Pricing Supplement No. 2
Pricing Supplement No. 3
Dated September 12, 2002
(to Prospectus dated November 28,
2001 and Prospectus Supplement
dated December 5, 2001)
Merck & Co., Inc.
Medium-Term Notes, Series E
Floating Rate Notes
The notes will be a further issuance of, and be consolidated with, Merck
& Co., Inc.’s $66,059,000 Floating Rate Medium-Term Notes, Series E Due
August 22, 2042, as part of Merck and Co., Inc.’s Series E Medium-Term Note
Program.
| Principal Amount: |
$16,423,000 |
| Trade Date: |
September 12, 2002 |
Settlement Date
(Original Issue Date): |
September 17, 2002 |
| Stated Maturity: |
August 22, 2042 |
| Interest Rate Basis: |
3-month LIBOR |
| Spread: |
Minus 45 basis points |
| Initial Interest Rate: |
3-month LIBOR, determined as if the original issue date were an
interest reset date, minus the spread |
| Interest Reset Dates: |
Quarterly, on the 22nd day of each February, May, August and November,
commencing November 22, 2002 |
| Interest Payment Dates: |
February 22, May 22, August 22 and November 22 of each year, commencing
November 22, 2002 |
| Issue Price: |
100.00% of the principal amount (plus accrued interest from August 23, 2002) |
| Underwriter’s Discount: |
1.00% of the principal amount |
| Net Proceeds to Merck: |
99.00% of the principal amount (plus accrued interest from August 23, 2002) |
| Calculation Agent: |
U.S. Bank Trust National Association |
Optional
Repayment Dates: |
The notes will be repayable at the option of the holder on at least 30
days notice on the following optional repayment dates and at the
following repayment prices: |
| |
Optional Repayment Date |
Repayment Price |
| |
August 22, 2013 and on each third
anniversary thereafter to maturity |
100.00% |
| Optional Redemption: |
The notes may be redeemed at any time, at the option of Merck, in whole
or in part, in amounts of $1,000 or any multiple of $1,000, at the
following redemption prices, if redeemed during the following 12-month
periods: |
| |
Redemption Period |
Redemption Price
|
| |
August 22, 2032 through August 21, 2033 |
105.00% |
| |
August 22, 2033 through August 21, 2034 |
104.50% |
| |
August 22, 2034 through August 21, 2035 |
104.00% |
| |
August 22, 2035 through August 21, 2036 |
103.50% |
| |
August 22, 2036 through August 21, 2037 |
103.00% |
| |
August 22, 2037 through August 21, 2038 |
102.50% |
| |
August 22, 2038 through August 21, 2039 |
102.00% |
| |
August 22, 2039 through August 21, 2040 |
101.50% |
| |
August 22, 2040 through August 21, 2041 |
101.00% |
| |
August 22, 2041 through August 21, 2042 |
100.50% |
| Underwriter: |
UBS Warburg LLC |
Notes Used as Qualified Replacement Property:
Prospective investors seeking to treat the notes as “qualified
replacement property” for purposes of Section 1042 of the Internal Revenue
Code of 1986, as amended (the “Code”), should be aware that Section
1042 requires the issuer to meet certain requirements in order for the notes to
constitute qualified replacement property. In general, qualified replacement
property is a security issued by a domestic “operating corporation”
that did not, for the taxable year preceding the taxable year in which such
security was purchased, have “passive investment income” in excess of
25 percent of the gross receipts of such corporation for such preceding taxable
year (the “Passive Income Test”). A corporation will be considered an
“operating corporation” if at the time the securities are purchased or
before the end of the replacement period, as defined in Section 1042 of the
Code, more than 50 percent of its assets are used in the active conduct of a
trade or business. For these purposes, where the issuing corporation is in
control of one or more corporations or such issuing corporation is controlled by
one or more other corporations, all such corporations are treated as one
corporation (the “Affiliated Group”) for the purposes of computing the
amount of passive investment income for purposes of Section 1042. Merck believes
that it is an “operating corporation” and that less than 25 percent of
its Affiliated Group’s gross receipts is passive investment income for the
taxable year ending December 31, 2001. In making this determination, Merck has
made certain assumptions and used procedures which it believes are reasonable.
However, the calculation and characterization of certain types of income (as
active or passive investment income) in certain of the Affiliated Group’s
finance and insurance companies is not entirely clear as there are no Treasury
regulations or rulings promulgated by the Internal Revenue Service (the
“IRS”) that explain the calculation and characterization of such
income in circumstances similar to those of Merck’s Affiliated Group. Even
if such categories of income were treated as passive investment income, Merck
believes that the Affiliated Group’s passive investment income did not
exceed more than 25 percent of the Affiliated Group’s gross receipts for
the taxable year ending December 31, 2001. No assurance can be given as to
whether Merck will continue to meet the Passive Income Test. It is, in addition,
possible that the IRS may disagree with the manner in which Merck has calculated
the Affiliated Group’s gross receipts (including the characterization
thereof) and passive investment income and the conclusions reached herein.
Investors that treat the notes as “qualified replacement property” are
subject to special rules regarding their basis and holding period in the notes.
Investors should consult their own tax advisors about the operation of the rules
relating to qualified replacement property in their particular
circumstances.
UBS WARBURG