SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-8135
SIGMA-ALDRICH CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 43-1050617
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3050 Spruce Street, St. Louis, Missouri 63103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-771-5765
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
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(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by
non-affiliates of the Registrant:
$2,422,561,948 March 4, 1994
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Value Date of Valuation
Number of shares outstanding of each of the Registrant's
classes of common stock, as of March 4, 1994:
Common Stock, $1.00 par value, 49,827,529 shares outstanding
The following documents are incorporated by reference in the Parts
of Form 10-K indicated below:
Parts of Form 10-K into
Documents Incorporated by Reference: which Incorporated:
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Pages 11-24 of the Annual Report to
Shareholders for the year ended
December 31, 1993 Parts I, II and IV
Proxy Statement for the 1994 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F- of this report.
<PAGE>
PART I
Item 1. Business.
Sigma-Aldrich Corporation engages through subsidiaries in two
lines of business: the production and sale of a broad range of
biochemicals, organic and inorganic chemicals, radiolabeled
chemicals, diagnostic reagents, chromatography products and related
products (hereinafter referred to as "chemical products"), and the
manufacture and sale of metal components for strut, cable tray,
pipe support and telecommunication systems and electrical
enclosures (hereinafter referred to as "metal products" or
"B-Line"). Its principal executive offices are located at 3050 Spruce
Street, St. Louis, Missouri 63103.
Sigma-Aldrich Corporation (hereinafter referred to as the
"Company", which term includes all consolidated subsidiaries of the
Company) was incorporated under the laws of the State of Delaware
in May 1975. Effective July 31, 1975 ("Reorganization"), the
Company succeeded, as a reporting company, Sigma International,
Ltd., the predecessor of Sigma Chemical Company ("Sigma"), and
Aldrich Chemical Company, Inc. ("Aldrich"), both of which had
operated continuously for more than 20 years prior to the
Reorganization. Effective December 9, 1980, B-Line Systems, Inc.,
previously a subsidiary of Sigma, became a subsidiary of the
Company.
Effective June 23, 1989, the Company purchased all of the
issued and outstanding capital stock of Fluka Chemie AG ("Fluka"),
a Swiss corporation, from Ciba-Geigy International AG, F. Hoffman-
LaRoche & Co. Limited and eleven minority shareholders.
Effective May 5, 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,
from Rohm and Haas Company.
(a) Chemical Products.
1) Products:
The Company distributes approximately 71,000 chemical products
for use primarily in research and development, in the diagnosis of
disease, and as specialty chemicals for manufacturing. In
laboratory applications, the Company's products are used in the
fields of biochemistry, synthetic chemistry, quality control and
testing, immunology, hematology, pharmacology, microbiology,
neurology, and endocrinology, and in the studies of life processes.
Sigma diagnostic products are used in the detection of heart, liver
and kidney diseases and various metabolic disorders. Certain of
these diagnostic products are used in measuring concentrations of
various naturally occurring substances in the blood, indicative of
certain pathological conditions. The diagnostic products are used
in manual, semi-automated and automated testing procedures.
Supelco offers a full line of chromatography products and
application technologies for analyzing and separating complex
chemical mixtures. The line includes items for the collection and
preparation of various samples for further chemical analysis, gas
and liquid chromatography, reference standards and related
laboratory products.
Aldrich also offers approximately 38,000 esoteric chemicals as
a special service to customers interested in screening them for
application in many areas (such as medicine and agriculture).
This area accounts for less than 1% of the Company's sales.
Because of continuing developments in the field of research,
there can be no assurance of a continuing market for each of the
Company's products. However, through a continuing review of
technical literature, along with constant communications with
customers, the Company keeps abreast of the trends in research and
diagnostic techniques. This information, along with its own
research technology, determines the Company's development of
improved and/or additional products.
2) Production and Purchasing:
The Company has chemical production facilities in Milwaukee
and Sheboygan, Wisconsin (Aldrich); St. Louis, Missouri (Sigma);
Bellefonte, Pennsylvania (Supelco); Germany (Aldrich Chemie GmbH
and Co. K.G.); Israel (Makor Chemicals Limited); Switzerland
(Fluka) and the United Kingdom (Sigma Chemical Company Ltd.). A
minor amount of production is done by some of the Company's other
subsidiaries. Biochemicals and diagnostic reagents are primarily
produced by extraction and purification from yeasts, bacteria and
other naturally occurring animal and plant sources. Organic and
inorganic chemicals and radiolabeled chemicals are primarily
produced by synthesis. Chromatography media and columns are
produced using proprietary chemical synthesis and proprietary
preparation processes. Similar processes are used for filtration
and sample collection processes.
Of the approximately 71,000 products listed in the Sigma,
Aldrich, Fluka and Supelco catalogs, the Company produced
approximately 31,000 which accounted for 44% of the net sales of
chemical products for the year ended December 31, 1993. The
remainder of products were purchased from a large number of sources
either under contract or in the open market.
No one supplier accounts for as much as 10% of the Company's
chemical purchases. The Company has generally been able to obtain
adequate supplies of products and materials to meet its needs.
Whether a product is produced by the Company or purchased from
outside suppliers, it is subjected to quality control procedures,
including the verification of purity, prior to final packaging.
This is done by a combined staff of 201 chemists and lab
technicians utilizing sophisticated scientific equipment.
3) Distribution and Sales:
The Company markets its chemical products primarily through
Sigma, Aldrich, Fluka and Supelco under their own trademarks and
labels. Marketing of products is primarily done through the
distribution of over 2,600,000 comprehensive catalogs to customers
and potential customers throughout the world. This is supplemented
by certain specialty catalogs, by advertising in chemical and other
scientific journals, by direct mail distribution of in-house
publications and special product brochures and by personal visits
by technical and sales representatives with customers.
For customer convenience, Sigma packages approximately 300
combinations of certain of its individual products in diagnostic
kit form. A diagnostic kit will include products which, when used
in a series of manual and/or automated testing procedures, will aid
in detecting particular conditions or diseases. The sale of these
kits is promoted by a field sales unit. Diagnostic kits accounted
for less than 10% of the Company's net sales of chemical products
in the year ended December 31, 1993.
During the year ended December 31, 1993, products were sold to
approximately 129,000 customers, including hospitals, universities,
clinical laboratories as well as private and governmental research
laboratories. The majority of the Company's sales are small orders
in laboratory quantities averaging less than $200. The Company
also makes its chemical products available in larger-than-normal
laboratory quantities for use in manufacturing. Sales of these
products accounted for approximately 15% of chemical sales in 1993.
During the year ended December 31, 1993, no one customer and no one
product accounted for more than 1% of the net sales of chemical
products.
Sigma, Aldrich, Fluka and Supelco encourage their customers
and potential customers, wherever located, to contact them by
telephone "collect" or on "toll-free" WATS lines for technical
staff consultation or for placing orders. Order processing,
shipping, invoicing and product inventory are computerized.
Shipments are made seven days a week from St. Louis, six days a
week from Milwaukee, England, Germany, Israel and Japan and five
days a week from all other locations. The Company strives to ship
its products to customers on the same day an order is received and
carries significant inventories to maintain this policy.
4) International Operations:
In the year ended December 31, 1993, approximately 50% of the
Company's net sales of chemical products were to customers located
in foreign countries. These sales were made directly by Sigma,
Aldrich, Fluka and Supelco, through distributors and by
subsidiaries organized in Australia, Belgium, Brazil, Canada, Czech
Republic, England, France, Germany, Holland, Hungary, India,
Israel, Italy, Japan, Mexico, Scotland, Singapore, South Korea,
Spain and Switzerland. Several foreign subsidiaries also have
production facilities.
For sales with final destinations in a foreign market, the
Company has a Foreign Sales Corporation ("FSC") subsidiary which
provides the Company certain Federal income tax advantages. The
effect of the tax rules governing the FSC is to lower the effective
Federal income tax rate on export income. The Company intends to
continue to comply with the provisions of the Internal Revenue Code
relating to FSCs.
The Company's foreign operations and domestic export sales are
subject to currency revaluations, changes in tariff restrictions
and restrictive regulations of foreign governments, among other
factors inherent in these operations. The Company is unable to
predict the extent to which its business may be affected in the
future by these matters. During the year ended December 31, 1993,
approximately 10% of the Company's domestic operations' chemical
purchases were from foreign suppliers. Additional information
regarding international operations is included in Note 9 to the
consolidated financial statements on pages 21 and 22 of the 1993
Annual Report which is incorporated herein by reference.
5) Patents and Trademarks:
The Company's patents are not material to its operations. The
Company's significant trademarks are the brand names "Sigma",
"Aldrich", "Fluka", "Supelco" and "B-Line" and their related logos
which have various expiration dates and are expected to be renewed
indefinitely.
6) Regulations:
The Company engages principally in the business of selling
products which are not foods or food additives, drugs, or cosmetics
within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended (the "Act"). A limited number of the Company's products,
including in-vitro diagnostic reagents, are subject to labeling,
manufacturing and other provisions of the Act. The Company
believes it is in compliance in all material respects with the
applicable regulations.
The Company believes that it is in compliance in all material
respects with Federal, state and local environmental and safety
regulations relating to the manufacture, sale and distribution of
its products. The following are brief summaries of some of the
Federal laws and regulations which may have an impact on the
Company's business. These summaries are only illustrative of the
extensive regulatory requirements of the Federal, state and local
governments and are not intended to provide the specific details of
each law or regulation.
The Clean Air Act (CAA), as amended, and the regulations
promulgated thereunder, regulates the emission of harmful
pollutants to the air outside of the work environment. Federal or
state regulatory agencies may require companies to acquire permits,
perform monitoring and install control equipment for certain
pollutants.
The Clean Water Act (CWA), as amended, and the regulations
promulgated thereunder, regulates the discharge of harmful
pollutants into the waters of the United States. Federal or state
regulatory agencies may require companies to acquire permits,
perform monitoring and to treat waste water before discharge to the
waters of the United States or a Publicly Owned Treatment Works
(POTW).
The Occupational Safety and Health Act of 1970 (OSHA),
including the Hazard Communication Standard ("Right to Know"), and
the regulations promulgated thereunder, requires the labeling of
hazardous substance containers, the supplying of Material Safety
Data Sheets ("MSDS") on hazardous products to customers and
hazardous substances the employee may be exposed to in the
workplace, the training of the employees in the handling of
hazardous substances and the use of the MSDS, along with other
health and safety programs.
The Resource Conservation and Recovery Act of 1976 (RCRA), as
amended, and the regulations promulgated thereunder, requires
certain procedures regarding the treatment, storage and disposal of
hazardous waste.
The Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (CERCLA) and the Superfund Amendments and
Reauthorization Act of 1986 (SARA), and the regulations promulgated
thereunder, require notification of certain chemical spills and
notification to state and local emergency response groups of the
availability of MSDS and the quantities of hazardous materials in
the Company's possession. The Toxic Substances Control Act of 1976
(TSCA), requires reporting, testing and pre-manufacture notification
procedures for certain chemicals. Exemptions are provided from some
of these requirements with respect to chemicals manufactured in small
quantities solely for research and development use.
The Department of Transportation (DOT) has promulgated
regulations pursuant to the Hazardous Materials Transportation Act,
referred to as the Hazardous Material Regulations (HMR), which set
forth the requirements for hazard labeling, classification and
packaging of chemicals, shipment modes and other goods destined for
shipment in interstate commerce.
Approximately 700 products, for which sales are immaterial to
the total sales of the Company, are subject to control by either
the Drug Enforcement Administration ("DEA") or the Nuclear
Regulatory Commission ("NRC"). The DEA and NRC have issued
licenses to several Company sites to permit importation,
manufacture, research, analysis, distribution and export of certain
products. The Company screens customer orders involving products
regulated by the NRC and the DEA to verify that a license, if
necessary, has been obtained.
(b) Metal Products.
Components for strut, cable tray and pipe support systems are
manufactured by B-Line at its facilities in Highland and Troy,
Illinois; Norcross, Georgia and Reno, Nevada. Components and
complete systems used to support telecommunications apparatus and
cabling are manufactured and sold by B-Line through its Saunders
Communications unit, which is located in Santa Fe Springs,
California. Circle AW Products Company, which was acquired on June
16, 1993 and operates as a wholly-owned subsidiary of B-Line,
manufactures electrical enclosures at its facilities in Portland,
Oregon and Modesto, California.
Strut and pipe support systems are metal frameworks and
related accessories used in industry to support pipes, lighting
fixtures and conduit. Strut systems can be easily assembled with
bolts and spring-loaded nuts, eliminating the necessity of drilling
or welding associated with other types of frameworks. B-Line
manufactures and sells a wide variety of components for these
systems, including steel struts rolled from coils, stamped steel
fittings for interconnecting struts, shelf-supporting brackets,
pipe and conduit supporting clamps, and accessories for the
installation of strut systems on location. Pipe hangers are
generally used in conjunction with strut systems to support heavy
and light duty piping runs in the mechanical, plumbing and
refrigeration industry. The principal materials used by B-Line in
manufacturing are coils of steel and extruded aluminum which B-Line
purchases from a number of suppliers. No one supplier is essential
to B-Line's production. A limited number of components for strut
and pipe support systems, including bolts and nuts and certain
forged and cast components, are purchased from numerous sources and
sold by B-Line as accessories to its own manufactured products.
Cable tray systems are continuous networks of ventilated or
solid trays used primarily in the routing of power cables and
control wiring in power plant or industrial installations. The
systems are generally hung from ceilings or supported by strut
frameworks. Cable tray is produced from either extruded aluminum
or roll-formed steel in various configurations to offer versatility
to designers and installers. Non-metallic strut and cable tray
products, which are used primarily in corrosive environments, are
also available.
Telecommunications equipment racks and cable runways are
manufactured from aluminum or steel. The systems are installed in
the central offices of telephone operating companies. As switching
equipment is changed and upgraded, the systems are replaced.
Electrical enclosures are metal enclosure boxes, generally
manufactured with steel, that are used to contain and protect
electric meters, fuse and circuit breaker boards and electrical
panels. These products are used in industrial, commercial and
residential installations.
B-Line also manufactures a line of lightweight support
fasteners to be used in commercial and industrial facilities to
attach electrical and acoustical fixtures.
B-Line sells primarily to electrical, mechanical and
telecommunications wholesalers. Products are marketed directly by
district sales offices and by regional sales managers through
independent manufacturers' representatives. Products are shipped
to customers from the Highland and Troy, Illinois; Norcross,
Georgia; Reno, Nevada; Portland, Oregon; and Modesto and Santa Fe
Springs, California plants, from two regional warehouses and 42
consigned stock locations. B-Line's products are advertised in
trade journals and by circulation of comprehensive catalogs.
(c) Competition.
Substantial competition exists in all the Company's marketing
and production areas. Although no comprehensive statistics are
available, the Company believes it is a major supplier of organic
chemicals and biochemicals for research and for diagnostic testing
procedures involving enzymes and of chromatography products for
analyzing and separating complex chemical mixtures. A few
competitors, like the Company, offer thousands of chemicals and
stock and analyze most of their products. While the Company
generally offers a larger number of products, some of the Company's
products are unusual and have relatively little demand. In
addition, there are many competitors who offer a limited quantity
of chemicals, and several companies compete with the Company by
offering thousands of chemicals although few of them stock or
analyze substantially all of the chemicals they offer for sale.
The Company believes its B-Line subsidiary to be among the
three largest producers of metal strut framing, pipe hangers and
cable tray component systems, although reliable industry statistics
are not available.
In all product areas the Company competes primarily on the
basis of customer service, quality and price.
(d) Employees.
The Company employed 5,110 persons as of December 31, 1993.
Of these, 4,198 were engaged in production and distribution of
chemical products. The B-Line subsidiary employed 912 persons.
The total number of persons employed within the United States was
3,792, with the balance employed by the foreign subsidiaries. The
Company employed over 1,400 persons who have degrees in chemistry,
biochemistry, engineering or other scientific disciplines,
including approximately 235 with Ph.D. degrees.
Employees engaged in chemical production, research and
distribution are not represented by any organized labor group.
B-Line's production workers at the Highland and Troy, Illinois
facilities are members of the International Association of
Machinists and Aerospace Workers, District No. 9 (AFL-CIO). The
labor agreement covering these employees expires November 12, 1995.
B-Line's production workers at the Norcross, Georgia facility are
members of the United Food and Commercial Workers International
(AFL-CIO), Retail Clerks Union Local 1063. The labor agreement
covering these employees expires June 11, 1994.
(e) Back-log of Orders.
The majority of orders for chemical products in laboratory
quantities are shipped from inventory, resulting in no back-log of
these orders. However, individual items may occasionally be out of
stock. These items are shipped as soon as they become available.
Some orders for larger-than-normal laboratory quantities are for
future delivery. On December 31, 1993 and 1992, the back-log of
firm orders and orders for future delivery of chemical products was
approximately $9,100,000 and $6,800,000, respectively. The Company
estimates that substantially all of the December 31, 1993, back-log
will be shipped during 1994.
On December 31, 1993 and 1992, B-Line had a back-log of
orders amounting to $2,400,000 and $2,200,000, respectively.
B-Line estimates that substantially all of the December 31, 1993,
back-log will be shipped during 1994.
(f) Information as to Industry Segments.
Information concerning industry segments for the years ended
December 31, 1993, 1992 and 1991, is located in Note 9 to the
consolidated financial statements on page 21 of the 1993 Annual
Report which is incorporated herein by reference.
(g) Executive Officers of the Registrant
Information regarding executive officers is contained in Part
III, Item 10, and incorporated herein by reference.
Item 2. Properties.
The Company's primary chemical production facilities are
located in St. Louis, Missouri; Milwaukee and Sheboygan,
Wisconsin; Bellefonte, Pennsylvania and Buchs, Switzerland. In St.
Louis, the Company owns a 320,000 square foot building used for
manufacturing, a complex of buildings aggregating 349,000 square
feet which is currently being used for warehousing and production,
a 75,000 square foot building used for warehousing and a 30,000
square foot building used for production, quality control and
packaging. A 280,000 square foot building in St. Louis is being
partially utilized to provide additional quality control, packaging
and warehousing capacity. Also in St. Louis, the Company owns 30
acres upon which is located a 240,000 square foot administration
and distribution facility, in which its principal executive offices
are located, and a 175,000 square foot diagnostic production and
office building. In Milwaukee, the Company owns a 165,000 square
foot building which is used for manufacturing, warehousing and
offices, a 110,000 square foot building which is used for
additional manufacturing and warehousing and a complex of buildings
aggregating 331,000 square feet which is used primarily for
warehousing and distribution. Also in Milwaukee, the Company owns
a 151,000 square foot building which is used for manufacturing and
warehousing, a 56,000 square foot administration facility and a
615,000 square foot building which is being renovated for use as a
distribution facility. The Company also owns 515 acres in
Sheboygan, Wisconsin, upon which are located multiple buildings
totaling 160,000 square feet for production and packaging. Fluka
owns an 11 acre site in Buchs, Switzerland, upon which are located
its primary production facilities. Approximately 220,000 square
feet of owned production, warehousing and office facilities are at
this site. In Greenville, Illinois, the Company owns 555 acres of
land for future development of biochemical production facilities.
Supelco owns 72 acres near Bellefonte, Pennsylvania, upon which is
located a 160,000 square foot building used for manufacturing,
warehousing, research and administration.
The Company's B-Line manufacturing business is conducted in
Highland and Troy, Illinois; Norcross, Georgia; Reno, Nevada;
Portland, Oregon; and Modesto and Santa Fe Springs, California.
B-Line owns a 270,000 square foot building in Highland, a 55,000
square foot building in Troy, Illinois, a 68,000 square foot
building in Portland, Oregon, a 173,000 square foot building in
Reno, Nevada, and a 125,000 square foot building in Modesto,
California. B-Line leases a 101,000 square foot facility in
Norcross, Georgia, and an 18,000 square foot building in Santa Fe
Springs, California.
The Company also owns warehouse and distribution facilities
containing approximately 35,000 and 8,000 square feet in Metuchen,
New Jersey and Ronkonkoma, New York, respectively, and leases
warehouses in Chicago, Illinois and Dallas, Texas under short-term
leases. Manufacturing and warehousing facilities are also owned or
leased in England, Germany, Israel, Japan, Scotland and
Switzerland. Sales offices are leased in all other locations.
The Company considers the properties to be well maintained, in
sound condition and repair, and adequate for its present needs.
The Company will continue to expand its production and distribution
capabilities in select markets.
Item 3. Legal Proceedings.
There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted by the Registrant to the
stockholders for a vote during the fourth quarter of 1993.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
Information concerning market price of the Registrant's Common
Stock and related shareholder matters for the years ended December
31, 1993 and 1992, is located on page 11 of the 1993 Annual Report
which is incorporated herein by reference.
As of March 4, 1994, there were 2,356 record holders of the
Registrant's Common Stock.
Items 6 through 8. Selected Financial Data, Management's Discussion
and Analysis of Financial Condition and Results of Operations, and
Financial Statements.
The information required by Items 6 through 8 is incorporated
herein by reference to pages 11 - 24 of the 1993 Annual Report.
See Index to Financial Statements and Schedules on page F-1 of this
report. Those pages of the Company's 1993 Annual Report listed in
such Index or referred to in Items 1(a)(4), 1(f) and 5 are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not applicable.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information under the captions "Nominees for Board of
Directors" and "Security Ownership of Directors, Executive Officers
and Principal Beneficial Owners" of the 1994 Proxy Statement is
incorporated herein by reference.
The executive officers of the Registrant are:
Name of Executive Officer Age Positions and Offices Held
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Carl T. Cori 57 Chairman of the Board,
President and Chief Executive
Officer
Peter A. Gleich 48 Vice President and
Secretary
David R. Harvey 54 Executive Vice President
and Chief Operating Officer
Kirk A. Richter 47 Controller
Thomas M. Tallarico 49 Vice President and Treasurer
There is no family relationship between any of the officers.
Dr. Harvey and Mr. Richter have held the positions indicated for
more than five years.
Dr. Cori has been President and Chief Executive Officer of the
Company for more than five years. He was elected Chairman of the
Board in May 1991.
Mr. Gleich has been Vice President and Secretary of the Company for
more than five years. He also served as Treasurer of the Company
from 1975 to May 1991.
Mr. Tallarico has served as Vice President of the Company since
February 1991 and as Treasurer of the Company since May 1991. He
served as publisher of the St. Louis Sun Publishing Company, St.
Louis, Missouri, from March 1989 to July 1990. He served as Senior
Vice President and General Manager of Pulitzer Publishing Co., St.
Louis Post-Dispatch, St. Louis, Missouri, from 1986 to March 1989.
The present terms of office of the officers will expire when the
next annual meeting of the Directors is held and their successors
are elected.
Item 11. Executive Compensation.
Information under the captions "Director Compensation and
Transactions" and "Information Concerning Executive Compensation"
of the 1994 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information under the caption "Security Ownership of
Directors, Executive Officers and Principal Beneficial Owners" of
the 1994 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information under the caption "Director Compensation and
Transactions" of the 1994 Proxy Statement is incorporated herein by
reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Documents filed as part of this report:
1. Financial Statements.
See Index to Financial Statements on page F-1 of this
report. Those pages of the Company's 1993 Annual Report
listed in such Index or referred to in Items 1(a)(4),
1(f) and 5 are incorporated herein by reference.
2. Financial Statement Schedules.
See Index to Financial Statement Schedules on page F-1 of
this report.
3. Exhibits.
See Index to Exhibits on page F-5 of this report.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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/ Thomas M. Tallarico March 30, 1994
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Thomas M. Tallarico, Vice President and Date
Treasurer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Carl T. Cori, Peter A. Gleich, David
R. Harvey, Kirk A. Richter and Thomas M. Tallarico and each of them (with
full power to each of them to act alone), his true and lawful attorneys-in-
fact and agents, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this report, and to
file the same, with all exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
By /s/ Carl T. Cori March 30, 1994
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Carl T. Cori, Director, Chairman of the Date
Board, President and Chief Executive
Officer
By /s/ David R. Harvey March 30, 1994
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David R. Harvey, Director, Executive Vice Date
President and Chief Operating Officer
By /s/ Peter A. Gleich March 30, 1994
-------------------------------------- --------------
Peter A. Gleich, Vice President and Date
Secretary
By /s/ Kirk A. Richter March 30, 1994
-------------------------------------- --------------
Kirk A. Richter, Controller Date
By /s/ Thomas M. Tallarico March 30, 1994
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Thomas M. Tallarico, Vice President and Date
Treasurer
By /s/ David M. Kipnis March 30, 1994
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David M. Kipnis, Director Date
By /s/ Andrew E. Newman March 30, 1994
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Andrew E. Newman, Director Date
By /s/ Jerome W. Sandweiss March 30, 1994
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Jerome W. Sandweiss, Director Date
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page Number Reference
Annual Report
Form 10-K to Shareholders
Comparative financial data for the years
1993, 1992, 1991, 1990, and 1989 11
Management's discussion of financial
condition and results of operations 12
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 1993 and 1992 15
Consolidated statements for the years
ended December 31, 1993, 1992 and 1991
Income 14
Stockholders' Equity 16
Cash Flows 17
Notes to consolidated financial statements 18
Reports of independent public accountants EX-23
FINANCIAL STATEMENT SCHEDULES:
V Property, plant and equipment for the years
ended December 31, 1993, 1992 and 1991 F-3
VI Accumulated depreciation of property, plant
and equipment for the years ended
December 31, 1993, 1992 and 1991 F-3
IX Short-term borrowings for the years ended
December 31, 1993, 1992 and 1991 F-4
X Supplementary income statement information
for the years ended December 31, 1993,
1992 and 1991 F-4
All other schedules are not submitted because they
are not applicable, not required or because the
information is included in the consolidated financial
statements or notes thereto.
<TABLE>
SCHEDULE V
<CAPTION>
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31,
(in thousands)
Balance at Balance
Beginning Additions Retirements Translation at End
of Period at Cost Acquisitions & Sales Adjustments of Period
-----------------------------------------------------------------------------
1993:
<S> <C> <C> <C> <C> <C> <C> <C>
Land $ 18,922 $ 4,523 $ 1,688 $ - $ (475) $ 24,658
Buildings and improvements 128,179 24,239 15,203 (64) (1,238) 166,319
Machinery and equipment 175,783 21,392 9,748 (2,206) (1,590) 203,127
Construction in progress 6,518 25,028 28 - (142) 31,432
-------- ------- ------- -------- -------- --------
$329,402 $75,182 $26,667 $(2,270) $(3,445) $425,536
======== ======= ======= ======== ======== ========
1992:
Land $ 18,119 $ 1,866 $ - $ - $(1,063) $ 18,922
Buildings and improvements 121,872 9,328 - (227) (2,794) 128,179
Machinery and equipment 167,223 17,333 - (5,763) (3,010) 175,783
Construction in progress 4,365 2,359 - - (206) 6,518
-------- ------- ------ -------- -------- --------
$311,579 $30,886 $ - $(5,990) $(7,073) $329,402
======== ======= ====== ======== ======== ========
1991:
Land $ 15,768 $ 2,771 $ - $ - $ (420) $ 18,119
Buildings and improvements 110,877 12,771 - (15) (1,761) 121,872
Machinery and equipment 160,279 9,797 - (1,385) (1,468) 167,223
Construction in progress 3,801 720 - - (156) 4,365
-------- ------- ------ -------- -------- --------
$290,725 $26,059 $ - $(1,400) $(3,805) $311,579
======== ======= ====== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31,
(in thousands)
Balance at Retire- Balance
Beginning ments Translation at End
of Period Additions & Sales Adjustments of Period
------------------------------------------------------------------
1993:
<S> <C> <C> <C> <C> <C>
Buildings and improvements $ 38,009 $ 7,615 $ (28) $ (293) $ 45,303
Machinery and equipment 103,090 22,064 (1,751) (492) 122,911
-------- ------- -------- --------- --------
$141,099 $29,679 $(1,779) $ (785) $168,214
======== ======= ======== ========= ========
1992:
Buildings and improvements $ 33,174 $ 5,794 $ (146) $ (813) $ 38,009
Machinery and equipment 86,714 21,583 (3,509) (1,698) 103,090
-------- ------- -------- --------- --------
$119,888 $27,377 $(3,655) $ (2,511) $141,099
======== ======= ======== ========= ========
1991:
Buildings and improvements $ 28,312 $ 5,995 $ (1) $ (1,132) $ 33,174
Machinery and equipment 70,041 19,776 (1,192) (1,911) 86,714
-------- ------- -------- --------- --------
$ 98,353 $25,771 $(1,193) $ (3,043) $119,888
======== ======= ======== ========= ========
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE IX
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31,
(in thousands)
Maximum Average Weighted
Category of Weighted Amount Amount Average
Aggregate Balance Average Outstanding Outstanding Interest Rate
Short-Term at End of Interest During the During the During the
Borrowings Period Rate Period Period Period (1)
- ---------------------------------------------------------------------------------
1993
- ----------
Borrowings
from Banks:
<S> <C> <C> <C> <C> <C>
Domestic $34,451 4.4% $38,050 $18,991 3.9%
Foreign 2,296 5.5 6,051 3,484 6.0
1992
- ----------
Borrowings
from Banks:
Domestic 875 2.6 1,250 1,019 2.8
Foreign 5,471 8.7 12,915 10,550 9.3
1991
- ----------
Borrowings
from Banks:
Domestic 1,250 4.6 27,100 11,669 6.8
Foreign 12,351 9.9 14,502 11,491 9.3
(1) Computation based on average monthly outstanding borrowings.
</TABLE>
SCHEDULE X
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31,
(in thousands)
Charged to Costs and Expenses
1993 1992 1991
------- ------- -------
Maintenance and repairs $10,575 $ 8,857 $ 8,902
Depreciation and amortization 32,505 28,863 26,826
Advertising 28,674 25,274 24,466
Royalties and taxes, other than payroll and income taxes, incurred during 1993,
1992 and 1991 were less than 1% of sales.
INDEX TO EXHIBITS
These Exhibits are numbered in accordance with the Exhibit Table of
Item 6.01 of Regulation S-K:
Exhibit Reference
(3) Certificate of Incorporation and By-Laws:
(a) Certificate of Incorporation and
Amendments Incorporated by reference to Exhibit
3(a) of Form 10-K filed for the year
ended December 31, 1991, Commission
File Number 0-8135.
(b) By-Laws as amended February 1993 Incorporated by reference to Exhibit
3(b) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(4) Instruments Defining the Rights of
Shareholders, Including Indentures:
(a) Certificate of Incorporation and
Amendments See Exhibit 3(a) above.
(b) By-Laws as amended February 1993 See Exhibit 3(b) above.
(c) The Company agrees to furnish to the
Securities and Exchange Commission upon
request pursuant to Item 601(b)(4)(iii)
of Regulation S-K copies of instruments
defining the rights of holders of long-term
debt of the Company and its consolidated
subsidiaries.
(10) Material Contracts:
(a) Incentive Stock Bonus Plan* Incorporated by reference to Exhibit
10(a) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(b) First Amendment to Incentive Incorporated by reference to Exhibit
Stock Bonus Plan* 10(b) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(c) Second Amendment to Incentive Incorporated by refence to Exhibit
Stock Bonus Plan* 10(c) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(d) Share Option Plan of 1987* Incorporated by reference to Exhibit
10(d) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(e) First Amendment to Share Option Incorporated by refence to Exhibit
Plan of 1987* 10(e) of Form 10-K filed for the year
ended December 31, 1992, Commission
File Number 0-8135.
(f) Employment Agreement with Carl T. Incorporated by reference to Exhibit
Cori* (Similar Employment Agreements 10(f) of Form 10-K filed for the
also exist with Peter A. Gleich, year ended December 31, 1992,
David R. Harvey, Kirk A. Richter Commission File Number 0-8135.
and Thomas M. Tallarico)
(g) Letter re: Consultation Services Incorporated by reference to Exhibit
with Dr. David M. Kipnis* 10(g) of Form 10-K field for the
year ended December 31, 1992,
Commission File Number 0-8135.
(11) Statement Regarding Computation Incorporated by reference to the
of Per Share Earnings information on net income per share
included in Note 1 to the Company's
1993 financial statements filed as
Exhibit 13 below.
(13) Pages 11-24 of the Annual Report
to Shareholders for the year
ended December 31, 1993
(21) Subsidiaries of Registrant
(23) Consent of Independent Public Accountants
*Represents management contract or compensatory plan or arrangement required
to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
(Page 11 of 1993 annual report to shareholders)
SELECTED FINANCIAL DATA
-----------------------
(unaudited)
COMMON STOCK DATA:
(per share)
PRICE RANGE
1993 1992 DIVIDENDS
---------------- ----------------- -----------------
HIGH LOW HIGH LOW 1993 1992
------- ------- -------- ------- ------ ------
1st Quarter $58 $46-1/4 $52-1/2 $41-3/4 $.0725 $.0625
2nd Quarter 51-1/2 45 50-1/4 42 .0725 .0625
3rd Quarter 50-3/4 44-1/2 51-1/4 47-1/4 .0725 .0625
4th Quarter 50 45-1/2 59-1/4 49 .0825 .0725
The common stock is traded on the National Market System ("NMS")
of the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"). The trading symbol is SIAL.
Options in the Company's common stock are traded on the Chicago
Board Options Exchange.
<TABLE>
COMPARATIVE FINANCIAL DATA:
(in millions except per share data) 1993 1992 1991 1990 1989
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales $739.4 $654.4 $589.4 $529.1 $441.1
Income before cumulative effect of accounting
changes 107.1 95.5 79.8 71.2 64.0
Net income 96.3 95.5 79.8 71.2 64.0
Per share:
Income before cumulative effect of accounting
changes 2.15 1.92 1.60 1.44 1.29
Net income 1.93 1.92 1.60 1.44 1.29
Dividends .3000 .2600 .2275 .2050 .1850
Total assets 753.4 615.8 596.5 546.2 472.4
Long-term debt 17.3 18.7 69.3 70.8 61.5
</TABLE>
QUARTERLY FINANCIAL DATA:
(in millions except per share data)
1993 QUARTER ENDED
March 31 June 30 Sept 30 Dec 31
-------- ------- ------- -------
Net sales $180.0 $183.8 $190.8 $184.8
Gross profit 98.4 100.3 101.4 102.7
Income before cumulative
effect of accounting changes 26.9 26.9 26.7 26.6
Net income 16.1 26.9 26.7 26.6
Income per share before
cumulative effect of
accounting changes .54 .54 .54 .53
Net income per share .32 .54 .54 .53
1992 QUARTER ENDED
March 31 June 30 Sept 30 Dec 31
-------- ------- ------- -------
Net sales $168.6 $162.2 $165.9 $157.7
Gross profit 89.7 89.3 90.1 86.7
Net income 23.9 24.1 24.9 22.6
Net income per share .48 .48 .50 .46
(Page 12-13 of 1993 Annual Report to Shareholders)
MANAGEMENT'S DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
RESULTS OF OPERATIONS
During the three years ended December 31, 1993, the Company's
sales and earnings continued to grow. The Company acquired the
net assets and business of Supelco, Inc. ("Supelco") and the
stock of Circle AW Products Company ("Circle AW") in the second
quarter of 1993 as described in Note 11 to the consolidated
financial statements. The operating results for these businesses
are included in the consolidated statement of income from their
respective acquisition dates.
Chemical sales increased 10.8%, 11.1% and 13.2% for 1993, 1992
and 1991, respectively. This sales growth is attributed to
selective price increases, the annual addition of new products,
wider distribution of catalogs and literature and the opening of
new foreign sales offices. Price increases for products listed
in the Company's general chemical catalogs averaged 5.0% per year
in each of the last three years. New product sales are not
material in the year introduced, but do contribute to annual
sales growth in subsequent years. Export sales from the United
States increased 13.5% after remaining even in 1992, with 1993
levels reflecting the benefits of the Supelco acquisition and the
opening of sales offices in additional foreign countries to serve
as liaisons with United States operations. Increased emphasis on
foreign markets and new sales offices helped achieve growth in
foreign direct sales of approximately 17% in 1993 and 15% in 1992
and 1991, after eliminating the effect of changes in foreign
currency exchange rates. The effect of translating foreign
currency sales into the U.S. dollar reduced sales growth by 3.8%
in 1993 while increasing growth by 0.7% in 1992. Sales for 1993
benefited from the acquisition of Supelco in May. After
consideration of the Supelco acquisition and the impact of
currency translation, the chemical sales growth rate has slowed
in 1993 and 1992 due to weaker economic conditions in several
markets.
Metal sales increased 24.8%, 10.9% and 2.5% for 1993, 1992 and
1991, respectively. The higher growth rate in 1993 was due to
both increased volume from stronger construction demand and the
acquisition of Circle AW in June 1993. Average prices increased
2% in 1993 over 1992 while 1992 prices were unchanged from 1991.
The 10.9% sales increase in 1992 reflects volume increases and a
full year of sales from the telecommunications product line
acquired in September 1991.
Cost of products sold was 45.5%, 45.6% and 47.2% of sales in
1993, 1992 and 1991, respectively. The improved rate in both
1993 and 1992 relative to 1991 was due to increased utilization
of newer facilities and productivity gains in manufacturing for
both chemical and metal products. These improvements raised
chemical gross profit margins by 0.4% and 1.4% in 1993 and 1992,
respectively.
For metal products, 1993 sales price increases offset higher raw
material costs, resulting in the gross margin level being
unchanged from 1992, while in 1992, the gross profit margin
improved by 1.8% due to lower raw material costs. The gross
profit margin in 1993 also reflects higher product cost levels
for the acquisitions.
Selling, general and administrative expenses were 32.1%, 31.9%
and 31.8% of sales in 1993, 1992 and 1991, respectively. In both
1993 and 1992, the Company's expanding foreign operations
increased expenses by approximately $11.0 million, some of which
were of a start-up nature. Fringe benefit costs increased in
1993 and 1992, primarily due to increased postretirement benefit
costs of $2.2 million in 1993 and a one-time expense of $1.2
million in 1992 related to employee enrollment in a new 401(k)
plan. The Company increased its catalog and promotional
expenses by $2.7 million in 1993. Depreciation and amortization
expense increased $3.6 million, primarily due to the Supelco and
Circle AW acquisitions. Offsetting these increases, net interest
expense declined by $2.1 million due to reduced borrowing levels
during most of the year and lower interest rates.
Management expects future sales growth from price increases, the
continued introduction of new products, more effective
distribution of catalogs and added promotional and marketing
programs. Additionally, 1994 sales will benefit from the
inclusion of Supelco and Circle AW results for a full year and
from new offices opened in Hungary, South Korea and Mexico.
LIQUIDITY AND CAPITAL RESOURCES
Cash and temporary cash investments decreased $34.7 million in
1993 and short-term borrowings increased $30.6 million, primarily
due to the acquisitions of Supelco and Circle AW, as described in
Note 11 to the consolidated financial statements, and increased
capital expenditures. During 1992, cash and temporary cash
investments increased $16.8 million and total borrowings were
reduced by $55.6 million.
Cash provided by operating activities was $98.7 million in 1993,
a decrease of $15.7 million from 1992. The decline resulted
mainly from increased inventory levels of $28.6 million partially
offset by a $17.1 million increase in income before cumulative
effect of accounting changes, including a $5.4 million increase
in depreciation, amortization and other noncash expenses. Cash
generated by operations and available from credit facilities
continues to provide sufficient liquidity for present and future
operating and capital needs.
Cash in excess of operating and capital needs in 1994 is expected
to be used to repay existing borrowings or to be invested on a
temporary basis. At December 31, 1993, there was $36.7 million of
borrowings outstanding under the Company's credit arrangements,
which include domestic bank facilities of $70 million and
multi-currency facilities of $30 million.
Capital expenditures increased to $75.2 million in 1993.
Expenditures were made to increase production and distribution
capabilities and improve plant efficiencies, including expansion
of large-scale production capacity in the United States and
Switzerland and the acquisition of a manufacturing plant in
Scotland. Capital expenditure levels are expected to be
comparable in 1994. The Company has not made any significant
commitments for or acquisitions of facilities early in 1994.
ACCOUNTING CHANGES
The Company adopted two new Financial Accounting Standards
effective January 1, 1993, and elected to recognize the prior
years' effect of adoption as the cumulative effect of changes in
accounting principles. As described in Note 10 to the
consolidated financial statements, the cumulative effect of
adopting the standard on accounting for postretirement benefits
other than pensions reduced net income by $13.8 million. The
cumulative effect of adopting the new accounting standard for
income taxes increased net income by $3.0 million, as described
in Note 7 to the consolidated financial statements. The net
impact of the adoption of both standards was to reduce 1993 net
income by $10.8 million. These changes have no effect on current
or future cash flows.
(Five bar graphs appear on pages 12-13 depicting the following data)
1993 1992 1991
------ ------ ------
Chemical sales (millions of dollars) $613.1 $553.1 $498.1
Metal sales (millions of dollars) 126.3 101.3 91.3
Cost of sales (percent of sales) 45.5% 45.6% 47.2%
Operating expenses (percent of sales) 32.1% 31.9% 31.8%
Capital expenditures (millions of dollars) 75.2 30.9 26.1
<PAGE>
(Page 14 of 1993 Annual Report to Shareholders)
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(in thousands except per share data)
Years Ended December 31,
1993 1992 1991
-------- -------- --------
Net sales $739,435 $654,406 $589,371
Cost of products sold 336,639 298,648 277,970
------- ------- -------
Gross profit 402,796 355,758 311,401
Selling, general and
administrative expenses 237,179 208,446 187,523
------- ------- -------
Income before income taxes and
cumulative effect of accounting changes 165,617 147,312 123,878
Provision for income taxes 58,463 51,854 44,085
------- ------- -------
Income before cumulative effect of
accounting changes 107,154 95,458 79,793
Cumulative effect of accounting changes (10,806) -- --
------- ------- -------
Net income $96,348 $95,458 $79,793
======= ======= =======
Weighted average number of
shares outstanding 49,802 49,770 49,716
======= ======= =======
Income per share before cumulative
effect of accounting changes $2.15 $1.92 $1.60
Cumulative effect of accounting changes (0.22) -- --
-------- ------- -------
Net income per share $1.93 $1.92 $1.60
======== ======= =======
The accompanying notes are an integral part of these statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To Sigma-Aldrich Corporation:
We have audited the accompanying consolidated balance sheets of
Sigma-Aldrich Corporation (a Delaware Corporation) and
subsidiaries (the "Company") as of December 31, 1993 and 1992,
and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Sigma-Aldrich Corporation and subsidiaries as of December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Notes 7 and 10 to the consolidated financial
statements, effective January 1, 1993, the Company changed its
method of accounting for income taxes and postretirement benefits
other than pensions.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri
February 11, 1994
<PAGE>
(Page 15 of 1993 Annual Report to Shareholders)
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
December 31,
ASSETS 1993 1992
Current assets: -------- --------
Cash $ 989 $ 7,590
Temporary cash investments 9,263 37,342
Accounts receivable, less allowance for
doubtful accounts of $6,684 and $5,208,
respectively 113,439 91,927
Inventories 305,487 260,145
Other current assets 21,629 18,772
------- -------
Total current assets 450,807 415,776
Property, plant and equipment: ------- -------
Land 24,658 18,922
Buildings and improvements 166,319 128,179
Machinery and equipment 203,127 175,783
Construction in progress 31,432 6,518
Less - Accumulated depreciation (168,214) (141,099)
-------- --------
Net property, plant and equipment 257,322 188,303
-------- --------
Other assets 45,302 11,711
-------- --------
$753,431 $615,790
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 36,747 $ 6,346
Current maturities of long-term debt 955 598
Accounts payable 43,967 32,459
Accrued payroll and other expenses 25,479 22,665
Accrued income taxes 4,209 4,091
------ ------
Total current liabilities 111,357 66,159
------- ------
Long-term debt 17,266 18,737
------- ------
Deferred postretirement benefits 24,559 --
------- ------
Deferred compensation 9,109 6,675
------- ------
Deferred income taxes -- 12,442
------- ------
Stockholders' equity:
Common stock 49,805 49,776
Capital in excess of par value 8,883 7,488
Retained earnings 538,111 456,704
Cumulative translation adjustments (5,659) (2,191)
------- -------
Total stockholders' equity 591,140 511,777
------- -------
$753,431 $615,790
======= =======
The accompanying notes are an integral part of these balance
sheets.
<TABLE>
(Page 16 of 1993 Annual Report to Shareholders)
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
(in thousands except per share data)
Common Stock
100,000 Shares Authorized
($1.00 Par) Capital in Cumulative
--------------------- Excess of Retained Translation
Shares Amount Par Value Earnings Adjustments
------ ------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1990 49,658 $49,658 $5,477 $305,705 $ 7,628
Net income -- -- -- 79,793 --
Dividends ($.2275 per share) -- -- -- (11,311) --
Awards under deferred
compensation plan 29 29 432 -- --
Exercise of stock options 59 59 937 -- --
Translation adjustment -- -- -- -- 2,546
------ ------ ----- ------- ------
Balance, December 31, 1991 49,746 49,746 6,846 374,187 10,174
Net income -- -- -- 95,458 --
Dividends ($.26 per share) -- -- -- (12,941) --
Awards under deferred
compensation plan 20 20 455 -- --
Exercise of stock options 10 10 187 -- --
Translation adjustment -- -- -- -- (12,365)
------ ------ ----- ------- -------
Balance, December 31, 1992 49,776 49,776 7,488 456,704 (2,191)
Net income -- -- -- 96,348 --
Dividends ($.30 per share) -- -- -- (14,941) --
Awards under deferred
compensation plan 21 21 1,175 -- --
Exercise of stock options 8 8 220 -- --
Translation adjustment -- -- -- -- (3,468)
------ -------- ------ -------- --------
Balance, December 31, 1993 49,805 $49,805 $8,883 $538,111 $ (5,659)
====== ======== ====== ======== =========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
(Page 17 of 1993 Annual Report to Shareholders)
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1993 1992 1991
------ ------ ------
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 96,348 $ 95,458 $ 79,793
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of accounting changes 10,806 -- --
Depreciation and amortization 32,505 28,863 26,826
Deferred tax provision (252) 1,848 715
Postretirement benefits expense 2,789 -- --
Deferred compensation expense 3,244 2,150 1,335
Deferred compensation payments (810) (465) (888)
Increase in accounts receivable (12,604) (12,605) (5,877)
Increase in inventories (34,144) (5,588) (25,616)
(Increase) decrease in other current assets (2,537) (1,331) 4,110
Increase (decrease) in accounts payable 9,949 6,069 (5,323)
Increase (decrease) in accrued payroll
and other expenses (3,900) 4,383 95
Increase (decrease) in accrued income taxes (2,663) (4,377) 499
-------- -------- -------
Net cash provided by operating activities 98,731 114,405 75,669
-------- -------- -------
Cash flows from investing activities:
Property, plant and equipment additions (75,182) (30,886) (26,059)
Sale of equipment 588 873 207
Acquisition of businesses,
net of cash acquired (64,015) -- --
Other, net (410) 348 (2,931)
--------- -------- --------
Net cash used in investing activities (139,019) (29,665) (28,783)
--------- -------- ---------
Cash flows from financing activities:
Issuance (repayment) of notes payable 30,649 (6,588) (16,601)
Issuance of long-term debt 1,154 1,946 1,990
Repayment of long-term debt (10,087) (49,049) (893)
Payment of dividends (14,941) (12,941) (11,311)
Exercise of employee stock options 228 197 996
Net cash provided by (used in) -------- -------- --------
financing activities 7,003 (66,435) (25,819)
-------- -------- --------
Effect of exchange rate changes on cash (1,395) (1,492) 474
-------- -------- --------
Net change in cash and cash equivalents (34,680) 16,813 21,541
Cash and cash equivalents at beginning
of year 44,932 28,119 6,578
-------- -------- --------
Cash and cash equivalents at end of year $ 10,252 $ 44,932 $ 28,119
======== ======== ========
Supplemental disclosures of cash flow information:
Income taxes paid $61,187 $54,385 $42,852
Interest paid, net of capitalized interest 2,320 5,269 8,285
The accompanying notes are an integral part of these statements
</TABLE>
<PAGE>
(Pages 18-24 of 1993 Annual Report to Shareholders)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
Accounting Changes:
The Company adopted Financial Accounting Standards Nos. 106 and
109 effective January 1, 1993, and elected to recognize the prior
years' effect as the cumulative effect of changes in accounting
principles. See Note 7 - Income Taxes and Note 10 - Pension and
Other Postretirement Benefit Plans for further information
regarding these accounting changes.
Financial Instruments:
The Company considers its temporary cash investments, which have
original maturities of three months or less, to be cash
equivalents for purposes of the consolidated statements of cash
flows. The Company has no financial instruments that have
material off-balance sheet risk or a materially different fair
value than the respective instrument's carrying value.
Property, Plant and Equipment:
The cost of property, plant and equipment is depreciated over the
estimated useful lives of the assets on the straight-line method
using lives ranging from three to twelve years for machinery and
equipment and fifteen to forty years for buildings and
improvements. The Company capitalizes interest as part of the
cost of constructing major facilities and equipment.
Net Income Per Share:
Net income per share is based on the weighted average number of
shares outstanding during each period.
Foreign Currency Translation:
Foreign currency assets and liabilities are translated at current
exchange rates and profit and loss accounts at weighted average
exchange rates. Resulting translation gains and losses are
included as a separate component in stockholders' equity.
NOTE 2 - INVENTORIES
The principal categories of inventories are (in thousands):
December 31,
----------------------
1993 1992
-------- --------
Finished goods $233,833 $201,542
Work in process 19,457 14,909
Raw materials 52,197 43,694
-------- --------
Total $305,487 $260,145
======== ========
Chemical products are valued at the lower of cost or market.
Costs for certain domestic chemical inventories (20% of total
chemical inventories) are determined using the last-in, first-out
method. Costs for other chemical inventories are determined by
specific lot using purchase price and cost to manufacture, which
includes material, labor and overhead. If the cost of all
chemical inventories had been determined using the specific cost
method, inventories would have been $7,327,000, $7,472,000,
$4,514,000 and $3,229,000 higher than reported at December 31,
1993, 1992, 1991 and 1990, respectively.
Metal inventories are valued at the lower of cost or market, cost
being determined using the first-in, first-out method, which
includes material, labor and overhead.
NOTE 3 - NOTES PAYABLE
The Company has three unsecured domestic bank revolving credit
facilities totaling $70,000,000. A $40,000,000 facility expires
April 30, 1994, with two other facilities of $15,000,000 each
expiring in April 1994, or earlier upon notice by either party.
The Company also has two $15,000,000 unsecured multi-currency
bank commitments. One facility expires in June 1995 and the
other in June 1996. Interest rates for all facilities are based
on federal funds, LIBOR, prime or other rates offered by the
lending banks. Borrowings outstanding under the domestic
arrangements amounted to $24,850,000 at December 31, 1993, with
an average interest rate of 3.4%. Borrowings under the
multi-currency commitments amounted to $9,601,000 at an average
interest rate of 6.8%. There were no borrowings outstanding at
December 31, 1992. The Company intends to renew all of these
facilities as they expire. At December 31, 1992, the Company had
an unsecured $875,000 note outstanding at an interest rate of
2.55% which was repaid in May 1993.
Notes payable by foreign subsidiaries amounted to $2,296,000 and
$5,471,000 at December 31, 1993 and 1992, respectively, and are
payable in local currencies with weighted average interest rates
of 5.5% and 8.7% at December 31, 1993 and 1992, respectively.
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
December 31,
----------------------
1993 1992
------- -------
6.0% Industrial
Revenue Bonds
due April 1, 2010....... $ 5,775 $ 5,775
5.875% Industrial
Revenue Bonds
due July 1, 2004....... 3,550 3,550
7.0% Industrial
Revenue Bonds
due Nov. 1, 2014....... 2,700 2,700
Unsecured
Swiss debt............. 2,294 3,278
Other.................. 3,902 4,032
------- -------
. 18,221 19,335
Less-Current
maturities............. (955) (598)
------- -------
$17,266 $18,737
======= =======
Both the 6.0% and 5.875% Industrial Revenue Bonds are subject to
optional redemption by the Company or bondholder in 1997, at
which time the interest rate will be adjusted and the next
interest rate calculation period will be determined. At the
conclusion of each subsequent calculation period, the bonds will
again be subject to optional redemption by the Company or
bondholder, the interest rate will be adjusted and the next
calculation period will be determined. Any such bonds that are
redeemed can be reissued by the Company. The 7.0% Industrial
Revenue Bonds are subject to optional annual redemption at par
value by the Company in 1994 or the bondholder in 2000.
At December 31, 1993 and 1992, SFr. 3,407,000 and SFr. 4,796,000
respectively, were borrowed from the pension fund of Fluka Chemie
AG, a wholly-owned subsidiary. The interest rate on this debt
was 6.0% and 7.0% at December 31, 1993 and 1992, respectively.
There is no specified repayment schedule for this borrowing.
During the year ended December 31, 1992, the Company repaid SFr.
66,000,000 borrowings that had been outstanding under unsecured
credit facilities maintained with three Swiss banks. These
borrowings were treated as a hedge of the Company's investment in
Swiss assets and, accordingly, gains or losses were included in
cumulative translation adjustments in stockholders' equity.
Total interest expense incurred by the Company, net of immaterial
amounts capitalized, was $2,442,000, $5,375,000 and $7,605,000 in
1993, 1992 and 1991, respectively.
NOTE 5 - INSURANCE
The Company's general and products liability insurance coverage,
which provides for risks up to $200 million, was renewed during
1993. As is the case with other chemical companies, the current
policies exclude coverage for environmental damage and are
written on a claims-made basis.
NOTE 6 - LEASE COMMITMENTS
The Company's subsidiaries lease manufacturing and warehouse
facilities and computer equipment under non-cancelable leases
expiring at various dates through 2021. Rent charged to
operations was $8,222,000, $6,357,000 and $6,981,000 in 1993,
1992 and 1991, respectively. Minimum rental commitments for
non-cancelable leases in effect at December 31, 1993, are as
follows (in thousands):
1994....... $5,515
1995....... 4,196
1996....... 2,817
1997....... 1,125
1998....... 527
1999-2021.. 1,361
NOTE 7 - INOME TAXES
The provision for income taxes consists of the following (in
thousands):
1993 1992 1991
Current: ------- ------- -------
Federal $50,470 $39,519 $32,859
State 4,654 3,972 3,541
Foreign 3,591 6,515 6,970
------- ------- -------
Total current 58,715 50,006 43,370
------- ------- -------
Deferred:
Federal 904 1,950 505
State (48) (39) 49
Foreign (1,108) (63) 161
------- ------- -------
Total deferred (252) 1,848 715
------- ------- -------
Total tax provision $58,463 $51,854 $44,085
======= ======= =======
A reconciliation of statutory and effective tax rates is as
follows:
1993 1992 1991
------ ------ ------
Statutory tax rate 35.0% 34.0% 34.0%
FSC benefits (1.7) (1.5) (1.5)
State income taxes,
net of federal benefits 2.0 1.9 1.8
Foreign taxes (1.6) (0.5) 0.9
Other, net 1.6 1.3 0.4
------ ------ ------
35.3% 35.2% 35.6%
====== ====== ======
The Company adopted Financial Accounting Standard No. 109,
"Accounting for Income Taxes", effective January 1, 1993, which
resulted in a cumulative adjustment that increased net income by
$3,000,000, or $.06 per share. This 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 tax law).
Deferred income tax provisions reflect the effect of
temporary differences between financial statement and tax
reporting of income and expense items. The net deferred tax
assets at December 31, 1993, which are included in other assets
on the consolidated balance sheet, result from the following
temporary differences (in thousands):
Gross deferred
assets:
Inventories $12,936
Pension and post-
retirement benefit plans 9,679
-------
Total 22,615
-------
Gross deferred
liabilities:
Depreciation (14,886)
Other (3,605)
-------
Total (18,491)
-------
Net deferred tax assets $ 4,124
=======
No valuation allowance for the deferred tax assets was required
at December 31, 1993.
United States taxes are not provided on unremitted earnings and
related cumulative translation adjustments of foreign
subsidiaries (approximately $67,212,000 at December 31, 1993)
because the Company intends to reinvest the earnings
indefinitely. The amount of estimated income taxes that would
be incurred should such earnings be distributed is not
significant due to the availability of foreign tax credits. The
Company has a Foreign Sales Corporation ("FSC") subsidiary which
is taxed at a lower effective tax rate on its income from export
sales from the United States.
NOTE 8 - COMMON STOCK
The Company's deferred compensation plan provides for cash and
common stock payments to certain key employees. Under this plan
a bonus pool is calculated by a formula based on the amount of
increase in profitability. Bonus units are then awarded. Bonus
units are distributed five years after being awarded in the form
of one share of common stock for each bonus unit. In addition,
the Company makes cash payments equal to the amount of Federal
income taxes the employee would be required to pay for the
receipt of such stock and cash at the highest marginal Federal
income tax rate. Expenses for this plan are recorded during the
period for which the calculation is made. During 1993, 1992 and
1991, 20,800, 20,278 and 28,586 shares of common stock,
respectively, were issued under this plan. At December 31, 1993,
78,317 bonus units were awarded but not distributed. This plan
permits issuance of a maximum of 1,200,000 shares of the
Company's common stock, of which 841,705 shares remain to be
awarded.
The Company's Share Option Plan of 1987 permits the granting of
incentive stock options or non-qualified options to purchase up
to 1,000,000 shares of the Company's common stock through 1997.
Incentive stock options may not have an option price of less than
the fair market value of the shares at the date of the grant.
Options generally become exercisable one year following the grant
date, however, options granted in 1993 to purchase 193,000
shares become exercisable ratably over a five year period.
Options to purchase 186,790 shares were exercisable at December
31, 1993. Options to purchase 397,700 shares of the Company's
common stock under this plan remain to be granted at December 31,
1993.
Changes in the number of shares subject to option are as follows:
Shares
Subject
Price Range to Option
---------------- ---------
Balance, December 31, 1991 $20.38 - $42.75 92,270
Options granted 46.75 - 50.25 116,500
Options exercised 20.38 (9,660)
Options cancelled 46.75 (3,000)
-------
Balance, December 31, 1992 20.38 - 50.25 196,110
Options granted 48.00 - 55.25 370,000
Options exercised 20.38 - 46.75 (8,420)
Options cancelled 46.75 - 55.25 (20,900)
-------
Balance, December 31, 1993 $20.38 - $55.25 536,790
=======
NOTE 9 - COMPANY OPERATIONS BY SEGMENT
The Chemical Products segment distributes biochemicals, organic
chemicals, chromatography products, diagnostic reagents and
related products for use in research and development, in the
diagnosis of disease and in manufacturing. These products are
both manufactured by the Company and purchased for resale. The
Metal Products segment manufactures and distributes components
for metal frameworks used in industry to support pipes, lighting
fixtures and conduit, continuous networks of trays used in
routing power and telecommunications cabling and electrical
enclosures. Sales between these two industry segments are not
significant. Cash and temporary cash investments are considered
available for general corporate purposes and, accordingly, are
not allocated to the identifiable assets of either segment. The
United States sales to unaffiliated customers presented in the
summary of operations by geographic segment on page 22 includes
sales to foreign markets as follows (in thousands):
Year Amount
----- -------
1993 $99,876
1992 88,035
1991 88,705
The Company's operations by industry segment are as follows (in thousands):
1993 1992 1991
-------- -------- --------
Net sales to unaffiliated customers:
Chemical Products $613,083 $553,127 $498,063
Metal Products 126,352 101,279 91,308
-------- -------- --------
Total $739,435 $654,406 $589,371
======== ======== ========
Income before provision for income taxes
and cumulative effect of accounting changes:
Chemical Products $148,491 $136,913 $118,391
Metal Products 18,649 14,018 12,568
Interest expense, net of interest income (1,523) (3,619) (7,081)
-------- -------- --------
Total $165,617 $147,312 $123,878
======== ======== ========
Depreciation:
Chemical Products $26,063 $23,916 $22,833
Metal Products 3,616 3,461 2,938
------- ------- -------
Total $29,679 $27,377 $25,771
======= ======= =======
Capital expenditures:
Chemical Products $65,767 $27,164 $23,491
Metal Products 9,415 3,722 2,568
------- ------- -------
Total $75,182 $30,886 $26,059
======= ======= =======
Identifiable assets at December 31:
Chemical Products $658,393 $517,446 $514,794
Metal Products 84,786 53,412 53,600
Cash and cash equivalents 10,252 44,932 28,119
-------- -------- --------
Total $753,431 $615,790 $596,513
======== ======== ========
The Company's operations by geographic segment are as follows (in thousands):
1993 1992 1991
------ ------ ------
Net sales to unaffiliated customers:
United States $530,133 $457,275 $421,318
Foreign 209,302 197,131 168,053
Net intercompany sales between
geographic areas:
United States 85,521 74,362 57,575
Foreign 27,276 26,709 25,272
Eliminations (112,797) (101,071) (82,847)
-------- -------- --------
Total $739,435 $654,406 $589,371
======== ======== ========
Income before provision for income taxes
and cumulative effect of accounting changes:
United States $158,908 $131,094 $110,760
Foreign 9,096 19,797 19,338
Eliminations (2,387) (3,579) (6,220)
-------- -------- --------
Total $165,617 $147,312 $123,878
======== ======== ========
Identifiable assets at December 31:
United States $551,736 $461,860 $444,180
Foreign 225,035 175,244 169,010
Eliminations (23,340) (21,314) (16,677)
-------- -------- --------
Total $753,431 $615,790 $596,513
======== ======== ========
NOTE 10 - PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
Pension and Retirement Savings Plans
The Company and its subsidiaries have several retirement plans
covering substantially all domestic employees and certain
employees of foreign subsidiaries. The Company's defined benefit
plans provide all eligible employees with a monthly retirement
benefit based upon compensation and years of service with the
Company.
<TABLE>
<CAPTION>
The net periodic pension cost for the Company's defined benefit plans is as follows (in thousands):
December 31,
Domestic Foreign
--------------------------- ------------------------
1993 1992 1991 1993 1992 1991
------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Service cost $1,429 $1,396 $1,214 $1,580 $ 334 $294
Interest cost 1,956 1,722 1,433 1,264 265 272
Actual return on
plan assets (2,419) (1,067) (4,387) (2,565) (706) (641)
Net amortization
and deferral 652 (366) 3,220 936 281 297
------ ------ ------ ------ ----- ----
Net periodic pension
cost $1,618 $1,685 $1,480 $1,215 $ 174 $222
====== ====== ====== ====== ===== ====
</TABLE>
The Company's policy is to fund its domestic defined benefit plan
with the minimum contribution required under the Internal Revenue
Code. Foreign plans are funded at a level to maintain the
solvency of the plans as defined by local law. A plan that covers
all eligible employees of Fluka Chemie AG, which was previously
reported as a defined contribution plan, has been reflected as a
defined benefit plan in 1993. At December 31, 1993, assets of the
Company's defined benefit plans were invested in listed common
stocks, stock mutual funds, government and corporate bonds and
money market instruments. No common stock of the Company is held
by these plans.
<TABLE>
The funding status of the Company's defined benefit plans and
amounts recognized with respect to these plans in the
consolidated balance sheets are as follows (in thousands):
December 31,
Domestic Foreign
----------------- ----------------
1993 1992 1993 1992
Actuarial present value of benefit obligations: ------- ------- ------- ------
<S> <C> <C> <C> <C>
Vested $23,563 $19,222 $23,038 $2,838
======= ======= ======= ======
Accumulated $25,111 $20,569 $23,038 $2,838
======= ======= ======= ======
Projected $27,951 $24,124 $28,982 $3,437
Plan assets at fair value 30,298 24,140 28,257 4,396
------- ------- ------- ------
Deficiency (excess) of plan assets over projected
benefit obligations (2,347) (16) 725 (959)
Unrecognized net gain (loss) (297) 1,207 (1,478) 71
Unrecognized prior service cost (2,726) (3,971) (1,181) (315)
Unrecognized net assets 998 1,089 347 394
------- ------- ------- -----
Pension (assets) $(4,372) $(1,691) $(1,587) $(809)
======= ======= ======= =====
</TABLE>
<TABLE>
<CAPTION>
Assumptions used in the preceding determinations, which reflect
average long-term expectations and may not represent current
experience, are as follows:
December 31,
Domestic Foreign
-------------- --------------
1993 1992 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate in determining
benefit obligations 7.5% 8.0% 5.0% 9.0%
Compensation rate increase 5.5% 6.0% 4.0% 7.5%
Return on plan assets 8.5% 8.5% 6.8% 9.0%
</TABLE>
The Company's domestic defined contribution plan, which was changed to
a 401(k) retirement savings plan effective January 1, 1993, provides
eligible employees with retirement benefits in addition to those
provided by the defined benefit plan. The plan permits participants to
voluntarily contribute up to 15% of their compensation, subject to
Internal Revenue Code limitations. The Company also contributes a
fixed amount per year for each eligible employee plus a percentage of
the employee's contribution. The Company's policy is to fully fund
its defined contribution plan. The cost for this plan was $2,032,000,
$2,825,000 and $2,489,000 for the years ended December 31, 1993, 1992
and 1991, respectively.
Other Postretirement Benefits
Certain employees of U.S. operations who retire on or after attaining
age 55 with at least 7 years of service with the Company are entitled
to postretirement health, dental and life coverages. These benefits
are subject to deductibles, co-payment provisions and coordination
with benefits available under Medicare. The Company may amend or
change the plan periodically.
Financial Accounting Standards No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions , requires that the
expected future cost of these benefits be expensed during the years
that the employees render service. The Company adopted this accounting
principle effective January 1, 1993, and recorded a charge to expense
of $21,306,000 ($13,806,000 after tax, or $.28 per share) as the
cumulative effect of a change in accounting principle to recognize the
prior years' costs. Prior to 1993, benefit costs were recognized as
claims were paid. The total cost of postretirement benefits charged to
operations was $446,000 and $178,000 in 1992 and 1991, respectively.
The components of expense exclusive of the cumulative effect of the
change in accounting principle in 1993 were as follows (in thousands):
Service cost $1,039
Interest cost 1,750
------
Net postretirement
benefit cost $2,789
======
Future benefit costs were estimated assuming medical costs increase at
a 14.0% annual rate in 1993 decreasing ratably until the year 2000 to
a 7.0% growth rate and remaining at 7.0% per year thereafter. A 1.0%
increase in this annual trend rate would have increased the
accumulated postretirement benefit obligation at December 31, 1993 by
$2,440,000 and 1993 postretirement benefit expense by $320,000. The
weighted average discount rate used to estimate the accumulated
postretirement benefit obligation is 7.5%. Benefits are funded as
claims are paid. The accounting change does not impact the Company's
cash flows.
In connection with the acquisition of Supelco, Inc., an accumulated
postretirement benefit obligation of $1,704,000 was assumed on May 6,
1993.
A reconciliation of the plan's funded status to the accrued postretirement
benefit liability included in the consolidated balance sheet at
December 31, 1993, is as follows (in thousands):
Accumulated postretirement benefit obligation:
Retirees $ 8,139
Active - fully eligible 5,613
Active - other 14,486
------
Total 28,238
Plan assets at fair value --
------
Unfunded postretirement benefit obligation 28,238
Unrecognized net loss (3,000)
------
Accrued postretirement benefit liability 25,238
Less-Current portion included in accrued payroll
and other expenses (679)
-------
Deferred postretirement benefits liability $24,559
=======
NOTE 11 - ACQUISITIONS
On May 6, 1993, the Company acquired the net assets and business of
Supelco, Inc., a worldwide supplier of chromatography products used in
chemical research and production, for $54,700,000 in cash. On June
16, 1993, the Company acquired all of the stock of Circle AW Products
Company, a supplier of electrical and electronic metal enclosures to
industrial, residential and commercial markets, for $10,800,000 in
cash. The net tangible assets of these businesses were recorded based
upon fair market values as of the respective acquisition dates. The
excess of the purchase prices over these values aggregated $30,500,000
and was recorded as intangible assets, with the unamortized balance
included in other assets in the consolidated balance sheet. The
results of operations for these businesses from their respective
acquisition dates are included in the Company's consolidated statement
of income for the period ended December 31, 1993, including
amortization of the intangible assets over periods ranging from 5 to
40 years.
The following presents (in thousands, except net income per share) the
unaudited pro forma consolidated results of operations as if these
acquisitions had occurred at the beginning of the years presented.
The unaudited pro forma results do not purport to be indicative of the
actual results that would have been achieved had these acquisitions
occurred as of January 1, 1992, or of results which may occur in the
future.
Year ended December 31,
-----------------------
1993 1992
-------- --------
Net sales $765,519 $723,517
======== ========
Net income $107,825* $ 95,284
======== ========
Net income per share $ 2.17* $ 1.91
======== ========
*Before cumulative effect of accounting changes.
SIGMA-ALDRICH CORPORATION
PRINCIPAL SUBSIDIARIES
Sigma-Aldrich Corporation (Delaware), the Registrant:
1. Sigma Chemical Company (Delaware)
(A) Sigma F & D Division, Inc. (Missouri)
(B) Sigma Redevelopment Corporation (Missouri)
(C) Sigma Second Street Redevelopment Corporation (Missouri)
(D) Sigma Israel Chemical Company, Ltd. (Israel)
(E) Makor Chemicals Limited (Israel)
(F) Sigma-Aldrich Chemie Holding GmbH (Germany)
(G) Sigma-Aldrich (Vertriebs) GmbH (Germany)
2. Aldrich Chemical Company, Inc. (Delaware)
(A) Sigma-Aldrich N.V./S.A. (Belgium)
(B) Aldrich-Chemie Verwaltungs GmbH (Germany)
(C) Aldrich-Chemie GmbH and Co. K.G. (Germany)
(D) Aldrich-Japan, Inc. (Delaware)
(E) Sigma-Aldrich, S.r.l. (Italy)
3. B-Line Systems, Inc. (Missouri)
(A) Circle AW Products Company (Delaware)
4. Sigma-Aldrich Company, Ltd. (United Kingdom)
(A) Sigma-Aldrich Holding Limited (United Kingdom)
(B) Sigma Chemical Company Ltd. (United Kingdom)
(C) Aldrich Chemical Company Ltd. (United Kingdom)
(D) B-Line Systems Limitd (United Kingdom)
5. Sigma-Aldrich Foreign Sales Corporation (U.S. Virgin Islands)
6. Fluka Chemie AG (Switzerland)
(A) Fluka Chemical Corporation (New Jersey)
(B) Fluka Feinchemikalien GmbH (Germany)
(C) Fluka Chemical Ltd. (United Kingdom)
7. Sigma-Aldrich Foreign Holding Company (Missouri)
(A) Sigma-Aldrich Quimica S.A. (Spain)
(B) Sigma-Aldrich Pty., Limited (Australia)
(C) Sigma-Aldrich Canada, Ltd. (Canada)
(D) Sigma-Aldrich s.r.o. (Prague)
(E) Sigma-Aldrich Chemical Representacoes, Ltd. (Brazil)
(F) Sigma-Aldrich Quimica S.A. de C.V. (Mexico)
(G) Sigma-Aldrich Handels GmbH (Austria)
(H) Sigma-Aldrich Kft. (Hungary)
8. Supelco, Inc. (Delaware)
(A) Supelco S.A. (Switzerland)
(B) Supelco France (France)
(C) Supelco Japan Limited (Japan)
(D) Supleco Canada Ltd/Ltee (Canada)
9. Sigma-Aldrich Chimie S.N.C. (France)
(A) Sigma-Aldrich Chemie France S.a.r.l. (France)
(B) Aldrich-Chimie S.a.r.l. (France)
(C) Fluka Chimie S.a.r.l. (France)
All subsidiaries are directly or indirecly 100% owned.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Sigma-Aldrich Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in
SIGMA-ALDRICH CORPORATION and subsidiaries' annual report to
shareholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated February 11, 1994. Our
audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in the index
on Page F-1 are the responsibility of the Company's management
and are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri
February 11, 1994
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by reference in this Form
10-K, into the Company's previously filed registration statements
on Form S-8, file numbers 2-95937 and 33-24415.
/s/ ARTHUR ANDERSEN & CO.
ARTHUR ANDERSEN & CO.
St. Louis, Missouri
March 30, 1994
