non-GAAP
Sales	$	9,425								$	9,425

Costs, Expenses and Other
Materials and production	3,569			1,250		105		1,355		2,214
Marketing and administrative	2,601			227		36		263		2,338
Research and development	1,737			63		2		65		1,672
Restructuring costs	82					82		82		—
Other (income) expense, net	55			(14	)			(14	)	69
Income Before Taxes	1,381			(1,526	)	(225	)	(1,751	)	3,132
Taxes on Income	423							(278	)(3)	701
Net Income	958							(1,473	)	2,431
Less: Net Income Attributable to Noncontrolling Interests	5									5
Net Income Attributable to Merck & Co., Inc.	$	953						(1,473	)	$	2,426
Earnings per Common Share Assuming Dilution	$	0.33								$	0.85

Average Shares Outstanding Assuming Dilution	2,865									2,865
Tax Rate	30.6		%							22.4		%

Merck is providing 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 performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.

(1) Amounts included in materials and production costs reflect $1.2 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as $20 million of amortization of purchase accounting adjustments to inventories as a result of the Cubist Pharmaceuticals, Inc. acquisition. Amounts included in marketing and administrative expenses reflect integration, transaction and certain other costs related to business acquisitions, including severance costs which are not part of the company’s formal restructuring programs, as well as transaction and certain other costs related to divestitures. Amounts included in research and development expenses reflect $61 million of charges to increase the fair value of liabilities for contingent consideration, as well as $2 million of in-process research and development (“IPR&D”) impairment charges.

(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.

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

FIRST QUARTER 2016

(AMOUNTS IN MILLIONS)

Table 3a

	Global					U.S.					International
	1Q 2016		1Q 2015		% Change	1Q 2016		1Q 2015		% Change	1Q 2016		1Q 2015		% Change
TOTAL SALES (1)	$	9,312	$	9,425	-1	$	4,222	$	3,953	7	$	5,090	$	5,472	-7
PHARMACEUTICAL	8,104		8,266		-2	3,913		3,637		8	4,191		4,629		-9

Primary Care and Women’s Health
Cardiovascular
Zetia	612		568		8	386		345		12	226		223		2
Vytorin	277		320		-13	109		111		-1	168		209		-20

Diabetes
Januvia	906		884		2	549		501		10	357		383		-7
Janumet	506		509		-1	226		212		7	280		297		-6

General Medicine & Women’s Health
NuvaRing	175		166		6	128		112		14	48		54		-11
Implanon / Nexplanon	134		137		-2	99		84		18	35		53		-34
Dulera	113		130		-13	107		125		-14	6		5		11
Follistim AQ	94		82		16	53		34		55	42		47		-13

Hospital and Specialty
Hepatitis
Zepatier	50				*	49				*	1				*

HIV
Isentress	340		385		-12	162		187		-13	178		198		-11

Hospital Acute Care
Cubicin(2)	292		187		56	255		166		54	37		21		74
Noxafil	145		111		31	71		45		57	74		66		13
Cancidas	133		163		-19	4		6		-34	128		157		-18
Invanz	114		132		-14	65		67		-2	49		65		-25
Bridion	90		85		6	5				*	86		85		1
Primaxin	73		65		13	1		3		-73	73		62		17

Immunology
Remicade	349		501		-30						349		501		-30
Simponi	188		158		19						188		158		19

Oncology
Keytruda	249		83		*	133		66		*	116		16		*
Emend	126		122		3	82		78		4	44		43		1
Temodar	66		74		-12	4				*	62		74		-17

Diversified Brands
Respiratory
Singulair	237		245		-3	17		6		*	220		240		-8
Nasonex	229		289		-21	112		143		-22	117		146		-20

Other
Cozaar / Hyzaar	126		185		-32	6		8		-25	121		177		-32
Arcoxia	111		123		-10						111		123		-10
Fosamax	75		94		-20	1		3		-76	74		91		-19
Zocor	46		49		-7	4		5		-28	42		44		-4
Vaccines
Gardasil / Gardasil 9	378		359		5	320		295		8	58		64		-9
ProQuad, M-M-R II and Varivax	357		348		3	310		308		1	47		40		19
RotaTeq	188		192		-2	149		157		-5	39		35		11
Zostavax	125		175		-28	109		151		-28	16		24		-33
Pneumovax 23	107		110		-3	67		77		-13	40		33		21

Other Pharmaceutical (3)	1,093		1,235		-12	330		342		-4	759		895		-15

ANIMAL HEALTH	829		829			233		203		15	596		626		-5

Other Revenues (4)	379		330		15	76		113		-33	303		217		40

* 100% or greater

(1) Only select products are shown.

(2) First quarter of 2015 reflects approximately two months of sales following the acquisition of Cubist Pharmaceuticals, Inc. by Merck on Jan. 21, 2015. Percentages reflect comparison to full quarter of sales in 2016.

(3) Includes Pharmaceutical products not individually shown above. Other Vaccines sales included in Other Pharmaceutical were $103 million and $78 million on a global basis for first quarter 2016 and 2015, respectively.

(4) Other revenues are comprised primarily of alliance 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

	2016			2015															% Change
	1Q			1Q			2Q			3Q			4Q			Full Year			1Q
TOTAL PHARMACEUTICAL	$	8,104		$	8,266		$	8,564		$	8,925		$	9,027		$	34,782		-2

United States	3,913			3,637			3,934			4,382			4,285			16,238			8
% Pharmaceutical Sales	48.3		%	44.0		%	45.9		%	49.1		%	47.5		%	46.7		%

Europe (1)	1,914			2,024			1,896			1,920			1,873			7,714			-5
% Pharmaceutical Sales	23.6		%	24.5		%	22.1		%	21.5		%	20.8		%	22.2		%

Japan	620			627			629			564			785			2,605			-1
% Pharmaceutical Sales	7.7		%	7.6		%	7.3		%	6.3		%	8.7		%	7.5		%

Asia Pacific	806			809			822			854			946			3,431			0
% Pharmaceutical Sales	9.9		%	9.8		%	9.6		%	9.6		%	10.5		%	9.9		%

China	337			318			335			353			339			1,344			6

Latin America	359			630			676			585			512			2,403			-43
% Pharmaceutical Sales	4.4		%	7.6		%	7.9		%	6.5		%	5.7		%	6.9		%

Eastern Europe/Middle East Africa	272			321			372			380			402			1,476			-15
% Pharmaceutical Sales	3.4		%	3.9		%	4.3		%	4.3		%	4.5		%	4.2		%

Canada	147			170			167			159			172			668			-13
% Pharmaceutical Sales	1.8		%	2.1		%	2.0		%	1.8		%	1.9		%	1.9		%

Other	73			48			68			81			52			247			52
% Pharmaceutical Sales	0.9		%	0.6		%	0.8		%	0.9		%	0.6		%	0.7		%

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

MERCK & CO., INC.

FIRST QUARTER 2016

OTHER (INCOME) EXPENSE, NET - GAAP

(AMOUNTS IN MILLIONS)

(UNAUDITED)

Table 4

OTHER (INCOME) EXPENSE, NET

	1Q16			1Q15
INTEREST INCOME	$	(79	)	$	(74	)
INTEREST EXPENSE	172			164
EXCHANGE LOSSES	38			95
EQUITY INCOME FROM AFFILIATES	(34		)	(145		)
Other, net	(49		)	15
TOTAL	$	48		$	55

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