Dividends paid to stockholders were $2.5 billion and $2.4 billion for the first nine months of 2004 and 2003, respectively. In May and July 2004, the Board of Directors declared quarterly dividends of 37 and 38 cents per share on the Company’s common stock for the third and fourth quarters of 2004, respectively. The Company’s total dividends paid during 2004 will be $1.49 per share, a three percent increase over the amount paid during the same period in 2003.

The Company purchased $688.0 million of its Common Stock (14.9 million shares) for its Treasury during the first nine months of 2004. The Company has approximately $8.8 billion remaining under the July 2002 treasury stock purchase authorization.

On October 22, 2004, President Bush signed the American Jobs Creation Act of 2004 (the Jobs Creation Act). The Jobs Creation Act includes a temporary incentive for U.S. multinationals to repatriate foreign earnings, a domestic manufacturing deduction and international tax reforms designed to improve the global competitiveness of U.S. businesses. The Company is in the process of evaluating the impact of the Jobs Creation Act and has not yet determined the effects on its effective tax rate and deferred tax assets and liabilities.

Legal Proceedings

As previously disclosed, federal and state personal injury lawsuits involving individual claims, as well as several putative class actions have been filed against the Company with respect to Vioxx. As of October 31, 2004, the Company has been served or is aware that it has been named as a defendant in approximately 375 lawsuits, which include approximately 1,000 plaintiff groups alleging personal injuries resulting from the use of Vioxx. Certain of these lawsuits include allegations regarding gastrointestinal bleeding, cardiovascular events and kidney damage. The Company has also been named as a defendant in several putative class actions seeking medical monitoring as a result of the putative class members’ use of Vioxx. In addition, certain state court actions seek various remedies under state consumer fraud and fair business practice statutes, including recovering the cost of Vioxx purchased by individuals and third-party payers such as union health plans (all of the actions discussed in this paragraph are collectively referred to as the “Vioxx Personal Injury Lawsuits”). The actions filed in the state courts of California and New Jersey, respectively, have been transferred to a single judge in each state for coordinated proceedings. In addition, the Company has filed a motion with the Judicial Panel on Multidistrict Litigation to transfer to a single federal judge and consolidate for pretrial purposes all federal cases of a similar nature alleging personal injury and/or economic loss relating to the purchase or use of Vioxx; several plaintiffs in certain Vioxx Personal Injury Lawsuits pending in federal court have made similar requests.

As previously disclosed, in addition to the Vioxx Personal Injury Lawsuits, a number of purported class action lawsuits also were filed in the third quarter of 2003 and the first quarter of 2004 by several individual shareholders in the United States District Court for the Eastern District of Louisiana naming as defendants the Company and several current or former officers of the Company, and alleging that the defendants made false and misleading statements regarding Vioxx in violation of the federal securities laws. The plaintiffs request certification of a class of purchasers of the Company’s common stock between May 22, 1999 and October 22, 2003, and seek unspecified compensatory damages and the costs of suit, including attorney fees. After the announcement of the withdrawal of Vioxx, the Company was named as a defendant in four additional purported securities class action lawsuits filed in federal courts in New Jersey and Pennsylvania. These later-filed actions request certification of a class of purchasers of Company stock during various periods between September 23, 2003 and September 30, 2004. The allegations in the later-filed actions are similar to those in the earlier-filed actions, except that the later-filed actions also contain allegations relating to the withdrawal of Vioxx from the market. The complaint in the earlier-filed consolidated actions has been amended to include allegations regarding the withdrawal of Vioxx and to extend the purported class period until October 29, 2004. In October 2004, a purported class action lawsuit was filed in the New Jersey Superior Court for Hunterdon County against the Company and certain officers and members of the Board of Directors (past and present) alleging that the defendants made incomplete and misleading statements and omissions in a registration statement and certain prospectuses filed in connection with the Merck Stock Investment Plan, a dividend reinvestment plan. The plaintiffs in this case request certification of a class of investors who acquired the Company’s common stock through the Merck Stock Investment Plan between April 26, 2002 and September 30, 2004, and seek unspecified compensatory damages, rescission and the costs of suit, including attorney fees (all of the actions discussed in this paragraph are collectively referred to as the “Vioxx Securities Lawsuits”).

As previously disclosed, in March 2004, two shareholder derivative actions were filed in the United States District Court for the Eastern District of Louisiana naming the Company and certain members of the Board (past and present), together with certain executive officers, as defendants. The complaints arise out of substantially the same factual allegations that are made in the Vioxx-related federal securities putative class actions filed against the Company, which principally allege that the Company made false and misleading statements regarding Vioxx. The derivative suits, which

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