##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 1-3305
 MERCK & CO., INC.
 
 Incorporated in New Jersey
    
    I.R.S. Employer IdentificationNo. 22-1109110
  Class
    
    Number of Shares OutstandingCommon Stock
    
    2,176,567,489
  þ o
  þ o o
  o þ




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TABLE OF CONTENTS  Part I Financial InformationItem 1. Financial StatementsItem 4. Controls and ProceduresPART II Other InformationItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 6. ExhibitsSignaturesEXHIBIT INDEXEX-12: COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGESEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents  
 Part I  Financial Information
 
 Item 1. Financial Statements
 
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Sales
    
    $
    6,074.1
    
    
    $
    5,410.4
    
    
    $
    17,954.8
    
    
    $
    16,591.9Costs, Expenses and OtherMaterials and production
    
    
    1,517.7
    
    
    
    1,544.1
    
    
    
    4,595.9
    
    
    
    4,332.0Marketing and administrative
    
    
    1,951.4
    
    
    
    2,370.6
    
    
    
    5,837.2
    
    
    
    5,819.6Research and development
    
    
    1,440.5
    
    
    
    945.4
    
    
    
    3,501.0
    
    
    
    3,059.9Restructuring costs
    
    
    49.3
    
    
    
    49.6
    
    
    
    170.9
    
    
    
    86.5Equity income from affiliates
    
    
    (768.5
    )
    
    
    (595.4
    )
    
    
    (2,180.2
    )
    
    
    (1,710.2
    )Other (income) expense, net
    
    
    (180.9
    )
    
    
    (134.7
    )
    
    
    (521.2
    )
    
    
    (305.4
    )4,009.5
    
    
    
    4,179.6
    
    
    
    11,403.6
    
    
    
    11,282.4Income Before Taxes
    
    
    2,064.6
    
    
    
    1,230.8
    
    
    
    6,551.2
    
    
    
    5,309.5Taxes on Income
    
    
    539.1
    
    
    
    290.2
    
    
    
    1,644.9
    
    
    
    1,349.6Net Income
    
    $
    1,525.5
    
    
    $
    940.6
    
    
    $
    4,906.3
    
    
    $
    3,959.9Basic Earnings per Common Share
    
    $
    0.70
    
    
    $
    0.43
    
    
    $
    2.26
    
    
    $
    1.82Earnings per Common Share Assuming Dilution
    
    $
    0.70
    
    
    $
    0.43
    
    
    $
    2.24
    
    
    $
    1.81Dividends Declared per Common Share
    
    $
    0.38
    
    
    $
    0.38
    
    
    $
    1.14
    
    
    $
    1.14
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##### Table of Contents



September 30,
    
    December 31,2007
    
    2006AssetsCurrent AssetsCash and cash equivalents
    
    $
    5,208.3
    
    
    $
    5,914.7Short-term investments
    
    
    2,183.2
    
    
    
    2,798.3Accounts receivable
    
    
    3,501.6
    
    
    
    3,314.8Inventories (excludes inventories of $333.1 in 2007 and $416.1
in 2006 classified in Other assets  see Note 4)
    
    
    1,849.5
    
    
    
    1,769.4Prepaid expenses and taxes
    
    
    1,421.1
    
    
    
    1,433.0Total current assets
    
    
    14,163.7
    
    
    
    15,230.2Investments
    
    
    7,501.1
    
    
    
    7,788.2Property, Plant and Equipment, at cost, net of allowance for
depreciation of $12,163.3 in 2007 and $11,015.4 in 2006
    
    
    12,490.7
    
    
    
    13,194.1Goodwill
    
    
    1,431.6
    
    
    
    1,431.6Other Intangibles, Net
    
    
    771.3
    
    
    
    943.9Other Assets
    
    
    9,342.3
    
    
    
    5,981.8$
    45,700.7
    
    
    $
    44,569.8Liabilities and Stockholders EquityCurrent LiabilitiesLoans payable and current portion of long-term debt
    
    $
    1,973.1
    
    
    $
    1,285.1Trade accounts payable
    
    
    392.1
    
    
    
    496.6Accrued and other current liabilities
    
    
    6,452.9
    
    
    
    6,653.3Income taxes payable
    
    
    858.0
    
    
    
    3,460.8Dividends payable
    
    
    829.9
    
    
    
    826.9Total current liabilities
    
    
    10,506.0
    
    
    
    12,722.7Long-Term Debt
    
    
    3,873.6
    
    
    
    5,551.0Deferred Income Taxes and Noncurrent Liabilities
    
    
    8,161.8
    
    
    
    6,330.3Minority Interests
    
    
    2,437.4
    
    
    
    2,406.1Stockholders EquityCommon stock, one cent par valueAuthorized - 5,400,000,000 sharesIssued - 2,983,508,675 shares at September 30, 2007Issued - 2,976,223,337 shares at December 31, 2006
    
    
    29.8
    
    
    
    29.8Other paid-in capital
    
    
    7,823.0
    
    
    
    7,166.5Retained earnings
    
    
    41,601.8
    
    
    
    39,095.1Accumulated other comprehensive loss
    
    
    (1,053.6
    )
    
    
    (1,164.3
    )48,401.0
    
    
    
    45,127.1Less treasury stock, at cost806,941,186 shares at September 30, 2007808,437,892 shares at December 31, 2006
    
    
    27,679.1
    
    
    
    27,567.4Total stockholders equity
    
    
    20,721.9
    
    
    
    17,559.7$
    45,700.7
    
    
    $
    44,569.8
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Nine Months EndedSeptember 30,2007
    
    2006Cash Flows from Operating ActivitiesNet income
    
    $
    4,906.3
    
    
    $
    3,959.9Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    1,489.2
    
    
    
    1,725.4Deferred income taxes
    
    
    (391.6
    )
    
    
    (226.1
    )Equity income from affiliates
    
    
    (2,180.2
    )
    
    
    (1,710.2
    )Dividends and distributions from equity affiliates
    
    
    1,626.1
    
    
    
    1,372.5Share-based compensation
    
    
    250.8
    
    
    
    246.0Acquired research
    
    
    325.1
    
    
    
    296.3Other
    
    
    19.8
    
    
    
    34.5Taxes paid for Internal Revenue Service settlement
    
    
    (2,788.1
    )
    
    
    Net changes in assets and liabilities
    
    
    1,394.0
    
    
    
    (709.2
    )Net Cash Provided by Operating Activities
    
    
    4,651.4
    
    
    
    4,989.1Cash Flows from Investing ActivitiesCapital expenditures
    
    
    (726.3
    )
    
    
    (684.7
    )Purchases of securities, subsidiaries and other investments
    
    
    (8,412.2
    )
    
    
    (15,983.2
    )Acquisition of Sirna Therapeutics, Inc.
    
    
    (1,135.9
    )
    
    
    Proceeds from sales of securities, subsidiaries and other investments
    
    
    8,311.9
    
    
    
    13,480.0Other
    
    
    0.3
    
    
    
    (1.5
    )Net Cash Used by Investing Activities
    
    
    (1,962.2
    )
    
    
    (3,189.4
    )Cash Flows from Financing ActivitiesNet change in short-term borrowings
    
    
    161.1
    
    
    
    (1,606.6
    )Proceeds from issuance of debt
    
    
    
    
    
    
    5.1Payments on debt
    
    
    (1,158.9
    )
    
    
    (505.6
    )Purchases of treasury stock
    
    
    (574.6
    )
    
    
    (751.0
    )Dividends paid to stockholders
    
    
    (2,478.1
    )
    
    
    (2,494.0
    )Proceeds from exercise of stock options
    
    
    473.4
    
    
    
    340.8Other
    
    
    106.1
    
    
    
    (172.5
    )Net Cash Used by Financing Activities
    
    
    (3,471.0
    )
    
    
    (5,183.8
    )Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    75.4
    
    
    
    20.9Net Decrease in Cash and Cash Equivalents
    
    
    (706.4
    )
    
    
    (3,363.2
    )Cash and Cash Equivalents at Beginning of Year
    
    
    5,914.7
    
    
    
    9,585.3Cash and Cash Equivalents at End of Period
    
    $
    5,208.3
    
    
    $
    6,222.1
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Notes to Consolidated Financial Statements (unaudited)
 1.
    
    Basis of PresentationThe accompanying unaudited interim consolidated financial statements have been prepared pursuant
to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and
disclosures required by accounting principles generally accepted in the United States for
complete consolidated financial statements are not included herein. The interim statements
should be read in conjunction with the financial statements and notes thereto included in the
Companys latest Annual Report on Form 10-K.The results of operations of any interim period are not necessarily indicative of the results of
operations for the full year. In the Companys opinion, all adjustments necessary for a fair
presentation of these interim statements have been included and are of a normal and recurring
nature.In June 2007, the Financial Accounting Standards Board (FASB) ratified the consensus reached
by the Emerging Issues Task Force on Issue No. 07-3, Accounting for Advance Payments for Goods
or Services Received for Use in Future Research and Development Activities(Issue 07-3), which
is effective January 1, 2008 and is applied prospectively for new contracts entered into on or
after the effective date. Issue 07-3 addresses nonrefundable advance payments for goods or
services that will be used or rendered for future research and development activities. Issue
07-3 will require these payments be deferred and capitalized and recognized as an expense as the
related goods are delivered or the related services are performed. The Company is assessing the
effects of adoption of Issue 07-3 on its financial position and results of operations.In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities, including an amendment of FASB Statement No. 115(FAS 159), which
is effective January 1, 2008. FAS 159 permits companies to choose to measure certain financial
assets and financial liabilities at fair value. Unrealized gains and losses on items for which
the fair value option has been elected are reported in earnings at each subsequent reporting
date. The effect of adoption of FAS 159 on the Companys financial position and results of
operations is not expected to be material.In September 2006, the FASB issued Statement No. 157, Fair Value Measurements(FAS 157), which
will be effective January 1, 2008. FAS 157 clarifies the definition of fair value, establishes
a framework for measuring fair value, and expands the disclosures on fair value measurements.
The effect of adoption of FAS 157 on the Companys financial position and results of operations
is not expected to be material.2.
    
    RestructuringIn 2005, the Company initiated a series of steps to reduce its cost structure. In November
2005, the Company announced the initial phase of its global restructuring program designed to
reduce the Companys cost structure, increase efficiency and enhance competitiveness. As part
of this program, Merck announced plans to sell or close five manufacturing sites and two
preclinical sites by the end of 2008 and eliminate approximately 7,000 positions company-wide.
The Company has also sold or closed certain other facilities and related assets in connection
with the restructuring program. Through the end of 2008, when the initial phase of the global
restructuring program is expected to be substantially complete, the cumulative pre-tax costs of
the program are expected to range from $1.9 billion to $2.2 billion. Approximately 70% of the
cumulative pre-tax costs are estimated as non-cash, relating primarily to accelerated
depreciation for those facilities scheduled for closure. Since the inception of the global
restructuring program through September 30, 2007, the Company has recorded total pre-tax
accumulated costs of $1.9 billion and eliminated approximately 6,000 positions which are
comprised of employee separations and the elimination of contractors and vacant positions.
However, the Company continues to hire new employees as the Companys business requires it. For
segment reporting purposes, restructuring charges are unallocated expenses.
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Notes to Consolidated Financial Statements (unaudited)
  Three Months Ended September 30,2007
    
    2006Separation
    
    Accelerated
    
    
    
    
    
    
    
    
    
    Separation
    
    Accelerated($ in millions)
    
    Costs
    
    Depreciation
    
    Other
    
    Total
    
    Costs
    
    Depreciation
    
    Other
    
    TotalMaterials and production
    
    $
    
    
    
    $
    127.4
    
    
    $
    1.4
    
    
    $
    128.8
    
    
    $
    
    
    
    $
    187.4
    
    
    $
    12.2
    
    
    $
    199.6Research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring costs
    
    
    36.7
    
    
    
    
    
    
    
    12.6
    
    
    
    49.3
    
    
    
    37.8
    
    
    
    
    
    
    
    11.8
    
    
    
    49.6$
    36.7
    
    
    $
    127.4
    
    
    $
    14.0
    
    
    $
    178.1
    
    
    $
    37.8
    
    
    $
    187.4
    
    
    $
    24.0
    
    
    $
    249.2
 Nine Months Ended September 30,2007
    
    2006Separation
    
    Accelerated
    
    
    
    
    
    
    
    
    
    Separation
    
    Accelerated($ in millions)
    
    Costs
    
    Depreciation
    
    Other
    
    Total
    
    Costs
    
    Depreciation
    
    Other
    
    TotalMaterials and production
    
    $
    
    
    
    $
    363.7
    
    
    $
    1.9
    
    
    $
    365.6
    
    
    $
    
    
    
    $
    549.0
    
    
    $
    23.1
    
    
    $
    572.1Research and development
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    55.4
    
    
    
    
    
    
    
    55.4Restructuring costs
    
    
    121.7
    
    
    
    
    
    
    
    49.2
    
    
    
    170.9
    
    
    
    87.4
    
    
    
    
    
    
    
    (0.9
    )
    
    
    86.5$
    121.7
    
    
    $
    363.7
    
    
    $
    51.0
    
    
    $
    536.4
    
    
    $
    87.4
    
    
    $
    604.4
    
    
    $
    22.2
    
    
    $
    714.0
     Separation
    
    Accelerated($ in millions)
    
    Costs
    
    Depreciation
    
    Other
    
    TotalRestructuring reserves as of January 1, 2007
    
    $
    177.7
    
    
    $
    
    
    
    $
    
    
    
    $
    177.7Expense
    
    
    121.7
    
    
    
    363.7
    
    
    
    51.0
    
    
    
    536.4(Payments) receipts, net
    
    
    (127.1
    )
    
    
    
    
    
    
    (45.5
    )
    
    
    (172.6
    )Non-cash activity
    
    
    
    
    
    
    (363.7
    )
    
    
    (5.5
    )
    
    
    (369.2
    )Restructuring reserves as of September 30, 2007
    
    $
    172.3
    
    
    $
    
    
    
    $
    
    
    
    $
    172.3
 3.
    
    Acquisitions and Research CollaborationsIn September 2007, Merck announced that it had successfully completed the acquisition of
NovaCardia, Inc. (NovaCardia), a privately held clinical-stage pharmaceutical company focused
on cardiovascular disease. This acquisition adds rolofylline (KW-3902) (MK-7418),
NovaCardias investigational Phase III
compound for acute heart failure, to Mercks pipeline. Merck acquired all of the outstanding
equity of NovaCardia for a total purchase price of $366.4 million (including $16.4 million of
cash and investments on hand at closing), which was paid through the
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Notes to Consolidated Financial Statements (unaudited)
  .
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Notes to Consolidated Financial Statements (unaudited)
 4.
    
    InventoriesInventories consisted of:
 September 30,
    
    December 31,($ in millions)
    
    2007
    
    2006Finished goods
    
    $
    409.4
    
    
    $
    403.8Raw materials and work in process
    
    
    1,672.1
    
    
    
    1,688.9Supplies
    
    
    101.1
    
    
    
    92.8Total (approximates current cost)
    
    
    2,182.6
    
    
    
    2,185.5Reduction to LIFO cost for domestic inventories
    
    
    
    
    
    
    $
    2,182.6
    
    
    $
    2,185.5Recognized as:Inventories
    
    $
    1,849.5
    
    
    $
    1,769.4Other assets
    
    $
    333.1
    
    
    $
    416.1
 Amounts recognized as Other assets are comprised entirely of raw materials and work in process
inventories, which include inventories for products not expected to be sold within one year,
principally vaccines.5.
    
    Joint Ventures and Other Equity Method AffiliatesEquity income from affiliates reflects the performance of the Companys joint ventures and other
equity method affiliates and was comprised of the following:
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Merck/Schering-Plough
    
    $
    480.9
    
    
    $
    350.1
    
    
    $
    1,293.1
    
    
    $
    858.1AstraZeneca LP
    
    
    181.2
    
    
    
    173.7
    
    
    
    608.3
    
    
    
    602.6Other (1)
    
    
    106.4
    
    
    
    71.6
    
    
    
    278.8
    
    
    
    249.5$
    768.5
    
    
    $
    595.4
    
    
    $
    2,180.2
    
    
    $
    1,710.2
 (1) Primarily reflects results from Merial Limited, and joint ventures with Sanofi
Pasteur and Johnson & Johnson.
 Merck/Schering-Plough
 Zetia Ezetrol Zetia Zocor Vytorin Inegy
 Zetia Vytorin Zetia
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Notes to Consolidated Financial Statements (unaudited)
  Singulair
  Three Months Ended
    
    Nine Months EndedMarch 31,
    
    June 30,
    
    September 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006
    
    2007
    
    2006Sales
    
    $
    1,167.8
    
    
    $
    793.2
    
    
    $
    1,263.9
    
    
    $
    973.4
    
    
    $
    1,300.0
    
    
    $
    1,028.5
    
    
    $
    3,731.7
    
    
    $
    2,795.1Zetia
    
    
    544.0
    
    
    
    414.8
    
    
    
    577.5
    
    
    
    476.0
    
    
    
    607.0
    
    
    
    501.9
    
    
    
    1,728.5
    
    
    
    1,392.7Vytorin
    
    
    623.8
    
    
    
    378.4
    
    
    
    686.4
    
    
    
    497.4
    
    
    
    693.0
    
    
    
    526.6
    
    
    
    2,003.2
    
    
    
    1,402.4Materials and production costs
    
    
    50.0
    
    
    
    38.9
    
    
    
    51.2
    
    
    
    45.8
    
    
    
    60.9
    
    
    
    47.3
    
    
    
    162.1
    
    
    
    132.0Other expense, net
    
    
    322.6
    
    
    
    296.5
    
    
    
    323.4
    
    
    
    294.0
    
    
    
    302.9
    
    
    
    283.5
    
    
    
    948.9
    
    
    
    874.0Income before taxes
    
    $
    795.2
    
    
    $
    457.8
    
    
    $
    889.3
    
    
    $
    633.6
    
    
    $
    936.2
    
    
    $
    697.7
    
    
    $
    2,620.7
    
    
    $
    1,789.1Mercks share of income 

before taxes(1)
    
    $
    362.5
    
    
    $
    191.8
    
    
    $
    453.3
    
    
    $
    322.8
    
    
    $
    481.9
    
    
    $
    354.5
    
    
    $
    1,297.7
    
    
    $
    869.1
 (1)
Mercks share of the MSP Partnerships income before taxes differs from the
equity income recognized from the MSP Partnership primarily due to the timing of recognition of
certain transactions between the Company and the MSP Partnership.
 AstraZeneca LP
   Nexium Prilosec
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Notes to Consolidated Financial Statements (unaudited)
 6.
    
    Debt and Financial InstrumentsIn September 2007, the Company redeemed its $300 million variable-rate borrowing, which was due
in 2009.During the second quarter of 2007, the Company reclassified the $1.38 billion Astra Note due in
2008 from Long-term debt to Loans payable and current portion of long-term debt.In June 2007, the Company entered into a pay-floating, receive-fixed interest rate swap contract
effectively converting $250 million of its $1.0 billion, 4.75% fixed-rate notes into floating
rate instruments. The interest rate swap is designated as a hedge of the fair value change in
the notes attributable to changes in the benchmark London Interbank Offered Rate (LIBOR) swap
rate and will mature in 2015. The fair value change in the notes is fully offset in interest
expense by the fair value change in the swap contract.In April 2007, the Company extended the maturity date of its $1.5 billion, 5-year revolving
credit facility from 2011 to 2012. The facility provides backup liquidity for the Companys
commercial paper borrowing facility and is to be used for general corporate purposes. The
Company has not drawn funding from this facility.In March 2007, $350 million of 2.5% notes, along with an associated pay-floating, receive-fixed
interest rate swap, matured and were retired.In February 2007, the Company redeemed $500 million of notes that were subject to annual
interest rate resets upon notification from the remarketing agent that, due to an overall rise
in interest rates, it would not exercise its annual option to remarket the notes.7.
    
    ContingenciesThe Company is involved in various claims and legal proceedings of a nature considered normal to
its business, including product liability, intellectual property, and commercial litigation, as
well as additional matters such as antitrust actions.VioxxLitigationProduct Liability LawsuitsAs previously disclosed, individual and putative class actions have been filed against the
Company in state and federal courts alleging personal injury and/or economic loss with respect
to the purchase or use of Vioxx. All such actions filed in federal court are coordinated in a
multidistrict litigation in the U.S. District Court for the Eastern District of Louisiana (the
MDL) before District Judge Eldon E. Fallon. A number of such actions filed in state court are
coordinated in separate coordinated proceedings in state courts in New Jersey, California and
Texas, and the counties of Philadelphia, Pennsylvania and Washoe and Clark Counties, Nevada. As
of October 9, 2007, the Company had been served or was aware that it had been named as a
defendant in approximately 26,600 lawsuits, filed on or before September 30, 2007, which include
approximately 47,000 plaintiff groups, alleging personal injuries resulting from the use of
Vioxx, and in approximately 264 putative class actions alleging personal injuries and/or
economic loss. (All of the actions discussed in this paragraph are collectively referred to as
the VioxxProduct Liability Lawsuits.) Of these lawsuits, approximately 8,800 lawsuits
representing approximately 25,800 plaintiff groups are or are slated to be in the federal MDL
and approximately 15,850 lawsuits representing approximately 15,850 plaintiff groups are
included in a coordinated proceeding in New Jersey Superior Court before Judge Carol E. Higbee.In addition to the VioxxProduct Liability Lawsuits discussed above, the claims of over 5,550
plaintiff groups had been dismissed as of September 30, 2007. Of these, there have been over
1,625 plaintiff groups whose claims were dismissed with prejudice (i.e., they cannot be brought
again) either by plaintiffs themselves or by the courts. Over 3,925 additional plaintiff groups
have had their claims dismissed without prejudice (i.e., they can be brought again).Merck has entered into a tolling agreement (the Tolling Agreement) with the MDL Plaintiffs
Steering Committee that establishes a procedure to halt the running of the statute of
limitations (tolling) as to certain categories of claims allegedly arising from the use of Vioxx
by non-New Jersey citizens. The Tolling Agreement applies to individuals who have not filed
lawsuits and may or may not eventually file lawsuits and only to those claimants who seek to
toll claims alleging injuries resulting from a thrombotic cardiovascular event that results in a myocardial
infarction or ischemic
 - 10 -




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Notes to Consolidated Financial Statements (unaudited)
  Vioxx
   Vioxx
  Vioxx
     Vioxx
 - 11 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
 Vioxx
 Vioxx
 Vioxx Vioxx
 Vioxx
 Other Lawsuits
 Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx
 Shareholder Lawsuits
 Vioxx Vioxx Vioxx Vioxx Vioxx
 - 12 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
  Vioxx Vioxx
  Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx
 International Lawsuits
 Vioxx Vioxx
 Additional Lawsuits
 Vioxx Vioxx Vioxx Vioxx
 Insurance
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 - 13 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
 Vioxx
 Vioxx Vioxx
 Investigations
 Vioxx. Vioxx Vioxx Vioxx
 Vioxx
 Vioxx
 Reserves
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 - 14 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
 Vioxx
 Vioxx Vioxx Vioxx
 Other Product Liability Litigation
 Fosamax Fosamax Fosamax Fosamax Fosamax Fosamax
 Fosamax Fosamax Fosamax Fosamax Fosamax Fosamax
 Governmental Proceedings
 Pepcid.
  - 15 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
  qui tam qui tam
 Other Litigation
  8. Share-Based Compensation
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Pre-tax share-based compensation expense
    
    $
    72.7
    
    
    $
    63.7
    
    
    $
    250.9
    
    
    $
    246.0Income tax benefits
    
    
    (22.8
    )
    
    
    (20.0
    )
    
    
    (79.1
    )
    
    
    (76.3
    )Total share-based compensation expense, net of tax
    
    $
    49.9
    
    
    $
    43.7
    
    
    $
    171.8
    
    
    $
    169.7
  Nine Months EndedSeptember 30,2007
    
    2006Expected dividend yield
    
    
    3.4
    %
    
    
    4.3
    %Risk-free interest rate
    
    
    4.4
    %
    
    
    4.6
    %Expected volatility
    
    
    24.5
    %
    
    
    26.4
    %Expected life (years)
    
    
    5.7
    
    
    
    5.6
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Notes to Consolidated Financial Statements (unaudited)
 9. Pension and Other Postretirement Benefit Plans
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    90.3
    
    
    $
    89.2
    
    
    $
    275.3
    
    
    $
    269.5Interest cost
    
    
    99.9
    
    
    
    85.5
    
    
    
    284.5
    
    
    
    255.6Expected return on plan assets
    
    
    (123.1
    )
    
    
    (110.3
    )
    
    
    (366.7
    )
    
    
    (327.6
    )Net amortization
    
    
    44.0
    
    
    
    42.0
    
    
    
    112.5
    
    
    
    126.9Termination benefits
    
    
    2.5
    
    
    
    2.1
    
    
    
    18.5
    
    
    
    18.3Curtailments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2Settlements
    
    
    
    
    
    
    15.0
    
    
    
    
    
    
    
    15.0$
    113.6
    
    
    $
    123.5
    
    
    $
    324.1
    
    
    $
    357.9
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    25.8
    
    
    $
    24.6
    
    
    $
    68.1
    
    
    $
    66.5Interest cost
    
    
    28.8
    
    
    
    26.9
    
    
    
    80.7
    
    
    
    77.1Expected return on plan assets
    
    
    (37.4
    )
    
    
    (30.6
    )
    
    
    (98.0
    )
    
    
    (87.0
    )Net amortization
    
    
    (7.5
    )
    
    
    0.6
    
    
    
    (12.5
    )
    
    
    2.4Termination benefits
    
    
    0.2
    
    
    
    0.4
    
    
    
    3.7
    
    
    
    2.6Curtailments
    
    
    
    
    
    
    
    
    
    
    (3.9
    )
    
    
    $
    9.9
    
    
    $
    21.9
    
    
    $
    38.1
    
    
    $
    61.6
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Notes to Consolidated Financial Statements (unaudited)
 10. Other (Income) Expense, Net
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Interest income
    
    $
    (186.9
    )
    
    $
    (195.0
    )
    
    $
    (540.9
    )
    
    $
    (564.6
    )Interest expense
    
    
    91.5
    
    
    
    87.7
    
    
    
    297.2
    
    
    
    277.8Exchange gains
    
    
    (8.3
    )
    
    
    (11.5
    )
    
    
    (39.8
    )
    
    
    (4.5
    )Minority interests
    
    
    30.6
    
    
    
    30.7
    
    
    
    92.0
    
    
    
    90.7Other, net
    
    
    (107.8
    )
    
    
    (46.6
    )
    
    
    (329.7
    )
    
    
    (104.8
    )$
    (180.9
    )
    
    $
    (134.7
    )
    
    $
    (521.2
    )
    
    $
    (305.4
    )
  11. Taxes on Income
 Accounting
for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109,
    - 18 -




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Notes to Consolidated Financial Statements (unaudited)
       - 19 -




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##### Table of Contents



Notes to Consolidated Financial Statements (unaudited)
 12. Earnings Per Share
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Average common shares outstanding
    
    
    2,170.5
    
    
    
    2,175.2
    
    
    
    2,168.2
    
    
    
    2,180.1Common shares issuable(1)
    
    
    22.3
    
    
    
    10.5
    
    
    
    19.2
    
    
    
    8.4Average common shares outstanding assuming dilution
    
    
    2,192.8
    
    
    
    2,185.7
    
    
    
    2,187.4
    
    
    
    2,188.5
 (1)Issuable primarily under share-based compensation
plans.
  13. Comprehensive Income
  14. Segment Reporting
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##### Table of Contents



Notes to Consolidated Financial Statements (Unaudited)
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Segment revenues:Pharmaceutical segment (1)
    
    $
    4,877.9
    
    
    $
    4,764.3
    
    
    $
    14,895.9
    
    
    $
    15,173.8Vaccines segment(1)
    
    
    1,123.3
    
    
    
    516.3
    
    
    
    2,856.2
    
    
    
    1,065.8Other segment revenues
    
    
    44.9
    
    
    
    46.6
    
    
    
    125.6
    
    
    
    123.6$
    6,046.1
    
    
    $
    5,327.2
    
    
    $
    17,877.7
    
    
    $
    16,363.2Segment profits:(2)Pharmaceutical segment
    
    $
    3,453.0
    
    
    $
    3,222.3
    
    
    $
    10,468.3
    
    
    $
    10,479.9Vaccines segment
    
    
    823.3
    
    
    
    293.3
    
    
    
    1,924.8
    
    
    
    558.5Other segment profits
    
    
    112.9
    
    
    
    88.3
    
    
    
    395.5
    
    
    
    328.6$
    4,389.2
    
    
    $
    3,603.9
    
    
    $
    12,788.6
    
    
    $
    11,367.0
 (1)
    
    In accordance with segment reporting requirements, Vaccines segment revenues
exclude $121.0 million and $39.1 million for the third quarter of 2007 and 2006,
respectively, and $333.4 million and $110.3 million for the first nine months of 2007 and
2006, respectively, of vaccines sales by certain non-U.S. subsidiaries managed by and
included in the Pharmaceutical segment.(2)
    
    Includes the majority of Equity income from affiliates.
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Segment revenues
    
    $
    6,046.1
    
    
    $
    5,327.2
    
    
    $
    17,877.7
    
    
    $
    16,363.2Other revenues
    
    
    28.0
    
    
    
    83.2
    
    
    
    77.1
    
    
    
    228.7$
    6,074.1
    
    
    $
    5,410.4
    
    
    $
    17,954.8
    
    
    $
    16,591.9
  - 21 -




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##### Table of Contents



Notes to Consolidated Financial Statements (Unaudited)
 (1)
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Pharmaceutical:Singulair
    
    $
    1,018.1
    
    
    $
    868.0
    
    
    $
    3,111.9
    
    
    $
    2,619.1Cozaar/Hyzaar
    
    
    813.6
    
    
    
    813.3
    
    
    
    2,458.8
    
    
    
    2,298.1Fosamax
    
    
    725.2
    
    
    
    770.5
    
    
    
    2,253.0
    
    
    
    2,345.0Zocor
    
    
    217.8
    
    
    
    371.0
    
    
    
    654.2
    
    
    
    2,424.1Cosopt/Trusopt
    
    
    196.8
    
    
    
    190.9
    
    
    
    575.0
    
    
    
    517.8Primaxin
    
    
    185.6
    
    
    
    181.8
    
    
    
    568.4
    
    
    
    523.6Januvia
    
    
    184.6
    
    
    
    0.6
    
    
    
    415.3
    
    
    
    0.6Cancidas
    
    
    135.2
    
    
    
    127.1
    
    
    
    403.2
    
    
    
    397.1Vasotec/Vaseretic
    
    
    119.5
    
    
    
    134.5
    
    
    
    368.5
    
    
    
    410.8Maxalt
    
    
    125.0
    
    
    
    105.1
    
    
    
    341.5
    
    
    
    295.2Proscar
    
    
    89.6
    
    
    
    127.3
    
    
    
    328.0
    
    
    
    498.5Propecia
    
    
    99.2
    
    
    
    88.9
    
    
    
    292.8
    
    
    
    249.0Arcoxia
    
    
    76.1
    
    
    
    66.3
    
    
    
    245.2
    
    
    
    191.8Crixivan/Stocrin
    
    
    72.3
    
    
    
    83.1
    
    
    
    229.9
    
    
    
    238.8Janumet
    
    
    18.6
    
    
    
    
    
    
    
    42.9
    
    
    
    Other pharmaceutical(2)
    
    
    679.6
    
    
    
    796.8
    
    
    
    2,274.0
    
    
    
    2,054.04,756.8
    
    
    
    4,725.2
    
    
    
    14,562.6
    
    
    
    15,063.5Vaccines:(3)Gardasil
    
    
    418.4
    
    
    
    70.0
    
    
    
    1,141.3
    
    
    
    79.6RotaTeq
    
    
    171.3
    
    
    
    61.8
    
    
    
    375.4
    
    
    
    94.8Zostavax
    
    
    61.2
    
    
    
    10.2
    
    
    
    150.7
    
    
    
    11.4ProQuad/M-M-R II/Varivax
    
    
    428.5
    
    
    
    247.5
    
    
    
    1,018.1
    
    
    
    588.6Hepatitis vaccines
    
    
    68.4
    
    
    
    68.5
    
    
    
    219.5
    
    
    
    181.1Other vaccines
    
    
    96.5
    
    
    
    97.4
    
    
    
    284.6
    
    
    
    220.61,244.3
    
    
    
    555.4
    
    
    
    3,189.6
    
    
    
    1,176.1Other (4)
    
    
    73.0
    
    
    
    129.8
    
    
    
    202.6
    
    
    
    352.3$
    6,074.1
    
    
    $
    5,410.4
    
    
    $
    17,954.8
    
    
    $
    16,591.9
 (1)
    
    Presented net of discounts and returns.(2)
    
    Other pharmaceutical primarily includes sales of other human pharmaceutical
products and revenue from the Companys relationship with AstraZeneca LP primarily relating
to sales ofNexium andPrilosec. Revenue from AstraZeneca LP was $416.3 million and $442.5
million for the third quarter of 2007 and 2006, respectively, and was $1,438.2 million and
$1,240.5 million for the first nine months of 2007 and 2006, respectively.(3)
    
    These amounts do not reflect sales of vaccines sold in most major European
markets through the Companys joint venture, Sanofi Pasteur MSD, the results of which are
reflected in Equity income from affiliates. These amounts do reflect supply sales to
Sanofi Pasteur MSD.(4)
    
    Other primarily includes other pharmaceutical and animal health joint venture
supply sales and other miscellaneous revenues.
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Notes to Consolidated Financial Statements (Unaudited)
  Three Months Ended
    
    Nine Months endedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Segment profits
    
    $
    4,389.2
    
    
    $
    3,603.9
    
    
    $
    12,788.6
    
    
    $
    11,367.0Other profits
    
    
    10.3
    
    
    
    56.9
    
    
    
    40.3
    
    
    
    163.0Adjustments
    
    
    86.6
    
    
    
    110.4
    
    
    
    258.7
    
    
    
    375.6Unallocated:Interest income
    
    
    186.9
    
    
    
    195.0
    
    
    
    540.9
    
    
    
    564.6Interest expense
    
    
    (91.5
    )
    
    
    (87.7
    )
    
    
    (297.2
    )
    
    
    (277.8
    )Equity income from affiliates
    
    
    47.9
    
    
    
    37.7
    
    
    
    180.6
    
    
    
    175.6Depreciation and amortization
    
    
    (458.0
    )
    
    
    (521.5
    )
    
    
    (1,388.5
    )
    
    
    (1,599.9
    )Research and development
    
    
    (1,440.5
    )
    
    
    (945.4
    )
    
    
    (3,501.0
    )
    
    
    (3,059.9
    )Other expenses, net
    
    
    (666.3
    )
    
    
    (1,218.5
    )
    
    
    (2,071.2
    )
    
    
    (2,398.7
    )$
    2,064.6
    
    
    $
    1,230.8
    
    
    $
    6,551.2
    
    
    $
    5,309.5
   - 23 -




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Operating Results
 Sales
 Gardasil Varivax RotaTeq Zostavax Singulair Januvia Nexium Cozaar/Hyzaar* Zocor Proscar Zocor Proscar
 
 Cozaar Hyzaar
 - 24 -




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##### Table of Contents



Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Pharmaceutical:Singulair
    
    $
    1,018.1
    
    
    $
    868.0
    
    
    $
    3,111.9
    
    
    $
    2,619.1Cozaar/Hyzaar
    
    
    813.6
    
    
    
    813.3
    
    
    
    2,458.8
    
    
    
    2,298.1Fosamax
    
    
    725.2
    
    
    
    770.5
    
    
    
    2,253.0
    
    
    
    2,345.0Zocor
    
    
    217.8
    
    
    
    371.0
    
    
    
    654.2
    
    
    
    2,424.1Cosopt/Trusopt
    
    
    196.8
    
    
    
    190.9
    
    
    
    575.0
    
    
    
    517.8Primaxin
    
    
    185.6
    
    
    
    181.8
    
    
    
    568.4
    
    
    
    523.6Januvia
    
    
    184.6
    
    
    
    0.6
    
    
    
    415.3
    
    
    
    0.6Cancidas
    
    
    135.2
    
    
    
    127.1
    
    
    
    403.2
    
    
    
    397.1Vasotec/Vaseretic
    
    
    119.5
    
    
    
    134.5
    
    
    
    368.5
    
    
    
    410.8Maxalt
    
    
    125.0
    
    
    
    105.1
    
    
    
    341.5
    
    
    
    295.2Proscar
    
    
    89.6
    
    
    
    127.3
    
    
    
    328.0
    
    
    
    498.5Propecia
    
    
    99.2
    
    
    
    88.9
    
    
    
    292.8
    
    
    
    249.0Arcoxia
    
    
    76.1
    
    
    
    66.3
    
    
    
    245.2
    
    
    
    191.8Crixivan/Stocrin
    
    
    72.3
    
    
    
    83.1
    
    
    
    229.9
    
    
    
    238.8Janumet
    
    
    18.6
    
    
    
    
    
    
    
    42.9
    
    
    
    Other pharmaceutical(1)
    
    
    679.6
    
    
    
    796.8
    
    
    
    2,274.0
    
    
    
    2,054.04,756.8
    
    
    
    4,725.2
    
    
    
    14,562.6
    
    
    
    15,063.5Vaccines:(2)Gardasil
    
    
    418.4
    
    
    
    70.0
    
    
    
    1,141.3
    
    
    
    79.6RotaTeq
    
    
    171.3
    
    
    
    61.8
    
    
    
    375.4
    
    
    
    94.8Zostavax
    
    
    61.2
    
    
    
    10.2
    
    
    
    150.7
    
    
    
    11.4ProQuad/M-M-R II/Varivax
    
    
    428.5
    
    
    
    247.5
    
    
    
    1,018.1
    
    
    
    588.6Hepatitis
    
    
    68.4
    
    
    
    68.5
    
    
    
    219.5
    
    
    
    181.1Other vaccines
    
    
    96.5
    
    
    
    97.4
    
    
    
    284.6
    
    
    
    220.61,244.3
    
    
    
    555.4
    
    
    
    3,189.6
    
    
    
    1,176.1Other (3)
    
    
    73.0
    
    
    
    129.8
    
    
    
    202.6
    
    
    
    352.3$
    6,074.1
    
    
    $
    5,410.4
    
    
    $
    17,954.8
    
    
    $
    16,591.9
 
 (1)
    
    Other pharmaceutical primarily includes sales of other human pharmaceutical products
and revenue from the Companys relationship with AZLP primarily relating to sales ofNexium
andPrilosec. Revenue from AZLP was $416.3 million and $442.5 million for the third quarter
of 2007 and 2006, respectively, and was $1,438.2 million and $1,240.5 million for the first
nine months of 2007 and 2006, respectively.(2)
    
    These amounts do not reflect sales of vaccines sold in most major European markets
through the Companys joint venture, Sanofi Pasteur MSD, the results of which are reflected in
Equity income from affiliates. These amounts do reflect supply sales to Sanofi Pasteur MSD.(3)
    
    Other primarily includes other pharmaceutical and animal health joint venture supply
sales and other miscellaneous revenues. Zocor
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##### Table of Contents



Segment Revenues
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Pharmaceutical segment (1)
    
    $
    4,877.9
    
    
    $
    4,764.3
    
    
    $
    14,895.9
    
    
    $
    15,173.8Vaccines segment (1)
    
    
    1,123.3
    
    
    
    516.3
    
    
    
    2,856.2
    
    
    
    1,065.8Other segment (2)
    
    
    44.9
    
    
    
    46.6
    
    
    
    125.6
    
    
    
    123.6Other (3)
    
    
    28.0
    
    
    
    83.2
    
    
    
    77.1
    
    
    
    228.7Total revenues
    
    $
    6,074.1
    
    
    $
    5,410.4
    
    
    $
    17,954.8
    
    
    $
    16,591.9
 (1)
    
    In accordance with segment reporting requirements, Vaccines segment revenues exclude
$121.0 million and $39.1 million for the third quarter of 2007 and 2006, respectively, and
$333.4 million and $110.3 million for the first nine months of 2007 and 2006, respectively, of
vaccines sales by certain non-U.S. subsidiaries managed by and included in the Pharmaceutical
segment.(2)
    
    Includes other non-reportable human and animal health segments.(3)
    
    Other revenues are primarily comprised of miscellaneous corporate revenues, sales
related to divested products or businesses and other supply sales not included in segment
results. Pharmaceutical Segment Revenues
 Januvia Singulair Zocor Zocor Proscar Singulair Januvia Cozaar/Hyzaar, Nexium .
 Singulair Singulair
 Cozaar Hyzaar Cozaar Hyzaar
 Fosamax Fosamax Plus D Fosavance Fosamac Fosamax Fosamax Plus D Fosamax Fosamax Plus D Fosamax Fosamax Plus D Fosamax Fosamax Plus D
 Zocor Zocor
 Januvia Januvia Januvia Januvia
 Januvia Januvia
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Janumet Januvia Janumet Janumet
 Cosopt Arcoxia Maxalt Primaxin, Propecia
 Isentress Isentress Isentress Isentress,
 Arcoxia Arcoxia Arcoxia Arcoxia Arcoxia
 Stocrin Stocrin Stocrin Stocrin Stocrin Stocrin
 Vaccines Segment Revenues
 Varivax
  Gardasil, Varivax RotaTeq Zostavax
 - 27 -




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##### Table of Contents



Gardasil Gardasil Gardasil
 Gardasil
 RotaTeq RotaTeq RotaTeq
 Gardasil RotaTeq
 ProQuad Varivax M-M-R ProQuad Varivax
 Zostavax Zostavax Zostavax
 Costs,
Expenses and Other
 - 28 -




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Zocor
 Vioxx
  Emend Emend Emend
 Cordaptive Cordaptive Cordaptive
 - 29 -




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##### Table of Contents



Cordaptive Cordaptive Cordaptive Cordaptive Cordaptive
      - 30 -




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##### Table of Contents



Vytorin Zetia Selected Joint Venture and
Affiliate Information
  Segment Profits
 Three Months Ended
    
    Nine Months EndedSeptember 30 ,
    
    September 30 ,($ in millions)
    
    2007
    
    2006
    
    2007
    
    2006Pharmaceutical segment
    
    $
    3,453.0
    
    
    $
    3,222.3
    
    
    $
    10,468.3
    
    
    $
    10,479.9Vaccines segment
    
    
    823.3
    
    
    
    293.3
    
    
    
    1,924.8
    
    
    
    558.5Other segment
    
    
    112.9
    
    
    
    88.3
    
    
    
    395.5
    
    
    
    328.6Other
    
    
    (2,324.6
    )
    
    
    (2,373.1
    )
    
    
    (6,237.4
    )
    
    
    (6,057.5
    )Income before income taxes
    
    $
    2,064.6
    
    
    $
    1,230.8
    
    
    $
    6,551.2
    
    
    $
    5,309.5
  - 31 -




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##### Table of Contents



Januvia Singulair Zocor Proscar
   Vioxx
 Selected Joint Venture and Affiliate Information
 Zetia Vytorin Zetia Ezetrol Vytorin Inegy Vytorin
 Singulair
 Gardasil
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##### Table of Contents



Liquidity and Capital Resources
 September 30,
    
    
    December 31,($ in millions)
    
    2007
    
    
    2006Cash and investments
    
    $
    14,892.6
    
    
    $
    16,501.2Working capital
    
    $
    3,657.7
    
    
    $
    2,507.5Total debt to total liabilities and equity
    
    
    12.8
    %
    
    
    15.3
    %
   Accounting for Uncertainty in Income Taxes  an interpretation of
FASB Statement No. 109
    - 33 -




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##### Table of Contents



Critical Accounting Policies
  Recently Issued Accounting Standards
 Accounting for Advance Payments for Goods or Services Received for Use in Future Research
and Development Activities
 - 34 -




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##### Table of Contents



The Fair Value Option for Financial Assets and
Financial Liabilities, including an amendment of FASB Statement No. 115
 Fair Value Measurements
 Legal Proceedings
  Vioxx Litigation
 Product Liability Lawsuits
 Vioxx Vioxx Vioxx
 Vioxx
 Vioxx www.merck.com
 Vioxx
 - 35 -




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Vioxx
   Vioxx
  Vioxx
     Vioxx Vioxx
 - 36 -




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##### Table of Contents



Vioxx
 Vioxx Vioxx
 Vioxx
 Other Lawsuits
 Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx
 Shareholder Lawsuits
 Vioxx Vioxx Vioxx Vioxx Vioxx
 - 37 -




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##### Table of Contents



Vioxx Vioxx
  Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx
 International Lawsuits
 Vioxx Vioxx
 Additional Lawsuits
 Vioxx Vioxx Vioxx Vioxx
 Insurance
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx
 - 38 -




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##### Table of Contents



Investigations
 Vioxx. Vioxx Vioxx Vioxx
 Vioxx
 Vioxx
 Reserves
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx
 - 39 -




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##### Table of Contents



Other Product Liability Litigation
 Fosamax Fosamax Fosamax Fosamax Fosamax Fosamax
 Fosamax Fosamax Fosamax Fosamax Fosamax Fosamax
 Governmental Proceedings
 Pepcid.
  qui tam qui tam
 Vaccine Litigation
 M-M-R M-M-R
 - 40 -




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##### Table of Contents



M-M-R II
 Patent Litigation
 Fosamax, Prilosec, Zetia, Singulair, Primaxin, Trusopt Cosopt Zetia Prilosec Nexium Prilosec. Fosamax Singulair Trusopt Cosopt Primaxin Prilosec Nexium
  Environmental Litigation
  Other Litigation
  - 41 -




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##### Table of Contents



Item 4. Controls and Procedures
   CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
   - 42-




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##### Table of Contents



PART II   Other Information
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   ($ in millions)Total Number
    
    Average Price
    
    Approximate Dollar Value of Sharesof Shares
    
    Paid Per
    
    That May Yet Be PurchasedPeriod
    
    Purchased(1)
    
    Share
    
    Under the Plans or Programs(1)July 1 - July 31, 2007
    
    
    351,470
    
    
    $
    50.25
    
    
    $
    6,017.8August 1 - August 31, 2007
    
    
    1,272,530
    
    
    $
    51.07
    
    
    $
    5,952.8September 1 - September 30, 2007
    
    
    0
    
    
    
    N/A
    
    
    $
    5,952.8Total
    
    
    1,624,000
    
    
    $
    50.89
    
    
    $
    5,952.8
 
 (1)
    
    All shares purchased during the period were made as part of a plan announced
in July 2002 to purchase $10 billion in Merck shares. 
 Item 6. Exhibits
 Number
    
    Description3.1
    
    Restated Certificate of Incorporation of Merck & Co., Inc. (May 17, 2007) 
Incorporated by reference to Current Report on Form 8-K dated May 17, 20073.2
    
    By-Laws of Merck & Co., Inc. (as amended effective May 31, 2007) 
Incorporated by reference to Current Report on Form 8-K dated May 31, 200712
    
    Computation of Ratios of Earnings to Fixed Charges31.1
    
    Rule 13a  14(a)/15d  14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a  14(a)/15d  14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer
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Signatures
  MERCK & CO., INC.Date: November 1, 2007
    /s/ Bruce N. KuhlikBRUCE N. KUHLIKSenior Vice President and General CounselDate: November 1, 2007
    /s/ John CananJOHN CANANVice President, Controller - 44-




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EXHIBIT INDEX
 Number
    
    Description3.1
    
    Restated Certificate of Incorporation of Merck & Co., Inc. (May 17, 2007) 
Incorporated by reference to Current Report on Form 8-K dated May 17, 20073.2
    
    By-Laws of Merck & Co., Inc. (as amended effective May 31, 2007) 
Incorporated by reference to Current Report on Form 8-K dated May 31, 200712
    
    Computation of Ratios of Earnings to Fixed Charges31.1
    
    Rule 13a  14(a)/15d  14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a  14(a)/15d  14(a) Certification of Chief Financial Officer32.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer
 - 45-