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EXHIBIT 99(b)
FINANCIAL STATEMENTS AND EXHIBITS
REQUIRED BY FORM 11-K ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 1-3305
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MERCK & CO., INC. EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
(Full title of the plan)
MERCK & CO., INC.
P.O. BOX 100
WHITEHOUSE STATION, NEW JERSEY 08889-0100
(Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office)
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Merck & Co., Inc.:
We have audited the accompanying statement of net assets available for
benefits of the Merck & Co., Inc. Employee Stock Purchase and Savings Plan (the
"Plan") as of December 31, 1999 and 1998, and the related statement of changes
in net assets available for benefits for the year ended December 31, 1999. These
financial statements and the schedule referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule of assets
held for investment purposes is presented for purposes of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 12, 2000
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31,
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1999 1998
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Assets:
Investments at market value............................... $347,069,430 $366,805,677
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Receivables:
Employer's contribution................................. 104,491 66,729
Participants' contributions............................. 370,507 237,677
Accrued interest and dividends.......................... 1,193,134 1,102,289
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Total receivables..................................... 1,668,132 1,406,695
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Net assets available for benefits........................... $348,737,562 $368,212,372
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The accompanying notes to financial statements are an integral part of this
financial statement.
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED
DECEMBER 31, 1999
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Additions to net assets attributed to:
Investment income (loss):
Net depreciation in market value of investments......... ($21,751,959)
Interest................................................ 710,600
Dividends............................................... 7,382,703
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Total investment loss................................. (13,658,656)
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Contributions to the Plan:
By participants......................................... 18,531,288
By the employer......................................... 4,635,888
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Total contributions................................... 23,167,176
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Total additions....................................... 9,508,520
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Deductions from net assets attributed to:
Benefits paid to participants............................. (26,160,639)
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Net reallocations........................................... (2,822,691)
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Total deductions and net reallocations among Plans.... (28,983,330)
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Net decrease........................................ (19,474,810)
Net assets available for benefits
Beginning of year................................... 368,212,372
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End of year......................................... $348,737,562
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The accompanying notes to financial statements are an integral part of this
financial statement.
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. DESCRIPTION OF PLAN:
The following description of the Merck & Co., Inc. Employee Stock Purchase
and Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the Plan's
provisions.
1. GENERAL
The Plan was designed to provide an easy, economical way for employees to
become stockholders of Merck & Co., Inc. (the "Company" or "Merck") as well as a
systematic means of saving and investing for the future. Generally, any regular
full-time, part-time, or temporary employee of the Company who is a U.S.
resident covered by a collective bargaining agreement providing for
participation in this Plan as defined by the Plan document, and has completed
one year of employment, is eligible to participate.
The Plan is administered by a management committee appointed by the Chief
Executive Officer of the Company. All costs of administering the Plan are borne
by the Company.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
2. CONTRIBUTIONS
Depending on the terms of the applicable collective bargaining agreements,
participants may contribute from 2% up to either 10% or 15% of their base pay
per pay period. In addition, the Company will match 50% of employee
contributions up to 6% of base pay per pay period, or contributions of a
predetermined dollar amount negotiated with each bargaining group, whichever is
less. Company matching contributions are invested according to the following age
parameters:
Under age 50 -- 50% of Company matching contributions is invested in the
Merck Common Stock Fund (Non-participant directed) and 50% is invested in the
funds to which the participant is currently contributing (Participant directed).
Age 50 and above -- Participants have the option to invest all Company
matching contributions in any of the available fund options (Participant
directed).
Participants direct the investment of their contributions into any
investment option including the Merck Common Stock Fund (Participant directed).
The Plan currently offers 15 mutual funds and the Merck Common Stock Fund.
3. PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contribution,
the Company's matching contribution and allocation of Plan earnings. The
allocation is based on participants' account balances, as defined in the Plan
document.
4. VESTING
Participants are immediately vested in their contributions, all Company
matching contributions, plus actual earnings thereon.
5. PARTICIPANT LOANS
Participants may borrow from their account balances with interest charged
at the prime rate plus 1%. Loan terms range from one to five years or up to
thirty years for the purchase of a primary residence. The minimum loan is $500
and the maximum loan is the lesser of $50,000 less the highest outstanding loan
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
balance during the one year period prior to the new loan application date, or
50% of the participant's account balance less any current outstanding loan
balance.
6. PAYMENT OF BENEFITS
In-service (which include hardship withdrawals) and termination
distributions are made throughout the year in accordance with applicable Plan
provisions. At December 31, 1999 and 1998, net assets available for benefits
included distributions in process of payment of $662,943 and $835,834,
respectively.
B. SUMMARY OF ACCOUNTING POLICIES:
USE OF ESTIMATES
The financial statements are prepared in conformity with accounting
principles generally accepted in the United States and, accordingly, include
amounts that are based on management's best estimates and judgments. Actual
results could differ from these estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The financial statements of the Plan have been prepared on the accrual
basis of accounting. The investments of the Plan are stated at quoted market
value. Shares of mutual funds are valued at the net asset value of the shares
held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date. The net appreciation
(depreciation) in market value of investments is based on the beginning of the
year market value or value at the time of purchase during the year and is
included in the statement of changes in net assets available for benefits.
C. INVESTMENTS:
The following presents investments that represent 5% or more of the Plan's
net assets as of year-end.
DECEMBER 31,
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1999 1998
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Merck Common Stock Fund, 11,958,440 and
12,173,650 units, respectively................. $274,189,812* $306,880,503*
T. Rowe Price Blue Chip Growth Fund, 500,017 and
489,337 units, respectively.................... 18,170,608 14,973,705**
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* Includes non-participant directed portion
** This investment did not represent 5% of the Plan's net assets as of December
31, 1998
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated in
value by $(21,751,959) as follows:
Mutual Funds.......................................... $ 6,196,485
Common Stock Fund..................................... (27,948,444)
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$(21,751,959)
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
D. NON-PARTICIPANT-DIRECTED INVESTMENTS:
Information about the net assets and the significant components of the
changes in net assets relating to the non-participant-directed investments is as
follows:
DECEMBER 31,
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1999 1998
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Net Assets:
Merck Common Stock Fund....................... $41,979,744 $52,432,551
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YEAR ENDED
DECEMBER 31, 1999
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Changes in Net Assets
Contributions.................................. $ 2,327,169
Dividends...................................... 718,838
Interest....................................... 66,235
Net depreciation............................... (8,243,378)
Benefits paid to participants....................... (2,989,835)
Transfers to participant directed investments and
other Plans....................................... (2,331,836)
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$(10,452,807)
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E. RELATED-PARTY TRANSACTIONS:
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company ("Fidelity"). Fidelity is the trustee as defined by the
Plan and, therefore, these transactions qualify as party-in-interest
transactions.
Merck & Co., Inc. also is a party-in-interest to the Plan under the
definition provided in Section 3(14) of ERISA. Therefore, Merck Common Stock
Fund transactions qualify as party-in-interest transactions.
All party-in-interest transactions are set forth on the attached schedules.
F. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
G. TAX STATUS:
The Plan obtained a tax determination letter from the Internal Revenue
Service dated September 18, 1995 indicating that it had been designed in
accordance with applicable sections of the Internal Revenue Code ("IRC"). The
Plan was most recently amended in July 1998. The Plan sponsor believes that the
Plan is designed and currently operated in compliance with the IRC. Therefore,
no provision for income taxes has been made.
H. PROHIBITED TRANSACTIONS:
There were no prohibited transactions during 1999.
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MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
I. OTHER MATTERS:
Net reallocations in 1999 of ($2,822,691) consist of transfers between the
Plan and the Merck & Co., Inc. Employee Savings and Security Plan for employees
who changed their status during the year.
J. SUBSEQUENT EVENTS:
Subsequent to year-end, the Company match was increased for certain unions
from 50% to 60% of employee contributions up to 6% of base pay. In addition,
participant accounts of employees belonging to those unions will be credited
with a ratification bonus.
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SCHEDULE H
EIN: 22-1109110
PLAN NO.: 004
MERCK & CO., INC.
EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN
LINE 4i -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
(C) DESCRIPTION OF INVESTMENT INCLUDING
(B) IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, COLLATERAL, (E) CURRENT
(A) LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE (D) COST VALUE
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* Merck & Co., Inc. Merck Common Stock Fund
11,958,440 units $114,434,243 $274,189,812
* Fidelity Investments Fidelity Equity-Income Fund
46,074 units 2,274,857 2,463,996
Fidelity Growth & Income Portfolio
130,131 units 4,765,709 6,136,862
Fidelity Retirement Money Market Fund
10,145,470 units 10,164,416 10,164,416
Spartan U.S. Equity Index Fund
57,592 units 2,174,821 2,999,980
Fidelity Low-Priced Stock Fund
20,566 units 489,009 465,615
Putnam Investments The George Putnam Fund of Boston A
315,573 units 5,695,411 5,137,525
Putnam Voyager Fund A
75,876 units 1,812,543 2,349,124
T. Rowe Price T. Rowe Price Blue Chip Growth Fund
500,017 units 12,306,072 18,170,608
T. Rowe Price New Income Fund
132,381 units 1,167,171 1,080,229
T. Rowe Price Mid-Cap Growth Fund
54,506 units 1,660,741 2,187,331
T. Rowe Price Dividend Growth Fund
26,927 units 563,168 544,206
Franklin Templeton Franklin Small Cap Growth Fund A
50,591 units 1,525,697 2,232,592
Templeton Developing Markets Trust A
30,848 units 402,942 481,544
The Vanguard Group Vanguard U.S. Growth Portfolio
149,500 units 5,224,407 6,507,725
The American Funds Group EuroPacific Growth Fund
78,448 units 2,354,400 3,346,580
*Participants' Loan Account (with interest
rates ranging from 6.5% to 12.5% and with
maturities through 2028) 8,611,285 8,611,285
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Total $175,626,892 $347,069,430
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* Denotes a party-in-interest to the Plan.
The accompanying notes to financial statements are an integral part of this
schedule.
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated June 12, 2000 included in the financial
statements and exhibits required by Form 11-K Annual Report for the Merck & Co.,
Inc. Employee Stock Purchase and Savings Plan into the Company's previously
filed Registration Statements on Form S-8 (Nos. 33-21087, 33-21088, 33-36101,
33-40177, 33-51235, 33-53463, 33-64273, 33-64665, 333-23293, 333-23295,
333-91769, 333-30526 and 333-31762), on Form S-4 (No. 33-50667) and on Form S-3
(Nos. 33-60322, 33-39349, 33-51785, 33-57421, 333-17045, 333-36383 and 333-
77569). It should be noted that we have not audited any financial statements of
the Plan subsequent to December 31, 1999 or performed any audit procedures
subsequent to the date of our report.
ARTHUR ANDERSEN LLP
New York, New York
June 27, 2000