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 June 30, 1995
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 49,856,107 shares of the Company's $1.00 par value
common stock outstanding on July 31, 1995.
<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 Six Months
Ended June 30, Ended June 30,
----------------------- ----------------------
1995 1994 1995 1994
----------------------- ----------------------
<S> <C> <C> <C> <C>
Net sales $243,325 $212,453 $488,127 $420,911
Cost of products sold 114,450 101,682 229,226 196,990
-------- -------- -------- --------
Gross profit 128,875 110,771 258,901 223,921
Selling, general and administrative expenses 76,961 69,079 156,226 136,282
-------- -------- -------- --------
Income before income taxes 51,914 41,692 102,675 87,639
Provision for income taxes 18,430 14,717 36,450 30,936
-------- -------- -------- --------
Net income $ 33,484 $ 26,975 $ 66,225 $ 56,703
======== ======== ======== ========
Net income per share $ 0.67 $ 0.54 $ 1.33 $ 1.14
======== ======== ======== ========
Weighted average number of shares outstanding 49,852 49,829 49,851 49,827
======== ======== ======== ========
Dividends per share $ 0.0900 $ 0.0825 $ 0.1800 $ 0.1650
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Balance Sheets
(in thousands)
<CAPTION> June 30, December 31,
Assets 1995 1994
------------- ------------
<S> <C> <C>
Current assets: (unaudited)
Cash and temporary cash investments $ 19,342 $ 9,745
Accounts receivable, net of allowance for doubtful
accounts 161,875 134,893
Inventories 351,157 330,333
Other current assets 29,185 27,374
------- -------
Total current assets 561,559 502,345
------- -------
Property, plant and equipment:
Land 29,664 28,512
Buildings and improvements 204,330 195,101
Machinery and equipment 253,696 232,497
Construction in progress 53,386 50,609
Less-Accumulated depreciation (227,974) (204,030)
--------- ----------
Net property, plant and equipment 313,102 302,689
--------- ----------
Other assets 45,074 46,939
--------- ----------
$919,735 $851,973
========= ==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 2,339 $ 18,671
Current maturities of long-term debt 517 650
Accounts payable 42,761 53,832
Accrued payroll and other expenses 42,861 27,304
Accrued income taxes 7,094 4,580
------- -------
Total current liabilities 95,572 105,037
------- -------
Long-term debt 14,344 14,478
------- -------
Deferred postretirement benefits 30,895 27,257
------- -------
Deferred compensation 7,680 5,696
------- -------
Stockholders' equity:
Common stock, $1.00 par value, 100,000 shares authorized,
49,855 and 49,832 shares outstanding, respectively 49,855 49,832
Capital in excess of par value 10,673 10,004
Retained earnings 688,950 631,634
Cumulative translation adjustments 21,766 8,035
-------- --------
Total stockholders' equity 771,244 699,505
-------- --------
$919,735 $851,973
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<CAPTION> Six Months
Ended June 30,
-----------------------------
1995 1994
Cash flows from operating activities: -----------------------------
<S> <C> <C>
Net income $ 66,225 $ 56,703
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,081 19,587
Postretirement benefits expense 1,811 1,684
Deferred tax provision 609 (129)
Deferred compensation expense 2,999 (959)
Deferred compensation payments (454) (656)
Increase in accounts receivable (23,449) (27,737)
Increase in inventories (17,058) (23,851)
Increase in other current assets (796) (710)
Increase (decrease) in accounts payable (13,095) 1,640
Increase in accrued payroll and other expenses 15,790 6,796
Increase (decrease) in accrued income taxes 2,328 (4,292)
--------- --------
Net cash provided by operating activities 55,991 28,076
--------- --------
Cash flows from investing activities:
Property, plant and equipment additions (22,245) (39,273)
Sale of property, plant and equipment 27 199
Other, net -- (1,932)
--------- --------
Net cash used by investing activities (22,218) (41,006)
--------- --------
Cash flows from financing activities:
Issuance (repayment) of notes payable (16,359) 24,389
Repayment of long-term debt (889) (2,049)
Payment of dividends (8,973) (8,221)
Exercise of employee stock options 110 199
--------- ---------
Net cash (used in) provided by financing activities (26,111) 14,318
--------- ---------
Effect of exchange rate changes on cash 1,935 1,512
--------- ---------
Net change in cash and cash equivalents 9,597 2,900
Cash and cash equivalents at January 1 9,745 10,252
--------- ---------
Cash and cash equivalents at June 30 $ 19,342 $ 13,152
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 33,588 $ 35,352
Interest paid, net of capitalized interest $ 1,149 $ 1,761
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Sigma-Aldrich Corporation and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands)
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, 1994.
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 six
months ended June 30, 1995, are not necessarily indicative of
the results that may be expected for the year ending December 31,
1995.
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:
June 30, December 31,
1995 1994
-------- --------
Finished goods $267,353 $250,351
Work in process 20,113 20,232
Raw materials 63,691 59,750
-------- --------
$351,157 $330,333
======== ========
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(in thousands)
Results of Operations
For the quarter ended June 30, sales increased 14.5% to $243.3 million from
$212.5 million in 1994. Chemical sales grew 15.3% in the second quarter and
16.5% for the six months. Sales continued to grow in all the Company's
worldwide markets with the impact of currency exchange rates contributing 5% of
both periods' gain. Sales volume to customers outside of the United States was
strong reflecting the strength of the Company's worldwide distribution capacity
and the impact of its local presence in 23 countries. All chemical divisions
contributed to the sales growth. Research sales maintained its growth pace
due to aggressive sales and marketing programs. Bulk sales grew faster than the
overall chemical rate as new plant capacity supported increased custom
manufacturing orders. The health care sector's renewed confidence regarding the
availability of reimbursement funds has had a positive effect on our diagnostic
business. Chromatography sales continued to grow reflecting the Company's
increased customer focus. Metal sales grew 11.5% in the second quarter and
13.8% for the six months. Second quarter sales were $2.5 million higher than
the first quarter of 1995 reflecting continuing strong demand for the Company's
electrical, mechanical and telecommunication support products and enclosures.
Cost of sales was $229.2 million, representing 47.0% of sales, compared to
$197.0 million, or 46.8% of sales for the first six months of 1994. For the
quarter, cost of sales was 47.0% of sales compared to 47.9% in 1994. The
fluctuation in gross profit percentage for both periods resulted from a change
in the chemical sales mix. Gross margins for metal products improved slightly
as selling price increases compensated for higher raw material prices.
Selling, general and administrative expenses for the six months ended June 30,
1995, were $156.2 million, or 32.0% of sales compared to $136.3 million or 32.4%
of sales in 1994. The percentage decrease in selling, general and
administrative expenses is attributable to the adjusting of staff levels and
controls over other expenses, offset by an increase in deferred compensation
expense.
Net income for the second quarter grew by 24.1% to $33.5 million from $27.0
million in 1994, while net income for the first half of 1995 grew by 16.8% to
$66.2 million from $56.7 million in 1994. Profit margins improved from more
recent quarters as a result of steps taken late in 1994 to adjust staffing
levels, improve productivity and control other expenses.
Liquidity and Capital Resources
Net cash flows totalled $9.6 million for the six months ended June 30, 1995 as
presented in the Consolidated Statements of Cash Flows (unaudited). The
primary source of cash was net cash provided by operating activities of
$56.0 million, an increase of $27.9 million from 1994. The increase is
primarily due to higher net income and fluctuations in working capital
accounts. The major uses of cash were property, plant and equipment
additions of $22.2 million, repayment of notes payable and long-term debt
totalling $17.2 million and payment of dividends totalling $9.0 million.
Although net cash flows provided by operating activities vary from year to
year, it is anticipated that future increases should be in line with sales
growth.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 2, 1995. The
matters for which a vote of security holders was held included election
of the Board of Directors, adoption of the Company's Share Option Plan of
1995 and a shareholder proposal on earnings announcements.
Following are the results of the votes for the election of the Board of
Directors:
Votes Votes
Nominee For Withheld
----------------------- ------------- --------------
Carl T. Cori 39,435,900 3,650,036
David R. Harvey 42,529,573 556,363
Robert J. Hurst 42,313,504 772,432
David M. Kipnis 39,424,238 3,661,698
Andrew E. Newman 39,439,188 3,646,748
William C. O'Neil, Jr. 39,429,488 3,656,448
Jerome W. Sandweiss 42,187,802 898,134
D. Dean Spatz 42,521,964 563,972
Thomas N. Urban 39,604,289 3,481,647
Following are the results of the votes for the adoption of the Company Share
Option Plan of 1995 and the shareholder proposal:
Votes Votes
For Against Abstain
---------- ---------- ----------
Share Option Plan of 1995 36,473,793 6,437,578 174,565
Shareholder proposal on
earnings announcements 6,329,173 31,754,290 1,214,441
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(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, 1994.
Commission File Number O-8135.
(b) By-Laws as amended February 1993
--------------------------------
Incorporated by reference to Exhibit 3(b) on Form
10-K filed for the year ended December 31, 1992,
Commission File Number O-8135.
(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 August 11, 1995
--------------------------------------------- ---------------
Kirk A. Richter, Controller Date
(on behalf of the Company as Controller and
as Principal Accounting Officer)
