Merck 2010 Annual Report Download - page 30
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The free cash flow of the Merck Group in 2010 was also strongly affected by the acquisition
of Millipore. It amounted to EUR –3,522 million compared to EUR 812 million in 2009. By
contrast, adjusted for the effects of acquisitions and divestments, underlying free cash flow
rose from EUR 852 million in 2009 to EUR 1,670 million, an increase of 96%.
Firstly, this increase is due to the strong improvement in the performance of the Chemicals
business sector compared to 2009. This business sector’s contribution to underlying free cash
flow rose from EUR 432 million in 2009 to EUR 812 million in 2010, a rise equivalent to around
88%. Secondly, the Pharmaceuticals business sector accounted for 48% or EUR 1,353 million
of underlying free cash flow, which was also mainly the result of good business performance.
Underlying free cash flow for Corporate and Other, which also includes interest and tax pay-
ments, amounted to EUR –496 million, which was nearly consistent with 2009.
Cash flow was lowered by payments amounting to EUR 241 million in connection with our former
subsidiary Dey Inc., USA, having allegedly reported false price information. EUR 215 million of
these costs relate to the settlement with the U.S. Department of Justice. Although the company
Dey Inc. was transferred to Mylan Inc., USA, within the scope of the divestment of the Generics
business in 2007, Merck remains liable to Mylan for the costs of this litigation. The overall
effect is reported in the segment Corporate and Other but was eliminated in the calculation of
underlying free cash flow as adjustments for the divestment of the Generics business.
EUR million
2,000
0
– 2,000
–4,000
2006* 2007* 2008 2009 2010
Free cash flow Underlying free cash flow
Underlying free cash flow
doubles
Merck Annual Report 2010 26