Merck Statement on Venezuelan Currency Devaluation

Wed Feb 13, 2013 9:00am EST

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Merck Confirms 2013 Full-Year Guidance and Provides Guidance on First Quarter
WHITEHOUSE STATION, N.J.--(Business Wire)--
Merck, known as MSD outside the United States and Canada, said today that it has
completed a preliminary assessment of the impact of the Venezuelan government`s
intention to devalue its currency effective Feb. 13, 2013. 

As a result of the devaluation, the company will incur a one-time, after-tax
loss due to exchange of approximately $0.05 per share in the first quarter of
2013 related to the remeasurement of the local balance sheet at the date of the
devaluation. Also, the company expects the impact of the devaluation on ongoing
operations to be approximately $0.02 per share spread over the balance of 2013. 

Since Jan. 1, 2010, Venezuela has been designated hyperinflationary and, as a
result, local foreign operations are remeasured in U.S. dollars with the impact
recorded in income. On Feb. 8, 2013, the Venezuelan government declared its
intention to devalue its currency (bolĂ­var fuerte). The official exchange rate
is expected to move from 4.30 VEF/$ to 6.30 VEF/$. 

The effects of the devaluation do not change the company`s full year 2013 GAAP
(generally accepted accounting principles) or full year non-GAAP EPS (earnings
per share) guidance ranges. 

The company is providing guidance about its expectations for the first quarter
of 2013, which includes the impact of the devaluation in the quarter. Merck
expects first-quarter non-GAAP EPS to be between $0.76 and $0.78, and the GAAP
EPS range to be $0.37 to $0.42. A reconciliation of anticipated first-quarter
2013 EPS as reported in accordance with GAAP to non-GAAP EPS that excludes
certain items is provided in the table below.

 $ in millions, except EPS amounts                  First Quarter 2013  
 GAAP EPS                                           $0.37 to 0.42       
 Difference1                                        0.39 to 0.36        
 Non-GAAP EPS that excludes items listed below 2    $0.76 to $0,78      

 Acquisition-related costs3                        $1,280 to $1,200  
 Restructuring costs                               175 to 125        
 Net decrease (increase) in income before taxes    1,455 to 1,325    
 Estimated income tax (benefit) expense            (255) to (225)    
 Decrease (increase) in net income                 $1,200 to $1,100  

1 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 period. 

2 Merck is providing certain 2013 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. 

3 Includes expenses for the amortization of intangible assets and amortization
of purchase accounting adjustments to inventories recognized as a result of
mergers and acquisitions, as well as intangible asset impairment charges. Also
includes integration and other costs associated with mergers and acquisitions. 

About Merck

Today's Merck is a global healthcare leader working to help the world be well.
Merck is known as MSD outside the United States and Canada. Through our
prescription medicines, vaccines, biologic therapies, and consumer care and
animal health products, we work with customers and operate in more than 140
countries to deliver innovative health solutions. We also demonstrate our
commitment to increasing access to healthcare through far-reaching policies,
programs and partnerships. For more information, visit and connect
with us on Twitter, Facebook and YouTube. 

Forward-Looking Statement

This news release includes "forward-looking statements" within the meaning of
the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995. These statements are based upon the current beliefs and
expectations of Merck`s management and are subject to significant risks and
uncertainties. If underlying assumptions prove inaccurate or risks or
uncertainties materialize, actual results may differ materially from those set
forth in the forward-looking statements. 

Risks and uncertainties include but are not limited to, general industry
conditions and competition; general economic factors, including interest rate
and currency exchange rate fluctuations; the impact of pharmaceutical industry
regulation and health care legislation in the United States and internationally;
global trends toward health care cost containment; technological advances, new
products and patents attained by competitors; challenges inherent in new product
development, including obtaining regulatory approval; Merck`s ability to
accurately predict future market conditions; manufacturing difficulties or
delays; financial instability of international economies and sovereign risk;
dependence on the effectiveness of Merck`s patents and other protections for
innovative products; and the exposure to litigation, including patent
litigation, and/or regulatory actions. 

Merck undertakes no obligation to publicly update any forward-looking statement,
whether as a result of new information, future events or otherwise. Additional
factors that could cause results to differ materially from those described in
the forward-looking statements can be found in Merck`s 2011 Annual Report on
Form 10-K and the company`s other filings with the Securities and Exchange
Commission (SEC) available at the SEC`s Internet site (

Ron Rogers, 908-423-6449
Steve Cragle, 908-423-3461
Carol Ferguson, 908-423-4465
Justin Holko, 908-423-5088 

Copyright Business Wire 2013

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