SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-8135
SIGMA-ALDRICH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
43-1050617
(I.R.S. Employer Identification No.)
3050 Spruce Street, St. Louis, Missouri 63103
(Address of principal executive office)
(Registrant's telephone number, including area code) 314 771-5765
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
There were 49,827,779 shares of the Company's $1.00 par value
common stock outstanding on April 30, 1994.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Statements of Income (unaudited)
(in thousands except per share amounts)
<CAPTION> Three Months
Ended March 31,
-----------------------
1994 1993
-----------------------
<S> <C> <C>
Net Sales $208,458 $180,013
Cost of products sold 95,308 81,639
-------- --------
Gross profit 113,150 98,374
Selling, general and administrative expenses 67,203 56,757
-------- --------
Income before income taxes and cumulative effect
of accounting changes 45,947 41,617
Provision for income taxes 16,219 14,649
-------- --------
Income before cumulative effect of accounting
changes 29,728 26,968
Cumulative effect of accounting changes - (10,806)
-------- --------
Net income $ 29,728 $ 16,162
======== ========
Weighted average shares outstanding 49,825 49,798
======== ========
Income per share before cumulative effect
of accounting changes $ 0.60 $ 0.54
Cumulative effect of accounting changes - (0.22)
-------- --------
Net income per share $ 0.60 $ 0.32
======== ========
Dividends per share $ 0.0825 $ 0.0725
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<CAPTION> March 31, December 31,
Assets 1994 1993
------------- ------------
<S> <C> <C>
Current assets: (unaudited)
Cash $ 5,608 $ 989
Temporary cash investments 8,122 9,263
Accounts receivable, net of allowance for doubtful
accounts 134,145 113,439
Inventories 315,927 305,487
Other current assets 22,178 21,629
------- -------
Total current assets 485,980 450,807
------- -------
Property, plant and equipment:
Land 26,880 24,658
Buildings and improvements 176,514 166,319
Machinery and equipment 205,006 203,127
Construction in progress 40,844 31,432
Less-Accumulated depreciation (177,951) (168,214)
--------- ----------
Net property, plant and equipment 271,293 257,322
--------- ----------
Other assets 44,451 45,302
--------- ----------
$801,724 $753,431
========= ==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 49,472 $ 36,747
Current maturities of long-term debt 1,022 955
Accounts payable 34,282 43,967
Accrued payroll and other expenses 29,082 25,479
Accrued income taxes 15,203 4,209
------- -------
Total current liabilities 129,061 111,357
------- -------
Long-term debt 16,379 17,266
------- -------
Deferred postretirement benefits 25,178 24,559
------- -------
Deferred compensation 7,981 9,109
------- -------
Stockholders' equity:
Common stock, $1.00 par value, 100,000 shares authorized,
49,828 and 49,805 shares outstanding, respectively 49,828 49,805
Capital in excess of par value 9,922 8,883
Retained earnings 563,729 538,111
Cumulative translation adjustments (354) (5,659)
-------- --------
Total stockholders' equity 623,125 591,140
-------- --------
$801,724 $753,431
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<CAPTION> Three Months
Ended March 31,
---------------------------
1994 1993
Cash flows from operating activities: ---------------------------
<S> <C> <C>
Net income $ 29,728 $ 16,162
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting changes --- 10,806
Depreciation and amortization 9,539 7,661
Deferred tax provision 147 (434)
Postretirement benefits expense 842 651
Deferred compensation expense 379 1,625
Deferred compensation payments (623) (523)
Increase in accounts receivable (19,469) (26,425)
Increase in inventories (8,086) (4,230)
Increase in other current assets (156) (1,656)
Decrease in accounts payable (9,877) (645)
Increase in accrued payroll and other expenses 2,872 6,943
Increase in accrued income taxes 10,896 10,312
--------- --------
Net cash provided by operating activities 16,192 20,247
--------- --------
Cash flows from investing activities:
Property, plant and equipment additions (20,120) (6,495)
Sale of property, plant and equipment 10 112
Other, net (1,027) 647
--------- --------
Net cash used in investing activities (21,137) (5,736)
--------- --------
Cash flows from financing activities:
Issuance (repayment) of notes payable 12,711 (696)
Repayment of long-term debt (987) (117)
Payment of dividends (4,110) (3,610)
Exercise of employee stock options 179 142
--------- ---------
Net cash provided by (used in) financing activities 7,793 (4,281)
--------- ---------
Effect of exchange rate changes on cash 630 485
--------- ---------
Net change in cash and cash equivalents 3,478 10,715
Cash and cash equivalents at January 1 10,252 44,932
--------- ---------
Cash and cash equivalents at March 31 $ 13,730 $ 55,647
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 4,931 $ 4,741
Interest paid, net of capitalized interest $ 575 $ 791
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
[TEXT]
Sigma-Aldrich Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share data)
Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X and,
accordingly, do not include all information and footnotes required
by generally accepted accounting principles for complete financial
statements. For further information, refer to the notes to
consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 (1993 10-K).
In the opinion of Management, all adjustments, consisting of
normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the three
months ended March 31, 1994, are not necessarily indicative of
the results that may be expected for the year ending December 31,
1994.
Net Income per Share
Net income per share is based on the weighted average number of
shares outstanding during each period.
Inventories
The principal categories of consolidated inventories were:
March 31, December 31,
1994 1993
--------- ---------
Finished goods $239,298 $233,833
Work in process 21,594 19,457
Raw materials 55,035 52,197
-------- --------
$315,927 $305,487
======== ========
Accounting Changes
The Company adopted two new Financial Accounting Standards
effective January 1, 1993, and recognized the prior years'
effect of adoption as the cumulative effect of a change in
accounting principle. Standard No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", which requires that
the expected cost of these benefits be expensed during the years
that the employees render service, resulted in an after-tax charge
of $13,806 ($21,306 pre-tax), or $.28 per share. Standard No. 109,
"Accounting for Income Taxes", increased net income by $3,000,
or $.06 per share. This adjustment was due to deferred income taxes
being recorded under prior accounting standards at the tax rate in effect
when the deferrals arose (generally 46% and 40%), whereas the
new accounting standard requires that deferred income taxes be
recorded at the rate that will be in effect when the income taxes are
expected to be paid (35% under current law).
Acquisitions
On May 6, 1993, the Company acquired the net assets and business of
Supelco, Inc. ("Supelco"), a worldwide supplier of chromatography
products used in chemical research and production, for $54,700 in
cash and, separately, on June 16, 1993, the Company acquired all of
the stock of Circle AW Products Company ("Circle AW"), a supplier
of electrical and electronic metal enclosures to industrial,
residential and commercial markets, for $10,800 in cash. The net
tangible assets of these businesses were recorded based upon fair market
values at the respective acquisition dates with the aggregate excess of
the purchase prices over these values of $30,500 being recorded as
intangible assets.
The following presents the pro forma consolidated results of operations
for the three months ended March 31, 1993, (in thousands, except net income
per share) as if these acquisitions had occurred at the beginning of 1993.
The pro forma results do not purport to be indicative of the actual results
that would have been achieved had these acquisitions occurred as of such
date or of results which may occur in the future.
Net sales $197,302
========
Net income* $ 26,804
========
Net income per share* $ .54
========
*Before cumulative effect of accounting changes
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(in thousands)
Results of Operations
For the three months ended March 31, 1994, sales increased 15.8%
to $208,458 from $180,013 in 1993. Chemical sales increases, which
exceeded 11% for the quarter, benefitted from the addition of Supelco,
acquired in May 1993. Sales and orders continued to grow in both U.S.
and overseas markets, helped by the distribution of new Sigma and Supelco
catalogs. However, growth rates were affected by slowdowns in several
markets and the adverse impact of currency exchange rates which reduced
the gain by one percent. Metal sales increased 40% due in large part
to the acquisition of Circle AW in June 1993, and continued improvements
in construction demand and modest price increases initiated later in 1993.
Cost of sales was $95,308, representing 45.7% of sales, compared
to $81,639, or 45.4% of sales, for the first three months of 1993.
The gross profit percentage decreased slightly as higher product
cost levels for the acquisitions and higher metal costs were not
entirely offset by productivity improvements.
Selling, general and administrative expenses for the three months
ended March 31, 1994, were $67,203, or 32.2% of sales compared
to $56,757, or 31.5% of sales in 1993. Higher costs relating to new
catalogs, expansion of foreign operations and amortization attributable
to the acquisitions, partially offset by a decrease in deferred
compensation expense, were the main factors causing the increase.
Net income before the cumulative effect of accounting changes in 1993
increased 10.2% to $29,728 for the three months of 1994. The improvement
was due to the sales and cost increases described above, resulting in
sales growing faster than income. Net income for the first three months
of 1993 was $16,162, which included a $10,806 one-time, after-tax charge
for the cumulative effect of accounting changes. These one-time
accounting changes resulted from adopting two new Financial Accounting
Standards effective January 1, 1993. Standard No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", resulted
in an after-tax charge of $13,806 ($21,306 pre-tax) while Standard No. 109,
"Accounting for Income Taxes", increased net income by $3,000.
Liquidity and Capital Resources
Cash and temporary cash investments increased $3,478 in the first
three months of 1994. Cash provided by operating activities was $16,192,
a decrease of $4,055 from 1993 due to working capital requirements exceeding
the increase in cash generated from income before accounting
changes and depreciation and amortization expense. Property, plant
and equipment additions of $20,120 in the first quarter, primarily for
the purchase of a warehousing facility in Allentown, Pennsylvania,
and the continuing expansion of a production facility in Sheboygan,
Wisconsin, were funded by the cash provided by operations
and additional short-term borrowings of $12,711.
Although net cash flows from operating activities vary from period
to period, it is anticipated that future increases should be in
line with sales growth and should be sufficient to meet capital and
debt service requirements.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) No exhibits are required to be filed herewith.
(b) No reports were filed on Form 8-K during the period for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SIGMA-ALDRICH CORPORATION
(Registrant)
By: /s/ Kirk A. Richter
------------------------
Date: March 12, 1994
Kirk A. Richter, Controller
(on behalf of the Company as Controller and as
Principal Accounting Officer)
