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			2Q			3Q			Sep YTD			1Q			2Q			3Q			Sep YTD			4Q			Dec YTD			3Q		Sep YTD
Sales		$	9,312		$	9,844		$	10,536		$	29,692		$	9,425		$	9,785		$	10,073		$	29,283		$	10,215		$	39,498		5	%	1	%
Costs, Expenses and Other
Materials and production		3,572			3,578			3,409			10,559			3,569			3,754			3,761			11,084			3,850			14,934			-9	%	-5	%
Marketing and administrative		2,318			2,458			2,393			7,169			2,601			2,624			2,472			7,698			2,615			10,313			-3	%	-7	%
Research and development		1,659			2,151			1,664			5,475			1,737			1,670			1,500			4,906			1,797			6,704			11	%	12	%
Restructuring costs		91			134			161			386			82			191			113			386			233			619			42	%	—
Other (income) expense, net		48			19			22			88			55			739			(170		)	624			905			1,527			*		-86	%
Income Before Taxes		1,624			1,504			2,887			6,015			1,381			807			2,397			4,585			815			5,401			20	%	31	%
Income Tax Provision (Benefit)		494			295			699			1,487			423			119			566			1,108			(166		)	942
Net Income		1,130			1,209			2,188			4,528			958			688			1,831			3,477			981			4,459			19	%	30	%
Less: Net Income Attributable to Noncontrolling Interests		5			4			4			13			5			1			5			12			5			17
Net Income Attributable to Merck & Co., Inc.		$	1,125		$	1,205		$	2,184		$	4,515		$	953		$	687		$	1,826		$	3,465		$	976		$	4,442		20	%	30	%
Earnings per Common Share Assuming Dilution		$	0.40		$	0.43		$	0.78		$	1.62		$	0.33		$	0.24		$	0.64		$	1.22		$	0.35		$	1.56		22	%	33	%
Average Shares Outstanding Assuming Dilution		2,795			2,789			2,786			2,791			2,865			2,850			2,836			2,850			2,813			2,841
Tax Rate		30.4		%	19.6		%	24.2		%	24.7		%	30.6		%	14.7		%	23.6		%	24.2		%	-20.4		%	17.4		%

 

* 100% or greater

 

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

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

THIRD QUARTER 2015

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2c

 

					Acquisition and
					Divestiture-		Restructuring		Certain Other		Adjustment
		GAAP			Related Costs (1)		Costs (2)		Items (3)		Subtotal		Non-GAAP
Materials and production		$	3,761		1,184		70				1,254		$	2,507
Marketing and administrative		2,472			26		17				43		2,429
Research and development		1,500			(71	)	17				(54	)	1,554
Restructuring costs		113					113				113		—
Other (income) expense, net		(170		)	7				(283	)	(276	)	106
Income Before Taxes		2,397			(1,146	)	(217	)	283		(1,080	)	3,477
Tax Provision (Benefit)		566			(248	)(4)	(57	)(4)	119	(4)	(186	)	752
Net Income		1,831			(898	)	(160	)	164		(894	)	2,725
Net Income Attributable to Merck & Co., Inc.		1,826			(898	)	(160	)	164		(894	)	2,720
Earnings per Common Share Assuming Dilution		$	0.64		(0.32	)	(0.06	)	0.06		(0.32	)	$	0.96
Tax Rate		23.6		%									21.6		%

 

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

 

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.  Management uses this information internally for planning and forecasting purposes and to measure the performance of the company along with other metrics.  Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS.  This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1) Amounts included in materials and production costs primarily reflect $1.2 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions.  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.  Amount included in research and development expenses represents income resulting from a reduction in the estimated fair value of liabilities for contingent consideration.

 

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

 

(3) Primarily reflects a $250 million gain on the divestiture of certain migraine clinical development programs.

 

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

 

 

MERCK & CO., INC.

GAAP TO NON-GAAP RECONCILIATION

NINE MONTHS ENDED SEPTEMBER 30, 2015

(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)

(UNAUDITED)

Table 2d

 

					Acquisition and
					Divestiture-		Restructuring		Certain Other		Adjustment
		GAAP			Related Costs (1)		Costs (2)		Items (3)		Subtotal		Non-GAAP
Materials and production		$	11,084		3,675		280				3,955		$	7,129
Marketing and administrative		7,698			389		70				459		7,239
Research and development		4,906			63		34				97		4,809
Restructuring costs		386					386				386		—
Other (income) expense, net		624			7				418		425		199
Income Before Taxes		4,585			(4,134	)	(770	)	(418	)	(5,322	)	9,907
Tax Provision (Benefit)		1,108			(805	)(4)	(145	)(4)	(251	)(5)	(1,201	)	2,309
Net Income		3,477			(3,329	)	(625	)	(167	)	(4,121	)	7,598
Net Income Attributable to Merck & Co., Inc.		3,465			(3,329	)	(625	)	(167	)	(4,121	)	7,586
Earnings per Common Share Assuming Dilution		$	1.22		(1.16	)	(0.22	)	(0.06	)	(1.44	)	$	2.66
Tax Rate		24.2		%									23.3		%

 

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

 

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.  Management uses this information internally for planning and forecasting purposes and to measure the performance of the company along with other metrics.  Senior management’s annual compensation is derived in part using non-GAAP income and non-GAAP EPS.  This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP.

 

(1) Amounts included in materials and production costs reflect $3.6 billion of expenses for the amortization of intangible assets recognized as a result of acquisitions, as well as $76 million of amortization of purchase accounting adjustments to inventories related to 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 primarily reflect 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) Primarily reflects foreign exchange losses of $715 million to devalue the company’s net monetary assets in Venezuela and a $250 million gain on the divestiture of certain migraine clinical development programs.

 

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

 

(5) Includes the estimated tax impact of the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments, as well as a net benefit of $370 million on the settlement of certain federal income tax issues.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

THIRD QUARTER 2016

(AMOUNTS IN MILLIONS)

Table 3a

 

		Global								U.S.								International
		3Q 2016			3Q 2015			% Change		3Q 2016			3Q 2015			% Change		3Q 2016			3Q 2015			% Change
TOTAL SALES (1)		$	10,536		$	10,073		5		$	5,063		$	4,749		7		$	5,474		$	5,324		3
PHARMACEUTICAL		9,443			8,925			6		4,710			4,382			7		4,733			4,543			4
Primary Care and Women’s Health
Cardiovascular
Zetia		671			633			6		411			406			1		261			228			15
Vytorin		273			302			-10		109			122			-11		164			180			-9
Diabetes
Januvia		1,006			1,014			-1		568			628			-10		438			386			13
Janumet		548			562			-2		241			274			-12		307			288			7
General Medicine & Women’s Health
NuvaRing		195			190			3		144			135			7		51			56			-7
Implanon / Nexplanon		148			176			-16		97			107			-10		51			69			-26
Follistim AQ		101			95			6		49			37			31		52			57			-10
Dulera		97			133			-27		92			128			-28		6			5			21
Hospital and Specialty
Hepatitis
Zepatier		164								152								13
HIV
Isentress		372			377			-1		215			204			5		157			173			-9
Hospital Acute Care
Cubicin		320			325			-2		264			291			-9		56			35			60
Invanz		152			153			-1		93			89			4		59			64			-7
Noxafil		147			132			11		65			61			7		82			71			15
Cancidas		142			139			2		8			6			48		134			133			0
Bridion		139			89			56		24								115			89			29
Primaxin		77			75			3		1			1			-39		76			74			4
Immunology
Remicade		311			442			-30										311			442			-30
Simponi		193			178			8										193			178			8
Oncology
Keytruda		356			159			124		188			109			72		168			50			237
Emend		137			141			-3		91			88			4		46			53			-13
Temodar		78			83			-6		5			6			-22		73			77			-5
Diversified Brands
Respiratory
Singulair		239			201			19		6			10			-44		233			191			22
Nasonex		94			121			-22		20			41			-51		74			80			-7
Other
Cozaar / Hyzaar		131			150			-12		4			7			-41		128			143			-11
Arcoxia		114			123			-7										114			123			-7
Fosamax		68			86			-21		2			4			-47		66			83			-20
Zocor		54			56			-3		3			5			-43		51			51			1
Vaccines
Gardasil / Gardasil 9		860			625			38		737			556			33		124			69			78
ProQuad / M-M-R II / Varivax		496			390			27		419			327			28		77			64			21
Zostavax		190			179			6		138			145			-5		52			34			54
Pneumovax 23		175			138			27		122			103			19		53			35			51
RotaTeq		171			160			7		123			115			7		48			45			8
Other Pharmaceutical (2)		1,224			1,298			-8		319			377			-15		900			917			-2
ANIMAL HEALTH (3)		865			827			5		237			226			5		628			601			4
Other Revenues (3)(4)		228			321			-29		116			141			-18		113			180			-37

 

(1)  Only select products are shown.

 

(2)  Includes Pharmaceutical products not individually shown above.  Other Vaccines sales included in Other Pharmaceutical were $135 million and $99 million on a global basis for third quarter 2016 and 2015, respectively.

 

(3)  Amounts reflect a reclassification of certain revenues between Animal Health and Other Revenues.

 

(4)  Other revenues are comprised primarily of alliance revenue, third-party manufacturing sales and miscellaneous corporate revenues, including revenue hedging activities.

 

 

MERCK & CO., INC.

FRANCHISE / KEY PRODUCT SALES

SEPTEMBER YEAR-TO-DATE 2016

(AMOUNTS IN MILLIONS)

Table 3b

 

		Global								U.S.								International
		Sep YTD			Sep YTD					Sep YTD			Sep YTD					Sep YTD			Sep YTD
		2016			2015			% Change		2016			2015			% Change		2016			2015			% Change
TOTAL SALES (1)		$	29,692		$	29,283		1		$	13,792		$	12,907		7		$	15,899		$	16,376		-3
PHARMACEUTICAL		26,247			25,755			2		12,792			11,953			7		13,455			13,802			-3
Primary Care and Women’s Health
Cardiovascular
Zetia		1,985			1,836			8		1,253			1,160			8		731			676			8
Vytorin		843			942			-11		341			356			-4		502			586			-14
Diabetes
Januvia		2,976			2,942			1		1,748			1,777			-2		1,228			1,165			5
Janumet		1,624			1,625					724			749			-3		899			877			3
General Medicine & Women’s Health
NuvaRing		571			538			6		421			373			13		150			165			-9
Implanon / Nexplanon		446			437			2		308			265			16		138			172			-20
Dulera		331			383			-14		314			369			-15		18			15			19
Follistim AQ		268			288			-7		121			123			-1		146			164			-11
Hospital and Specialty
Hepatitis
Zepatier		326								308								18
HIV
Isentress		1,050			1,137			-8		546			603			-9		504			534			-6
Hospital Acute Care
Cubicin (2)		969			805			20		824			722			14		145			83			76
Noxafil		434			360			21		202			156			30		232			204			14
Invanz		409			424			-4		239			235			2		170			189			-10
Cancidas		406			436			-7		18			19			-2		388			417			-7
Bridion		343			262			31		42								301			262			15
Primaxin		231			228			2		3			5			-42		228			222			3
Immunology
Remicade		999			1,398			-29										999			1,398			-29
Simponi		581			505			15										581			505			15
Oncology
Keytruda		919			352			161		481			261			84		438			90			386
Emend		405			396			2		266			245			8		140			151			-7
Temodar		216			238			-9		10			6			60		207			232			-11
Diversified Brands
Respiratory
Singulair		705			658			7		30			26			14		675			632			7
Nasonex		425			625			-32		161			308			-48		264			317			-17
Other
Cozaar / Hyzaar		389			524			-26		13			23			-43		376			501			-25
Arcoxia		342			361			-5										342			361			-5
Fosamax		217			277			-22		3			10			-69		214			267			-20
Zocor		150			168			-11		9			15			-43		141			153			-7
Vaccines
Gardasil / Gardasil 9		1,631			1,410			16		1,371			1,159			18		259			252			3
ProQuad / M-M-R II / Varivax		1,236			1,096			13		1,053			936			13		182			160			14
RotaTeq		489			441			11		356			320			11		133			121			10
Zostavax		464			503			-8		363			402			-10		102			101			1
Pneumovax 23		403			354			14		267			250			7		136			104			31
Other Pharmaceutical (3)		3,464			3,806			-11		997			1,080			-8		2,468			2,726			-9
ANIMAL HEALTH (4)		2,594			2,499			4		726			643			13		1,868			1,856			1
Other Revenues (4)(5)		851			1,029			-17		274			311			-12		576			718			-20

 

(1)  Only select products are shown.

 

(2)  Reflects sales following the acquisition of Cubist Pharmaceuticals, Inc. by Merck on January 21, 2015.

 

(3)  Includes Pharmaceutical products not individually shown above.  Other Vaccines sales included in Other Pharmaceutical were $329 million and $253 million on a global basis for September YTD 2016 and 2015, respectively.

 

(4)  Amounts reflect a reclassification of certain revenues between Animal Health and Other Revenues.

 

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