XML 127 R32.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2

Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effect of Net Investment Hedges

The effects of the Company’s net investment hedges on OCI and the Consolidated Statement of Income are shown below:

	Amount of Pretax (Gain) Loss Recognized in Other Comprehensive Income (1)												Amount of Pretax (Gain) Loss Recognized in Other (income) expense, net for Amounts Excluded from Effectiveness Testing
Years Ended December 31	2019				2018				2017				2019				2018				2017
Net Investment Hedging Relationships
Foreign exchange contracts	$	(10	)		$	(18	)		$	—			$	(31	)		$	(11	)		$	—
Euro-denominated notes	(75		)		(183		)		520				—				—				—

⁽¹⁾ No amounts were reclassified from AOCI into income related to the sale of a subsidiary.

Summary of Interest Rate Derivatives

At December 31, 2019, the Company was a party to 19 pay-floating, receive-fixed interest rate swap contracts designated as fair value hedges of fixed-rate notes in which the notional amounts match the amount of the hedged fixed-rate notes as detailed in the table below.

	2019
Debt Instrument	Par Value of Debt				Number of Interest Rate Swaps Held			Total Swap Notional Amount
1.85% notes due 2020	$	1,250			5			$	1,250
3.875% notes due 2021	1,150				5			1,150
2.40% notes due 2022	1,000				4			1,000
2.35% notes due 2022	1,250				5			1,250

Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position

The table below presents the location of amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges as of December 31:

	Carrying Amount of Hedged Liabilities								Cumulative Amount of Fair Value Hedging Adjustment Increase (Decrease) Included in the Carrying Amount
	2019				2018				2019				2018
Balance Sheet Line Item in which Hedged Item is Included
Loans payable and current portion of long-term debt	$	1,249			$	—			$	(1	)		$	—
Long-Term Debt	3,409				4,560				14				(82		)

Fair Value of Derivatives on a Gross Basis Segregated Between those Derivatives that are Designated as Hedging Instruments and those that are Not Designated as Hedging Instruments

Presented in the table below is the fair value of derivatives on a gross basis segregated between those derivatives that are designated as hedging instruments and those that are not designated as hedging instruments as of December 31:

			2019												2018
			Fair Value of Derivative								U.S. Dollar Notional				Fair Value of Derivative								U.S. Dollar Notional
	Balance Sheet Caption		Asset				Liability								Asset				Liability
Derivatives Designated as Hedging Instruments
Interest rate swap contracts	Other Assets		$	15			$	—			$	3,400			$	—			$	—			$	—
Interest rate swap contracts	Accrued and other current liabilities		—				1				1,250				—				—				—
Interest rate swap contracts	Other Noncurrent Liabilities		—				—				—				—				81				4,650
Foreign exchange contracts	Other current assets		152				—				6,117				263				—				6,222
Foreign exchange contracts	Other Assets		55				—				2,160				75				—				2,655
Foreign exchange contracts	Accrued and other current liabilities		—				22				1,748				—				7				774
Foreign exchange contracts	Other Noncurrent Liabilities		—				1				53				—				1				89
			$	222			$	24			$	14,728			$	338			$	89			$	14,390
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts	Other current assets		$	66			$	—			$	7,245			$	116			$	—			$	5,430
Foreign exchange contracts	Accrued and other current liabilities		—				73				8,693				—				71				9,922
			$	66			$	73			$	15,938			$	116			$	71			$	15,352
			$	288			$	97			$	30,666			$	454			$	160			$	29,742

Information on Derivative Positions Subject to Master Netting Arrangements as if they were Presented on a Net Basis

The following table provides information on the Company’s derivative positions subject to these master netting arrangements as if they were presented on a net basis, allowing for the right of offset by counterparty and cash collateral exchanged per the master agreements and related credit support annexes at December 31:

	2019								2018
	Asset				Liability				Asset				Liability
Gross amounts recognized in the consolidated balance sheet	$	288			$	97			$	454			$	160
Gross amounts subject to offset in master netting arrangements not offset in the consolidated balance sheet	(84		)		(84		)		(121		)		(121		)
Cash collateral received	(34		)		—				(107		)		—
Net amounts	$	170			$	13			$	226			$	39

Location and Pretax Gain or Loss Amounts for Derivatives

The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value or cash flow hedging relationships:

	Sales												Other (income) expense, net (1)										Other comprehensive income (loss)
Years Ended December 31	2019				2018				2017				2019				2018			2017			2019				2018				2017
Financial Statement Line Items in which Effects of Fair Value or Cash Flow Hedges are Recorded	$	46,840			$	42,294			$	40,122			$	139			(402	)		(500	)		$	(648	)		$	(361	)		$	316
(Gain) loss on fair value hedging relationships
Interest rate swap contracts
Hedged items	—				—				—				95				(27	)		(48	)		—				—				—
Derivatives designated as hedging instruments	—				—				—				(65		)		50			12			—				—				—
Impact of cash flow hedging relationships
Foreign exchange contracts
Amount of gain (loss) recognized in OCI on derivatives	—				—				—				—				—			—			87				228				(562		)
(Decrease) increase in Sales as a result of AOCI reclassifications	255				(160		)		138				—				—			—			(255		)		160				(138		)
Interest rate contracts
Amount of gain recognized in Other (income) expense, net on derivatives	—				—				—				(4		)		(4	)		(3	)		—				—				—
Amount of loss recognized in OCI on derivatives	—				—				—				—				—			—			(6		)		(4		)		(3		)

⁽¹⁾ Interest expense is a component of Other (income) expense, net.

Income Statement Effects of Derivatives Not Designated as Hedging Instruments

The table below provides information regarding the income statement effects of derivatives not designated as hedging instruments:

			Amount of Derivative Pretax (Gain) Loss Recognized in Income
Years Ended December 31	Income Statement Caption		2019				2018				2017
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts (1)	Other (income) expense, net		$	174			$	(260	)		$	110
Foreign exchange contracts (2)	Sales		1				(8		)		(3		)

⁽¹⁾ These derivative contracts mitigate changes in the value of remeasured foreign currency denominated monetary assets and liabilities attributable to changes in foreign currency exchange rates.

⁽²⁾ These derivative contracts serve as economic hedges of forecasted transactions.

Information on Investments in Debt and Equity Securities

Information on investments in debt and equity securities at December 31 is as follows:

	2019																2018
	Amortized Cost				Gross Unrealized								Fair Value				Amortized Cost				Gross Unrealized								Fair Value
					Gains				Losses												Gains				Losses
Commercial paper	$	668			$	—			$	—			$	668			$	—			$	—			$	—			$	—
Corporate notes and bonds	608				13				—				621				4,985				3				(68		)		4,920
U.S. government and agency securities	266				3				—				269				895				2				(5		)		892
Asset-backed securities	226				1				—				227				1,285				1				(11		)		1,275
Foreign government bonds	—				—				—				—				167				—				(1		)		166
Mortgage-backed securities	—				—				—				—				8				—				—				8
Total debt securities	1,768				17				—				1,785				7,340				6				(85		)		7,261
Publicly traded equity securities (1)													838																456
Total debt and publicly traded equity securities													$	2,623															$	7,717

⁽¹⁾ Unrealized net gains recognized in Other (income) expense, net on equity securities still held at December 31, 2019 were $160 million during 2019. Unrealized net losses recognized in Other (income) expense, net on equity securities still held at December 31, 2018 were $35 million during 2018.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis at December 31 are summarized below:

	Fair Value Measurements Using																Fair Value Measurements Using
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
	2019																2018
Assets
Investments
Commercial paper	$	—			$	668			$	—			$	668			$	—			$	—			$	—			$	—
Corporate notes and bonds	—				621				—				621				—				4,835				—				4,835
Asset-backed securities (1)	—				227				—				227				—				1,253				—				1,253
U.S. government and agency securities	—				209				—				209				—				731				—				731
Foreign government bonds	—				—				—				—				—				166				—				166
Publicly traded equity securities	518				—				—				518				147				—				—				147
	518				1,725				—				2,243				147				6,985				—				7,132
Other assets (2)
U.S. government and agency securities	60				—				—				60				55				106				—				161
Corporate notes and bonds	—				—				—				—				—				85				—				85
Asset-backed securities (1)	—				—				—				—				—				22				—				22
Mortgage-backed securities	—				—				—				—				—				8				—				8
Publicly traded equity securities	320				—				—				320				309				—				—				309
	380				—				—				380				364				221				—				585
Derivative assets (3)
Forward exchange contracts	—				169				—				169				—				241				—				241
Purchased currency options	—				104				—				104				—				213				—				213
Interest rate swaps	—				15				—				15				—				—				—				—
	—				288				—				288				—				454				—				454
Total assets	$	898			$	2,013			$	—			$	2,911			$	511			$	7,660			$	—			$	8,171
Liabilities
Other liabilities
Contingent consideration	$	—			$	—			$	767			$	767			$	—			$	—			$	788			$	788
Derivative liabilities (3)
Forward exchange contracts	—				95				—				95				—				74				—				74
Interest rate swaps	—				1				—				1				—				81				—				81
Written currency options	—				1				—				1				—				5				—				5
	—				97				—				97				—				160				—				160
Total liabilities	$	—			$	97			$	767			$	864			$	—			$	160			$	788			$	948

⁽¹⁾  Primarily all of the asset-backed securities are highly-rated (Standard & Poor’s rating of AAA and Moody’s Investors Service rating of Aaa), secured primarily by auto loan, credit card and student loan receivables, with weighted-average lives of primarily 5 years or less.

⁽²⁾  Investments included in other assets are restricted as to use, including for the payment of benefits under employee benefit plans.

⁽³⁾ 

The fair value determination of derivatives includes the impact of the credit risk of counterparties to the derivatives and the Company’s own credit risk, the effects of which were not significant.

Summarized Information about the Changes in Liabilities for Contingent Consideration

Summarized information about the changes in liabilities for contingent consideration associated with business acquisitions is as follows:

	2019				2018
Fair value January 1	$	788			$	935
Changes in estimated fair value (1)	64				89
Additions	—				8
Payments	(85		)		(244		)
Fair value December 31 (2)(3)	$	767			$	788

⁽¹⁾ Recorded in Cost of sales, Research and development expenses, and Other (income) expense, net. Includes cumulative translation adjustments.

⁽²⁾ Balance at December 31, 2019 includes $114 million recorded as a current liability for amounts expected to be paid within the next 12 months.

⁽³⁾ At December 31, 2019 and 2018, $625 million and $614 million, respectively, of the liabilities relate to the termination of the SPMSD joint venture in 2016. As part of the termination, Merck recorded a liability for contingent future royalty payments of 11.5% on net sales of all Merck products that were previously sold by the joint venture through December 31, 2024. The fair value of this liability is determined utilizing the estimated amount and timing of projected cash flows and a risk-adjusted discount rate of 8% is used to present value the cash flows.

X

- Definition

Tabular disclosure of derivative positions subject to master netting arrangements as if they were presented on a net basis.

+ References

No definition available.

+ Details

Name:	mrk_OffsettingAssetsAndLiabilitiesTableTextBlock
Namespace Prefix:	mrk_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- References

No definition available.

+ Details

Name:	us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix:	us-gaap_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19279-110258

+ Details

Name:	us-gaap_FairValueLiabilitiesMeasuredOnRecurringBasisUnobservableInputReconciliationTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of the reconciliation of available-for-sale securities from cost basis to fair value.

+ References

No definition available.

+ Details

Name:	us-gaap_ScheduleOfAvailableForSaleSecuritiesReconciliationTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4E
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624181-113959

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4A
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5618551-113959

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959

+ Details

Name:	us-gaap_ScheduleOfDerivativeInstrumentsGainLossInStatementOfFinancialPerformanceTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624163-113959

+ Details

Name:	us-gaap_ScheduleOfDerivativeInstrumentsInStatementOfFinancialPositionFairValueTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258

+ Details

Name:	us-gaap_ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure for fair value hedging instruments of (a) the location and amount of gains and losses reported in the statement of financial performance and (b) the location and fair value amounts of the instruments reported in the statement of financial position.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959

+ Details

Name:	us-gaap_ScheduleOfFairValueHedgingInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of interest rate derivatives, including, but not limited to, the fair value of the derivatives, statement of financial position location, and statement of financial performance location of these instruments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959

+ Details

Name:	us-gaap_ScheduleOfInterestRateDerivativesTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of the effective portion of gains and losses on derivative instruments (and nonderivative instruments) designated and qualifying in net investment hedges recorded in accumulated other comprehensive income (loss) during the term of the hedging relationship and reclassified into earnings during the current period.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4CCC
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL109998896-113959

+ Details

Name:	us-gaap_ScheduleOfNetInvestmentHedgesInAccumulatedOtherComprehensiveIncomeLossTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration

X

- Definition

Tabular disclosure of derivative instrument not designated or qualifying as hedging instrument.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL5624171-113959

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4CC
-URI http://asc.fasb.org/extlink&oid=109980867&loc=SL109998890-113959

+ Details

Name:	us-gaap_ScheduleOfOtherDerivativesNotDesignatedAsHedgingInstrumentsStatementsOfFinancialPerformanceAndFinancialPositionLocationTableTextBlock
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration