|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New Jersey
|
22-1918501
|
|
(State or other jurisdiction of incorporation)
|
(I.R.S Employer Identification No.)
|
|
|
|
|
2000 Galloping Hill Road
|
||
Kenilworth
|
New Jersey
|
07033
|
(Address of principal executive offices) (zip code)
|
|
Not Applicable
|
|
(Former name, former address and former fiscal year, if changed since last report.)
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
|
|
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
|
|
Emerging growth company
|
☐
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Sales
|
$
|
11,760
|
|
|
$
|
10,465
|
|
|
$
|
22,575
|
|
|
$
|
20,502
|
|
Costs, Expenses and Other
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
3,401
|
|
|
3,417
|
|
|
6,453
|
|
|
6,601
|
|
||||
Selling, general and administrative
|
2,712
|
|
|
2,508
|
|
|
5,138
|
|
|
5,016
|
|
||||
Research and development
|
2,189
|
|
|
2,274
|
|
|
4,119
|
|
|
5,470
|
|
||||
Restructuring costs
|
59
|
|
|
228
|
|
|
212
|
|
|
323
|
|
||||
Other (income) expense, net
|
140
|
|
|
(48
|
)
|
|
327
|
|
|
(340
|
)
|
||||
|
8,501
|
|
|
8,379
|
|
|
16,249
|
|
|
17,070
|
|
||||
Income Before Taxes
|
3,259
|
|
|
2,086
|
|
|
6,326
|
|
|
3,432
|
|
||||
Taxes on Income
|
615
|
|
|
370
|
|
|
820
|
|
|
975
|
|
||||
Net Income
|
2,644
|
|
|
1,716
|
|
|
5,506
|
|
|
2,457
|
|
||||
Less: Net (Loss) Income Attributable to Noncontrolling Interests
|
(26
|
)
|
|
9
|
|
|
(79
|
)
|
|
14
|
|
||||
Net Income Attributable to Merck & Co., Inc.
|
$
|
2,670
|
|
|
$
|
1,707
|
|
|
$
|
5,585
|
|
|
$
|
2,443
|
|
Basic Earnings per Common Share Attributable to Merck & Co., Inc. Common Shareholders
|
$
|
1.04
|
|
|
$
|
0.64
|
|
|
$
|
2.17
|
|
|
$
|
0.91
|
|
Earnings per Common Share Assuming Dilution Attributable to Merck & Co., Inc. Common Shareholders
|
$
|
1.03
|
|
|
$
|
0.63
|
|
|
$
|
2.15
|
|
|
$
|
0.90
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net Income Attributable to Merck & Co., Inc.
|
$
|
2,670
|
|
|
$
|
1,707
|
|
|
$
|
5,585
|
|
|
$
|
2,443
|
|
Other Comprehensive (Loss) Income Net of Taxes:
|
|
|
|
|
|
|
|
||||||||
Net unrealized (loss) gain on derivatives, net of reclassifications
|
(52
|
)
|
|
266
|
|
|
(100
|
)
|
|
196
|
|
||||
Net unrealized gain (loss) on investments, net of reclassifications
|
44
|
|
|
3
|
|
|
126
|
|
|
(96
|
)
|
||||
Benefit plan net gain and prior service credit, net of amortization
|
11
|
|
|
30
|
|
|
26
|
|
|
66
|
|
||||
Cumulative translation adjustment
|
(19
|
)
|
|
(361
|
)
|
|
131
|
|
|
(104
|
)
|
||||
|
(16
|
)
|
|
(62
|
)
|
|
183
|
|
|
62
|
|
||||
Comprehensive Income Attributable to Merck & Co., Inc.
|
$
|
2,654
|
|
|
$
|
1,645
|
|
|
$
|
5,768
|
|
|
$
|
2,505
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,659
|
|
|
$
|
7,965
|
|
Short-term investments
|
446
|
|
|
899
|
|
||
Accounts receivable (net of allowance for doubtful accounts of $122 in 2019
and $119 in 2018)
|
7,964
|
|
|
7,071
|
|
||
Inventories (excludes inventories of $1,464 in 2019 and $1,417 in 2018
classified in Other assets - see Note 6)
|
5,847
|
|
|
5,440
|
|
||
Other current assets
|
3,382
|
|
|
4,500
|
|
||
Total current assets
|
24,298
|
|
|
25,875
|
|
||
Investments
|
3,779
|
|
|
6,233
|
|
||
Property, Plant and Equipment, at cost, net of accumulated depreciation of $17,049
in 2019 and $16,324 in 2018
|
13,862
|
|
|
13,291
|
|
||
Goodwill
|
19,490
|
|
|
18,253
|
|
||
Other Intangibles, Net
|
13,381
|
|
|
11,431
|
|
||
Other Assets
|
9,155
|
|
|
7,554
|
|
||
|
$
|
83,965
|
|
|
$
|
82,637
|
|
Liabilities and Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Loans payable and current portion of long-term debt
|
$
|
3,816
|
|
|
$
|
5,308
|
|
Trade accounts payable
|
3,142
|
|
|
3,318
|
|
||
Accrued and other current liabilities
|
11,054
|
|
|
10,151
|
|
||
Income taxes payable
|
634
|
|
|
1,971
|
|
||
Dividends payable
|
1,439
|
|
|
1,458
|
|
||
Total current liabilities
|
20,085
|
|
|
22,206
|
|
||
Long-Term Debt
|
22,771
|
|
|
19,806
|
|
||
Deferred Income Taxes
|
2,089
|
|
|
1,702
|
|
||
Other Noncurrent Liabilities
|
11,283
|
|
|
12,041
|
|
||
Merck & Co., Inc. Stockholders’ Equity
|
|
|
|
||||
Common stock, $0.50 par value
Authorized - 6,500,000,000 shares
Issued - 3,577,103,522 shares in 2019 and 2018
|
1,788
|
|
|
1,788
|
|
||
Other paid-in capital
|
39,484
|
|
|
38,808
|
|
||
Retained earnings
|
45,295
|
|
|
42,579
|
|
||
Accumulated other comprehensive loss
|
(5,362
|
)
|
|
(5,545
|
)
|
||
|
81,205
|
|
|
77,630
|
|
||
Less treasury stock, at cost:
1,010,308,500 shares in 2019 and 984,543,979 shares in 2018
|
53,570
|
|
|
50,929
|
|
||
Total Merck & Co., Inc. stockholders’ equity
|
27,635
|
|
|
26,701
|
|
||
Noncontrolling Interests
|
102
|
|
|
181
|
|
||
Total equity
|
27,737
|
|
|
26,882
|
|
||
|
$
|
83,965
|
|
|
$
|
82,637
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income
|
$
|
5,506
|
|
|
$
|
2,457
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,871
|
|
|
2,427
|
|
||
Intangible asset impairment charges
|
252
|
|
|
—
|
|
||
Charge for future payments related to collaboration license options
|
—
|
|
|
650
|
|
||
Deferred income taxes
|
(149
|
)
|
|
(258
|
)
|
||
Share-based compensation
|
204
|
|
|
170
|
|
||
Other
|
114
|
|
|
365
|
|
||
Net changes in assets and liabilities
|
(3,378
|
)
|
|
(1,274
|
)
|
||
Net Cash Provided by Operating Activities
|
4,420
|
|
|
4,537
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Capital expenditures
|
(1,377
|
)
|
|
(1,033
|
)
|
||
Purchases of securities and other investments
|
(1,810
|
)
|
|
(5,248
|
)
|
||
Proceeds from sales of securities and other investments
|
4,935
|
|
|
7,403
|
|
||
Acquisition of Antelliq Corporation, net of cash acquired
|
(3,620
|
)
|
|
—
|
|
||
Other acquisitions, net of cash acquired
|
(270
|
)
|
|
(372
|
)
|
||
Other
|
85
|
|
|
(274
|
)
|
||
Net Cash (Used in) Provided by Investing Activities
|
(2,057
|
)
|
|
476
|
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Net change in short-term borrowings
|
(3,532
|
)
|
|
2,069
|
|
||
Payments on debt
|
—
|
|
|
(3,008
|
)
|
||
Proceeds from issuance of debt
|
4,958
|
|
|
—
|
|
||
Purchases of treasury stock
|
(2,325
|
)
|
|
(2,162
|
)
|
||
Dividends paid to stockholders
|
(2,896
|
)
|
|
(2,610
|
)
|
||
Proceeds from exercise of stock options
|
304
|
|
|
299
|
|
||
Other
|
(207
|
)
|
|
(277
|
)
|
||
Net Cash Used in Financing Activities
|
(3,698
|
)
|
|
(5,689
|
)
|
||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
28
|
|
|
(108
|
)
|
||
Net Decrease in Cash, Cash Equivalents and Restricted Cash
|
(1,307
|
)
|
|
(784
|
)
|
||
Cash, Cash Equivalents and Restricted Cash at Beginning of Year (includes restricted
cash of $2 million at January 1, 2019 included in Other Assets)
|
7,967
|
|
|
6,096
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period (includes restricted cash
of $1 million at June 30, 2019 included in Other Assets)
|
$
|
6,660
|
|
|
$
|
5,312
|
|
1.
|
Basis of Presentation
|
2.
|
Acquisitions, Research Collaborations and License Agreements
|
($ in millions)
|
April 1, 2019
|
||
Cash and cash equivalents
|
$
|
31
|
|
Accounts receivable
|
73
|
|
|
Inventories
|
97
|
|
|
Property, plant and equipment
|
62
|
|
|
Identifiable intangible assets (useful lives ranging from 18-24 years) (1)
|
2,689
|
|
|
Deferred income tax liabilities
|
(563
|
)
|
|
Other assets and liabilities, net
|
(81
|
)
|
|
Total identifiable net assets
|
2,308
|
|
|
Goodwill (2)
|
1,343
|
|
|
Consideration transferred
|
$
|
3,651
|
|
(1)
|
The estimated fair values of identifiable intangible assets relate primarily to trade names and were determined using an income approach. The future net cash flows were discounted to present value utilizing a discount rate of 11.5%. Actual cash flows are likely to be different than those assumed.
|
(2)
|
The goodwill recognized is largely attributable to anticipated synergies expected to arise after the acquisition and was allocated to the Animal Health segment. The goodwill is not deductible for tax purposes.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Alliance revenue
|
$
|
111
|
|
|
$
|
44
|
|
|
$
|
190
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales (1)
|
73
|
|
|
24
|
|
|
92
|
|
|
36
|
|
||||
Selling, general and administrative
|
33
|
|
|
9
|
|
|
59
|
|
|
16
|
|
||||
Research and development
|
33
|
|
|
42
|
|
|
78
|
|
|
71
|
|
||||
|
|
|
|
|
|
|
|
||||||||
($ in millions)
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
Receivables from AstraZeneca included in Other current assets
|
|
|
|
|
$
|
105
|
|
|
$
|
52
|
|
||||
Payables to AstraZeneca included in Accrued and other current liabilities (2)
|
|
|
|
|
605
|
|
|
405
|
|
||||||
Payables to AstraZeneca included in Other Noncurrent Liabilities (3)
|
|
|
|
|
300
|
|
|
250
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Alliance revenue
|
$
|
97
|
|
|
$
|
35
|
|
|
$
|
171
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales (1)
|
23
|
|
|
1
|
|
|
74
|
|
|
1
|
|
||||
Selling, general and administrative
|
19
|
|
|
2
|
|
|
38
|
|
|
2
|
|
||||
Research and development (2)
|
62
|
|
|
36
|
|
|
109
|
|
|
1,436
|
|
||||
|
|
|
|
|
|
|
|
||||||||
($ in millions)
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
Receivables from Eisai included in Other current assets
|
|
|
|
|
$
|
98
|
|
|
$
|
71
|
|
||||
Payables to Eisai included in Accrued and other current liabilities (3)
|
|
|
|
|
709
|
|
|
375
|
|
||||||
Payables to Eisai included in Other Noncurrent Liabilities (3)
|
|
|
|
|
125
|
|
|
543
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net product sales recorded by Merck
|
$
|
53
|
|
|
$
|
47
|
|
|
$
|
100
|
|
|
$
|
90
|
|
Merck’s profit share from sales in Bayer’s marketing territories
|
51
|
|
|
28
|
|
|
94
|
|
|
53
|
|
||||
Total sales
|
104
|
|
|
75
|
|
|
194
|
|
|
143
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cost of sales (1)
|
29
|
|
|
132
|
|
|
58
|
|
|
159
|
|
||||
Selling, general and administrative
|
11
|
|
|
10
|
|
|
20
|
|
|
17
|
|
||||
Research and development
|
32
|
|
|
28
|
|
|
62
|
|
|
56
|
|
||||
|
|
|
|
|
|
|
|
||||||||
($ in millions)
|
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
Receivables from Bayer included in Other current assets
|
|
|
|
|
$
|
41
|
|
|
$
|
32
|
|
||||
Payables to Bayer included in Other Noncurrent Liabilities (2)
|
|
|
|
|
375
|
|
|
375
|
|
4.
|
Restructuring
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||||||
($ in millions)
|
Separation
Costs
|
|
Accelerated
Depreciation
|
|
Other
|
|
Total
|
|
Separation
Costs
|
|
Accelerated
Depreciation
|
|
Other
|
|
Total
|
||||||||||||||||
Cost of sales
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
1
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
98
|
|
|
$
|
1
|
|
|
$
|
99
|
|
Selling, general and administrative
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
32
|
|
||||||||
Research and development
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
|
—
|
|
|
2
|
|
|
1
|
|
|
3
|
|
||||||||
Restructuring costs
|
25
|
|
|
—
|
|
|
34
|
|
|
59
|
|
|
153
|
|
|
—
|
|
|
59
|
|
|
212
|
|
||||||||
|
$
|
25
|
|
|
$
|
98
|
|
|
$
|
36
|
|
|
$
|
159
|
|
|
$
|
153
|
|
|
$
|
132
|
|
|
$
|
61
|
|
|
$
|
346
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
($ in millions)
|
Separation
Costs
|
|
Accelerated
Depreciation
|
|
Other
|
|
Total
|
|
Separation
Costs
|
|
Accelerated
Depreciation
|
|
Other
|
|
Total
|
||||||||||||||||
Cost of sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Selling, general and administrative
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||||||
Research and development
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
(3
|
)
|
|
8
|
|
|
5
|
|
||||||||
Restructuring costs
|
200
|
|
|
—
|
|
|
28
|
|
|
228
|
|
|
255
|
|
|
—
|
|
|
68
|
|
|
323
|
|
||||||||
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
235
|
|
|
$
|
255
|
|
|
$
|
(2
|
)
|
|
$
|
86
|
|
|
$
|
339
|
|
($ in millions)
|
Separation
Costs
|
|
Accelerated
Depreciation
|
|
Other
|
|
Total
|
||||||||
Restructuring reserves January 1, 2019
|
$
|
443
|
|
|
$
|
—
|
|
|
$
|
91
|
|
|
$
|
534
|
|
Expense
|
153
|
|
|
132
|
|
|
61
|
|
|
346
|
|
||||
(Payments) receipts, net
|
(126
|
)
|
|
—
|
|
|
(77
|
)
|
|
(203
|
)
|
||||
Non-cash activity
|
—
|
|
|
(132
|
)
|
|
(2
|
)
|
|
(134
|
)
|
||||
Restructuring reserves June 30, 2019 (1)
|
$
|
470
|
|
|
$
|
—
|
|
|
$
|
73
|
|
|
$
|
543
|
|
(1)
|
The remaining cash outlays are expected to be substantially completed by the end of 2023.
|
5.
|
Financial Instruments
|
|
Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)
|
|
Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
|
||||||||||||||||||||||||||||
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||
Net Investment Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign exchange contracts
|
$
|
17
|
|
|
$
|
(12
|
)
|
|
$
|
7
|
|
|
$
|
(14
|
)
|
|
$
|
(8
|
)
|
|
$
|
(3
|
)
|
|
$
|
(15
|
)
|
|
$
|
(3
|
)
|
Euro-denominated notes
|
28
|
|
|
(271
|
)
|
|
(2
|
)
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
June 30, 2019
|
|||||||
($ in millions)
|
Par Value of Debt
|
|
Number of Interest Rate Swaps Held
|
|
Total Swap Notional Amount
|
|||
1.85% notes due 2020
|
1,250
|
|
|
5
|
|
|
1,250
|
|
3.875% notes due 2021
|
1,150
|
|
|
5
|
|
|
1,150
|
|
2.40% notes due 2022
|
1,000
|
|
|
4
|
|
|
1,000
|
|
2.35% notes due 2022
|
1,250
|
|
|
5
|
|
|
1,250
|
|
|
Carrying Amount of Hedged Liabilities
|
|
Cumulative Amount of Fair Value Hedging Adjustment Increase (Decrease) Included in the Carrying Amount
|
||||||||||||
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||
Balance Sheet Line Item in which Hedged Item is Included
|
|
|
|
|
|
|
|
||||||||
Loans payable and current portion of long-term debt
|
$
|
1,244
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
Long-Term Debt
|
3,406
|
|
|
4,560
|
|
|
11
|
|
|
(82
|
)
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Fair Value of Derivative
|
|
U.S. Dollar
Notional
|
|
Fair Value of Derivative
|
|
U.S. Dollar
Notional
|
||||||||||||||||
($ in millions)
|
Balance Sheet Caption
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
|
|||||||||||||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate swap contracts
|
Other Assets
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
2,150
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swap contracts
|
Accrued and other current liabilities
|
—
|
|
|
6
|
|
|
1,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Interest rate swap contracts
|
Other Noncurrent Liabilities
|
—
|
|
|
2
|
|
|
1,250
|
|
|
—
|
|
|
81
|
|
|
4,650
|
|
||||||
Foreign exchange contracts
|
Other current assets
|
168
|
|
|
—
|
|
|
6,389
|
|
|
263
|
|
|
—
|
|
|
6,222
|
|
||||||
Foreign exchange contracts
|
Other Assets
|
49
|
|
|
—
|
|
|
2,790
|
|
|
75
|
|
|
—
|
|
|
2,655
|
|
||||||
Foreign exchange contracts
|
Accrued and other current liabilities
|
—
|
|
|
13
|
|
|
1,252
|
|
|
—
|
|
|
7
|
|
|
774
|
|
||||||
Foreign exchange contracts
|
Other Noncurrent Liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
89
|
|
||||||
|
|
$
|
231
|
|
|
$
|
21
|
|
|
$
|
15,081
|
|
|
$
|
338
|
|
|
$
|
89
|
|
|
$
|
14,390
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts
|
Other current assets
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
6,665
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
5,430
|
|
Foreign exchange contracts
|
Accrued and other current liabilities
|
—
|
|
|
63
|
|
|
4,982
|
|
|
—
|
|
|
71
|
|
|
9,922
|
|
||||||
|
|
$
|
70
|
|
|
$
|
63
|
|
|
$
|
11,647
|
|
|
$
|
116
|
|
|
$
|
71
|
|
|
$
|
15,352
|
|
|
|
$
|
301
|
|
|
$
|
84
|
|
|
$
|
26,728
|
|
|
$
|
454
|
|
|
$
|
160
|
|
|
$
|
29,742
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
($ in millions)
|
Asset
|
|
Liability
|
|
Asset
|
|
Liability
|
||||||||
Gross amounts recognized in the consolidated balance sheet
|
$
|
301
|
|
|
$
|
84
|
|
|
$
|
454
|
|
|
$
|
160
|
|
Gross amounts subject to offset in master netting arrangements not offset in the consolidated
balance sheet
|
(69
|
)
|
|
(69
|
)
|
|
(121
|
)
|
|
(121
|
)
|
||||
Cash collateral received
|
(32
|
)
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
||||
Net amounts
|
$
|
200
|
|
|
$
|
15
|
|
|
$
|
226
|
|
|
$
|
39
|
|
|
Sales
|
|
Other (income) expense, net (1)
|
|
Other comprehensive income (loss)
|
|
Sales
|
|
Other (income) expense, net (1)
|
|
Other comprehensive income (loss)
|
||||||||||||||||||||||||||||||||||
|
Three Months Ended June 30,
|
|
Three Months Ended June 30,
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||||
Financial Statement Line Items in which Effects of Fair Value or Cash Flow Hedges are Recorded
|
$
|
11,760
|
|
|
$
|
10,465
|
|
|
$
|
140
|
|
|
(48
|
)
|
|
$
|
(16
|
)
|
|
$
|
(62
|
)
|
|
22,575
|
|
|
$
|
20,502
|
|
|
$
|
327
|
|
|
$
|
(340
|
)
|
|
$
|
183
|
|
|
$
|
62
|
|
(Gain) loss on fair value hedging relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Interest rate swap contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Hedged items
|
—
|
|
|
—
|
|
|
55
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
(77
|
)
|
|
—
|
|
|
—
|
|
||||||||||
Derivatives designated as hedging instruments
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68
|
)
|
|
84
|
|
|
—
|
|
|
—
|
|
||||||||||
Impact of cash flow hedging relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Amount of income (loss) recognized in OCI on derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
84
|
|
||||||||||
Increase (decrease) in Sales as a result of AOCI reclassifications
|
75
|
|
|
(73
|
)
|
|
—
|
|
|
—
|
|
|
(75
|
)
|
|
73
|
|
|
119
|
|
|
(166
|
)
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
|
166
|
|
||||||||||
Interest rate contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Amount of gain recognized in Other (income) expense, net on derivatives
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||||||||
Amount of loss recognized in OCI on derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(2
|
)
|
|
|
|
Amount of Derivative Pretax (Gain) Loss Recognized in Income
|
||||||||||||||
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
($ in millions)
|
Income Statement Caption
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts (1)
|
Other (income) expense, net
|
|
$
|
2
|
|
|
$
|
(195
|
)
|
|
$
|
120
|
|
|
$
|
(167
|
)
|
Foreign exchange contracts (2)
|
Sales
|
|
(6
|
)
|
|
(14
|
)
|
|
4
|
|
|
(5
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Gross Unrealized
|
|
Fair
Value
|
||||||||||||||||||||
($ in millions)
|
Gains
|
|
Losses
|
|
Gains
|
|
Losses
|
|
|||||||||||||||||||||||
Corporate notes and bonds
|
$
|
2,666
|
|
|
$
|
36
|
|
|
$
|
(2
|
)
|
|
$
|
2,700
|
|
|
$
|
4,985
|
|
|
$
|
3
|
|
|
$
|
(68
|
)
|
|
$
|
4,920
|
|
Asset-backed securities
|
789
|
|
|
4
|
|
|
(1
|
)
|
|
792
|
|
|
1,285
|
|
|
1
|
|
|
(11
|
)
|
|
1,275
|
|
||||||||
U.S. government and agency securities
|
575
|
|
|
10
|
|
|
—
|
|
|
585
|
|
|
895
|
|
|
2
|
|
|
(5
|
)
|
|
892
|
|
||||||||
Foreign government bonds
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
167
|
|
|
—
|
|
|
(1
|
)
|
|
166
|
|
||||||||
Mortgage-backed securities
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||||
Total debt securities
|
$
|
4,076
|
|
|
$
|
50
|
|
|
$
|
(3
|
)
|
|
$
|
4,123
|
|
|
$
|
7,340
|
|
|
$
|
6
|
|
|
$
|
(85
|
)
|
|
$
|
7,261
|
|
Publicly traded equity securities (1)
|
|
|
|
|
|
|
756
|
|
|
|
|
|
|
|
|
|
|
|
456
|
|
|||||||||||
Total debt and publicly traded equity securities
|
|
|
|
|
|
|
|
|
|
$
|
4,879
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,717
|
|
|
Fair Value Measurements Using
|
|
Fair Value Measurements Using
|
||||||||||||||||||||||||||||
|
Quoted Prices
In Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
Quoted Prices
In Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||||||||||
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate notes and bonds
|
$
|
—
|
|
|
$
|
2,660
|
|
|
$
|
—
|
|
|
$
|
2,660
|
|
|
$
|
—
|
|
|
$
|
4,835
|
|
|
$
|
—
|
|
|
$
|
4,835
|
|
Asset-backed securities (1)
|
—
|
|
|
788
|
|
|
—
|
|
|
788
|
|
|
—
|
|
|
1,253
|
|
|
—
|
|
|
1,253
|
|
||||||||
U.S. government and agency securities
|
—
|
|
|
508
|
|
|
—
|
|
|
508
|
|
|
—
|
|
|
731
|
|
|
—
|
|
|
731
|
|
||||||||
Foreign government bonds
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
166
|
|
|
—
|
|
|
166
|
|
||||||||
Publicly traded equity securities
|
228
|
|
|
—
|
|
|
—
|
|
|
228
|
|
|
147
|
|
|
—
|
|
|
—
|
|
|
147
|
|
||||||||
|
228
|
|
|
3,997
|
|
|
—
|
|
|
4,225
|
|
|
147
|
|
|
6,985
|
|
|
—
|
|
|
7,132
|
|
||||||||
Other assets (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. government and agency securities
|
58
|
|
|
19
|
|
|
—
|
|
|
77
|
|
|
55
|
|
|
106
|
|
|
—
|
|
|
161
|
|
||||||||
Corporate notes and bonds
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
85
|
|
||||||||
Mortgage-backed securities
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||||||
Asset-backed securities (1)
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
||||||||
Publicly traded equity securities
|
528
|
|
|
—
|
|
|
—
|
|
|
528
|
|
|
309
|
|
|
—
|
|
|
—
|
|
|
309
|
|
||||||||
|
586
|
|
|
68
|
|
|
—
|
|
|
654
|
|
|
364
|
|
|
221
|
|
|
—
|
|
|
585
|
|
||||||||
Derivative assets (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Purchased currency options
|
—
|
|
|
158
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
213
|
|
|
—
|
|
|
213
|
|
||||||||
Forward exchange contracts
|
—
|
|
|
129
|
|
|
—
|
|
|
129
|
|
|
—
|
|
|
241
|
|
|
—
|
|
|
241
|
|
||||||||
Interest rate swaps
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
—
|
|
|
301
|
|
|
—
|
|
|
301
|
|
|
—
|
|
|
454
|
|
|
—
|
|
|
454
|
|
||||||||
Total assets
|
$
|
814
|
|
|
$
|
4,366
|
|
|
$
|
—
|
|
|
$
|
5,180
|
|
|
$
|
511
|
|
|
$
|
7,660
|
|
|
$
|
—
|
|
|
$
|
8,171
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
753
|
|
|
$
|
753
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
788
|
|
|
$
|
788
|
|
Derivative liabilities (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Forward exchange contracts
|
—
|
|
|
73
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|
74
|
|
|
—
|
|
|
74
|
|
||||||||
Interest rate swaps
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
||||||||
Written currency options
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||||||
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
84
|
|
|
$
|
753
|
|
|
$
|
837
|
|
|
$
|
—
|
|
|
$
|
160
|
|
|
$
|
788
|
|
|
$
|
948
|
|
(1)
|
Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by auto loan, credit card and student loan receivables, with weighted-average lives of primarily 5 years or less.
|
(2)
|
Investments included in other assets are restricted as to use, primarily for the payment of benefits under employee benefit plans.
|
(3)
|
The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.
|
|
Six Months Ended June 30,
|
||||||
($ in millions)
|
2019
|
|
2018
|
||||
Fair value January 1
|
$
|
788
|
|
|
$
|
935
|
|
Changes in estimated fair value (1)
|
50
|
|
|
122
|
|
||
Additions
|
—
|
|
|
8
|
|
||
Payments
|
(85
|
)
|
|
(235
|
)
|
||
Fair value June 30 (2)
|
$
|
753
|
|
|
$
|
830
|
|
6.
|
Inventories
|
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Finished goods
|
$
|
1,750
|
|
|
$
|
1,658
|
|
Raw materials and work in process
|
5,388
|
|
|
5,004
|
|
||
Supplies
|
202
|
|
|
194
|
|
||
Total (approximates current cost)
|
7,340
|
|
|
6,856
|
|
||
(Decrease) increase to LIFO costs
|
(29
|
)
|
|
1
|
|
||
|
$
|
7,311
|
|
|
$
|
6,857
|
|
Recognized as:
|
|
|
|
||||
Inventories
|
$
|
5,847
|
|
|
$
|
5,440
|
|
Other assets
|
1,464
|
|
|
1,417
|
|
7.
|
Loans Payable, Long-Term Debt and Leases
|
($ in millions)
|
June 30, 2019
|
||
Assets
|
|
||
Other Assets (1)
|
$
|
1,063
|
|
Liabilities
|
|
||
Accrued and other current liabilities
|
$
|
241
|
|
Other Noncurrent Liabilities
|
752
|
|
|
|
$
|
993
|
|
|
|
||
Weighted-average remaining lease term (years)
|
7.5
|
|
|
Weighted-average discount rate
|
3.4
|
%
|
($ in millions)
|
June 30, 2019
|
||
2019 (excluding the six months ended June 30, 2019)
|
$
|
138
|
|
2020
|
232
|
|
|
2021
|
172
|
|
|
2022
|
146
|
|
|
2023
|
98
|
|
|
Thereafter
|
339
|
|
|
Total lease payments
|
1,125
|
|
|
Less: imputed interest
|
(132
|
)
|
|
|
$
|
993
|
|
8.
|
Contingencies
|
9.
|
Equity
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||
|
Common Stock
|
Other
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury Stock
|
Non-
Controlling
Interests
|
Total
|
||||||||||||||||||
($ and shares in millions except per share amounts)
|
Shares
|
Par Value
|
Shares
|
Cost
|
|||||||||||||||||||||
Balance at April 1, 2018
|
3,577
|
|
$
|
1,788
|
|
$
|
39,874
|
|
$
|
41,107
|
|
$
|
(5,060
|
)
|
885
|
|
$
|
(44,041
|
)
|
$
|
233
|
|
$
|
33,901
|
|
Net income attributable to Merck & Co., Inc.
|
—
|
|
—
|
|
—
|
|
1,707
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,707
|
|
|||||||
Other comprehensive loss, net of taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
(62
|
)
|
—
|
|
—
|
|
—
|
|
(62
|
)
|
|||||||
Cash dividends declared on common stock ($0.48 per share)
|
—
|
|
—
|
|
—
|
|
(1,291
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,291
|
)
|
|||||||
Treasury stock shares purchased
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
27
|
|
(1,596
|
)
|
—
|
|
(1,596
|
)
|
|||||||
Share-based compensation plans and other
|
—
|
|
—
|
|
(133
|
)
|
—
|
|
—
|
|
(5
|
)
|
236
|
|
—
|
|
103
|
|
|||||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
|
9
|
|
|||||||
Distributions attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5
|
)
|
(5
|
)
|
|||||||
Balance at June 30, 2018
|
3,577
|
|
$
|
1,788
|
|
$
|
39,741
|
|
$
|
41,523
|
|
$
|
(5,122
|
)
|
907
|
|
$
|
(45,401
|
)
|
$
|
237
|
|
$
|
32,766
|
|
Balance at April 1, 2019
|
3,577
|
|
$
|
1,788
|
|
$
|
38,768
|
|
$
|
44,065
|
|
$
|
(5,346
|
)
|
994
|
|
$
|
(51,736
|
)
|
$
|
131
|
|
$
|
27,670
|
|
Net income attributable to Merck & Co., Inc.
|
—
|
|
—
|
|
—
|
|
2,670
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,670
|
|
|||||||
Other comprehensive loss, net of taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
(16
|
)
|
—
|
|
—
|
|
—
|
|
(16
|
)
|
|||||||
Cash dividends declared on common stock ($0.55 per share)
|
—
|
|
—
|
|
—
|
|
(1,440
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,440
|
)
|
|||||||
Treasury stock shares purchased
|
—
|
|
—
|
|
1,000
|
|
—
|
|
—
|
|
24
|
|
(2,235
|
)
|
—
|
|
(1,235
|
)
|
|||||||
Share-based compensation plans and other
|
—
|
|
—
|
|
(284
|
)
|
—
|
|
—
|
|
(8
|
)
|
401
|
|
—
|
|
117
|
|
|||||||
Net loss attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(26
|
)
|
(26
|
)
|
|||||||
Other changes in noncontrolling ownership interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
(3
|
)
|
|||||||
Balance at June 30, 2019
|
3,577
|
|
$
|
1,788
|
|
$
|
39,484
|
|
$
|
45,295
|
|
$
|
(5,362
|
)
|
1,010
|
|
$
|
(53,570
|
)
|
$
|
102
|
|
$
|
27,737
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
Common Stock
|
Other
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury Stock
|
Non-
Controlling
Interests
|
Total
|
||||||||||||||||||
($ and shares in millions except per share amounts)
|
Shares
|
Par Value
|
Shares
|
Cost
|
|||||||||||||||||||||
Balance at January 1, 2018
|
3,577
|
|
$
|
1,788
|
|
$
|
39,902
|
|
$
|
41,350
|
|
$
|
(4,910
|
)
|
880
|
|
$
|
(43,794
|
)
|
$
|
233
|
|
$
|
34,569
|
|
Net income attributable to Merck & Co., Inc.
|
—
|
|
—
|
|
—
|
|
2,443
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,443
|
|
|||||||
Adoption of new accounting standards
|
—
|
|
—
|
|
—
|
|
322
|
|
(274
|
)
|
—
|
|
—
|
|
—
|
|
48
|
|
|||||||
Other comprehensive income, net of taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
62
|
|
—
|
|
—
|
|
—
|
|
62
|
|
|||||||
Cash dividends declared on common stock ($0.96 per share)
|
—
|
|
—
|
|
—
|
|
(2,592
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,592
|
)
|
|||||||
Treasury stock shares purchased
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
37
|
|
(2,162
|
)
|
—
|
|
(2,162
|
)
|
|||||||
Share-based compensation plans and other
|
—
|
|
—
|
|
(161
|
)
|
—
|
|
—
|
|
(10
|
)
|
555
|
|
—
|
|
394
|
|
|||||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
14
|
|
|||||||
Distributions attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(10
|
)
|
(10
|
)
|
|||||||
Balance at June 30, 2018
|
3,577
|
|
$
|
1,788
|
|
$
|
39,741
|
|
$
|
41,523
|
|
$
|
(5,122
|
)
|
907
|
|
$
|
(45,401
|
)
|
$
|
237
|
|
$
|
32,766
|
|
Balance at January 1, 2019
|
3,577
|
|
$
|
1,788
|
|
$
|
38,808
|
|
$
|
42,579
|
|
$
|
(5,545
|
)
|
985
|
|
$
|
(50,929
|
)
|
$
|
181
|
|
$
|
26,882
|
|
Net income attributable to Merck & Co., Inc.
|
—
|
|
—
|
|
—
|
|
5,585
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,585
|
|
|||||||
Other comprehensive income, net of taxes
|
—
|
|
—
|
|
—
|
|
—
|
|
183
|
|
—
|
|
—
|
|
—
|
|
183
|
|
|||||||
Cash dividends declared on common stock ($1.10 per share)
|
—
|
|
—
|
|
—
|
|
(2,869
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,869
|
)
|
|||||||
Treasury stock shares purchased
|
—
|
|
—
|
|
1,000
|
|
—
|
|
—
|
|
38
|
|
(3,325
|
)
|
—
|
|
(2,325
|
)
|
|||||||
Share-based compensation plans and other
|
—
|
|
—
|
|
(324
|
)
|
—
|
|
—
|
|
(13
|
)
|
684
|
|
—
|
|
360
|
|
|||||||
Net loss attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(79
|
)
|
(79
|
)
|
|||||||
Balance at June 30, 2019
|
3,577
|
|
$
|
1,788
|
|
$
|
39,484
|
|
$
|
45,295
|
|
$
|
(5,362
|
)
|
1,010
|
|
$
|
(53,570
|
)
|
$
|
102
|
|
$
|
27,737
|
|
10.
|
Share-Based Compensation Plans
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Pretax share-based compensation expense
|
$
|
111
|
|
|
$
|
90
|
|
|
$
|
204
|
|
|
$
|
170
|
|
Income tax benefit
|
(15
|
)
|
|
(13
|
)
|
|
(28
|
)
|
|
(28
|
)
|
||||
Total share-based compensation expense, net of taxes
|
$
|
96
|
|
|
$
|
77
|
|
|
$
|
176
|
|
|
$
|
142
|
|
|
Six Months Ended
June 30, |
||||
|
2019
|
|
2018
|
||
Expected dividend yield
|
3.2
|
%
|
|
3.4
|
%
|
Risk-free interest rate
|
2.4
|
%
|
|
2.8
|
%
|
Expected volatility
|
18.7
|
%
|
|
19.1
|
%
|
Expected life (years)
|
5.9
|
|
|
6.1
|
|
11.
|
Pension and Other Postretirement Benefit Plans
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||||||
($ in millions)
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
|
U.S.
|
|
International
|
||||||||||||||||
Service cost
|
$
|
74
|
|
|
$
|
60
|
|
|
$
|
85
|
|
|
$
|
58
|
|
|
$
|
144
|
|
|
$
|
120
|
|
|
$
|
168
|
|
|
$
|
125
|
|
Interest cost
|
113
|
|
|
44
|
|
|
107
|
|
|
45
|
|
|
228
|
|
|
89
|
|
|
215
|
|
|
91
|
|
||||||||
Expected return on plan assets
|
(205
|
)
|
|
(107
|
)
|
|
(211
|
)
|
|
(108
|
)
|
|
(411
|
)
|
|
(214
|
)
|
|
(425
|
)
|
|
(221
|
)
|
||||||||
Amortization of unrecognized prior service credit
|
(12
|
)
|
|
(3
|
)
|
|
(13
|
)
|
|
(3
|
)
|
|
(25
|
)
|
|
(6
|
)
|
|
(25
|
)
|
|
(7
|
)
|
||||||||
Net loss amortization
|
35
|
|
|
16
|
|
|
56
|
|
|
21
|
|
|
70
|
|
|
31
|
|
|
112
|
|
|
43
|
|
||||||||
Termination benefits
|
3
|
|
|
1
|
|
|
7
|
|
|
—
|
|
|
5
|
|
|
1
|
|
|
17
|
|
|
—
|
|
||||||||
Curtailments
|
—
|
|
|
—
|
|
|
5
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
||||||||
Settlements
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
||||||||
|
$
|
8
|
|
|
$
|
11
|
|
|
$
|
36
|
|
|
$
|
16
|
|
|
$
|
12
|
|
|
$
|
21
|
|
|
$
|
66
|
|
|
$
|
34
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Service cost
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
24
|
|
|
$
|
28
|
|
Interest cost
|
18
|
|
|
18
|
|
|
35
|
|
|
35
|
|
||||
Expected return on plan assets
|
(18
|
)
|
|
(21
|
)
|
|
(36
|
)
|
|
(41
|
)
|
||||
Amortization of unrecognized prior service credit
|
(21
|
)
|
|
(21
|
)
|
|
(43
|
)
|
|
(42
|
)
|
||||
Termination benefits
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
||||
Curtailments
|
(1
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(6
|
)
|
||||
|
$
|
(10
|
)
|
|
$
|
(11
|
)
|
|
$
|
(21
|
)
|
|
$
|
(24
|
)
|
12.
|
Other (Income) Expense, Net
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest income
|
$
|
(75
|
)
|
|
$
|
(81
|
)
|
|
$
|
(164
|
)
|
|
$
|
(165
|
)
|
Interest expense
|
233
|
|
|
194
|
|
|
442
|
|
|
379
|
|
||||
Exchange losses
|
27
|
|
|
71
|
|
|
128
|
|
|
77
|
|
||||
Income from investments in equity securities, net (1)
|
(58
|
)
|
|
(153
|
)
|
|
(32
|
)
|
|
(178
|
)
|
||||
Net periodic defined benefit plan (credit) cost other than service cost
|
(140
|
)
|
|
(130
|
)
|
|
(281
|
)
|
|
(265
|
)
|
||||
Other, net
|
153
|
|
|
51
|
|
|
234
|
|
|
(188
|
)
|
||||
|
$
|
140
|
|
|
$
|
(48
|
)
|
|
$
|
327
|
|
|
$
|
(340
|
)
|
(1)
|
Includes net realized and unrealized gains and losses from investments in equity securities either owned directly or through ownership interests in investments funds.
|
13.
|
Taxes on Income
|
14.
|
Earnings Per Share
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ and shares in millions except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income attributable to Merck & Co., Inc.
|
$
|
2,670
|
|
|
$
|
1,707
|
|
|
$
|
5,585
|
|
|
$
|
2,443
|
|
Average common shares outstanding
|
2,574
|
|
|
2,683
|
|
|
2,579
|
|
|
2,689
|
|
||||
Common shares issuable (1)
|
14
|
|
|
13
|
|
|
17
|
|
|
13
|
|
||||
Average common shares outstanding assuming dilution
|
2,588
|
|
|
2,696
|
|
|
2,596
|
|
|
2,702
|
|
||||
Basic earnings per common share attributable to Merck & Co., Inc. common shareholders
|
$
|
1.04
|
|
|
$
|
0.64
|
|
|
$
|
2.17
|
|
|
$
|
0.91
|
|
Earnings per common share assuming dilution attributable to Merck & Co., Inc. common shareholders
|
$
|
1.03
|
|
|
$
|
0.63
|
|
|
$
|
2.15
|
|
|
$
|
0.90
|
|
(1)
|
Issuable primarily under share-based compensation plans.
|
15.
|
Other Comprehensive Income (Loss)
|
|
Three Months Ended June 30,
|
||||||||||||||||||
($ in millions)
|
Derivatives
|
|
Investments
|
|
Employee
Benefit
Plans
|
|
Cumulative
Translation
Adjustment
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
||||||||||
Balance April 1, 2018, net of taxes
|
$
|
(201
|
)
|
|
$
|
(167
|
)
|
|
$
|
(3,095
|
)
|
|
$
|
(1,597
|
)
|
|
$
|
(5,060
|
)
|
Other comprehensive income (loss) before reclassification adjustments, pretax
|
265
|
|
|
(17
|
)
|
|
(1
|
)
|
|
(301
|
)
|
|
(54
|
)
|
|||||
Tax
|
(56
|
)
|
|
—
|
|
|
1
|
|
|
(60
|
)
|
|
(115
|
)
|
|||||
Other comprehensive income (loss) before reclassification adjustments, net of taxes
|
209
|
|
|
(17
|
)
|
|
—
|
|
|
(361
|
)
|
|
(169
|
)
|
|||||
Reclassification adjustments, pretax
|
72
|
|
(1)
|
20
|
|
(2)
|
40
|
|
(3)
|
—
|
|
|
132
|
|
|||||
Tax
|
(15
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(25
|
)
|
|||||
Reclassification adjustments, net of taxes
|
57
|
|
|
20
|
|
|
30
|
|
|
—
|
|
|
107
|
|
|||||
Other comprehensive income (loss), net of taxes
|
266
|
|
|
3
|
|
|
30
|
|
|
(361
|
)
|
|
(62
|
)
|
|||||
Balance June 30, 2018, net of taxes
|
$
|
65
|
|
|
$
|
(164
|
)
|
|
$
|
(3,065
|
)
|
|
$
|
(1,958
|
)
|
|
$
|
(5,122
|
)
|
Balance April 1, 2019, net of taxes
|
$
|
118
|
|
|
$
|
4
|
|
|
$
|
(3,541
|
)
|
|
$
|
(1,927
|
)
|
|
$
|
(5,346
|
)
|
Other comprehensive income (loss) before reclassification adjustments, pretax
|
10
|
|
|
55
|
|
|
—
|
|
|
(25
|
)
|
|
40
|
|
|||||
Tax
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
6
|
|
|
4
|
|
|||||
Other comprehensive income (loss) before reclassification adjustments, net of taxes
|
8
|
|
|
55
|
|
|
—
|
|
|
(19
|
)
|
|
44
|
|
|||||
Reclassification adjustments, pretax
|
(76
|
)
|
(1)
|
(11
|
)
|
(2)
|
14
|
|
(3)
|
—
|
|
|
(73
|
)
|
|||||
Tax
|
16
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
13
|
|
|||||
Reclassification adjustments, net of taxes
|
(60
|
)
|
|
(11
|
)
|
|
11
|
|
|
—
|
|
|
(60
|
)
|
|||||
Other comprehensive income (loss), net of taxes
|
(52
|
)
|
|
44
|
|
|
11
|
|
|
(19
|
)
|
|
(16
|
)
|
|||||
Balance June 30, 2019, net of taxes
|
$
|
66
|
|
|
$
|
48
|
|
|
$
|
(3,530
|
)
|
|
$
|
(1,946
|
)
|
|
$
|
(5,362
|
)
|
|
Six Months Ended June 30,
|
||||||||||||||||||
($ in millions)
|
Derivatives
|
|
Investments
|
|
Employee
Benefit
Plans
|
|
Cumulative
Translation
Adjustment
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
||||||||||
Balance January 1, 2018, net of taxes
|
$
|
(108
|
)
|
|
$
|
(61
|
)
|
|
$
|
(2,787
|
)
|
|
$
|
(1,954
|
)
|
|
$
|
(4,910
|
)
|
Other comprehensive income (loss) before reclassification adjustments, pretax
|
84
|
|
|
(133
|
)
|
|
(2
|
)
|
|
18
|
|
|
(33
|
)
|
|||||
Tax
|
(18
|
)
|
|
1
|
|
|
4
|
|
|
(122
|
)
|
|
(135
|
)
|
|||||
Other comprehensive income (loss) before reclassification adjustments, net of taxes
|
66
|
|
|
(132
|
)
|
|
2
|
|
|
(104
|
)
|
|
(168
|
)
|
|||||
Reclassification adjustments, pretax
|
164
|
|
(1)
|
36
|
|
(2)
|
81
|
|
(3)
|
—
|
|
|
281
|
|
|||||
Tax
|
(34
|
)
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
(51
|
)
|
|||||
Reclassification adjustments, net of taxes
|
130
|
|
|
36
|
|
|
64
|
|
|
—
|
|
|
230
|
|
|||||
Other comprehensive income (loss), net of taxes
|
196
|
|
|
(96
|
)
|
|
66
|
|
|
(104
|
)
|
|
62
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Adoption of ASU 2018-02
|
(23
|
)
|
|
1
|
|
|
(344
|
)
|
|
100
|
|
|
(266
|
)
|
|||||
Adoption of ASU 2016-01
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance June 30, 2018, net of taxes
|
$
|
65
|
|
|
$
|
(164
|
)
|
|
$
|
(3,065
|
)
|
|
$
|
(1,958
|
)
|
|
$
|
(5,122
|
)
|
Balance January 1, 2019, net of taxes
|
$
|
166
|
|
|
$
|
(78
|
)
|
|
$
|
(3,556
|
)
|
|
$
|
(2,077
|
)
|
|
$
|
(5,545
|
)
|
Other comprehensive income (loss) before reclassification adjustments, pretax
|
(3
|
)
|
|
131
|
|
|
(1
|
)
|
|
131
|
|
|
258
|
|
|||||
Tax
|
1
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
7
|
|
|||||
Other comprehensive income (loss) before reclassification adjustments, net of taxes
|
(2
|
)
|
|
131
|
|
|
5
|
|
|
131
|
|
|
265
|
|
|||||
Reclassification adjustments, pretax
|
(124
|
)
|
(1)
|
(5
|
)
|
(2)
|
28
|
|
(3)
|
—
|
|
|
(101
|
)
|
|||||
Tax
|
26
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
19
|
|
|||||
Reclassification adjustments, net of taxes
|
(98
|
)
|
|
(5
|
)
|
|
21
|
|
|
—
|
|
|
(82
|
)
|
|||||
Other comprehensive income (loss), net of taxes
|
(100
|
)
|
|
126
|
|
|
26
|
|
|
131
|
|
|
183
|
|
|||||
Balance June 30, 2019, net of taxes
|
$
|
66
|
|
|
$
|
48
|
|
|
$
|
(3,530
|
)
|
|
$
|
(1,946
|
)
|
|
$
|
(5,362
|
)
|
(1)
|
Relates to foreign currency cash flow hedges that were reclassified from AOCI to Sales.
|
(2)
|
Represents net realized (gains) losses on the sales of available-for-sale debt securities that were reclassified from AOCI to Other (income) expense, net.
|
(3)
|
Includes net amortization of prior service cost and actuarial gains and losses included in net periodic benefit cost (see Note 11).
|
16.
|
Segment Reporting
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||||||||||||||
($ in millions)
|
U.S.
|
|
Int’l
|
|
Total
|
|
U.S.
|
|
Int’l
|
|
Total
|
|
U.S.
|
|
Int’l
|
|
Total
|
|
U.S.
|
|
Int’l
|
|
Total
|
||||||||||||||||||||||||
Pharmaceutical:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Oncology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Keytruda
|
$
|
1,498
|
|
|
$
|
1,136
|
|
|
$
|
2,634
|
|
|
$
|
959
|
|
|
$
|
707
|
|
|
$
|
1,667
|
|
|
$
|
2,782
|
|
|
$
|
2,121
|
|
|
$
|
4,903
|
|
|
$
|
1,797
|
|
|
$
|
1,333
|
|
|
$
|
3,131
|
|
Emend
|
67
|
|
|
54
|
|
|
121
|
|
|
89
|
|
|
59
|
|
|
148
|
|
|
130
|
|
|
107
|
|
|
237
|
|
|
168
|
|
|
105
|
|
|
273
|
|
||||||||||||
Alliance revenue - Lynparza
|
66
|
|
|
45
|
|
|
111
|
|
|
31
|
|
|
13
|
|
|
44
|
|
|
116
|
|
|
74
|
|
|
190
|
|
|
55
|
|
|
22
|
|
|
76
|
|
||||||||||||
Alliance revenue - Lenvima
|
54
|
|
|
43
|
|
|
97
|
|
|
19
|
|
|
16
|
|
|
35
|
|
|
104
|
|
|
67
|
|
|
171
|
|
|
19
|
|
|
16
|
|
|
35
|
|
||||||||||||
Vaccines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Gardasil/Gardasil 9
|
456
|
|
|
430
|
|
|
886
|
|
|
302
|
|
|
306
|
|
|
608
|
|
|
818
|
|
|
906
|
|
|
1,724
|
|
|
682
|
|
|
586
|
|
|
1,269
|
|
||||||||||||
ProQuad/M-M-R II/Varivax
|
500
|
|
|
174
|
|
|
675
|
|
|
356
|
|
|
70
|
|
|
426
|
|
|
843
|
|
|
328
|
|
|
1,171
|
|
|
668
|
|
|
150
|
|
|
818
|
|
||||||||||||
RotaTeq
|
104
|
|
|
68
|
|
|
172
|
|
|
99
|
|
|
57
|
|
|
156
|
|
|
258
|
|
|
125
|
|
|
383
|
|
|
250
|
|
|
99
|
|
|
349
|
|
||||||||||||
Pneumovax 23
|
123
|
|
|
47
|
|
|
170
|
|
|
122
|
|
|
71
|
|
|
193
|
|
|
248
|
|
|
107
|
|
|
355
|
|
|
234
|
|
|
137
|
|
|
372
|
|
||||||||||||
Vaqta
|
38
|
|
|
20
|
|
|
58
|
|
|
42
|
|
|
23
|
|
|
65
|
|
|
67
|
|
|
39
|
|
|
105
|
|
|
60
|
|
|
42
|
|
|
101
|
|
||||||||||||
Hospital Acute Care
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Bridion
|
129
|
|
|
149
|
|
|
278
|
|
|
95
|
|
|
145
|
|
|
240
|
|
|
248
|
|
|
285
|
|
|
533
|
|
|
175
|
|
|
269
|
|
|
444
|
|
||||||||||||
Noxafil
|
100
|
|
|
93
|
|
|
193
|
|
|
87
|
|
|
100
|
|
|
188
|
|
|
191
|
|
|
192
|
|
|
383
|
|
|
168
|
|
|
195
|
|
|
363
|
|
||||||||||||
Cubicin
|
22
|
|
|
45
|
|
|
67
|
|
|
48
|
|
|
46
|
|
|
94
|
|
|
64
|
|
|
91
|
|
|
155
|
|
|
95
|
|
|
97
|
|
|
192
|
|
||||||||||||
Invanz
|
18
|
|
|
60
|
|
|
78
|
|
|
87
|
|
|
63
|
|
|
149
|
|
|
31
|
|
|
118
|
|
|
150
|
|
|
177
|
|
|
123
|
|
|
300
|
|
||||||||||||
Primaxin
|
—
|
|
|
70
|
|
|
71
|
|
|
—
|
|
|
68
|
|
|
68
|
|
|
1
|
|
|
129
|
|
|
130
|
|
|
5
|
|
|
135
|
|
|
140
|
|
||||||||||||
Cancidas
|
3
|
|
|
64
|
|
|
67
|
|
|
4
|
|
|
83
|
|
|
87
|
|
|
4
|
|
|
125
|
|
|
129
|
|
|
7
|
|
|
171
|
|
|
178
|
|
||||||||||||
Immunology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Simponi
|
—
|
|
|
214
|
|
|
214
|
|
|
—
|
|
|
233
|
|
|
233
|
|
|
—
|
|
|
422
|
|
|
422
|
|
|
—
|
|
|
464
|
|
|
464
|
|
||||||||||||
Remicade
|
—
|
|
|
98
|
|
|
98
|
|
|
—
|
|
|
157
|
|
|
157
|
|
|
—
|
|
|
221
|
|
|
221
|
|
|
—
|
|
|
324
|
|
|
324
|
|
||||||||||||
Neuroscience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Belsomra
|
21
|
|
|
55
|
|
|
76
|
|
|
29
|
|
|
42
|
|
|
71
|
|
|
45
|
|
|
98
|
|
|
143
|
|
|
52
|
|
|
73
|
|
|
125
|
|
||||||||||||
Virology
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Isentress/Isentress HD
|
94
|
|
|
153
|
|
|
247
|
|
|
132
|
|
|
174
|
|
|
305
|
|
|
202
|
|
|
300
|
|
|
502
|
|
|
260
|
|
|
326
|
|
|
586
|
|
||||||||||||
Zepatier
|
39
|
|
|
68
|
|
|
108
|
|
|
(10
|
)
|
|
123
|
|
|
113
|
|
|
72
|
|
|
149
|
|
|
221
|
|
|
(10
|
)
|
|
253
|
|
|
243
|
|
||||||||||||
Cardiovascular
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Zetia
|
6
|
|
|
150
|
|
|
156
|
|
|
8
|
|
|
218
|
|
|
226
|
|
|
6
|
|
|
290
|
|
|
296
|
|
|
25
|
|
|
505
|
|
|
531
|
|
||||||||||||
Vytorin
|
3
|
|
|
73
|
|
|
76
|
|
|
3
|
|
|
152
|
|
|
155
|
|
|
6
|
|
|
167
|
|
|
174
|
|
|
11
|
|
|
311
|
|
|
322
|
|
||||||||||||
Atozet
|
—
|
|
|
92
|
|
|
92
|
|
|
—
|
|
|
101
|
|
|
101
|
|
|
—
|
|
|
186
|
|
|
186
|
|
|
—
|
|
|
174
|
|
|
174
|
|
||||||||||||
Adempas
|
—
|
|
|
104
|
|
|
104
|
|
|
—
|
|
|
75
|
|
|
75
|
|
|
—
|
|
|
194
|
|
|
194
|
|
|
—
|
|
|
143
|
|
|
143
|
|
||||||||||||
Diabetes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Januvia
|
471
|
|
|
437
|
|
|
908
|
|
|
503
|
|
|
446
|
|
|
949
|
|
|
855
|
|
|
877
|
|
|
1,732
|
|
|
968
|
|
|
862
|
|
|
1,829
|
|
||||||||||||
Janumet
|
166
|
|
|
366
|
|
|
533
|
|
|
209
|
|
|
377
|
|
|
585
|
|
|
333
|
|
|
730
|
|
|
1,063
|
|
|
401
|
|
|
729
|
|
|
1,129
|
|
||||||||||||
Women’s Health
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
NuvaRing
|
206
|
|
|
34
|
|
|
240
|
|
|
187
|
|
|
49
|
|
|
236
|
|
|
391
|
|
|
68
|
|
|
459
|
|
|
357
|
|
|
95
|
|
|
452
|
|
||||||||||||
Implanon/Nexplanon
|
136
|
|
|
48
|
|
|
183
|
|
|
114
|
|
|
60
|
|
|
174
|
|
|
285
|
|
|
98
|
|
|
382
|
|
|
242
|
|
|
106
|
|
|
348
|
|
||||||||||||
Diversified Brands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Singulair
|
8
|
|
|
153
|
|
|
160
|
|
|
5
|
|
|
180
|
|
|
185
|
|
|
13
|
|
|
338
|
|
|
352
|
|
|
11
|
|
|
350
|
|
|
360
|
|
||||||||||||
Cozaar/Hyzaar
|
6
|
|
|
103
|
|
|
109
|
|
|
7
|
|
|
118
|
|
|
125
|
|
|
10
|
|
|
202
|
|
|
213
|
|
|
14
|
|
|
231
|
|
|
245
|
|
||||||||||||
Nasonex
|
(1
|
)
|
|
73
|
|
|
72
|
|
|
—
|
|
|
81
|
|
|
81
|
|
|
(2
|
)
|
|
170
|
|
|
168
|
|
|
2
|
|
|
201
|
|
|
203
|
|
||||||||||||
Arcoxia
|
—
|
|
|
75
|
|
|
75
|
|
|
—
|
|
|
84
|
|
|
84
|
|
|
—
|
|
|
149
|
|
|
149
|
|
|
—
|
|
|
166
|
|
|
166
|
|
||||||||||||
Follistim AQ
|
24
|
|
|
39
|
|
|
63
|
|
|
27
|
|
|
43
|
|
|
70
|
|
|
53
|
|
|
67
|
|
|
121
|
|
|
56
|
|
|
81
|
|
|
138
|
|
||||||||||||
Other pharmaceutical (1)
|
401
|
|
|
869
|
|
|
1,268
|
|
|
287
|
|
|
902
|
|
|
1,189
|
|
|
759
|
|
|
1,650
|
|
|
2,406
|
|
|
608
|
|
|
1,770
|
|
|
2,378
|
|
||||||||||||
Total Pharmaceutical segment sales
|
4,758
|
|
|
5,702
|
|
|
10,460
|
|
|
3,841
|
|
|
5,442
|
|
|
9,282
|
|
|
8,933
|
|
|
11,190
|
|
|
20,123
|
|
|
7,557
|
|
|
10,644
|
|
|
18,201
|
|
||||||||||||
Animal Health:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Livestock
|
145
|
|
|
526
|
|
|
671
|
|
|
107
|
|
|
526
|
|
|
633
|
|
|
261
|
|
|
1,021
|
|
|
1,282
|
|
|
231
|
|
|
1,055
|
|
|
1,286
|
|
||||||||||||
Companion Animals
|
190
|
|
|
263
|
|
|
453
|
|
|
204
|
|
|
253
|
|
|
457
|
|
|
367
|
|
|
500
|
|
|
867
|
|
|
387
|
|
|
482
|
|
|
869
|
|
||||||||||||
Total Animal Health segment sales
|
335
|
|
|
789
|
|
|
1,124
|
|
|
311
|
|
|
779
|
|
|
1,090
|
|
|
628
|
|
|
1,521
|
|
|
2,149
|
|
|
618
|
|
|
1,537
|
|
|
2,155
|
|
||||||||||||
Other segment sales (2)
|
47
|
|
|
—
|
|
|
48
|
|
|
56
|
|
|
—
|
|
|
56
|
|
|
86
|
|
|
—
|
|
|
87
|
|
|
140
|
|
|
—
|
|
|
140
|
|
||||||||||||
Total segment sales
|
5,140
|
|
|
6,491
|
|
|
11,632
|
|
|
4,208
|
|
|
6,221
|
|
|
10,428
|
|
|
9,647
|
|
|
12,711
|
|
|
22,359
|
|
|
8,315
|
|
|
12,181
|
|
|
20,496
|
|
||||||||||||
Other (3)
|
4
|
|
|
125
|
|
|
128
|
|
|
54
|
|
|
(18
|
)
|
|
37
|
|
|
12
|
|
|
206
|
|
|
216
|
|
|
80
|
|
|
(74
|
)
|
|
6
|
|
||||||||||||
|
$
|
5,144
|
|
|
$
|
6,616
|
|
|
$
|
11,760
|
|
|
$
|
4,262
|
|
|
$
|
6,203
|
|
|
$
|
10,465
|
|
|
$
|
9,659
|
|
|
$
|
12,917
|
|
|
$
|
22,575
|
|
|
$
|
8,395
|
|
|
$
|
12,107
|
|
|
$
|
20,502
|
|
(1)
|
Other pharmaceutical primarily reflects sales of other human health pharmaceutical products, including products within the franchises not listed separately.
|
(2)
|
Represents the non-reportable segments of Healthcare Services and Alliances.
|
(3)
|
Other is primarily comprised of miscellaneous corporate revenues, including revenue hedging activities, as well as third-party manufacturing sales.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
United States
|
$
|
5,144
|
|
|
$
|
4,262
|
|
|
$
|
9,659
|
|
|
$
|
8,395
|
|
Europe, Middle East and Africa
|
3,163
|
|
|
3,144
|
|
|
6,265
|
|
|
6,334
|
|
||||
Japan
|
921
|
|
|
855
|
|
|
1,720
|
|
|
1,592
|
|
||||
China
|
763
|
|
|
559
|
|
|
1,509
|
|
|
1,045
|
|
||||
Asia Pacific (other than Japan and China)
|
716
|
|
|
791
|
|
|
1,461
|
|
|
1,543
|
|
||||
Latin America
|
658
|
|
|
594
|
|
|
1,219
|
|
|
1,126
|
|
||||
Other
|
395
|
|
|
260
|
|
|
742
|
|
|
467
|
|
||||
|
$
|
11,760
|
|
|
$
|
10,465
|
|
|
$
|
22,575
|
|
|
$
|
20,502
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Segment profits:
|
|
|
|
|
|
|
|
||||||||
Pharmaceutical segment
|
$
|
7,115
|
|
|
$
|
5,975
|
|
|
$
|
13,690
|
|
|
$
|
11,914
|
|
Animal Health segment
|
405
|
|
|
450
|
|
|
820
|
|
|
864
|
|
||||
Other segments
|
(2
|
)
|
|
26
|
|
|
—
|
|
|
88
|
|
||||
Total segment profits
|
7,518
|
|
|
6,451
|
|
|
14,510
|
|
|
12,866
|
|
||||
Other profits (losses)
|
94
|
|
|
(2
|
)
|
|
124
|
|
|
(89
|
)
|
||||
Unallocated:
|
|
|
|
|
|
|
|
||||||||
Interest income
|
75
|
|
|
81
|
|
|
164
|
|
|
165
|
|
||||
Interest expense
|
(233
|
)
|
|
(194
|
)
|
|
(442
|
)
|
|
(379
|
)
|
||||
Depreciation and amortization
|
(427
|
)
|
|
(332
|
)
|
|
(786
|
)
|
|
(682
|
)
|
||||
Research and development
|
(2,093
|
)
|
|
(2,190
|
)
|
|
(3,935
|
)
|
|
(5,307
|
)
|
||||
Amortization of purchase accounting adjustments
|
(378
|
)
|
|
(732
|
)
|
|
(775
|
)
|
|
(1,464
|
)
|
||||
Restructuring costs
|
(59
|
)
|
|
(228
|
)
|
|
(212
|
)
|
|
(323
|
)
|
||||
Other unallocated, net
|
(1,238
|
)
|
|
(768
|
)
|
|
(2,322
|
)
|
|
(1,355
|
)
|
||||
|
$
|
3,259
|
|
|
$
|
2,086
|
|
|
$
|
6,326
|
|
|
$
|
3,432
|
|
Segment Profits
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Pharmaceutical segment profits
|
$
|
7,115
|
|
|
$
|
5,975
|
|
|
$
|
13,690
|
|
|
$
|
11,914
|
|
Animal Health segment profits
|
405
|
|
|
450
|
|
|
820
|
|
|
864
|
|
||||
Other non-reportable segment profits
|
(2
|
)
|
|
26
|
|
|
—
|
|
|
88
|
|
||||
Other
|
(4,259
|
)
|
|
(4,365
|
)
|
|
(8,184
|
)
|
|
(9,434
|
)
|
||||
Income before taxes
|
$
|
3,259
|
|
|
$
|
2,086
|
|
|
$
|
6,326
|
|
|
$
|
3,432
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
($ in millions except per share amounts)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Income before taxes as reported under GAAP
|
$
|
3,259
|
|
|
$
|
2,086
|
|
|
$
|
6,326
|
|
|
$
|
3,432
|
|
Increase (decrease) for excluded items:
|
|
|
|
|
|
|
|
||||||||
Acquisition and divestiture-related costs
|
660
|
|
|
855
|
|
|
1,208
|
|
|
1,588
|
|
||||
Restructuring costs
|
159
|
|
|
235
|
|
|
346
|
|
|
339
|
|
||||
Other items:
|
|
|
|
|
|
|
|
||||||||
Charge for the acquisition of Viralytics
|
—
|
|
|
344
|
|
|
—
|
|
|
344
|
|
||||
Charge related to the formation of a collaboration with Eisai
|
—
|
|
|
—
|
|
|
—
|
|
|
1,400
|
|
||||
Other
|
48
|
|
|
(32
|
)
|
|
48
|
|
|
(54
|
)
|
||||
Non-GAAP income before taxes
|
4,126
|
|
|
3,488
|
|
|
7,928
|
|
|
7,049
|
|
||||
Taxes on income as reported under GAAP
|
615
|
|
|
370
|
|
|
820
|
|
|
975
|
|
||||
Estimated tax benefit on excluded items (1)
|
145
|
|
|
255
|
|
|
274
|
|
|
362
|
|
||||
Net tax benefit from the settlement of certain federal income tax matters
|
—
|
|
|
—
|
|
|
360
|
|
|
—
|
|
||||
Tax charge related to finalization of treasury regulations for the Tax Cuts and Job Act of 2017
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
||||
Non-GAAP taxes on income
|
760
|
|
|
625
|
|
|
1,387
|
|
|
1,337
|
|
||||
Non-GAAP net income
|
3,366
|
|
|
2,863
|
|
|
6,541
|
|
|
5,712
|
|
||||
Net (loss) income attributable to noncontrolling interests as reported under GAAP
|
(26
|
)
|
|
9
|
|
|
(79
|
)
|
|
14
|
|
||||
Acquisition and divestiture-related costs attributable to noncontrolling interests
|
36
|
|
|
—
|
|
|
89
|
|
|
—
|
|
||||
Non-GAAP net income attributable to noncontrolling interests
|
10
|
|
|
9
|
|
|
10
|
|
|
14
|
|
||||
Non-GAAP net income attributable to Merck & Co., Inc.
|
$
|
3,356
|
|
|
$
|
2,854
|
|
|
$
|
6,531
|
|
|
$
|
5,698
|
|
EPS assuming dilution as reported under GAAP
|
$
|
1.03
|
|
|
$
|
0.63
|
|
|
$
|
2.15
|
|
|
$
|
0.90
|
|
EPS difference (2)
|
0.27
|
|
|
0.43
|
|
|
0.37
|
|
|
1.21
|
|
||||
Non-GAAP EPS assuming dilution
|
$
|
1.30
|
|
|
$
|
1.06
|
|
|
$
|
2.52
|
|
|
$
|
2.11
|
|
(1)
|
The estimated tax impact on the excluded items is determined by applying the statutory rate of the originating territory of the non-GAAP adjustments.
|
(2)
|
Represents the difference between calculated GAAP EPS and calculated non-GAAP EPS, which may be different than the amount calculated by dividing the impact of the excluded items by the weighted-average shares for the applicable period.
|
Phase 2
|
Phase 3 (Phase 3 entry date)
|
Under Review
|
Cancer
MK-3475 Keytruda
Advanced Solid Tumors
MK-6482
Renal Cell
MK-7123(1)
Solid Tumors
MK-7339 Lynparza(2)
Advanced Solid Tumors
MK-7690(1)
Colorectal
MK-7902 Lenvima(2)
Biliary Tract
V937 Cavatak
Melanoma
Cytomegalovirus
V160
HIV-1 Infection
MK-8591 (islatravir)
Pediatric Neurofibromatosis Type 1
MK-5618 (selumetinib)(2)(3)
Respiratory Syncytial Virus
MK-1654
Schizophrenia
MK-8189
|
Cancer
MK-3475 Keytruda
Breast (October 2015)
Cervical (October 2018) (EU)
Colorectal (November 2015)
Cutaneous Squamous Cell (April 2019)
Gastric (May 2015) (EU)
Hepatocellular (May 2016) (EU)
Mesothelioma (May 2018)
Nasopharyngeal (April 2016)
Ovarian (December 2018)
Prostate (May 2019)
Small-Cell Lung (May 2017) (EU)
MK-7339 Lynparza(2)
Non-Small-Cell Lung (June 2019)
Pancreatic (December 2014)
Prostate (April 2017)
MK-7902 Lenvima(1)(2)
Bladder (May 2019)
Endometrial (June 2018)
Melanoma (March 2019)
Non-Small-Cell Lung (March 2019)
Cough
MK-7264 (gefapixant) (March 2018)
Heart Failure
MK-1242 (vericiguat) (September 2016)(2)
Pneumoconjugate Vaccine
V114 (June 2018)
|
New Molecular Entities/Vaccines
Bacterial Infection
MK-7655A (relebactam+imipenem/cilastatin) (EU)
Ebola Vaccine
V920 (U.S.)(4)(EU)
Certain Supplemental Filings
Cancer
MK-3475 Keytruda
• First-Line Advanced Renal Cell Carcinoma (KEYNOTE-426) (EU)
• First-Line Metastatic Non-Small-Cell Lung Cancer (KEYNOTE-042) (EU)
• First-Line Head and Neck Cancer (KEYNOTE-048) (EU)
• Recurrent Locally Advanced or Metastatic Esophageal Cancer (KEYNOTE-180/KEYNOTE-181) (EU)
• Alternative Dosing Regimen (Q6W) (U.S.)
HAP/VAP(5)
MK-7625A Zerbaxa (EU)
|
Footnotes:
(1) Being developed in combination with Keytruda.
(2) Being developed in a collaboration.
(3) This is a registrational study.
(4) Rolling submission.
(5) HAP - Hospital-Acquired Pneumonia / VAP - Ventilator-Associated Pneumonia
|
($ in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||
Cash and investments
|
$
|
10,884
|
|
|
$
|
15,097
|
|
Working capital
|
4,213
|
|
|
3,669
|
|
||
Total debt to total liabilities and equity
|
31.7
|
%
|
|
30.4
|
%
|
|
|
|
|
|
($ in millions)
|
||
Period
|
Total Number
of Shares
Purchased (1)
|
|
Average Price
Paid Per
Share
|
|
Approximate Dollar Value of Shares
That May Yet Be Purchased
Under the Plans or Programs (1)
|
||
April 1 - April 30
|
9,300,182
|
|
(2)
|
$74.95
|
|
$10,741
|
|
May 1 - May 31
|
7,834,108
|
|
|
$78.88
|
|
$10,123
|
|
June 1 - June 30
|
6,025,248
|
|
|
82.74
|
|
|
$9,640
|
Total
|
23,159,538
|
|
|
$79.98
|
|
$9,640
|
(1)
|
Shares purchased during the period were made as part of plans approved by the Board of Directors in November 2017 and October 2018 each to purchase up to $10 billion of Merck’s common stock for its treasury.
|
Number
|
|
Description
|
|
|
|
||
3.1
|
|
—
|
|
|
|
||
3.2
|
|
—
|
|
|
|
|
|
31.1
|
|
—
|
|
|
|
||
31.2
|
|
—
|
|
|
|
||
32.1
|
|
—
|
|
|
|
||
32.2
|
|
—
|
|
|
|
||
101
|
|
—
|
The following materials from Merck & Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income, (ii) the Condensed Consolidated Statement of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheet, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.
|
|
|
MERCK & CO., INC.
|
|
|
|
Date: August 6, 2019
|
|
/s/ Jennifer Zachary
|
|
|
JENNIFER ZACHARY
|
|
|
Executive Vice President and General Counsel
|
|
|
|
Date: August 6, 2019
|
|
/s/ Rita A. Karachun
|
|
|
RITA A. KARACHUN
|
|
|
Senior Vice President Finance - Global Controller
|
Number
|
|
Description
|
|
|
|
||
3.1
|
|
—
|
|
|
|
||
3.2
|
|
—
|
|
|
|
|
|
31.1
|
|
—
|
|
|
|
||
31.2
|
|
—
|
|
|
|
||
32.1
|
|
—
|
|
|
|
||
32.2
|
|
—
|
|
|
|
||
101
|
|
—
|
The following materials from Merck & Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statement of Income, (ii) the Condensed Consolidated Statement of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheet, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.
|
By:
|
/s/ Kenneth C. Frazier
|
|
KENNETH C. FRAZIER
Chairman, President and Chief Executive Officer
|
By:
|
/s/ Robert M. Davis
|
|
ROBERT M. DAVIS
Executive Vice President, Global Services
and Chief Financial Officer
|
|
|
|
Dated: August 6, 2019
|
/s/ Kenneth C. Frazier
|
|
|
Name:
Title:
|
KENNETH C. FRAZIER
Chairman, President and Chief Executive Officer
|
|
|
|
Dated: August 6, 2019
|
/s/ Robert M. Davis
|
|
|
Name:
Title:
|
ROBERT M. DAVIS
Executive Vice President, Global Services
and Chief Financial Officer
|