Q2 2006 Merck & Co., Inc. Earnings Conference Call - Part 1.

(From Fair Disclosure Wire)

OPERATOR: Good day, everyone, and welcome to Merck's second-quarter 2006 earnings conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Graeme Bell, Senior Director of Investor Relations with Merck. Please go ahead, sir. GRAEME BELL, SENIOR DIRECTOR, IR, MERCK & CO., INC.: Thank you, Michelle, and good morning. Thanks very much for joining us on Merck's second-quarter 2006 earnings conference call. I'm Graeme Bell, Senior Director of Investor Relations. As in prior quarters, I'm joined on the call by Merck's senior management. With me today is Merck's CEO and President, Dick Clark and Judy Lewent, our Executive Vice President and Chief Financial Officer.

I'd like to go over the logistics before we go into the details. On this call, we will review results of the second quarter 2006 released at 7.30 AM this morning. You can access the earnings press release and supporting material, a live webcast and an Internet-based replay of this conference at Merck.com. The Internet based replay of this conference will be available on the Web until July 31st.

Before we begin the review of the results, let me remind you that some of the statements made during this call may discuss certain subjects that may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in the statement. The forward-looking statements may include statements regarding product development, product potential and financial performance. No forward-looking statement can be guaranteed and actual results may differ materially from those projected. Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements in this call should be evaluated together with the many uncertainties that affect Merck's business, particularly those mentioned in Merck's most recent 10-K or in Form 10-Q that are posted on our website.

We will begin with brief remarks from our senior management and then open the call for questions and expect the total call to last approximately one hour.

With that, I'll turn the call over and we will begin with remarks from our CEO and President, Dick Clark. DICK CLARK, PRESIDENT AND CEO, MERCK & CO., INC.: Thank you, Graeme. Good morning, everyone, and thanks for joining us. It was another strong quarter for Merck and one that gives us momentum as we enter the second half of 2006 and keeps us on track to deliver on the commitments we laid out in December.

I am pleased to announce that our earnings per share for the second quarter were $0.73, including the impact of a charge related to the acquisition of GlycoFi and excluding a net charge related to the ongoing global restructuring program we first announced in November 2005. Including the impact of the restructuring charge, reported EPS were $0.69. This better than expected performance was driven by several factors, including worldwide sales of several Merck products and strong performance by our partnerships. And as we will discuss, acquisition costs moderated the overall results.

One product that drove these results, as it has for many years, is of course Zocor. As the Company's biggest selling and most successful brand, we celebrated Zocor's legacy of saving lives and improving the health of patients as its U.S. marketing exclusivity expired on June 23rd. Due to these strong results for the quarter and through the first six months of 2006, we're raising our full-year 2006 guidance. Our revised expectations are that full-year EPS will be in the range of $2.40 to $2.48, excluding the restructuring charges related to cite closures and position eliminations. And we anticipate reported full-year 2006 EPS of $2.10 to $2.24.

As you review our guidance, you'll see that we have also raised our estimate for marketing and administrative costs where we see opportunities to invest in our…