Merck Statement on Venezuelan Currency Devaluation


February 13, 2013 9:00 am ET

Merck Confirms 2013 Full-Year Guidance and Provides Guidance on First Quarter

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 (bolívar
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


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
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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

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