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 September 30, 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 49,830,779 shares of the Company's $1.00 par value
common stock outstanding on October 31, 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 Nine Months
Ended September 30, Ended September 30,
----------------------- ----------------------
1994 1993 1994 1993
-------- ------- ------- ---------
<S> <C> <C> <C> <C>
Net Sales $217,367 $190,797 $638,278 $554,642
Cost of products sold 106,579 89,403 303,569 254,548
-------- -------- -------- --------
Gross profit 110,788 101,394 334,709 300,094
Selling, general and administrative expenses 69,011 59,980 205,293 175,562
-------- -------- -------- --------
Income before income taxes and cumulative effect
of accounting changes 41,777 41,414 129,416 124,532
Provision for income taxes 14,748 14,702 45,684 43,960
-------- -------- -------- --------
Income before cumulative effect of accounting
changes 27,029 26,712 83,732 80,572
Cumulative effect of accounting changes - - - (10,806)
-------- -------- -------- --------
Net income $ 27,029 $ 26,712 $ 83,732 $ 69,766
======== ======== ======== ========
Income per share before cumulative effect
of accounting changes $ 0.54 $ 0.54 $ 1.68 $ 1.62
Cumulative effect of accounting changes - - - (0.22)
-------- -------- -------- --------
Net income per share $ 0.54 $ 0.54 $ 1.68 $ 1.40
======== ======== ======== ========
Weighted average number of shares outstanding 49,830 49,803 49,828 49,802
======== ======== ======== ========
Dividends per share $ 0.0825 $ 0.0725 $ 0.2475 $ 0.2175
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<CAPTION> September 30, December 31,
Assets 1994 1993
------------- ------------
<S> <C> <C>
Current assets: (unaudited)
Cash and temporary cash investments $ 10,289 $ 10,252
Accounts receivable, net of allowance for doubtful
accounts 143,290 113,439
Inventories 335,156 305,487
Other current assets 21,466 21,629
------- -------
Total current assets 510,201 450,807
------- -------
Property, plant and equipment:
Land 28,278 24,658
Buildings and improvements 182,244 166,319
Machinery and equipment 215,141 203,127
Construction in progress 68,867 31,432
Less-Accumulated depreciation (199,174) (168,214)
-------- --------
Net property, plant and equipment 295,356 257,322
-------- --------
Other assets 45,808 45,302
-------- --------
$851,365 $753,431
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 45,275 $ 36,747
Current maturities of long-term debt 493 955
Accounts payable 41,271 43,967
Accrued payroll and other expenses 31,286 25,479
Accrued income taxes 4,021 4,209
------- -------
Total current liabilities 122,346 111,357
------- -------
Long-term debt 14,991 17,266
------- -------
Deferred postretirement benefits 26,636 24,559
------- -------
Deferred compensation 5,951 9,109
------- -------
Stockholders' equity:
Common stock, $1.00 par value, 100,000 shares authorized,
49,830 and 49,805 shares outstanding, respectively 49,830 49,805
Capital in excess of par value 9,981 8,883
Retained earnings 609,511 538,111
Cumulative translation adjustments 12,119 (5,659)
-------- --------
Total stockholders' equity 681,441 591,140
-------- --------
$851,365 $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> Nine Months
Ended September 30,
---------------------------
1994 1993
Cash flows from operating activities: -------- ---------
<S> <C> <C>
Net income $ 83,732 $ 69,766
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting changes - 10,806
Depreciation and amortization 29,009 24,777
Deferred postretirement benefits expense 2,527 1,953
Deferred tax provision 304 (1,603)
Deferred compensation expense (1,543) 3,426
Deferred compensation payments (693) (543)
Increase in accounts receivable (24,003) (24,258)
Increase in inventories (24,732) (24,428)
Decrease in other current assets 704 2,070
Increase (decrease) in accounts payable (4,339) 973
Increase in accrued payroll and other expenses 3,761 4,479
Decrease in accrued income taxes (575) (2,816)
--------- --------
Net cash provided by operating activities 64,152 64,602
--------- --------
Cash flows from investing activities:
Property, plant and equipment additions (56,278) (46,796)
Sale of property, plant and equipment 257 201
Acquisition of businesses, net of cash acquired (1,400) (63,445)
Other, net (2,533) (798)
--------- --------
Net cash used by investing activities (59,954) (110,838)
--------- --------
Cash flows from financing activities:
Issuance of notes payable 8,538 30,352
Issuance of long-term debt - 684
Repayment of long-term debt (2,820) (8,711)
Payment of dividends (12,332) (10,832)
Exercise of employee stock options 205 587
--------- ---------
Net cash provided (used) by financing activities (6,409) 12,080
--------- ---------
Effect of exchange rate changes on cash 2,248 851
--------- ---------
Net change in cash and cash equivalents 37 (33,305)
Cash and cash equivalents at January 1 10,252 44,932
--------- ---------
Cash and cash equivalents at September 30 $ 10,289 $ 11,627
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 45,915 $ 47,660
Interest paid, net of capitalized interest $ 3,100 $ 1,706
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
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.
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 nine
months ended September 30, 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:
September 30, December 31,
1994 1993
--------- ---------
Finished goods $257,793 $233,833
Work in process 20,575 19,457
Raw materials 56,788 52,197
-------- --------
$335,156 $305,487
======== ========
Accounting Changes
The Company adopted two new Financial Accounting Standards
effective January 1, 1993, and then 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 nine months ended September 30, 1993, 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 $580,727
========
Net income* $ 80,942
========
Net income per share* $ 1.63
========
*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
Sales for the nine month period ended September 30 increased 15.1% to $638,278
in 1994 from $554,642 in 1993. Chemical sales increased 11% for both the third
quarter and the first nine months. Currency exchange rate effects accounted
for 2% of the quarterly sales gain, with no effect on the nine month increase.
Research chemical sales gains in the third quarter were in line with results
achieved in the first half of 1994. New product sales and increased marketing
efforts helped Bulk, Diagnostic and Chromatography sales grow faster than the
overall rate in the third quarter. Metal sales increases exceeded 35% for
the first nine months and 25% in the third quarter as strong construction
demand continued. The change in growth rates for the nine months and the
third quarter reflects the acquisition of Circle AW in June 1993.
Cost of sales was $303,569, representing 47.6% of sales, compared
to $254,548 or 45.9% of sales, for the first nine months of 1993.
For the quarter, cost of sales was 49.0% of sales compared to 46.9%
in 1993. The gross profit percentage decreased due to higher product
cost levels on new products, a change in the chemical sales mix to products
with lower margins and lower margins from Supelco, acquired in May 1993,
as well as higher metal costs which were not fully recovered through selling
price increases.
Selling, general and administrative expenses for the nine months
ended September 30, 1994, were $205,293, or 32.2% of sales compared
to $175,562, or 31.7% of sales in 1993. Higher advertising and marketing
costs, additional expenses for new facilities that are not yet fully utilized
and amortization attributable to the acquisitions, partially offset by a
decrease in deferred compensation expense, were the main factors causing
the increase.
Net income for the quarter ended September 30, 1994, was $27,029 compared to
$26,712 in 1993, while net income for the first nine months of 1994 increased
3.9% to $83,732 from $80,572 in 1993 before the cumulative effect of
accounting changes. Overall sales growth exceeded overall profit growth in
both periods due to the sales and cost factors described above, as well as
the continued higher growth in metal sales than chemical sales, since metal
sales provide lower margins than chemical sales. Net income for the nine
months ended September 30, 1993, was $69,766 after a one-time, after-tax
charge of $10,806 for the cumulative effect of accounting changes, as further
described in Notes to Consolidated Financial Statements in Item 1 above.
Liquidity and Capital Resources
The level of cash and temporary cash investments as of September 30, 1994,
was the same as December 31, 1993, with $64,152 of cash provided by operating
activities in the first nine months of 1994 being comparable to that in the
same period of 1993. Short-term borrowings have provided cash of $8,538 in
the first nine months of 1994, which is a reduction of $15,851 from the
amount of borrowings that had been outstanding as of June 30, 1994. The
increase in inventories is due to stocking new products, the initial stocking
at several new distribution sites to enhance customer service levels and a
build-up to support increased sales growth. Property, plant and equipment
expenditures of $56,278 in the first nine months include the purchase of a
distribution facility in Allentown, Pennsylvania, which was occupied in
October 1994, and the continuing expansion of a production facility in
Sheboygan, Wisconsin.
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) Exhibit 27 - Financial Data Schedule
(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: November 10, 1994
Kirk A. Richter, Controller
(on behalf of the Company as Controller and as
Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 10,289
<SECURITIES> 0
<RECEIVABLES> 143,290
<ALLOWANCES> 0
<INVENTORY> 335,156
<CURRENT-ASSETS> 510,201
<PP&E> 494,530
<DEPRECIATION> 199,174
<TOTAL-ASSETS> 851,365
<CURRENT-LIABILITIES> 122,346
<BONDS> 14,991
<COMMON> 49,830
0
0
<OTHER-SE> 631,611
<TOTAL-LIABILITY-AND-EQUITY> 851,365
<SALES> 638,278
<TOTAL-REVENUES> 638,278
<CGS> 303,569
<TOTAL-COSTS> 303,569
<OTHER-EXPENSES> 205,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 129,416
<INCOME-TAX> 45,684
<INCOME-CONTINUING> 83,732
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,732
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.68
</TABLE>
