Merck Announces First-Quarter 2012 Financial Results

(2) Represents separation and other related costs associated with restructuring activities under the company's formal restructuring programs.

(3) Primarily reflects equity income from the AstraZeneca LP and Sanofi Pasteur MSD partnerships.

(4) Other (income) expense, net in the first quarter of 2011 includes a charge of $500 million related to the resolution of the arbitration proceeding with Johnson & Johnson and a $134 million gain on the sale of certain manufacturing facilities and related assets.

(5) The company calculates earnings per share pursuant to the two-class method which requires the allocation of net income between common shareholders and participating security holders (losses are not allocated). Net income attributable to Merck & Co., Inc. common shareholders used to calculate earnings per common share assuming dilution was $1,736 million for the first quarter of 2012 and was $1,040 million for the first quarter of 2011.

(6) The GAAP effective tax rates for the first quarter of 2012 and 2011 were 29.5% and 38.1%, respectively. Excluding the impact of the non-GAAP reconciling items detailed in the accompanying tables, the effective tax rates were 24.8% and 25.5% for the first quarter of 2012 and 2011, respectively.

MERCK & CO., INC.CONSOLIDATED STATEMENT OF OPERATIONSGAAP TO NON-GAAP RECONCILIATIONFIRST QUARTER 2012(AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES)(UNAUDITED)Table 2a
					GAAP						Acquisition-Related Costs (1)					Restructuring Costs (2)					Certain Other Items				Adjustment Subtotal					Non-GAAP
Sales					$	11,731																			$	-				$	11,731
Costs, Expenses and Other
Materials and production						4,037					1,229					5										1,234					2,803
Marketing and administrative						3,074					51					24										75					2,999
Research and development						1,862					9					45										54					1,808
Restructuring costs						219										219										219					-
Equity income from affiliates						(110	)																			-					(110	)
Other (income) expense, net						142																				-					142
Income Before Taxes						2,507					(1,289	)				(293	)				-					(1,582	)				4,089
Income Tax Provision						740																				(276	)	(3)			1,016
Net Income						1,767																				(1,306	)				3,073
Less: Net Income Attributable to Noncontrolling Interests						29																				-					29
Net Income Attributable to Merck & Co., Inc.					$	1,738																			$	(1,306	)			$	3,044
Earnings per Common Share Assuming Dilution					$	0.56																								$	0.99		(4)
Average Shares Outstanding Assuming Dilution						3,074																									3,074
Tax Rate						29.5	%																								24.8	%

Merck is providing non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the company's performance. This information should be considered in addition to, but not in lieu of, information prepared in accordance with GAAP.

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