##### 



Exhibit 13
 Financial
Section
  Contents
 Financial ReviewDescription of Mercks Business
    
    
    20Overview
    
    
    20Competition and the Health Care Environment
    
    
    22Operating Results
    
    
    22Selected Joint Venture and Affiliate Information
    
    
    29Capital Expenditures
    
    
    31Analysis of Liquidity and Capital Resources
    
    
    31Financial Instruments Market Risk Disclosures
    
    
    32Critical Accounting Policies and Other Matters
    
    
    33Recently Issued Accounting Standards
    
    
    37Cautionary Factors That May Affect Future Results
    
    
    37Cash Dividends Paid per Common Share
    
    
    38Common Stock Market Prices
    
    
    38Condensed Interim Financial Data
    
    
    38Consolidated Statement of Income
    
    
    39Consolidated Statement of Retained Earnings
    
    
    39Consolidated Statement of Comprehensive Income
    
    
    39Consolidated Balance Sheet
    
    
    40Consolidated Statement of Cash Flows
    
    
    41Notes to Consolidated Financial Statements
    
    
    42Managements Report
    
    
    66Audit Committees Report
    
    
    66Report of Independent Registered Public Accounting Firm
    
    
    67Compensation and Benefits Committees Report
    
    
    67Selected Financial Data
    
    
    68
 Financial Review
 Description of Mercks Business
  Overview
   Mercks report to shareholders 2005 | page 20




---



##### 



Gardasil, Zostavax, RotaTeq, RotaTeq. Gardasil
 Januvia
 Vioxx, Vioxx
 Vioxx Vioxx Vioxx
 Vioxx
   Mercks report to shareholders 2005 | page 21




---



##### 



Competition and the Health Care Environment
 Crixivan or Stocrin.
     Operating
Results
  Vioxx, Singulair, Cancidas Cozaar/Hyzaar Nexium. Zocor
 Vioxx Vioxx
 Vioxx.
   Mercks report to shareholders 2005 | page 22




---



##### 



(1)
 ($ in millions)
    
    2005
    
    
    2004
    
    
    2003Zocor
    
    $
    4,381.7
    
    
    $
    5,196.5
    
    
    $
    5,011.4Fosamax
    
    
    3,191.2
    
    
    
    3,159.7
    
    
    
    2,676.6Cozaar/Hyzaar
    
    
    3,037.2
    
    
    
    2,823.7
    
    
    
    2,486.0Singulair
    
    
    2,975.6
    
    
    
    2,622.0
    
    
    
    2,009.4Proscar
    
    
    741.4
    
    
    
    733.1
    
    
    
    605.5Primaxin
    
    
    739.6
    
    
    
    640.6
    
    
    
    628.9Vasotec/Vaseretic
    
    
    623.1
    
    
    
    719.2
    
    
    
    763.7Cosopt/Trusopt
    
    
    617.2
    
    
    
    558.8
    
    
    
    484.4Cancidas
    
    
    570.0
    
    
    
    430.0
    
    
    
    275.7Maxalt
    
    
    348.4
    
    
    
    309.9
    
    
    
    324.2Propecia
    
    
    291.9
    
    
    
    270.2
    
    
    
    239.0Vioxx
    
    
    
    
    
    
    1,489.3
    
    
    
    2,548.8Vaccines/Biologicals
    
    
    1,103.3
    
    
    
    1,036.1
    
    
    
    1,056.1Other
    
    
    3,391.3
    
    
    
    2,949.5
    
    
    
    3,376.2$
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9
 (1)
    
    Presented net of discounts and returns.
 Zocor, Fosamax Fosamax Plus D, Fosamax, Cozaar/Hyzaar Vasotec, Singulair, Proscar, Primaxin Cancidas, Cosopt Trusopt, Maxalt, Propecia, Varivax, M-M-R Pneumovax, Recombivax HB,
 Nexium Prilosec.
 Singulair, Singulair
 Singulair Singulair
 Singulair
 Singulair Singulair Singulair.
 Singulair
 Singulair Singulair
 Singulair
 Cozaar, Hyzaar Cozaar
 Cozaar Hyzaar Cozaar/Hyzaar
 Hyzaar Cozaar Cozaar Hyzaar
 Hyzaar,
 Fosamax, Fosamax Plus D, Fosamax
   Mercks report to shareholders 2005 | page 23




---



##### 



Fosavance. Fosamax Plus D Fosamax. Fosamax Plus D
 Fosamax Fosamax Fosamax Fosamax
 Fosamax Fosamax Fosamax Fosamax
 Zocor Zocor Zocor Zocor Zocor Zocor
 Cancidas Primaxin Cosopt Emend
 Maxalt to Invanz Propecia Nexium
 Cancidas, a
 Proscar Proscar Proscar Propecia, Propecia
 Zetia Vytorin Zetia Ezetrol Vytorin Inegy Vytorin Vytorin
 Vytorin Vytorin Zocor
    ($ in millions)
    
    2005
    
    
    Change

    
    2004
    
    
    Change

    
    2003Materials and production
    
    $
    5,149.6
    
    
    
    + 4
    %
    
    $
    4,959.8
    
    
    
    +12
    %
    
    $
    4,436.9Marketing and administrative
    
    
    7,155.5
    
    
    
    - 1
    %
    
    
    7,238.7
    
    
    
    +17
    %
    
    
    6,200.3Research and development
    
    
    3,848.0
    
    
    
    - 4
    %
    
    
    4,010.2
    
    
    
    +22
    %
    
    
    3,279.9Restructuring costs
    
    
    322.2
    
    
    
    
    *

    
    
    107.6
    
    
    
    -45
    %
    
    
    194.6Equity income from affiliates
    
    
    (1,717.1
    )
    
    
    +70
    %
    
    
    (1,008.2
    )
    
    
    
    *
    
    
    (474.2
    )Other (income) expense, net
    
    
    (110.2
    )
    
    
    -68
    %
    
    
    (344.0
    )
    
    
    +69
    %
    
    
    (203.2
    )$
    14,648.0
    
    
    
    - 2
    %
    
    $
    14,964.1
    
    
    
    +11
    %
    
    $
    13,434.3
 *
    
    100% or greater.
 Mercks report to shareholders 2005 | page 24




---



##### 



Vioxx
 Vioxx Vioxx
  Vioxx Vioxx Vioxx
 Vioxx Vioxx
 Gardasil Gardasil.
 Gardasil Gardasil Gardasil to Gardasil.
 Gardasil
 Gardasil
   Mercks report to shareholders 2005 | page 25




---



##### 



Gardasil
 Gardasil, Gardasil. Gardasil
 ProQuad ProQuad ProQuad M-M-R Varivax
 Vaqta, Vaqta
 RotaTeq, RotaTeq RotaTeq
 Zostavax Zostavax Zostavax
 Januvia, st Januvia Januvia Januvia
 of Januvia
   Mercks report to shareholders 2005 | page 26




---



##### 



Pargluva, Pargluva. Pargluva, Pargluva Pargluva
   Mercks report to shareholders 2005 | page 27




---



##### 



Research PipelinePhase IAlzheimers Disease
    
    MK-0752, MK-0952Arthritis
    
    MK-0822Atherosclerosis
    
    MK-0354*, MK-0633,MK-0859Cancer
    
    MK-0429, MK-0752, Agensys*, MK-0731,
VX-680*, MK-0646*Cancer VaccineCardiovascular Disease
    
    MK-0448Diabetes
    
    MK-0941, MK-0893, MK-0533Endocrine
    
    MK-0974Flu VaccineGlaucoma
    
    MK-0994Insomnia
    
    MK-0454Obesity
    
    Nastech PYY3-36***Osteoporosis
    
    MK-0773Pain
    
    Neurogen*Parkinsons Disease
    
    MK-0657Psychiatric Disease
    
    MK-0249Respiratory Disease
    
    MK-0633S. aureusVaccinePhase IIArthritis
    
    MK-0686Cancer (CTCL)
    
    Vorinostat*Endocrine
    
    MK-0677HIV VaccineHPV Vaccine**Hypertension
    
    MK-0736Obesity
    
    MK-0364, MK-0493Osteoporosis
    
    MK-0822Pain
    
    MK-0686, MK-0759,MK-0974Pediatric Vaccine*Psychiatric Disease
    
    MK-0364, Lurasidone*Stroke
    
    ONO 2506***Urinary Incontinence
    
    MK-0634, MK-0594Phase IIIAIDS
    
    MK-0518Atherosclerosis
    
    MK-0524B, MK-0524ACINV
    
    MK-0517Diabetes
    
    MK-0431AInsomnia
    
    Gaboxadol*Under Regulatory ReviewHPV and Related Cervical Cancerand Genital Warts
    
    Gardasil**Shingles
    
    ZostavaxDiabetes
    
    JanuviaApprovableArthritis/Pain
    
    Arcoxia2005 U.S. ApprovalsOsteoporosis
    
    Fosamax Plus DPediatric Vaccine
    
    ProQuad2006 U.S. ApprovalsRotavirus Gastroenteritis
    
    RotaTeq
 *
    
    Licensed, alliance or acquisition (pipeline)**
    
    Multiple licenses, including CSL, Ltd.***
    
    Merck is in discussions with its licensing partner regarding further
plans for this compound.
 $ in millions
   Mercks report to shareholders 2005 | page 28




---



##### 



Zetia Vytorin Zetia
 
   Earnings
 ($ in millions except per share amounts)
    
    2005
    
    
    Change
    
    
    2004
    
    
    Change
    
    
    2003Income from continuing operations
    
    $
    4,631.3
    
    
    
    -20
    %
    
    $
    5,813.4
    
    
    
    -12
    %
    
    $
    6,589.6As a % of sales
    
    
    21.0
    %
    
    
    
    
    
    
    25.3
    %
    
    
    
    
    
    
    29.3
    %Net income
    
    
    4,631.3
    
    
    
    
    
    
    
    5,813.4
    
    
    
    
    
    
    
    6,830.9As a % of average total assets
    
    
    10.6
    %
    
    
    
    
    
    
    14.0
    %
    
    
    
    
    
    
    14.9
    %Earnings per common share assuming dilution from
continuing operations
    
    $
    2.10
    
    
    
    -20
    %
    
    $
    2.61
    
    
    
    -11
    %
    
    $
    2.92
  Vioxx
  Vioxx
 Vioxx
  
 Selected Joint Venture and Affiliate Information
  Zetia Ezetrol Zetia
   Mercks report to shareholders 2005 | page 29




---



##### 



Zetia Zocor Vytorin lnegy Vytorin Vytorin
 Prilosec,
  Nexium Prilosec. Prilosec.
   ($ in millions)
    
    2005
    
    
    2004
    
    
    2003Fipronil products
    
    $
    757.7
    
    
    $
    679.1
    
    
    $
    577.2Avermectin products
    
    
    467.5
    
    
    
    452.4
    
    
    
    476.7Other products
    
    
    761.8
    
    
    
    704.3
    
    
    
    634.9$
    1,987.0
    
    
    $
    1,835.8
    
    
    $
    1,688.8
 Hexavac. Hexavac Hexavac Hexavac Hexavac Hexavac Hexavac
 HBvaxPRO, Procomvax.
  ($ in millions)
    
    2005
    
    
    2004
    
    
    2003Hepatitis vaccines
    
    $
    81.1
    
    
    $
    80.5
    
    
    $
    73.6Viral vaccines
    
    
    78.5
    
    
    
    54.0
    
    
    
    51.5Other vaccines
    
    
    705.5
    
    
    
    672.5
    
    
    
    543.9$
    865.1
    
    
    $
    807.0
    
    
    $
    669.0
   ($ in millions)
    
    2005
    
    
    2004*
    
    
    2003Gastrointestinal
products
    
    $
    250.8
    
    
    $
    269.2
    
    
    $
    299.6Other products
    
    
    2.5
    
    
    
    46.1
    
    
    
    146.2$
    253.3
    
    
    $
    315.3
    
    
    $
    445.8
 *
    
    Includes sales of the European joint venture up through March 2004.
   Mercks report to shareholders 2005 | page 30




---



##### 



Capital Expenditures
   $ in millions
 Analysis of Liquidity and Capital Resources
   Selected Data
 ($ in millions)
    
    2005
    
    
    2004
    
    
    2003Working capital
    
    $
    7,745.8
    
    
    $
    1,731.1
    
    
    $
    1,957.6Total debt to total
liabilities and equity
    
    
    18.1
    %
    
    
    16.1
    %
    
    
    16.7
    %Cash provided by
operations to total
debt
    
    
    0.9:1
    
    
    
    1.3:1
    
    
    
    1.2:1
   Payments Due by Period
 2007-
    
    
    2009-($ in millions)
    
    Total
    
    
    2006
    
    
    2008
    
    
    2010
    
    
    ThereafterPurchase
obligations
    
    $
    1,568.2
    
    
    $
    423.2
    
    
    $
    753.2
    
    
    $
    372.6
    
    
    $
    19.2Loans payable and current
portion of long-term debt
    
    
    2,972.0
    
    
    
    2,972.0
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    5,125.6
    
    
    
    
    
    
    
    1,739.6
    
    
    
    311.9
    
    
    
    3,074.1Operating leases
    
    
    266.3
    
    
    
    79.8
    
    
    
    94.3
    
    
    
    45.9
    
    
    
    46.3$
    9,932.1
    
    
    $
    3,475.0
    
    
    $
    2,587.1
    
    
    $
    730.4
    
    
    $
    3,139.6
 Mercks report to shareholders 2005 | page 31




---



##### 



Financial Instruments Market Risk Disclosures
 
   Mercks report to shareholders 2005 | page 32




---



##### 



Critical Accounting Policies and Other Matters
   Mercks report to shareholders 2005 | page 33




---



##### 



2005
    
    
    2004Balance, January 1
    
    $
    1,030.3
    
    
    $
    752.2Current provision
    
    
    4,419.1
    
    
    
    4,031.6Adjustments relating to
prior years
    
    
    134.7
    
    
    
    57.7Payments
    
    
    (4,417.6
    )
    
    
    (3,811.2
    )Balance, December 31
    
    $
    1,166.5
    
    
    $
    1,030.3
 
   Mercks report to shareholders 2005 | page 34




---



##### 



of Arcoxia Arcoxia Arcoxia Arcoxia for Arcoxia on Arcoxias Arcoxia Arcoxia Arcoxia
   Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx
   Mercks report to shareholders 2005 | page 35




---



##### 



Mercks report to shareholders 2005 | page 36




---



##### 



Recently Issued Accounting Standards
 The Meaning of Other-Than-Temporary
Impairment and its Application to Certain Investments.
 Commission Guidance Regarding Accounting
for Sales of Vaccines and BioTerror Countermeasures to the Federal Government for Placement into
the Pediatric Vaccine Stockpile or the Strategic National Stockpile,
 Cautionary Factors That May Affect Future Results
   Mercks report to shareholders 2005 | page 37




---



##### 



Year
    
    
    4th Q
    
    
    3rd Q
    
    
    2nd Q
    
    
    1st Q2005
    
    $
    1.52
    
    
    $
    .38
    
    
    $
    .38
    
    
    $
    .38
    
    
    $
    .382004
    
    $
    1.49
    
    
    $
    .38
    
    
    $
    .37
    
    
    $
    .37
    
    
    $
    .37
  2005
    
    4th Q
    
    
    3rd Q
    
    
    2nd Q
    
    
    1st QHigh
    
    $
    32.54
    
    
    $
    32.34
    
    
    $
    35.20
    
    
    $
    32.61Low
    
    
    25.50
    
    
    
    26.97
    
    
    
    30.40
    
    
    
    27.482004High
    
    $
    34.32
    
    
    $
    47.73
    
    
    $
    48.78
    
    
    $
    49.33Low
    
    
    25.60
    
    
    
    32.46
    
    
    
    44.28
    
    
    
    42.85
   Condensed
Interim Financial Data(1)($ in millions except per share amounts)
    
    4th
Q(2)
    
    
    3rd
Q(3)
    
    
    2nd
Q(4)
    
    
    1st Q2005Sales
    
    $
    5,765.9
    
    
    $
    5,416.2
    
    
    $
    5,467.5
    
    
    $
    5,362.2Materials and production costs
    
    
    1,478.8
    
    
    
    1,238.8
    
    
    
    1,160.6
    
    
    
    1,271.4Marketing and administrative
expenses
    
    
    2,139.1
    
    
    
    1,661.4
    
    
    
    1,749.5
    
    
    
    1,605.5Research and development
expenses
    
    
    1,112.0
    
    
    
    942.6
    
    
    
    946.8
    
    
    
    846.6Restructuring costs
    
    
    228.9
    
    
    
    79.8
    
    
    
    5.8
    
    
    
    7.8Equity income from affiliates
    
    
    (586.6
    )
    
    
    (480.1
    )
    
    
    (334.1
    )
    
    
    (316.3
    )Other
(income) expense, net
    
    
    (126.3
    )
    
    
    (24.7
    )
    
    
    14.0
    
    
    
    26.5Income from continuing
operations before taxes
    
    
    1,520.0
    
    
    
    1,998.4
    
    
    
    1,924.9
    
    
    
    1,920.7Net income
    
    
    1,119.7
    
    
    
    1,420.9
    
    
    
    720.6
    
    
    
    1,370.1Basic earnings per common
share
    
    $
    .51
    
    
    $
    .65
    
    
    $
    .33
    
    
    $
    .62Earnings per common share
assuming dilution
    
    $
    .51
    
    
    $
    .65
    
    
    $
    .33
    
    
    $
    .622004Sales
    
    $
    5,748.0
    
    
    $
    5,538.1
    
    
    $
    6,021.7
    
    
    $
    5,630.8Materials and production costs
    
    
    1,283.6
    
    
    
    1,364.2
    
    
    
    1,163.7
    
    
    
    1,148.2Marketing and administrative
expenses
    
    
    2,347.2
    
    
    
    1,718.4
    
    
    
    1,594.3
    
    
    
    1,578.7Research and development
expenses
    
    
    1,108.6
    
    
    
    919.3
    
    
    
    986.0
    
    
    
    996.3Restructuring costs
    
    
    18.6
    
    
    
    34.5
    
    
    
    21.9
    
    
    
    32.7Equity income from affiliates
    
    
    (285.9
    )
    
    
    (307.1
    )
    
    
    (220.5
    )
    
    
    (194.7
    )Other
(income) expense, net
    
    
    (103.9
    )
    
    
    (4.2
    )
    
    
    37.5
    
    
    
    (273.3
    )Income from continuing
operations before taxes
    
    
    1,379.8
    
    
    
    1,813.0
    
    
    
    2,438.8
    
    
    
    2,342.9Net income
    
    
    1,101.1
    
    
    
    1,325.6
    
    
    
    1,768.1
    
    
    
    1,618.6Basic earnings per common
share
    
    $
    .50
    
    
    $
    .60
    
    
    $
    .80
    
    
    $
    .73Earnings per common share
assuming dilution
    
    $
    .50
    
    
    $
    .60
    
    
    $
    .79
    
    
    $
    .73
 (1)Prior period amounts have been reclassified to reflect separate line item
presentation of Restructuring costs.(2)Amounts for 2005 include the impact of restructuring actions (see Note 4). Amounts
for 2005 and 2004 include the impact of the reserve forVioxx
legal defense costs
(see Note 11).(3)Amounts for 2004 include the impact of the voluntary
worldwide withdrawalof Vioxx (see Note 3).(4)Amounts for 2005 include the impact of the net tax charge primarily
associated with the AJCA repatriation (see Note 17).




---



##### 



Consolidated Statement of Income
 Years Ended December 31
($ in millions except per share amounts)
 2005
    
    
    2004
    
    
    2003Sales
    
    $
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9Costs,
Expenses and OtherMaterials and production
    
    
    5,149.6
    
    
    
    4,959.8
    
    
    
    4,436.9Marketing and administrative
    
    
    7,155.5
    
    
    
    7,238.7
    
    
    
    6,200.3Research and development
    
    
    3,848.0
    
    
    
    4,010.2
    
    
    
    3,279.9Restructuring costs
    
    
    322.2
    
    
    
    107.6
    
    
    
    194.6Equity income from affiliates
    
    
    (1,717.1
    )
    
    
    (1,008.2
    )
    
    
    (474.2
    )Other (income) expense, net
    
    
    (110.2
    )
    
    
    (344.0
    )
    
    
    (203.2
    )14,648.0
    
    
    
    14,964.1
    
    
    
    13,434.3Income from Continuing
Operations Before Taxes
    
    
    7,363.9
    
    
    
    7,974.5
    
    
    
    9,051.6Taxes on Income
    
    
    2,732.6
    
    
    
    2,161.1
    
    
    
    2,462.0Income from Continuing Operations
    
    
    4,631.3
    
    
    
    5,813.4
    
    
    
    6,589.6Income from Discontinued
Operations, Net of Taxes
    
    
    
    
    
    
    
    
    
    
    241.3Net Income
    
    $
    4,631.3
    
    
    $
    5,813.4
    
    
    $
    6,830.9Basic Earnings per Common ShareContinuing Operations
    
    $
    2.11
    
    
    $
    2.62
    
    
    $
    2.95Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    .11Net Income
    
    $
    2.11
    
    
    $
    2.62
    
    
    $
    3.05
    *Earnings per Common Share
Assuming DilutionContinuing Operations
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    2.92Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    .11Net Income
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    3.03
 *
    Amount does not add as a result of rounding.
 Consolidated Statement of Retained Earnings
 Years Ended December 31
($ in millions)
 2005
    
    
    2004
    
    
    2003Balance, January 1
    
    $
    36,626.3
    
    
    $
    34,142.0
    
    
    $
    35,434.9Net Income
    
    
    4,631.3
    
    
    
    5,813.4
    
    
    
    6,830.9Common Stock Dividends Declared
    
    
    (3,338.7
    )
    
    
    (3,329.1
    )
    
    
    (3,264.7
    )Spin-off of Medco Health
    
    
    
    
    
    
    
    
    
    
    (4,859.1
    )Balance, December 31
    
    $
    37,918.9
    
    
    $
    36,626.3
    
    
    $
    34,142.0
 Consolidated
Statement of Comprehensive Income
 Years Ended December 31
($ in millions)
 2005
    
    
    2004
    
    
    2003Net Income
    
    $
    4,631.3
    
    
    $
    5,813.4
    
    
    $
    6,830.9Other Comprehensive Income (Loss)Net unrealized gain (loss) on
derivatives, net of tax and net
income realization
    
    
    81.3
    
    
    
    (31.7
    )
    
    
    (21.3
    )Net unrealized gain (loss) on
investments, net of tax and net
income realization
    
    
    50.3
    
    
    
    (100.9
    )
    
    
    (46.3
    )Minimum pension liability, net of tax
    
    
    (7.0
    )
    
    
    (4.9
    )
    
    
    231.9Cumulative translation adjustment
relating to equity investees, net of
tax
    
    
    (26.4
    )
    
    
    26.1
    
    
    
    98.2
    
    
    
    (111.4
    )
    
    
    164.3Comprehensive Income
    
    $
    4,729.5
    
    
    $
    5,702.0
    
    
    $
    6,995.2
 The accompanying notes are an integral part of these consolidated financial statements.




---



##### 



Consolidated Balance Sheet
 December 31
($ in millions)
 2005
    
    
    2004AssetsCurrent AssetsCash and cash equivalents
    
    $
    9,585.3
    
    
    $
    2,878.8Short-term investments
    
    
    6,052.3
    
    
    
    4,211.1Accounts receivable
    
    
    2,927.3
    
    
    
    3,627.7Inventories (excludes inventories of $753.8 in 2005 and
$638.7 in 2004 classified in Other assetssee Note 7)
    
    
    1,658.1
    
    
    
    1,898.7Prepaid expenses and taxes
    
    
    826.3
    
    
    
    858.9Total current assets
    
    
    21,049.3
    
    
    
    13,475.2Investments
    
    
    1,107.9
    
    
    
    6,727.1Property, Plant and Equipment (at cost)Land
    
    
    433.0
    
    
    
    366.6Buildings
    
    
    9,479.6
    
    
    
    8,874.3Machinery, equipment and office furnishings
    
    
    12,785.2
    
    
    
    11,926.1Construction in progress
    
    
    1,015.5
    
    
    
    1,641.623,713.3
    
    
    
    22,808.6Less allowance for depreciation
    
    
    9,315.1
    
    
    
    8,094.914,398.2
    
    
    
    14,713.7Goodwill
    
    
    1,085.7
    
    
    
    1,085.7Other Intangibles, Net
    
    
    518.7
    
    
    
    679.2Other Assets
    
    
    6,686.0
    
    
    
    5,891.9$
    44,845.8
    
    
    $
    42,572.8Liabilities and Stockholders EquityCurrent LiabilitiesLoans payable and current portion of long-term debt
    
    $
    2,972.0
    
    
    $
    2,181.2Trade accounts payable
    
    
    471.1
    
    
    
    421.4Accrued and other current liabilities
    
    
    5,381.2
    
    
    
    5,288.1Income taxes payable
    
    
    3,649.2
    
    
    
    3,012.3Dividends payable
    
    
    830.0
    
    
    
    841.1Total current liabilities
    
    
    13,303.5
    
    
    
    11,744.1Long-Term Debt
    
    
    5,125.6
    
    
    
    4,691.5Deferred Income Taxes and Noncurrent Liabilities
    
    
    6,092.9
    
    
    
    6,442.1Minority Interests
    
    
    2,407.2
    
    
    
    2,406.9Stockholders EquityCommon stock, one cent par valueAuthorized5,400,000,000 sharesIssued2,976,223,337
shares20052,976,230,393
shares2004
    
    
    29.8
    
    
    
    29.8Other paid-in capital
    
    
    6,900.0
    
    
    
    6,869.8Retained earnings
    
    
    37,918.9
    
    
    
    36,626.3Accumulated other comprehensive income (loss)
    
    
    52.3
    
    
    
    (45.9
    )44,901.0
    
    
    
    43,480.0Less treasury stock, at cost794,299,347
shares2005767,591,491
shares2004
    
    
    26,984.4
    
    
    
    26,191.8Total stockholders equity
    
    
    17,916.6
    
    
    
    17,288.2$
    44,845.8
    
    
    $
    42,572.8
 The
accompanying notes are an Integral part of this consolidated financial statement.




---



##### 



Consolidated
Statement of Cash Flows
 Years Ended December 31

($ in millions)
 2005
    
    
    2004
    
    
    2003Cash Flows from Operating Activities of Continuing OperationsNet income
    
    $
    4,631.3
    
    
    $
    5,813.4
    
    
    $
    6,830.9Less: Income from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (241.3
    )Income from continuing operations
    
    
    4,631.3
    
    
    
    5,813.4
    
    
    
    6,589.6Adjustments to reconcile income from continuing operations to net cash
provided by
operating activities of continuing operations:Depreciation and amortization
    
    
    1,708.1
    
    
    
    1,450.7
    
    
    
    1,314.2Deferred income taxes
    
    
    9.0
    
    
    
    48.9
    
    
    
    131.7Equity income from affiliates
    
    
    (1,717.1
    )
    
    
    (1,008.2
    )
    
    
    (474.2
    )Dividends and distributions from equity affiliates
    
    
    1,101.2
    
    
    
    587.0
    
    
    
    553.4Other
    
    
    695.5
    
    
    
    385.8
    
    
    
    (177.3
    )Net changes in assets and liabilities:Accounts receivable
    
    
    345.9
    
    
    
    173.1
    
    
    
    320.9Inventories
    
    
    125.6
    
    
    
    331.9
    
    
    
    (435.3
    )Trade accounts payable
    
    
    63.6
    
    
    
    (323.8
    )
    
    
    (21.6
    )Accrued and other current liabilities
    
    
    238.2
    
    
    
    1,382.3
    
    
    
    505.4Income taxes payable
    
    
    663.2
    
    
    
    453.9
    
    
    
    494.1Noncurrent liabilities
    
    
    (412.2
)
    
    
    (445.4
    )
    
    
    (255.3
    )Other
    
    
    156.2
    
    
    
    (50.5
    )
    
    
    (119.1
    )Net Cash Provided by Operating Activities of Continuing Operations
    
    
    7,608.5
    
    
    
    8,799.1
    
    
    
    8,426.5Cash
Flows from Investing Activities of Continuing OperationsCapital expenditures
    
    
    (1,402.7
    )
    
    
    (1,726.1
    )
    
    
    (1,915.9
    )Purchase of securities, subsidiaries and other investments
    
    
    (125,308.4
    )
    
    
    (82,256.4
    )
    
    
    (61,586.9
    )Proceeds from sale of securities, subsidiaries and other investments
    
    
    128,981.4
    
    
    
    82,363.8
    
    
    
    60,823.4Acquisitions of Banyu shares
    
    
    
    
    
    
    (12.8
    )
    
    
    (1,527.8
    )Other
    
    
    (3.1
    )
    
    
    (6.6
    )
    
    
    (25.0
    )Net Cash Provided (Used) by Investing Activities of Continuing
Operations
    
    
    2,267.2
    
    
    
    (1,638.1
    )
    
    
    (4,232.2
    )Cash
Flows from Financing Activities of Continuing OperationsNet change in short-term borrowings
    
    
    1,296.2
    
    
    
    (252.4
    )
    
    
    (2,347.2
    )Proceeds from issuance of debt
    
    
    1,000.0
    
    
    
    405.1
    
    
    
    1,300.3Payments on debt
    
    
    (1,014.9
    )
    
    
    (37.3
    )
    
    
    (736.2
    )Redemption of preferred units of subsidiary
    
    
    
    
    
    
    (1,500.0
    )
    
    
    Purchase of treasury stock
    
    
    (1,015.3
    )
    
    
    (974.6
    )
    
    
    (2,034.1
    )Dividends paid to stockholders
    
    
    (3,349.8
    )
    
    
    (3,310.7
    )
    
    
    (3,250.4
    )Proceeds from exercise of stock options
    
    
    136.5
    
    
    
    240.3
    
    
    
    388.2Other
    
    
    (93.1
    )
    
    
    (161.8
    )
    
    
    (148.5
    )Net Cash Used by Financing Activities of Continuing Operations
    
    
    (3,040.4
    )
    
    
    (5,591.4
    )
    
    
    (6,827.9
    )Effect of Exchange Rate Changes on Cash and Cash Equivalents
    
    
    (128.8
    )
    
    
    108.2
    
    
    
    155.7Discontinued Operations (Revised)Net cash provided by Medco Health operating activities
    
    
    
    
    
    
    
    
    
    
    279.2Net cash provided by Medco Health investing activities
    
    
    
    
    
    
    
    
    
    
    (31.2
    )Dividend received from Medco Health, net of intercompany settlements and
cash transferred
    
    
    
    
    
    
    
    
    
    
    1,187.9Net Cash Provided by Discontinued Operations
    
    
    
    
    
    
    
    
    
    
    1,435.9Net Increase
(Decrease) in Cash and Cash Equivalents
    
    
    6,706.5
    
    
    
    1,677.8
    
    
    
    (1,042.0
    )Cash and Cash Equivalents at Beginning of Year
    
    
    2,878.8
    
    
    
    1,201.0
    
    
    
    2,243.0Cash and Cash Equivalents at End of Year
    
    $
    9,585.3
    
    
    $
    2,878.8
    
    
    $
    1,201.0
 The accompanying notes are an integral part of this consolidated financial statement.




---



##### 



Notes to Consolidated Financial Statements
 ($ in millions except per share amounts)
  1
    
    Nature of Operations
  2
    
    Summary of Accounting Policies
 Principles
of Consolidation 
 Foreign
Currency Translation 
 Cash
and Cash Equivalents 
 Inventories 
 Investments

 Revenue Recognition 
 Depreciation

 Goodwill
and Other Intangibles 




---



##### 



Research
and Development
 Stock-Based
Compensation
  Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Net income, as reported
    
    $
    4,631.3
    
    
    $
    5,813.4
    
    
    $
    6,830.9Compensation expense, net of tax:Reported
    
    
    31.2
    
    
    
    16.7
    
    
    
    4.9Fair value method
    
    
    (357.1
    )
    
    
    (491.8
    )
    
    
    (559.4
    )Pro forma net income
    
    $
    4,305.4
    
    
    $
    5,338.3
    
    
    $
    6,276.4Earnings per common share
from continuing operations:Assuming dilution-as reported
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    2.92Assuming dilution-pro forma
    
    $
    1.96
    
    
    $
    2.39
    
    
    $
    2.73Earnings per common share:Basic- as reported
    
    $
    2.11
    
    
    $
    2.62
    
    
    $
    3.05Basic-pro forma
    
    $
    1.96
    
    
    $
    2.41
    
    
    $
    2.81Assuming dilution-as reported
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    3.03Assuming dilution-pro forma
    
    $
    1.96
    
    
    $
    2.39
    
    
    $
    2.79
  Years Ended December 31
    
    2005
    
    2004
    
    2003Dividend yield
    
    
    4.8
    %
    
    
    3.4
    %
    
    
    2.7
    %Risk-free interest rate
    
    
    4.0
    %
    
    
    3.1
    %
    
    
    2.9
    %Volatility
    
    
    32
    %
    
    
    30
    %
    
    
    31
    %Expected life (years)
    
    
    5.7
    
    
    
    5.7
    
    
    
    5.8




---



##### 



Legal
Defense Costs
 Use of
Estimates
 Reclassifications
 3
Voluntary Product Withdrawal
 Vioxx, Vioxx).
 Vioxx Vioxx
 4
Restructuring




---



##### 



2005
    
    
    2004Balance, January 1
    
    $
    45.7
    
    
    $
    78.3Expense
    
    
    273.9
    
    
    
    84.4Payments
    
    
    (79.3
    )
    
    
    (117.0
    )Balance, December 31
    
    $
    240.3
    
    
    $
    45.7
 5
Research Collaborations, Acquisitions/Divestitures and License
Agreements
 Pargluva, Pargluva Pargluva. Pargluva Pargluva Pargluva




---



##### 



Year Ended December 31
    
    2003*Total net revenues
    
    $
    20,328.7Income before taxes
    
    
    369.6Taxes on income
    
    
    128.3Income, net of taxes
    
    
    241.3
  Includes operations up
through August 19, 2003.
 August 19, 2003AssetsCash and cash equivalents
    
    $
    247.4Other current assets
    
    
    2,728.4Property, plant and equipment, net
    
    
    816.3Goodwill
    
    
    3,310.2Other intangibles, net
    
    
    2,351.9Other assets
    
    
    138.4$
    9,592.6LiabilitiesCurrent liabilities
    
    $
    2,176.2Long-term debt
    
    
    1,362.3Deferred income taxes
    
    
    1,195.0$
    4,733.5Net Assets Transferred
    
    $
    4,859.1
 6
    
    Financial Instruments




---



##### 



2005
    
    
    2004Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueAssetsCash and cash
equivalents
    
    $
    9,585.3
    
    
    $
    9,585.3
    
    
    $
    2,878.8
    
    
    $
    2,878.8Short-term
investments
    
    
    6,052.3
    
    
    
    6,052.3
    
    
    
    4,211.1
    
    
    
    4,211.1Long-term
investments
    
    
    1,107.9
    
    
    
    1,107.9
    
    
    
    6,727.1
    
    
    
    6,727.1Purchased
currency
options
    
    
    145.4
    
    
    
    145.4
    
    
    
    34.0
    
    
    
    34.0Forward
exchange
contracts
    
    
    13.7
    
    
    
    13.7
    
    
    
    13.4
    
    
    
    13.4Interest rate
swaps
    
    
    13.5
    
    
    
    13.5
    
    
    
    59.1
    
    
    
    59.1LiabilitiesLoans payable
and
current portion
of
long-term debt
    
    $
    2,972.0
    
    
    $
    2,974.4
    
    
    $
    2,181.2
    
    
    $
    2,201.5Long-term debt
    
    
    5,125.6
    
    
    
    5,171.4
    
    
    
    4,691.5
    
    
    
    4,820.9Written currency options
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    3.8Forward
exchange
contracts and
currency swap
    
    
    26.0
    
    
    
    26.0
    
    
    
    75.5
    
    
    
    75.5




---



##### 



2005Carrying
    
    
    Fair
    
    
    Gross
    
    
    UnrealizedValue
    
    
    Value
    
    
    Gains
    
    
    LossesAvailable-for-saleRepurchase
agreements
    
    $
    5,214.2
    
    
    $
    5,214.2
    
    
    $
    
    
    
    $
    Corporate notes
and bonds
    
    
    755.7
    
    
    
    755.7
    
    
    
    0.1
    
    
    
    Commercial paper
    
    
    654.7
    
    
    
    654.7
    
    
    
    
    
    
    
    Municipal securities
    
    
    288.3
    
    
    
    288.3
    
    
    
    0.5
    
    
    
    (1.3
    )U.S. Government and
agency
securities
    
    
    51.9
    
    
    
    51.9
    
    
    
    
    
    
    
    (0.1
    )Other debt
securities
    
    
    45.0
    
    
    
    45.0
    
    
    
    10.1
    
    
    
    (0.3
    )Equity securities
    
    
    150.4
    
    
    
    150.4
    
    
    
    60.0
    
    
    
    (4.9
    )Total
Available-for-sale
    
    $
    7,160.2
    
    
    $
    7,160.2
    
    
    $
    70.7
    
    
    $
    (6.6
    )Held-to-maturity
securities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 2004Carrying
    
    
    Fair
    
    
    Gross
    
    
    UnrealizedValue
    
    
    Value
    
    
    Gains
    
    
    LossesAvailable-for-saleCorporate notes
and bonds
    
    $
    5,096.9
    
    
    $
    5,096.9
    
    
    $
    13.3
    
    
    $
    (22.9
    )U.S. Government and
agency securities
    
    
    2,880.7
    
    
    
    2,880.7
    
    
    
    0.5
    
    
    
    (14.8
    )Commercial paper
    
    
    2,209.5
    
    
    
    2,209.5
    
    
    
    
    
    
    
    Municipal
securities
    
    
    138.4
    
    
    
    138.4
    
    
    
    1.2
    
    
    
    (0.4
    )Foreign government
bonds
    
    
    132.6
    
    
    
    132.6
    
    
    
    0.4
    
    
    
    (0.4
    )Other debt
securities
    
    
    65.9
    
    
    
    65.9
    
    
    
    5.3
    
    
    
    Equity securities
    
    
    404.2
    
    
    
    404.2
    
    
    
    35.1
    
    
    
    (0.7
    )Total
Available-for-sale
    
    $
    10,928.2
    
    
    $
    10,928.2
    
    
    $
    55.8
    
    
    $
    (39.2
    )Held-to-maturity
securities
    
    $
    10.0
    
    
    $
    10.0
    
    
    $
    
    
    
    $
    
 7
    
    Inventories
  2005
    
    
    2004Finished goods
    
    $
    400.0
    
    
    $
    376.8Raw materials and work in
process
    
    
    1,929.8
    
    
    
    2,166.8Supplies
    
    
    82.1
    
    
    
    94.7Total (approximates
current cost)
    
    
    2,411.9
    
    
    
    2,638.3Reduction to LIFO cost
    
    
    
    
    
    
    (100.9
    )$
    2,411.9
    
    
    $
    2,537.4Recognized as:Inventories
    
    $
    1,658.1
    
    
    $
    1,898.7Other assets
    
    
    753.8
    
    
    
    638.7
 Arcoxia,
 8
    
    Other Intangibles
  2005
    
    
    2004Patents and product rights
    
    $
    1,656.3
    
    
    $
    1,656.3Other
    
    
    180.4
    
    
    
    177.0Total acquired cost
    
    $
    1,836.7
    
    
    $
    1,833.3Patents and product rights
    
    $
    1,191.8
    
    
    $
    1,042.5Other
    
    
    126.2
    
    
    
    111.6Total accumulated amortization
    
    $
    1,318.0
    
    
    $
    1,154.1




---



##### 



9
    
    Joint Ventures and Other Equity Method Affiliates
 Zetia Ezetrol Zetia Zetia Zocor Vytorin Inegy Vytorin Vytorin
 Prilosec,
  Nexium Prilosec.
 Prilosec.
 Nexium Prilosec. Nexium Prilosec




---



##### 



Years Ended December 31
    

2005
    
    2004
    
    2003Sales
    
    $
    11,804.6
    
    
    $
    9,821.1
    
    
    $
    9,067.2Materials and production
costs
    
    
    4,627.4
    
    
    
    4,140.9
    
    
    
    3,946.1Other expense, net
    
    
    3,918.0
    
    
    
    3,691.4
    
    
    
    3,745.6Income before taxes
    
    
    3,259.2
    
    
    
    1,988.8
    
    
    
    1,375.5December 31
    

2005
    

2004Current assets
    
    $
    6,389.0
    
    
    $
    5,906.0Noncurrent assets
    
    
    1,430.5
    
    
    
    1,447.5Current liabilities
    
    
    3,420.0
    
    
    
    3,401.4Noncurrent liabilities
    
    
    160.4
    
    
    
    433.1
 10
Loans Payable, Long-Term Debt
and Other        Commitments
 2005
    
    
    20046.0% Astra note due 2008
    
    $
    1,380.0
    
    
    $
    1,380.04.8% notes due 2015
    
    
    992.0
    
    
    
    4.4% notes due 2013
    
    
    509.8
    
    
    
    527.26.4% debentures due 2028
    
    
    499.2
    
    
    
    499.26.0% debentures due 2028
    
    
    496.8
    
    
    
    496.72.5% notes due 2007
    
    
    343.0
    
    
    
    345.9Variable-rate borrowing due 2009
    
    
    300.0
    
    
    
    300.06.3% debentures due 2026
    
    
    247.6
    
    
    
    247.55.3% notes due 2006
    
    
    
    
    
    
    526.8Other
    
    
    357.2
    
    
    
    368.2$
    5,125.6
    
    
    $
    4,691.5
     11 Contingencies and Environmental Liabilities




---



##### 



VioxxLitigation
 Vioxx. Vioxx. Vioxx, Vioxx Vioxx Vioxx
 Vioxx
 Vioxx
 Vioxx
  Vioxx Vioxx. Vioxx
 th Vioxx ,




---



##### 



Vioxx
 Vioxx
  Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx;
  Vioxx Vioxx Vioxx Vioxx
 Vioxx
 Vioxx.
 Vioxx Vioxx Vioxx Vioxx Vioxx




---



##### 



Vioxx.
 Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx
  Vioxx Vioxx
  Vioxx Vioxx Vioxx Vioxx
  Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Vioxx
 Vioxx Vioxx
  Vioxx. Vioxx Vioxx. Vioxx. Vioxx
 Vioxx.
  Vioxx Vioxx Vioxx




---



##### 



Vioxx Vioxx Vioxx Vioxx
 Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx Vioxx
 Commercial
Litigation
 Pepcid




---



##### 



Governmental
Proceedings
 Pepcid.
   Tienam Tienam Tienam Tienam Tienam
 Tienam
 Vaccine Litigation
 M-M-R
  M-M-R




---



##### 



Patent Litigation
 Fosamax,
Prilosec, Propecia, Trusopt Cosopt Prilosec Nexium) Prilosec. Fosamax), Proscar/Propecia), (Trusopt) Cosopt)
 Fosamax Fosamax Fosamax
 Trusopt Cosopt, Trusopt Cosopt. Cosopt. Trusopt Cosopt
  Nexium.




---



##### 



Propecia
 Cozaar).
 Other Litigation
 Environmental Matters




---



##### 



12
    
    Preferred Stock of Subsidiary Companies
   13
    
    Stockholders Equity
   2005
    
    2004
    
    2003Shares
    
    Cost
    
    Shares
    
    Cost
    
    Shares
    

CostBalance, Jan. 1
    
    
    767.6
    
    
    $
    26,191.8
    
    
    
    754.5
    
    
    $
    25,617.5
    
    
    
    731.2
    
    
    $
    24,109.1Purchases
    
    
    33.2
    
    
    
    1,015.3
    
    
    
    24.9
    
    
    
    974.6
    
    
    
    39.0
    
    
    
    2,034.1Issuances(1)
    
    
    (6.5
    )
    
    
    (222.7
    )
    
    
    (11.8
    )
    
    
    (400.3
    )
    
    
    (15.7
    )
    
    
    (525.7
    )Balance, Dec. 31
    
    
    794.3
    
    
    $
    26,984.4
    
    
    
    767.6
    
    
    $
    26,191.8
    
    
    
    754.5
    
    
    $
    25,617.5
 (1)
    
    Issued primarily under stock option plans.




---



##### 



14
    
    Stock-Based Compensation Plans
 Number of
    
    

    AverageOptions
    
    
Price
    (1)Outstanding at December 31, 2002
    
    
    218,109.3
    
    
    $
    58.80Granted
    
    
    32,595.7
    
    
    
    52.74Exercised
    
    
    (15,482.2
    )
    
    
    25.07Forfeited or
converted(2)
    
    
    (11,970.7
    )
    
    
    63.18Medco Health spin-off adjustment
    
    
    12,626.2
    
    
    
    (3.22
    )Outstanding at December 31, 2003
    
    
    235,878.3
    
    
    
    56.80Granted
    
    
    31,377.9
    
    
    
    45.58Exercised
    
    
    (11,668.0
    )
    
    
    20.60Forfeited
    
    
    (10,824.1
    )
    
    
    59.78Outstanding at December 31, 2004
    
    
    244,764.1
    
    
    
    56.96Granted
    
    
    29,870.2
    
    
    
    31.67Exercised
    
    
    (6,379.4
    )
    
    
    21.40Forfeited
    
    
    (18,166.9
    )
    
    
    61.43Outstanding at December 31, 2005
    
    
    250,088.0
    
    
    $
    54.52
 (1)
    
    Weighted average exercise
price.(2)
    
    Includes 4.8 million options that were converted to Medco Health options.
   Exercise
    
    Outstanding
    
    ExercisablePrice
    
    Number of
    
    Average
    
    
    Average
    
    
    Number
    
    
    AverageRange
    

of Options
    
    
    
    Life
    (1)
    
    
    Price
    (2)
    

    of Options
    
    
    
    Price
    (2)Under $25
    
    
    2,069.3
    
    
    
    2.66
    
    
    $
    12.29
    
    
    
    2,069.3
    
    
    $
    12.29$25 to 40
    
    
    43,407.0
    
    
    
    6.99
    
    
    
    31.29
    
    
    
    11,919.9
    
    
    
    30.88$40 to 50
    
    
    74,048.0
    
    
    
    5.97
    
    
    
    48.32
    
    
    
    46,967.8
    
    
    
    48.07$50 to 65
    
    
    79,078.9
    
    
    
    4.39
    
    
    
    60.14
    
    
    
    76,509.0
    
    
    
    60.16$65 to 80
    
    
    50,666.0
    
    
    
    4.19
    
    
    
    75.91
    
    
    
    26,788.9
    
    
    
    76.09Over $80
    
    
    818.8
    
    
    
    3.68
    
    
    
    86.03
    
    
    
    763.3
    
    
    
    86.10250,088.0
    
    
    
    
    
    
    
    
    
    
    
    165,018.2
 (1)
    
    Weighted
average contractual
life remaining in
years.(2)
    
    Weighted
average exercise
price.
  15
    
    Pension and Other Postretirement Benefit Plans




---



##### 



Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Service cost
    
    $
    338.8
    
    
    $
    307.7
    
    
    $
    263.4Interest cost
    
    
    310.6
    
    
    
    286.0
    
    
    
    260.6Expected return on plan assets
    
    
    (400.7
    )
    
    
    (367.7
    )
    
    
    (341.2
    )Net amortization
    
    
    156.1
    
    
    
    130.0
    
    
    
    115.9Termination benefits
    
    
    32.0
    
    
    
    18.4
    
    
    
    37.9Curtailments
    
    
    9.1
    
    
    
    
    
    
    
    Settlements
    
    
    (4.2
    )
    
    
    23.0
    
    
    
    28.3Net pension cost
    
    $
    441.7
    
    
    $
    397.4
    
    
    $
    364.9
   Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Service cost
    
    $
    87.9
    
    
    $
    86.0
    
    
    $
    68.3Interest cost
    
    
    106.0
    
    
    
    105.7
    
    
    
    90.4Expected return on plan assets
    
    
    (103.0
    )
    
    
    (89.4
    )
    
    
    (62.0
    )Net amortization
    
    
    22.0
    
    
    
    31.0
    
    
    
    28.0Curtailments
    
    
    0.7
    
    
    
    (12.3
    )
    
    
    1.5Termination benefits
    
    
    6.5
    
    
    
    3.1
    
    
    
    8.1Net postretirement benefit cost
    
    $
    120.1
    
    
    $
    124.1
    
    
    $
    134.3
 OtherPostretirementPension Benefits
    
    
    Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004Fair value of plan
assets at January 1
    
    $
    5,480.9
    
    
    $
    4,282.7
    
    
    $
    1,165.3
    
    
    $
    949.5Actual return on plan
assets
    
    
    391.6
    
    
    
    718.8
    
    
    
    101.9
    
    
    
    150.7Company
contributions
    
    
    497.7
    
    
    
    761.5
    
    
    
    46.3
    
    
    
    94.4Benefits paid from plan
assets
    
    
    (306.2
    )
    
    
    (296.1
    )
    
    
    (36.1
    )
    
    
    (29.3
    )Other
    
    
    6.6
    
    
    
    14.0
    
    
    
    
    
    
    
    Fair value of plan
assets at December 31
    
    $
    6,070.6
    
    
    $
    5,480.9
    
    
    $
    1,277.4
    
    
    $
    1,165.3Benefit obligation at
January 1
    
    $
    5,879.5
    
    
    $
    5,071.9
    
    
    $
    1,892.4
    
    
    $
    1,840.4Subsidy under the
Act
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (169.0
    )Service cost
    
    
    338.8
    
    
    
    307.7
    
    
    
    87.9
    
    
    
    86.0Interest cost
    
    
    310.6
    
    
    
    286.0
    
    
    
    106.0
    
    
    
    105.7Actuarial losses
(gains)
    
    
    286.3
    
    
    
    511.2
    
    
    
    (29.3
    )
    
    
    152.0Benefits paid
    
    
    (329.1
    )
    
    
    (327.1
    )
    
    
    (88.5
    )
    
    
    (65.2
    )Plan amendments
    
    
    18.2
    
    
    
    4.6
    
    
    
    (159.1
    )
    
    
    (60.7
    )Curtailments
    
    
    (12.2
    )
    
    
    
    
    
    
    0.7
    
    
    
    Termination benefits
    
    
    32.0
    
    
    
    18.4
    
    
    
    6.5
    
    
    
    3.1Other
    
    
    (0.6
    )
    
    
    6.8
    
    
    
    
    
    
    
    Benefit obligation at
December 31
    
    $
    6,523.5
    
    
    $
    5,879.5
    
    
    $
    1,816.6
    
    
    $
    1,892.3
   OtherPostretirementPension Benefits
    
    
    Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004Plan assets less than
benefit obligation
    
    $
    (452.9
    )
    
    $
    (398.6
    )
    
    $
    (539.2
    )
    
    $
    (727.0
    )Unrecognized net loss
    
    
    2,300.3
    
    
    
    2,200.2
    
    
    
    682.7
    
    
    
    755.1Unrecognized plan
changes
    
    
    85.4
    
    
    
    99.2
    
    
    
    (338.9
    )
    
    
    (201.3
    )Net asset (liability)
    
    $
    1,932.8
    
    
    $
    1,900.8
    
    
    $
    (195.4
    )
    
    $
    (173.2
    )Recognized as:Other assets
    
    $
    2,347.4
    
    
    $
    2,281.3
    
    
    $
    
    
    
    $
    Accrued and other current
liabilities
    
    
    (8.0
    )
    
    
    (15.8
    )
    
    
    (24.9
    )
    
    
    (24.9
    )Deferred income taxes and
noncurrent liabilities
    
    
    (439.3
    )
    
    
    (387.7
    )
    
    
    (170.5
    )
    
    
    (148.3
    )Accumulated other
comprehensive loss
    
    
    32.7
    
    
    
    23.0
    
    
    
    
    
    
    
    




---



##### 



OtherPostretirementPension Benefits
    
    
    Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004U.S. equities
    
    
    39
    %
    
    
    41
    %
    
    
    54
    %
    
    
    55
    %International equities
    
    
    33
    
    
    
    30
    
    
    
    29
    
    
    
    27Fixed-income investments
    
    
    19
    
    
    
    21
    
    
    
    15
    
    
    
    16Real estate and other
investments
    
    
    3
    
    
    
    6
    
    
    
    
    
    
    
    1Cash and cash
equivalents
    
    
    6
    
    
    
    2
    
    
    
    2
    
    
    
    1100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
     OtherPension
    
    
    PostretirementBenefits
    
    
    Benefits2006
    
    $
    229.6
    
    
    $
    78.62007
    
    
    247.4
    
    
    
    84.92008
    
    
    266.5
    
    
    
    91.12009
    
    
    286.0
    
    
    
    98.02010
    
    
    303.9
    
    
    
    105.02011-2015
    
    
    1,985.1
    
    
    
    646.3
 December 31
    
    2005

    
    2004

    
    2003Net costDiscount rate
    
    
    5.40
    %
    
    
    5.65
    %
    
    
    5.90
    %Expected rate of
return on plan assets
    
    
    7.65
    
    
    
    7.70
    
    
    
    7.70Salary growth rate
    
    
    4.1
    
    
    
    4.1
    
    
    
    4.1Benefit
obligationDiscount rate
    
    
    5.15
    %
    
    
    5.40
    %
    
    
    5.65
    %Salary growth rate
    
    
    4.2
    
    
    
    4.1
    
    
    
    4.1
  December 31
    
    2005

    
    2004

    
    2003Net
costDiscount rate
    
    
    6.00
    %*
    
    
    6.25
    %
    
    
    6.50
    %Expected rate of
return on plan assets
    
    
    8.75
    
    
    
    8.75
    
    
    
    8.75Salary growth rate
    
    
    4.5
    
    
    
    4.5
    
    
    
    4.5Benefit
obligationDiscount rate
    
    
    5.75
    %
    
    
    6.00
    %*
    
    
    6.25
    %Salary growth rate
    
    
    4.5
    
    
    
    4.5
    
    
    
    4.5
 *
    
    5.75% used for
other postretirement
benefit plans.




---



##### 



December 31
    
    2005
    

    2004Health care cost trend rate assumed
for next year
    
    
    9.0
    %
    
    
    10.0
    %Rate to which the cost trend rate is
assumed to decline
    
    
    5.0
    %
    
    
    5.0
    %Year that the rate reached the
ultimate trend rate
    
    
    2013
    
    
    
    2013
  One Percentage PointIncrease
    
    
    DecreaseEffect on total service and
interest cost components
    
    $
    37.7
    
    
    $
    (29.8
    )Effect on benefit obligation
    
    
    298.0
    
    
    
    (240.3
    )
 16
Other (Income) Expense, Net
 Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Interest income
    
    $
    (480.9
    )
    
    $
    (300.1
    )
    
    $
    (308.7
    )Interest expense
    
    
    385.5
    
    
    
    293.7
    
    
    
    350.9Exchange gains
    
    
    (16.1
    )
    
    
    (18.4
    )
    
    
    (28.4
    )Minority interests
    
    
    121.8
    
    
    
    154.2
    
    
    
    168.7Other, net
    
    
    (120.5
    )
    
    
    (473.4
    )
    
    
    (385.7
    )$
    (110.2
    )
    
    $
    (344.0
    )
    
    $
    (203.2
    )
 Aggrastat
  17 Taxes on Income
  2005
    
    
Tax
RateAmount
    
    
    2005

    
    2004

    
    2003U.S. statutory rate
applied to income from
continuing operations
before taxes
    
    $
    2,577.4
    
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Differential arising
from:Foreign earnings
    
    
    (945.1
    )
    
    
    (12.8
    )
    
    
    (10.0
    )
    
    
    (10.2
    )Tax exemption for
Puerto Rico operations
    
    
    (98.0
    )
    
    
    (1.3
    )
    
    
    (1.6
    )
    
    
    (0.9
    )State taxes
    
    
    188.6
    
    
    
    2.5
    
    
    
    1.3
    
    
    
    1.7AJCA
    
    
    766.5
    
    
    
    10.4
    
    
    
    
    
    
    
    Other
    
    
    243.2
    
    
    
    3.3
    
    
    
    2.4
    
    
    
    1.6$
    2,732.6
    
    
    
    37.1
    %
    
    
    27.1
    %
    
    
    27.2
    %
    Years Ended December31
    
    2005
    
    
    2004
    
    
    2003Current provisionFederal
    
    $
    1,688.1
    
    
    $
    1,420.0
    
    
    $
    1,464.2Foreign
    
    
    739.6
    
    
    
    530.9
    
    
    
    611.3State
    
    
    295.9
    
    
    
    161.3
    
    
    
    254.82,723.6
    
    
    
    2,112.2
    
    
    
    2,330.3Deferred provisionFederal
    
    
    97.0
    
    
    
    95.6
    
    
    
    21.3Foreign
    
    
    (134.0
    )
    
    
    (32.3
    )
    
    
    96.5State
    
    
    46.0
    
    
    
    (14.4
    )
    
    
    13.99.0
    
    
    
    48.9
    
    
    
    131.7$
    2,732.6
    
    
    $
    2,161.1
    
    
    $
    2,462.0




---



##### 



2005
    
    
    2004Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesOther intangibles
    
    $
    36.0
    
    
    $
    158.2
    
    
    $
    60.7
    
    
    $
    286.1Inventory related
    
    
    628.1
    
    
    
    266.9
    
    
    
    749.7
    
    
    
    473.0Accelerated
depreciation
    
    
    
    
    
    
    1,539.1
    
    
    
    
    
    
    
    1,479.7Advance payment
    
    
    338.6
    
    
    
    
    
    
    
    338.6
    
    
    
    Equity investments
    
    
    104.5
    
    
    
    676.1
    
    
    
    189.3
    
    
    
    548.7Pensions and OPEB
    
    
    151.3
    
    
    
    789.9
    
    
    
    168.6
    
    
    
    811.9Compensation
related
    
    
    151.9
    
    
    
    
    
    
    
    182.5
    
    
    
    Vioxxlegal defense
cost reserve
    
    
    241.1
    
    
    
    
    
    
    
    205.2
    
    
    
    Net operating
losses
    
    
    314.9
    
    
    
    
    
    
    
    212.3
    
    
    
    Other
    
    
    1,208.9
    
    
    
    426.3
    
    
    
    1,144.4
    
    
    
    314.2Subtotal
    
    
    3,175.3
    
    
    
    3,856.5
    
    
    
    3,251.3
    
    
    
    3,913.6Valuation allowance
    
    
    (17.6
    )
    
    
    
    
    
    
    
    
    
    
    Total deferred
taxes
    
    $
    3,157.7
    
    
    $
    3,856.5
    
    
    $
    3,251.3
    
    
    $
    3,913.6Net deferred tax
liabilities
    
    
    
    
    
    $
    698.8
    
    
    
    
    
    
    $
    662.3Recognized as:Prepaid expenses and
taxes
    
    
    
    
    
    $
    (662.2
    )
    
    
    
    

    
    $
    (652.6
    )Other assets
    
    
    
    
    
    
    (68.5
    )
    
    
    
    

    
    
    (10.5
    )Income taxes
payable
    
    
    
    
    
    

    159.7
    
    
    
    
    
    
    
    156.2Deferred income taxes
and noncurrent
liabilities
    
    

    
    
    
    
    1,269.8
    
    
    
    
    
    
    
    1,169.2




---



##### 



18
Earnings per Share
  Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Average common shares
outstanding
    
    
    2,197.0
    
    
    
    2,219.0
    
    
    
    2,236.7Common
shares
issuable(1)
    
    
    3.4
    
    
    
    7.4
    
    
    
    16.4Average common shares
outstanding assuming
dilution
    
    
    2,200.4
    
    
    
    2,226.4
    
    
    
    2,253.1
 (1)
    
    Issuable primarily under stock-based compensation plans.  19
Comprehensive Income
  AfterPretax
    (1)
    
    Tax
    
    
    TaxYear Ended December 31, 2005Net unrealized gain on
derivatives
    
    $
    93.6
    
    
    $
    (38.3
    )
    
    $
    55.3Net loss realization
    
    
    44.0
    
    
    
    (18.0
    )
    
    
    26.0Derivatives
    
    
    137.6
    
    
    
    (56.3
    )
    
    
    81.3Net unrealized gain on
investments
    
    
    (23.5
    )
    
    
    1.6
    
    
    
    (21.9
    )Net loss realization
    
    
    71.1
    
    
    
    1.1
    
    
    
    72.2Investments
    
    
    47.6
    
    
    
    2.7
    
    
    
    50.3Minimum pension liability
    
    
    (11.9
    )
    
    
    4.9
    
    
    
    (7.0
    )Cumulative translation
adjustment relating to equity
investees
    
    
    (40.6
    )
    
    
    14.2
    
    
    
    (26.4
    )$
    132.7
    
    
    $
    (34.5
    )
    
    $
    98.2Year Ended December 31,
2004Net unrealized loss on
derivatives
    
    $
    (117.8
    )
    
    $
    48.2
    
    
    $
    (69.6
    )Net loss realization
    
    
    64.2
    
    
    
    (26.3
    )
    
    
    37.9Derivatives
    
    
    (53.6
    )
    
    
    21.9
    
    
    
    (31.7
    )Net unrealized gain on
investments
    
    
    (38.4
    )
    
    
    (9.6
    )
    
    
    (48.0
    )Net income realization
    
    
    (89.7
    )
    
    
    36.8
    
    
    
    (52.9
    )Investments
    
    
    (128.1
    )
    
    
    27.2
    
    
    
    (100.9
    )Minimum pension liability
    
    
    (7.2
    )
    
    
    2.3
    
    
    
    (4.9
    )Cumulative translation
adjustment relating to equity
investees
    
    
    40.2
    
    
    
    (14.1
    )
    
    
    26.1$
    (148.7
    )
    
    $
    37.3
    
    
    $
    (111.4
    )Year
Ended December 31, 2003Net unrealized loss on
derivatives
    
    $
    (87.6
    )
    
    $
    35.9
    
    
    $
    (51.7
    )Net loss realization
    
    
    51.5
    
    
    
    (21.1
    )
    
    
    30.4Derivatives
    
    
    (36.1
    )
    
    
    14.8
    
    
    
    (21.3
    )Net unrealized gain on
investments
    
    
    105.0
    
    
    
    (33.8
    )
    
    
    71.2Net income realization
    
    
    (114.3
    )
    
    
    (3.2
    )
    
    
    (117.5
    )Investments
    
    
    (9.3
    )
    
    
    (37.0
    )
    
    
    (46.3
    )Minimum pension liability
    
    
    424.5
    
    
    
    (192.6
    )
    
    
    231.9$
    379.1
    
    
    $
    (214.8
    )
    
    $
    164.3
 (1)
    
    Net of applicable
minority interest.
 December 31
    
    2005
    
    
    2004Net
unrealized gain (loss) on derivatives
    
    $
    15.6
    
    
    $
    (65.7
    )Net unrealized gain on investments
    
    
    59.5
    
    
    
    9.2Minimum pension liability
    
    
    (22.5
    )
    
    
    (15.5
    )Cumulative translation adjustment relating to
equity investees
    
    
    (0.3
    )
    
    
    26.1$
    52.3
    
    
    $
    (45.9
    )
  20 Segment
Reporting
   MerckPharm-
    
    
    Allaceutical
    
    
    Other
    
    
    TotalYear Ended December 31, 2005Segment revenues
    
    $
    20,678.8
    
    
    $
    1,146.0
    
    
    $
    21,824.8Segment profits
    
    
    13,157.9
    
    
    
    1,122.5
    
    
    
    14,280.4Included in segment profits:Equity income from
affiliates
    
    
    1,006.5
    
    
    
    399.0
    
    
    
    1,405.5Depreciation and
amortization
    
    
    (148.8
    )
    
    
    (4.2
    )
    
    
    (153.0
    )Year
Ended December 31, 2004Segment revenues
    
    $
    21,591.0
    
    
    $
    1,123.7
    
    
    $
    22,714.7Segment profits
    
    
    13,560.3
    
    
    
    1,131.3
    
    
    
    14,691.6Included in segment profits:Equity income from
affiliates
    
    
    512.8
    
    
    
    307.7
    
    
    
    820.5Depreciation and
amortization
    
    
    (151.8
    )
    
    
    (4.3
    )
    
    
    (156.1
    )Year Ended December 31, 2003Segment revenues
    
    $
    21,128.3
    
    
    $
    1,128.6
    
    
    $
    22,256.9Segment profits
    
    
    13,504.8
    
    
    
    1,078.3
    
    
    
    14,583.1Included in segment profits:Equity income from
affiliates
    
    
    304.0
    
    
    
    245.8
    
    
    
    549.8Depreciation and
amortization
    
    
    (143.5
    )
    
    
    (4.0
    )
    
    
    (147.5
    )




---



##### 



Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Segment revenues
    
    $
    21,824.8
    
    
    $
    22,714.7
    
    
    $
    22,256.9Other revenues
    
    
    187.1
    
    
    
    223.9
    
    
    
    229.0$
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9
  (1)
 Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Zocor
    
    $
    4,381.7
    
    
    $
    5,196.5
    
    
    $
    5,011.4Fosamax
    
    
    3,191.2
    
    
    
    3,159.7
    
    
    
    2,676.6Cozaar/Hyzaar
    
    
    3,037.2
    
    
    
    2,823.7
    
    
    
    2,486.0Singulair
    
    
    2,975.6
    
    
    
    2,622.0
    
    
    
    2,009.4Proscar
    
    
    741.4
    
    
    
    733.1
    
    
    
    605.5Primaxin
    
    
    739.6
    
    
    
    640.6
    
    
    
    628.9Vasotec/Vaseretic
    
    
    623.1
    
    
    
    719.2
    
    
    
    763.7Cosopt/Trusopt
    
    
    617.2
    
    
    
    558.8
    
    
    
    484.4Cancidas
    
    
    570.0
    
    
    
    430.0
    
    
    
    275.7Maxalt
    
    
    348.4
    
    
    
    309.9
    
    
    
    324.2Propecia
    
    
    291.9
    
    
    
    270.2
    
    
    
    239.0Vioxx
    
    
    
    
    
    
    1,489.3
    
    
    
    2,548.8Vaccines/Biologicals
    
    
    1,103.3
    
    
    
    1,036.1
    
    
    
    1,056.1Other
    
    
    3,391.3
    
    
    
    2,949.5
    
    
    
    3,376.2$
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9
 (1)
    
    Presented net of
discounts and returns.
 Nexium Prilosec.
 Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003United States
    
    $
    12,766.6
    
    
    $
    13,472.0
    
    
    $
    13,321.1Europe, Middle East and Africa
    
    
    5,203.5
    
    
    
    5,440.8
    
    
    
    5,341.3Japan
    
    
    1,637.9
    
    
    
    1,668.2
    
    
    
    1,600.9Other
    
    
    2,403.9
    
    
    
    2,357.6
    
    
    
    2,222.6$
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9
  Years Ended December 31
    
    2005
    
    
    2004
    
    
    2003Segment profits
    
    $
    14,280.4
    
    
    $
    14,691.6
    
    
    $
    14,583.1Other profits
    
    
    175.3
    
    
    
    24.6
    
    
    
    156.6Adjustments
    
    
    615.3
    
    
    
    481.3
    
    
    
    453.5Unallocated:Interest income
    
    
    480.9
    
    
    
    300.1
    
    
    
    308.7Interest expense
    
    
    (385.5
    )
    
    
    (293.7
    )
    
    
    (350.9
    )Equity income (loss) from
affiliates
    
    
    311.6
    
    
    
    187.7
    
    
    
    (75.6
    )Depreciation and
amortization
    
    
    (1,555.1
    )
    
    
    (1,294.6
    )
    
    
    (1,166.7
    )Research and development
    
    
    (3,848.0
    )
    
    
    (4,010.2
    )
    
    
    (3,279.9
    )Other expenses, net
    
    
    (2,711.0
    )
    
    
    (2,112.3
    )
    
    
    (1,577.2
    )$
    7,363.9
    
    
    $
    7,974.5
    
    
    $
    9,051.6
   December 31
    
    2005
    
    
    2004
    
    
    2003United States
    
    $
    10,460.8
    
    
    $
    10,712.9
    
    
    $
    10,383.3Europe, Middle
East and Africa
    
    
    1,963.7
    
    
    
    2,012.8
    
    
    
    1,846.3Japan
    
    
    585.1
    
    
    
    605.8
    
    
    
    599.1Other
    
    
    1,388.6
    
    
    
    1,382.2
    
    
    
    1,340.3$
    14,398.2
    
    
    $
    14,713.7
    
    
    $
    14,169.0




---



##### 



Managements Report
 Managements
Responsibility For Financial Statements
 Managements Report on lnternal Control Over Financial Reporting
 Internal Control-Integrated Framework Internal
Control-Integrated Framework
 -s- Richard T. Clark
    

-s- Judy C. LewentRichard T. Clark
    
    Judy C. LewentChief Executive Officer
    
    Executive Vice Presidentand President
    
    and Chief Financial Officer
   Audit Committees Report
 
 Peter C.Wendell
    
    Rochelle B. LazarusChairperson
    
    Thomas E. ShenkWendell P. Weeks






---



##### 



Report
of Independent Registered Public Accounting Firm
  Consolidated
financial statements
  Internal control over financial reporting
 Internal Control  Integrated Framework Internal Control  Integrated
Framework
 -s- PricewaterhouseCoopers LLPFlorham Park, New Jersey
    
    PricewaterhouseCoopers LLPFebruary 24, 2006
   Compensation
and Benefits Committees Report
 
 Lawrence A. Bossidy
    
    William G. BowenChairperson
    
    Johnnetta B. ColeWilliam N. Kelley




---



##### 



Selected
Financial Data(1)   ($ in millions except per share amounts)
 2005
    (2)
    

2004
    (3)
    

2003
    (4)
    
    2002
    
    
    2001
    
    
    2000Results
for Year:Sales
    
    $
    22,011.9
    
    
    $
    22,938.6
    
    
    $
    22,485.9
    
    
    $
    21,445.8
    
    
    $
    21,199.0
    
    
    $
    20,009.5Materials and production costs
    
    
    5,149.6
    
    
    
    4,959.8
    
    
    
    4,436.9
    
    
    
    4,004.9
    
    
    
    3,722.6
    
    
    
    3,273.0Marketing and administrative expenses
    
    
    7,155.5
    
    
    
    7,238.7
    
    
    
    6,200.3
    
    
    
    5,652.2
    
    
    
    5,700.6
    
    
    
    5,725.5Research and development expenses
    
    
    3,848.0
    
    
    
    4,010.2
    
    
    
    3,279.9
    
    
    
    2,677.2
    
    
    
    2,456.4
    
    
    
    2,343.8Restructuring costs
    
    
    322.2
    
    
    
    107.6
    
    
    
    194.6
    
    
    
    
    
    
    
    
    
    
    
    Equity income from affiliates
    
    
    (1,717.1
    )
    
    
    (1,008.2
    )
    
    
    (474.2
    )
    
    
    (644.7
    )
    
    
    (685.9
    )
    
    
    (764.9
    )Other (income) expense, net
    
    
    (110.2
    )
    
    
    (344.0
    )
    
    
    (203.2
    )
    
    
    104.5
    
    
    
    57.2
    
    
    
    69.8Income from continuing operations before
taxes
    
    
    7,363.9
    
    
    
    7,974.5
    
    
    
    9,051.6
    
    
    
    9,651.7
    
    
    
    9,948.1
    
    
    
    9,362.3Taxes on income
    
    
    2,732.6
    
    
    
    2,161.1
    
    
    
    2,462.0
    
    
    
    2,856.9
    
    
    
    2,894.9
    
    
    
    2,766.7Income from continuing operations
    
    
    4,631.3
    
    
    
    5,813.4
    
    
    
    6,589.6
    
    
    
    6,794.8
    
    
    
    7,053.2
    
    
    
    6,595.6Income from discontinued operations, net of
taxes
    
    
    
    
    
    
    
    
    
    
    241.3
    
    
    
    354.7
    
    
    
    228.6
    
    
    
    226.1Net income
    
    
    4,631.3
    
    
    
    5,813.4
    
    
    
    6,830.9
    
    
    
    7,149.5
    
    
    
    7,281.8
    
    
    
    6,821.7Basic earnings per common shareContinuing operations
    
    $
    2.11
    
    
    $
    2.62
    
    
    $
    2.95
    
    
    $
    3.01
    
    
    $
    3.08
    
    
    $
    2.86Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .11
    
    
    
    .16
    
    
    
    .10
    
    
    
    .10Net income
    
    $
    2.11
    
    
    $
    2.62
    
    
    $
    3.05

(5)
    
    $
    3.17
    
    
    $
    3.18
    
    
    $
    2.96Earnings per common share assuming dilutionContinuing operations
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    2.92
    
    
    $
    2.98
    
    
    $
    3.04
    
    
    $
    2.80Discontinued operations
    
    
    
    
    
    
    
    
    
    
    .11
    
    
    
    .16
    
    
    
    .10
    
    
    
    .10Net income
    
    $
    2.10
    
    
    $
    2.61
    
    
    $
    3.03
    
    
    $
    3.14
    
    
    $
    3.14
    
    
    $
    2.90Cash dividends declared
    
    
    3,338.7
    
    
    
    3,329.1
    
    
    
    3,264.7
    
    
    
    3,204.2
    
    
    
    3,156.1
    
    
    
    2,905.7Cash dividends paid per common share
    
    $
    1.52
    
    
    $
    1.49
    
    
    $
    1.45
    
    
    $
    1.41
    
    
    $
    1.37
    
    
    $
    1.21Capital expenditures
    
    
    1,402.7
    
    
    
    1,726.1
    
    
    
    1,915.9
    
    
    
    2,128.1
    
    
    
    2,401.8
    
    
    
    2,471.0Depreciation
    
    
    1,544.2
    
    
    
    1,258.7
    
    
    
    1,129.6
    
    
    
    1,067.5
    
    
    
    949.7
    
    
    
    803.0Year-End Position:Working capital
    
    $
    7,745.8
    
    
    $
    1,731.1
    
    
    $
    1,957.6
    
    
    $
    2,011.2
    
    
    $
    1,417.4
    
    
    $
    3,643.8Property, plant and
equipment (net)
    
    
    14,398.2
    
    
    
    14,713.7
    
    
    
    14,169.0
    
    
    
    14,195.6
    
    
    
    13,103.4
    
    
    
    11,482.1Total assets
    
    
    44,845.8
    
    
    
    42,572.8
    
    
    
    40,587.5

(6)
    
    
    47,561.2
    
    
    
    44,021.2
    
    
    
    40,154.9Long-term debt
    
    
    5,125.6
    
    
    
    4,691.5
    
    
    
    5,096.0
    
    
    
    4,879.0
    
    
    
    4,798.6
    
    
    
    3,600.7Stockholders equity
    
    
    17,916.6
    
    
    
    17,288.2
    
    
    
    15,576.4
    (6)
    
    
    18,200.5
    
    
    
    16,050.1
    
    
    
    14,832.4Financial Ratios:Income from continuing operations as a % of
sales
    
    
    21.0
    %
    
    
    25.3
    %
    
    
    29.3
    %
    
    
    31.7
    %
    
    
    33.3
    %
    
    
    33.0
    %Net income as a % of average total assets
    
    
    10.6
    %
    
    
    14.0
    %
    
    
    14.9
    %
    
    
    15.5
    %
    
    
    17.3
    %
    
    
    17.9
    %Year-End Statistics:Average common shares outstanding
(millions)
    
    
    2,197.0
    
    
    
    2,219.0
    
    
    
    2,236.7
    
    
    
    2,257.5
    
    
    
    2,288.3
    
    
    
    2,306.9Average common shares
outstanding assuming dilution (millions)
    
    
    2,200.4
    
    
    
    2,226.4
    
    
    
    2,253.1
    
    
    
    2,277.0
    
    
    
    2,322.3
    
    
    
    2,353.2Number of stockholders of record
    
    
    198,200
    
    
    
    216,100
    
    
    
    233,000
    
    
    
    246,300
    
    
    
    256,200
    
    
    
    265,700Number of employees
    
    
    61,500
    
    
    
    62,600
    
    
    
    63,200

(6)
    
    
    77,300
    
    
    
    78,100
    
    
    
    69,300
 (1)

    Prior year amounts have been reclassified to reflect separate line item presentation of
Restructuring costs.(2)

    Amounts for 2005 include the impact of net tax charge primarily associated with the
AJCA repatriation, restructuring actions and additional Vioxx legal defense costs.(3)

Amounts for 2004 include the impact of the withdrawal of
 Vioxxand Vioxxlegaldefense costs.(4)

    Amounts for 2003 include the impact of the implementation of a new distribution
program for U.S. wholesalers.(5)

Amount does not add as a result of rounding.(6)

Decrease in 2003 primarily reflects the impact of the spin-off of Medco Health.