SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1995
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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
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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
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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:
$2,742,075,125 March 8, 1996
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Value Date of Valuation
Number of shares of the registrant's common stock, $1.00 par value,
outstanding as of March 8, 1996 was 49,945,160.
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, 1995 Parts I, II and IV
Proxy Statement for the 1996 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F-3 of this report.
<PAGE>
PART I
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Item 1. Business.
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Sigma-Aldrich Corporation (hereinafter referred to as the "Company", which
term includes all consolidated subsidiaries of the Company) has 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.
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.("B-Line"), previously a
subsidiary of Sigma, became a subsidiary of the Company.
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.
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1) Products:
The Company distributes approximately 80,000 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 81,500 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 & Co. K.G.); Israel (Sigma Israel
Chemicals Ltd.); Switzerland (Fluka Chemie AG, "Fluka") and the United Kingdom
(Sigma-Aldrich 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 80,000 products listed in the Sigma, Aldrich, Fluka
and Supelco catalogs, the Company produced approximately 39,000 which accounted
for 49% of the net sales of chemical products for the year ended December 31,
1995. 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 approximately 290 chemists and lab technicians utilizing sophisticated
scientific equipment.
3) Distribution and Sales:
The Company markets its chemical products through separate sales and
marketing units for research, bulk and diagnostics and distributes over
2,900,000 comprehensive catalogs for the Sigma, Aldrich, Fluka and Supelco
brands 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
representatives with customers.
For customer convenience, Sigma packages approximately 315 combinations of
certain of its individual products in diagnostic kit form. A diagnostic kit
contains products which, when used in a series of manual and/or automated
testing procedures, aids in detecting particular conditions or diseases.
Diagnostic products accounted for approximately 10% of the Company's sales of
chemical products in the year ended December 31, 1995.
During the year ended December 31, 1995, products were sold to
approximately 138,000 customers, including hospitals, universities and clinical
laboratories as well as private and governmental research laboratories. The
majority of the Company's sales are small orders in laboratory quantities
averaging approximately $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
1995. During the year ended December 31, 1995, no one customer and no one
product accounted for more than 1% of the net sales of chemical products.
Customers and potential customers, wherever located, are encouraged to
contact the Company 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, United Kingdom, 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, 1995, 54% 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, Austria, Belgium, Brazil, Canada,
Czech Republic, France, Germany, Hungary, India, Israel, Italy, Japan, Mexico,
The Netherlands, Poland, Singapore, South Korea, Spain, Sweden, Switzerland
and United Kingdom. Several foreign subsidiaries also have production
facilities.
For sales with final destinations in an international market, the Company
has a Foreign Sales Corporation ("FSC") subsidiary which provides 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 international 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, 1995, approximately 15% of the Company's domestic operations' chemical
purchases were from international suppliers. Additional information regarding
international operations is included in Note 10 to the consolidated financial
statements on pages 21 and 22 of the 1995 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 marketing units; "Sigma-Aldrich Research", "SAF"
(Sigma-Aldrich Bulk)and "Sigma Diagnostics". Their related logos, which have
various expiration dates, 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 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 900 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.
Approximately 400 products, for which sales are immaterial to the total
sales of the Company, are subject to control by the Department of Commerce
("DOC"). The DOC has promulgated the Export Administration Regulations pursuant
to the Export Administration Act of 1979, as amended, to regulate the export of
certain products by requiring a special export license.
(b) Metal Products.
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Components for strut, cable tray and pipe support systems are manufactured
by B-Line at its facilities in Highland and Troy, Illinois; Norcross, Georgia;
Reno, Nevada and Sherman, Texas. Components and complete systems used to
support telecommunications apparatus and cabling are manufactured at the plant
in Reno, Nevada. 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
from 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, California
plants, from two regional warehouses and 49 consigned stock locations.
B-Line's products are advertised in trade journals and by circulation of
comprehensive catalogs.
(c) Competition.
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Substantial competition exists in all of 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, product quality and price.
(d) Employees.
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The Company employed 5,682 persons as of December 31, 1995. Of these,
4,587 were engaged in production and distribution of chemical products. The
B-Line subsidiary employed 1,095 persons. The total number of persons employed
within the United States was 4,156, with the balance employed by the
international subsidiaries. The Company employed over 1,900 persons who have
degrees in chemistry, biochemistry, engineering or other scientific disciplines,
including approximately 220 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 14, 1999. 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 13, 1998.
(e) Back-log of Orders.
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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, 1995 and 1994, the back-log
of firm orders and orders for future delivery of chemical products was not
significant. The Company expects that substantially all of the December 31,
1995 back-log will be shipped during 1996.
On December 31, 1995 and 1994, the back-log of orders at B-Line was not
significant. B-Line expects that substantially all of the December 31, 1995
back-log will be shipped during 1996.
(f) Information as to Industry Segments.
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Information concerning industry segments for the years ended December 31,
1995, 1994 and 1993, is located in Note 10 to the consolidated financial
statements on page 21 of the 1995 Annual Report which is incorporated
herein by reference.
(g) Executive Officers of the Registrant.
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Information regarding executive officers is contained in Part III, Item 10,
and is incorporated herein by reference.
Item 2. Properties.
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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, a 23,000 square foot building
used for warehousing and office space and a 30,000 square foot building used for
production, quality control and packaging. The Company owns a 280,000 square
foot building in St. Louis which 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 318,000 square feet for production and packaging. Fluka owns an 11
acre site in Buchs, Switzerland, upon which are located its primary production
facilities. Approximately 237,000 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 located in Highland and
Troy, Illinois; Norcross, Georgia; Sherman, Texas; Reno, Nevada; Portland,
Oregon; and Modesto, 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 238,000 square foot building in Sherman, Texas,
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.
The Company also owns warehouse and distribution facilities containing
approximately 173,000 and 8,000 square feet in Allentown, Pennsylvania and
Ronkonkoma, New York, respectively, and leases warehouses in Chicago, Illinois
and Dallas, Texas under short-term leases. Manufacturing and/or warehousing
facilities are also owned or leased in the United Kingdom, France, 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.
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There are no material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
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No matters were submitted by the Registrant to the stockholders for a vote
during the fourth quarter of 1995.
PART II
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Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
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Information concerning market price of the Registrant's Common Stock and
related shareholder matters for the years ended December 31, 1995 and 1994, is
located on page 11 of the 1995 Annual Report which is incorporated herein by
reference.
As of March 8, 1996, there were 2,226 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 and
Supplementary Data.
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The information required by Items 6 through 8 is incorporated herein by
reference to pages 11-24 of the 1995 Annual Report. See Index to Financial
Statements and Schedules on page F-1 of this report. Those pages of the
Company's 1995 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.
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Not applicable.
PART III
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Item 10. Directors and Executive Officers of the Registrant.
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Information under the captions "Nominees for Board of Directors" and
"Security Ownership of Directors, Executive Officers and Principal Beneficial
Owners" of the 1996 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 59 Chairman of the Board and Chief
Executive Officer
Peter A. Gleich 50 Vice President, Treasurer and Chief
Financial Officer
David R. Harvey 56 President and Chief Operating Officer
Kirk A. Richter 49 Controller
Thomas M. Tallarico 51 Vice President and Secretary
There is no family relationship between any of the officers.
Dr. Cori has been Chief Executive Officer of the Company for more than five
years. He was elected Chairman of the Board in May 1991 and served as President
of the Company for more than five years until March 1995.
Mr. Gleich was elected Treasurer and Chief Financial Officer in November 1994.
He has been Vice President of the Company for more than five years. He was
Secretary of the Company for more than five years until November 1994. He also
served as Treasurer of the Company from 1975 to May 1991.
Dr. Harvey has been Chief Operating Officer of the Company for more than five
years. He was elected President of the Company in March 1995, after serving as
Executive Vice President for more than five years.
Mr. Richter has held the position indicated for more than five years.
Mr. Tallarico was elected Secretary in November 1994. He has been a Vice
President of the Company for more than five years and served as Treasurer of the
Company from May 1991 to November 1994.
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.
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Information under the captions "Director Compensation and Transactions" and
"Information Concerning Executive Compensation" of the 1996 Proxy Statement is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
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Information under the caption "Security Ownership of Directors, Executive
Officers and Principal Beneficial Owners" of the 1996 Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
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Information under the caption "Director Compensation and Transactions" of
the 1996 Proxy Statement is incorporated herein by reference.
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
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(a) Documents filed as part of this report:
1. Financial Statements.
See Index to Financial Statements and Schedules on page F-1 of this
report. Those pages of the Company's 1995 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 Statements and Schedules on page F-1 of this
report.
3. Exhibits.
See Index to Exhibits on page F-3 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.
SIGNATURES
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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
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(Registrant)
By /s/ Peter A. Gleich March 28, 1996
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Peter A. Gleich, Vice President, Date
Treasurer and Chief Financial Officer
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 28, 1996
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Carl T. Cori, Director, Chairman of the Date
Board and Chief Executive Officer
By /s/ David R. Harvey March 28, 1996
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David R. Harvey, Director, President and Date
Chief Operating Officer
By /s/ Peter A. Gleich March 28, 1996
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Peter A. Gleich, Vice President, Treasurer Date
and Chief Financial Officer
By /s/ Kirk A. Richter March 28, 1996
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Kirk A. Richter, Controller Date
By /s/ Thomas M. Tallarico March 28, 1996
--------------------------------------- --------------
Thomas M. Tallarico, Vice President and Date
Secretary
By /s/ David M. Kipnis March 28, 1996
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David M. Kipnis, Director Date
By /s/ Andrew E. Newman March 28, 1996
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Andrew E. Newman, Director Date
By /s/ Jerome W. Sandweiss March 28, 1996
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Jerome W. Sandweiss, Director Date
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
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Page Number
Reference
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Annual Report
to Shareholders
---------------
Comparative financial data for the years
1995, 1994, 1993, 1992 and 1991 11
Management's discussion of financial
condition and results of operations 12
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 1995 and 1994 15
Consolidated statements for the years
ended December 31, 1995, 1994 and 1993
Income 14
Stockholders' Equity 16
Cash Flows 17
Notes to consolidated financial statements 18
Report of independent public accountants 14
FINANCIAL STATEMENT SCHEDULES:
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.
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 Incorporated by reference to Exhibit
Amendments 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 1996 See Exhibit 3(b).
(4) Instruments Defining the Rights of
Shareholders, Including Indentures:
(a) Certificate of Incorporation and See Exhibit 3(a) above.
Amendments
(b) By-Laws as amended February 1996 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 reference to
Stock Bonus Plan* Exhibit 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 reference to
Plan of 1987* Exhibit 10(e) of Form 10-K filed
for the year ended December 31,
1992, Commission File Number
0-8135.
(f) Second Amendment to Share Option Incorporated by reference to Exhibit
Plan of 1987* 10(f) of Form 10-K filed for the
year ended December 31, 1994,
Commission File Number 0-8135.
(g) Employment Agreement with Carl Incorporated by reference to Exhibit
T. Cori* (Similar Employment 10(g) of Form 10-K filed for the
Agreements also exist with year ended December 31, 1992,
Peter A. Gleich, David R. Commission File Number 0-8135.
Harvey, Kirk A. Richter and
Thomas M. Tallarico)
(h) Letter re: Consultation Services Incorporated by reference to Exhibit
with Dr. David M. Kipnis* 10(h) of Form 10-K filed for the
year ended December 31, 1992,
Commission File Number 0-8135.
(i) Share Option Plan of 1995* Incorporated by reference to
Appendix A of the Company's
Definitive Proxy Statement filed
March 30, 1995, 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
1995 financial statements filed as
Exhibit 13 below.
(13) Pages 11-24 of the Annual Report See Exhibit 13.
to Shareholders for the year
ended December 31, 1995
(21) Subsidiaries of Registrant Page F-20 of this report.
(23) Consent of Independent Public Page F-2 of this report.
Accountants
(27) Financial Data Schedule See Exhibit 27.
*Represents management contract or compensatory plan or arrangement required to
be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
SIGMA-ALDRICH CORPORATION Exhibit 3(b)
(A Delaware Corporation)
BY-LAWS
----------------------
ARTICLE I. OFFICES
1.01. Registered Office. The registered office shall be in the City
of Wilmington, County of New Castle, State of Delaware.
1.02. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of
the Corporation may require.
ARTICLE II. SHAREHOLDERS
* 2.01. Annual Meeting. The annual meeting of the shareholders shall
be held on the first Tuesday of May of each year commencing in 1976
or on such other date as may be fixed by or under the authority of
the Board of Directors, for the purpose of electing directors and for
the transaction of such other business as may properly come before
the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of Delaware, such meeting shall be held on
the next succeeding business day. If the election of directors shall
not be held on the day designated herein, or fixed as herein
provided, for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon
thereafter as is convenient.
** 2.01A. Notice of Shareholder Business.
(a) At an annual meeting of shareholders, only such business
shall be conducted, and only such proposals shall be acted
upon, as shall have been properly brought before the meeting
(i) pursuant to the Corporation's notice of meeting, (ii) by
or at the direction of the Board of Directors, or (iii) by any
shareholder of the Corporation who is a shareholder of record
at the time of giving of the notice provided for in this By-Law,
who shall be entitled to vote at such meeting and who
complies with the notice procedures set forth in this By-Law.
(b) For a proposal to be properly brought before an annual
meeting by a shareholder pursuant to clause (iii) of paragraph
(a) of this By-Law, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation.
To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the
Corporation not less than 10 days prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting
is changed by more than 30 days from such anniversary date,
notice by the shareholder to be timely must be received no
later than the
*Amended by Board resolution of 1/27/76.
**Added by Board resolution of 2/16/93.
close of business on the 10th day preceding the date of the
meeting as announced in the notice of the meeting or otherwise
publicly disclosed. A shareholder's notice to the Secretary
shall set forth as to each matter the shareholder proposes to
bring before the meeting: (i) a brief description of the
proposal desired to be brought before the annual meeting and
the reasons for conducting such business at the annual
meeting, (ii) the name and address, as they appear on the
Corporation's stock transfer records, of the shareholder
proposing such business, and the name and address of the
beneficial owner, if any, on whose behalf the proposal is
made, (iii) the class and number of shares of the Corporation
which are owned beneficially and of record by such shareholder
of record and by the beneficial owner, if any, on whose behalf
the proposal is made, and (iv) any material interest of such
shareholder of record and the beneficial owner, if any, on
whose behalf the proposal is made in such business.
(c) The Board of Directors may reject any shareholder
proposal submitted for consideration at the annual meeting
which is not made in accordance with the terms of this By-Law
or which is not a proper subject for shareholder action in
accordance with provisions of applicable law. Alternatively,
if the Board of Directors fails to consider the validity of
any shareholder proposal, the presiding officer of the meeting
shall, if the facts warrant, determine and declare at the
annual meeting that the shareholder proposal was not properly
brought before the meeting and in accordance with the
procedures prescribed by these By-Laws, and if he should make
that determination, he shall so declare at the meeting and any
such business or proposal shall not be acted upon.
Notwithstanding the foregoing provisions of this By-Law, a
shareholder shall also comply with all applicable requirements
of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder with respect to the matters
set forth in this By-Law. This provision shall not prevent
the consideration and approval or disapproval at the annual
meeting of reports of officers, directors and committees of
the Board of Directors, but, in connection with such reports,
no new business shall be acted upon at the meeting unless
stated, filed and recorded as herein provided.
2.02. Special Meeting. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute or by
the Certificate of Incorporation, may be called by the Chairman of
the Board of Directors, the President or the Board of Directors, or
by the person designated in the written request of the holders of not
less than a majority in amount of all shares of the Corporation
entitled to vote at the meeting. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at
any special meeting of shareholders shall be limited to the purpose
or purposes stated in the notice.
2.03. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Delaware, as the place
of meeting for any annual meeting or for any special meeting called
by the Board of Directors. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any place,
either within or without the State of Delaware, as the place for the
holding of such meeting. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall be the
registered office of the Corporation, or such other suitable place in
the county of such registered office as may be designated by the
person calling such meeting, but any meeting may be adjourned to
reconvene at any place designated by vote of a majority of the shares
represented thereat.
2.04. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less
than ten (unless a longer period is required by law) nor more than
sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the President, or the Secretary, or
other officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on
the stock record books of the Corporation, with postage thereon
prepaid.
2.05. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or
shareholders entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose,
the Board of Directors may provide that the stock transfer books
shall be closed for a stated period but not to exceed, in any case,
sixty days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote
at a meeting of shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the
stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders,
such date on which the particular action, requiring such
determination of shareholders, is to be taken. If the stock transfer
books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment
of a dividend, the close of business on the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof except
where the determination has been made through the closing of the
stock transfer books and the stated period of closing has expired.
2.06. Voting Records. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days
before every meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting or any adjournment
thereof, arranged in alphabetical order, and showing the address of
each shareholder and the number of shares registered in the name of
each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting,
or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by
any shareholder who is present. Upon the willful neglect or refusal
of the directors to produce such a list at any meeting for the
election of directors they shall be ineligible for election to any
office at such meetings. In all other instances, failure to comply
with the requirements of this section shall not affect the validity
of any action taken at such meeting.
2.07. Quorum. Except as otherwise provided in the Certificate of
Incorporation, a majority of the shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to
vote on the subject matter shall be the act of the shareholders
unless the vote of a greater number or voting by classes is required
by law or the Certificate of Incorporation. Though less than a
quorum of the outstanding shares are represented at a meeting, a
majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at
which a quorum shall be present or represented, any business may
be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at
the meeting.
* 2.08. Conduct of Meeting. The Chairman of the Board, and in his
absence, the President, and in his absence, a Vice-President in the
order provided under Section 4.07, and in their absence, any person
chosen by the shareholders present shall call the meeting of the
shareholders to order and shall act as chairman of the meeting, and
the Secretary of the Corporation shall act as secretary of all
meetings of the shareholders, but, in the absence of the Secretary,
the presiding officer may appoint any other person to act as
secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed in writing
by the shareholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the Secretary of the Corporation before or
at the time of the meeting. Unless otherwise provided in the proxy,
a proxy may be revoked at any time before it is voted, either by
written notice filed with the Secretary or the acting secretary of
the meeting or by oral notice given by the shareholder to the
presiding officer during the meeting. The presence of a shareholder
who has filed his proxy shall not of itself constitute a revocation.
No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules
establishing presumptions as to the validity and sufficiency of
proxies.
2.10. Voting of Shares. Each outstanding share shall be entitled to
one vote upon each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the
shares of any class or classes are enlarged, limited or denied by the
Certificate of Incorporation.
2.11. Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of
another corporation may be voted either in person or by proxy,
by the president of such corporation or any other officer
appointed by such president. A proxy executed by any
principal officer of such other corporation or assistant
thereto shall be conclusive evidence of the signer's authority
to act, in the absence of express notice to this Corporation,
given in writing to the Secretary of this Corporation, of the
designation of some other person by the board of directors or
by the by-laws of such other corporation.
*Amended by Board resolution of 11/25/80.
(b) Legal Representatives and Fiduciaries. Shares held by
any administrator, executor, guardian, conservator, trustee in
bankruptcy, receiver, or assignee for creditors may be voted
by him, either in person or by proxy, without a transfer of
such shares into his name provided that there is filed with
the Secretary before or at the time of meeting proper evidence
of his incumbency and the number of shares held. Shares
standing in the name of a fiduciary may be voted by him,
either in person or by proxy. A proxy executed by a
fiduciary, shall be conclusive evidence of the signer's
authority to act, in the absence of express notice to this
Corporation, given in writing to the Secretary of this
Corporation, that such manner of voting is expressly
prohibited or otherwise directed by the document creating the
fiduciary relationship.
(c) Pledgees. A shareholder whose shares are pledged shall
be entitled to vote such shares, unless in the transfer by the
pledgor on the books of the Corporation he has expressly
empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent such stock and vote
thereon.
(d) Treasury Stock and Subsidiaries. Neither treasury
shares, nor shares held by another corporation if a majority
of the shares entitled to vote for the election of directors
of such other corporation is held by this Corporation, shall
be voted at any meeting or counted in determining the total
number of outstanding shares entitled to vote, but shares of
its own issue held by this Corporation in a fiduciary
capacity, or held by such other corporation in a fiduciary
capacity, may be voted and shall be counted in determining the
total number of outstanding shares entitled to vote.
(e) Minors. Shares held by a minor may be voted by such
minor in person or by proxy and no such vote shall be subject
to disaffirmance or avoidance, unless prior to such vote the
Secretary of the Corporation has received written notice or
has actual knowledge that shareholder is a minor.
(f) Incompetents and Spendthrifts. Shares held by an
incompetent or spendthrift may be voted by such incompetent or
spendthrift in person or by proxy and no such vote shall be
subject to a disaffirmance or avoidance, unless prior to such
vote the Secretary of the Corporation has actual knowledge
that such shareholder has been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial
proceedings for appointment of a guardian.
(g) Joint Tenants. Shares registered in the names of two or
more individuals who are named in the registration as joint
tenants may be voted in person or by proxy signed by any one
or more of such individuals if either (i) no other such
individual or his legal representative is present and claims
the right to participate in the voting of such shares or prior
to the vote files with the Secretary of the Corporation a
contrary written voting authorization or direction or written
denial of authority of the individual present or signing the
proxy proposed to be voted or (ii) all such other individuals
are deceased and the Secretary of the Corporation has no
actual knowledge that the survivor has been adjudicated not to
be the successor to the interests of those deceased.
2.12. Waiver of Notice by Shareholders. Whenever any notice
whatever is required to be given to any shareholder of the
Corporation under the Certificate of Incorporation or By-Laws or any
provision of law, a waiver thereof in writing, signed at any time,
whether before or after the time of meeting, by the shareholder
entitled to such notice, shall be deemed equivalent to the giving of
such notice; provided that such waiver in respect to any matter of
which notice is required under any provision of the Delaware
Corporation Law, shall contain the same information as would have
been required to be included in such notice, except the time and
place of meeting.
2.13. Unanimous Consent Without Meeting. Any action required or
permitted by the Certificate of Incorporation or By-Laws or any
provision of law to be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
* 3.01. General Powers, Number and Election. The business and affairs
of the Corporation shall be managed by its Board of Directors. The
number of directors of the Corporation shall be eight who shall be
elected by the shareholders at the annual meeting of shareholders.
3.02. Tenure and Qualifications. Each director shall hold office
until the next annual meeting of shareholders and until his successor
shall have been elected, or until his prior death, resignation or
removal. A director may be removed from office by affirmative vote
of a majority of the outstanding shares entitled to vote for the
election of such director, taken at a meeting of shareholders called
for that purpose. A director may resign at any time by filing his
written resignation with the Secretary of the Corporation. Directors
need not be residents of the State of Delaware or shareholders of the
Corporation.
3.03. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this By-Law immediately after
the annual meeting of shareholders, and each adjourned session
thereof. The place of such regular meeting shall be the same as the
place of the meeting of shareholders which precedes it, or such other
suitable place as may be announced at such meeting of shareholders.
The Board of Directors may provide, by resolution, the time and
place, either within or without the State of Delaware for the holding
of additional regular meetings without other notice than such
resolution.
3.04. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board of
Directors, President, Secretary or any two directors. The Chairman
of the Board of Directors, President or Secretary calling any special
meeting of the Board of Directors called by them, and if no other
place is fixed the place of meeting shall be the registered office of
the Corporation in the State of Delaware.
*Amended by Board resolutions of 8/23/77, 2/24/81, 2/23/82, 2/19/85,
11/25/85, 11/11/86, 8/12/87, 6/20/89, 2/18/92 and 2/20/96.
3.05. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.03)
shall be given by written notice delivered personally or mailed or
given by telegram to each director at his business address (or at
such other address as such director shall have designated in writing
filed with the Secretary), in each case not less than five days prior
to the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice
shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Whenever any notice whatever is required to be
given to any director of the Corporation under the Certificate of
Incorporation or By-Laws or any provision of law, a waiver thereof in
writing, signed at any time, whether before or after the time of
meeting, by the director entitled to such notice, shall be deemed
equivalent to the giving of such notice. The attendance of a
director at a meeting shall constitute a waiver of notice of such
meeting, except where a director attends a meeting and objects
thereat to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of
such meeting.
3.06. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation or these By-Laws, a majority of the
number of directors as provided in Section 3.01 shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors, but a majority of the directors present (though less than
such quorum) may adjourn the meeting from time to time without
further notice.
3.07. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless the act of a greater number is
required by law or by the Certificate of Incorporation or these By-Laws.
3.08. Conduct of Meetings. The Chairman of the Board of Directors,
and in his absence, the President, or in his absence, a Vice
President, in the order provided under Section 4.07, and in their
absence, any director chosen by the directors present, shall call
meetings of the Board of Directors to order and shall act as chairman
of the meeting. The Secretary of the Corporation shall act as
secretary of all meetings of the Board of Directors, but in the
absence of the Secretary, the presiding officer may appoint any
Assistant Secretary or any director or other person present to act as
secretary of the meeting.
3.09. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of
directors, may be filled until the next succeeding annual election by
the affirmative vote of a majority of the directors then in office,
though less than a quorum of the Board of Directors; provided, that
in case of a vacancy created by the removal of a director by vote of
the shareholders, the shareholders shall have the right to fill such
vacancy at the same meeting or any adjournment thereof.
3.10. Compensation. The Board of Directors, by affirmative vote of
a majority of the directors then in office, and irrespective of any
personal interest of any of its members, may establish reasonable
compensation of all directors for services to the Corporation as
directors, officers or otherwise, or may delegate such authority to
an appropriate committee.
3.11. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors or a committee thereof
of which he is a member at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless
he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of
the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
3.12. Committees. The Board of Directors by resolution adopted by
the affirmative vote of a majority of the whole Board may designate
one or more committees, each committee to consist of three or more
directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter
supplemented or amended by further resolution adopted by a like vote,
shall have and may exercise, when the Board of Directors is not in
session, the management of the business and affairs of the
Corporation, except that no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
shareholders a dissolution of the Corporation or a revocation of a
dissolution, amending the By-Laws of the Corporation, declaring
dividends to shareholders, authorizing the issuance of stock, or
electing the principal officers or the filling of vacancies in the
Board of Directors or committees created pursuant to this section.
The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any
absent member or members at any meeting of such committee, upon
request by the President or upon request by the chairman of such
meeting. Each such committee shall fix its own rules governing the
conduct of its activities and shall make such reports to the Board of
Directors of its activities as the Board of Directors may request.
3.13. Unanimous Consent Without Meeting. Any action required or
permitted by the Certificate of Incorporation or By-Laws or any
provision of law to be taken by the Board of Directors at a meeting
or by resolution may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of
the directors then in office.
* 3.14. Nomination By-Law.
(a) Only persons who are nominated in accordance with the
procedures set forth in these By-Laws shall be eligible to
serve as Directors. Nominations of persons for election to
the Board of Directors of the Corporation may be made at a
meeting of shareholders (i) by or at the direction of the
Board of Directors or (ii) by any shareholder of the
Corporation who is a shareholder of record at the time of
giving of notice provided for in this By-Law, who shall be
entitled to vote for the election of directors at the meeting
and who complies with the notice procedures set forth in this
By-Law.
(b) Nominations by shareholders shall be made pursuant to
timely notice in writing to the Secretary of the Corporation.
To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal executive offices of the
Corporation (i) in the case of an annual meeting, not less than
*Added by Board resolution of 2/16/93.
10 days prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the
date of the annual meeting is changed by more than 30 days
from such anniversary date, notice by the shareholder to be
timely must be so received not later than the close of
business on the 10th day preceding the date of the meeting as
announced in the notice of the meeting or otherwise publicly
disclosed, and (ii) in the case of a special meeting at which
directors are to be elected, not later than the close of
business on the 10th day preceding the date of the meeting as
announced in the notice of the meeting or otherwise publicly
disclosed. Such shareholder's notice to the Secretary shall
set forth (i) as to each person whom the shareholder proposes
to nominate for election or reelection as a director all
information relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities and Exchange Act of 1934,
as amended (including such person's written consent to being
named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to the shareholder giving the
notice (x) the name and address, as they appear on the
Corporation's stock transfer records, of such shareholder,
(y) the class and number of shares of the Corporation which are
beneficially owned by such shareholder and also which are owned
of record by such shareholder, and (z) a representation that such
shareholder intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice; and (iii) as to the beneficial owner, if any, on whose
behalf the nomination is made, (x) the name and address of
such person and (y) the class and number of shares of the
Corporation which are beneficially owned by such person. The
Corporation may require any proposed nominee to furnish any
other information it may reasonably require to determine the
eligibility of the proposed nominee to serve as a director of
the Corporation. At the request of the Board of Directors,
any person nominated by the Board of Directors for election as
a director shall furnish to the Secretary of the Corporation
that information required to be set forth in a shareholder's
notice of nomination which pertains to the nominee.
(c) Subject to the rights, if any, of holders of any class of
capital stock of the Corporation (other than the common stock)
then outstanding, no person shall be eligible to serve as a
director of the Corporation unless nominated in accordance
with the procedures set forth in this By-Law. The presiding
officer of the meeting shall, if the facts warrant, determine
and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these By-Laws,
and if he should make that determination, he shall so declare
at the meeting and the defective nomination shall be
disregarded. Notwithstanding the foregoing provisions of this
By-Law, a shareholder shall also comply with all applicable
requirements of the Securities and Exchange Act of 1934, as
amended, and the rules and regulations thereunder with respect
to the matters set forth in this By-Law.
ARTICLE IV. OFFICERS *
4.01. Number. The principal officers of the Corporation shall be a
Chairman of the Board of Directors, a President, one or more Vice
Presidents, a Secretary, a Treasurer and a Controller, each of whom
shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any two or more offices may be
held by the same person, except the offices of President and
Secretary and the offices of President and Vice President.
4.02. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors
held after each annual meeting of the shareholders. If the election
shall not be held at such meeting, such election shall be held as
soon thereafter as is convenient. Each officer shall hold office
until his successor shall have been duly elected or until his prior
death, resignation or removal.
4.03. Removal. Any officer or agent may be removed by affirmative
vote of majority of the whole Board of Directors whenever in its
judgment the best interests of the Corporation will be served
thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment
shall not of itself create contract rights.
4.04. Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be
filled by the Board of Directors for the unexpired portion of the
term.
** 4.05. Chairman of the Board of Directors. The Chairman of the Board
of Directors shall be the Chief Executive Officer of the Corporation
and, subject to the control of the Board of Directors, shall
supervise and control the business, property and affairs of the
Corporation. The Chairman of the Board of Directors of the
Corporation shall preside at all meetings of the Board of Directors
and shareholders at which he is present. He may sign and execute all
instruments in the name of the Corporation which the Board of
Directors has authorized to be executed, except where the execution
thereof shall be expressly delegated by the Board of Directors or the
By-Laws to another officer or agent of the Corporation, or shall be
required by law to be otherwise executed. The Chairman of the Board
shall perform all duties incident to the office of Chief Executive
Officer and shall be an ex-officio member of all standing committees.
** 4.06. The President. The President shall be the Chief Operating
Officer of the Corporation and, subject to the control of the Board
of Directors, shall direct the day-to-day operations of the
Corporation's businesses and perform such duties as may be delegated
to him by the Chairman of the Board of Directors or the Board of
Directors. In the absence of the Chairman of the Board, or in the
event of his death, inability or refusal to act, the President shall
preside at the meetings of the Board
*Restated pursuant to Board action of 5/3/83 and amended by Board
resolutions of 11/8/94 and 3/6/95.
**Amended by Board resolutions of 1/27/76 and 11/25/80, restated pursuant
to Board action of 5/3/83 and amended by Board resolution of 3/6/95.
of Directors and shareholders at which he is present. He may sign
and execute all instruments in the name of the Corporation which the
Board of Directors has authorized to be executed, except where the
execution thereof shall be expressly delegated by the Board of
Directors or the By-Laws to another officer or agent of the
Corporation, or shall be required by law to be otherwise executed.
The President shall perform all duties incident to the office of
Chief Operating Officer and shall be an ex-officio member of all
standing committees.
* 4.07. The Vice Presidents. Subject to the provisions of Section
4.06, in the absence of the President or in the event of his death,
inability or refusal to act, or in the event for any reason it shall
be impractical for him to act personally, the Vice Presidents in the
order designated by the Board of Directors, or in the absence of any
designation, then in the order or their election, shall perform the
duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the Corporation; and shall
perform such other duties and have such authority as from time to
time may be delegated or assigned to him by the President or the
Board of Directors. The execution of any instrument of the
Corporation by any Vice President shall be conclusive evidence, as to
third parties, of his authority to act in the stead of the President.
** 4.08. The Secretary. The Secretary shall: (a) keep the minutes of
the meetings of the shareholders and of the Board of Directors in one
or more books provided for that purpose; (b) see that all notices
are duly given in accordance with the provisions of these By-Laws or
as required by law; (c) be custodian of the corporate records and of
the seal of the Corporation and see that the seal of the Corporation
is affixed to all documents the execution of which on behalf of the
Corporation under its seal is duly authorized; (d) keep or arrange
for the keeping of a register of the post office address of each
shareholder which shall be furnished to the Secretary by such
shareholder; (e) sign with the Chairman of the Board or the
President, or a Vice President, certificates for shares of the
Corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the
stock transfer books of the Corporation; and (g) in general perform
all duties and exercise such authority as from time to time may be
delegated or assigned to him by the Chairman of the Board, or the
President or by the Board of Directors.
*Amended by Board resolution of 3/6/95.
**Amended by Board resolution of 7/28/81, then restated pursuant to Board
action of 5/3/83.
* 4.09. The Treasurer. The Treasurer shall be the Chief Financial
Officer and, subject to the control of the Board of Directors, shall:
(a) have charge and custody of and be responsible for all funds and
securities of the Corporation; (b) receive and give receipts for
moneys due and payable to the Corporation from any source whatsoever,
and deposit all such moneys in the name of the Corporation in such
banks, trust companies or other depositaries as shall be selected in
accordance with the provisions of Section 5.04; and (c) in general
perform all of the duties and exercise such other authority as from
time to time may be delegated or assigned to him by the President or
by the Board of Directors. If required by the Board of Directors,
the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of
Directors shall determine. Whenever required by the Board of
Directors so to do, he shall exhibit a true and complete statement of
his cash account and of the securities and other funds in his
possession, custody and control. He shall at all reasonable times
within business hours exhibit his books and accounts to any director.
4.10. The Controller. The Controller shall be in charge of the
financial records of the Corporation, and shall, under the general
supervision of the Treasurer, be responsible for the accounting and
financial services of the Corporation.
** 4.11. Assistant Secretaries and Assistant Treasurers. There shall
be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors may from time to time authorize. The
Assistant Secretaries may sign with the Chairman of the Board, or the
President or a Vice President certificates for shares of the
Corporation the issuance of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers shall
respectively, if required by the Board of Directors, give bonds for
faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such
duties and have such authority as shall from time to time be
delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board or the President or the
Board of Directors.
4.12. Other Assistants and Acting Officers. The Board of Directors
shall have the power to appoint any person to act as assistant to any
officer, or agent for the Corporation in his stead, or to perform the
duties of such officer whenever for any reason it is impracticable
for such officer to act personally, and such assistant or acting
officer or other agent so appointed by the Board of Directors shall
have the power to perform all the duties of the office to which he is
so appointed to be assistant, or as to which he is so appointed to
act, except as such power may be otherwise defined or restricted by
the Board of Directors.
4.13. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a
director of the Corporation.
*Amended by Board resolution of 11/8/94.
**Amended by Board resolution of 7/28/81, then restated pursuant to Board
action of 5/3/83.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS:
SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute
or deliver any instrument in the name of and on behalf of the
Corporation, and such authorization may be general or confined to
specific instances. In the absence of other designation, all deeds,
mortgages and instruments of assignment or pledge made by the
Corporation shall be executed in the name of the Corporation by the
President or one of the Vice Presidents and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer; the
Secretary or an Assistant Secretary, when necessary or required,
shall affix the corporate seal thereto; and when so executed no other
party to such instrument or any third party shall be required to make
any inquiry into the authority of the signing officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be contracted
on behalf of the Corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the
authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts, or other orders for
the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as
shall from time to time be determined by or under the authority of a
resolution of the Board of Directors.
5.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of
Directors.
5.05. Voting of Securities Owned by This Corporation. Subject
always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned
or controlled by this Corporation may be voted at any meeting of
security holders of such other corporation by the President of this
Corporation if he be present, or in his absence by any Vice President
of this Corporation who may be present, and (b) whenever in the
judgment of the President, or in his absence, of any Vice President,
it is desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other securities issued by any
other corporation and owned by this Corporation, such proxy or
consent shall be executed in the name of this Corporation by the
President or one of the Vice Presidents of this Corporation, without
necessity of any authorization by the Board of Directors, affixation
of corporate seal or counter signature or attestation by another
officer. Any person or persons designated in the manner above stated
as the proxy or proxies of this Corporation shall have full right,
power and authority to vote the shares or other securities issued by
such other corporation and owned by this Corporation and the same as
such shares or other securities might be voted by this Corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
* 6.01. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form, consistent with law, as shall
be determined by the Board of Directors. Such certificates shall be
signed by the Chairman of the Board, or the President or a Vice
President and by the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued
until the former certificate for a like number of shares shall have
been surrendered and cancelled, except as provided in Section 6.06.
* 6.02. Facsimile Signatures and Seal. The seal of the Corporation on
any certificate for shares may be a facsimile. The signature of the
Chairman of the Board or the President or Vice President and the
Secretary or Assistant Secretary upon a certificate may be facsimiles
if the certificate is manually signed on behalf of a transfer agent,
or a registrar, other than the Corporation itself or an employee of
the Corporation.
6.03. Signature by Former Officers. In case any officer, who has
signed or whose facsimile signature has been placed upon any
certificate for shares, shall have ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer at the date of issue.
6.04. Transfer of Shares. Prior to due presentment of a certificate
for shares for registration of transfer the Corporation may treat the
registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to have and exercise all
the rights and power of an owner. Where a certificate for shares is
presented to the Corporation with a request to register for transfer,
the Corporation shall not be liable to the owner or any other person
suffering loss as a result of such registration of transfer if (a)
there were on or with the certificate the necessary endorsements, and
(b) the Corporation had no duty to inquire into adverse claims or has
discharged any such duty. The Corporation may require reasonable
assurance that said endorsements are genuine and effective and
compliance with such other regulations as may be prescribed by or
under the authority of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of
any restriction imposed by the Corporation upon the transfer of such
shares.
** 6.06. Lost, Destroyed or Stolen Certificates. Where the owner
claims that his certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate may be issued in place thereof if
the owner so requests before the Corporation has notice that such
shares have been acquired by a bona fide purchaser. When authorizing
such issuance of a new certificate the President, Vice President or
Secretary of the Corporation shall require the owner of such lost,
destroyed or wrongfully taken certificate to file with the
Corporation sufficient indemnity bond, and satisfy such other
reasonable requirements as may be prescribed by or under the
authority of the Board of Directors.
*Amended by Board resolution of 7/28/81.
**Amended by Board resolution of 2/18/86.
6.07. Consideration for Shares. The shares of the Corporation may
be issued for such consideration as shall be fixed from time to time
by the Board of Directors, provided that any shares having a par
value shall not be issued for a consideration less than the par value
thereof. The consideration to be paid for shares may be paid in
whole or in part, in money, in other property, tangible or
intangible, or in labor or services actually performed for the
Corporation. When payment of the consideration for which shares are
to be issued shall have been received by the Corporation, such shares
shall be deemed to be fully paid and nonassessable by the
Corporation. No certificate shall be issued for any share until such
share is fully paid.
6.08. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations
not inconsistent with the statutes of the State of Delaware as it may
deem expedient concerning the issue, transfer and registration of
certificates representing shares of the Corporation.
ARTICLE VII. INDEMNIFICATION
7.01. Mandatory Indemnification. The Corporation shall, to the full
extent permitted by the Delaware Corporation Law, indemnify any
person who was or is a party or threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the
fact that he is or was a director or officer of the Corporation or
is or was serving at the request of the Corporation as a director or
officer of any other corporation or enterprise. Such right of
indemnification shall inure to the benefit of the heirs, executors,
administrators and personal representatives of such a person.
7.02. Permissive Supplementary Benefits. The Corporation may, but
shall not be required to, supplement the right of indemnification
under Section 7.01 by (a) the purchase of insurance on behalf of any
one or more of such persons, whether or not the Corporation would be
obligated to indemnify such person Section 7.01, (b) individual or
group indemnification agreements with any one or more of such persons
and (c) advances for related expenses of such a person.
7.03. Amendment. This Article VII may be amended or repealed only
by a vote of the shareholders and not by a vote of the Board of
Directors.
ARTICLE IX. AMENDMENTS
9.01. By Shareholders. These By-Laws may be altered, amended or
appealed and new by-laws may be adopted by the shareholders by
affirmative vote of not less than a majority of the shares present or
represented at any annual or special meeting of the shareholders at
which a quorum is in attendance.
9.02. By Directors. These By-Laws may also be altered, amended or
repealed and new by-laws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of directors present at
any meeting at which a quorum is in attendance; but no by-laws
adopted by the shareholders shall be amended or repealed by the Board
of Directors if the by-law so adopted so provides.
9.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be
inconsistent with the By-Laws then in effect but is taken or
authorized by affirmative vote of not less than the number of shares
or the number of directors required to amend the By-Laws so that the
By-Laws would be consistent with such action, shall be given the same
effect as though the By-Laws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit the
specific action so taken or authorized.
(Page 11 of 1995 Annual Report to Shareholders)
<TABLE>
SELECTED FINANCIAL DATA
(unaudited)
<CAPTION>
COMMON STOCK DATA:
(per share)
PRICE RANGE
-----------------------------------------------
1995 1994 DIVIDENDS
-------------------- -------------------- -------------------
HIGH LOW HIGH LOW 1995 1994
------- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $42-1/2 $32-1/2 $55-1/4 $46-3/4 $.0900 $.0825
Second Quarter 49-1/2 38-1/4 50-3/4 39 .0900 .0825
Third Quarter 51-3/4 46-3/4 41 30 .0900 .0825
Fourth Quarter 50-1/2 44-1/4 37 31 .1100 .0900
</TABLE>
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>
<CAPTION>
COMPARATIVE FINANCIAL DATA:
(in millions except per share data)
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net sales $959.8 $851.2 $739.4 $654.4 $589.4
Income before cumulative effect of accounting
changes 131.7 110.3 107.1 95.5 79.8
Net income 131.7 110.3 96.3 95.5 79.8
Per share:
Income before cumulative effect of accounting
changes 2.64 2.21 2.15 1.92 1.60
Net income 2.64 2.21 1.93 1.92 1.60
Dividends .3800 .3375 .3000 .2600 .2275
Total assets 985.2 852.0 753.4 615.8 596.5
Long-term debt 13.8 14.5 17.3 18.7 69.3
</TABLE>
QUARTERLY FINANCIAL DATA:
(in millions except per share data)
1995 QUARTER ENDED
-----------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
Net sales $244.8 $243.3 $239.1 $232.6
Gross profit 130.0 128.9 126.7 126.3
Net income 32.7 33.5 33.2 32.3
Net income per share .66 .67 .66 .65
1994 QUARTER ENDED
-----------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
Net sales $208.5 $212.5 $217.3 $212.9
Gross profit 113.2 110.8 110.8 111.3
Net income 29.7 27.0 27.0 26.6
Net income per share .60 .54 .54 .53
(Pages 12-13 of 1995 Annual Report to Shareholders)
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------------------------------
Results of Operations
During the three years ended December 31, 1995, the Company's sales and
earnings continued to grow. In the second quarter of 1993, the Company
acquired the net assets and business of Supelco, Inc. ("Supelco") and the
stock of Circle AW Products Company ("Circle AW") as described in Note 12
to the consolidated financial statements. The operating results for these
businesses are included in the consolidated statements of income from their
respective acquisition dates.
Chemical sales increased 13.0%, 11.9%, and 10.8% for 1995, 1994 and 1993,
respectively. This sales growth is attributed to selective price increases,
the annual addition of new products and the opening of new international sales
offices. Price increases for products listed in the general chemical catalogs
averaged 4.5% in 1995 and 5.0% in 1994 and 1993. New product sales are not
material in the year introduced, but do contribute to sales growth in
subsequent years. The effect of translating foreign currency sales into the
U.S. dollar represented 3.5% of the increase for 1995 sales after having only
a slightly positive impact on 1994 sales growth. Chemical sales for 1995 also
benefited from aggressive marketing and closer customer contacts. Sales gains
for 1994 and 1993 reflect a benefit from the acquisition of Supelco in May
1993. The growth rate for U.S. sales has slowed in the past two years due to
reduced growth in research funding and uncertainties surrounding possible
government health care reform. Emphasis on international markets and new sales
offices helped achieve growth in international direct sales of 18% in 1995,
16% in 1994 and 17% in 1993, after eliminating the effect of changes in
currency exchange rates. The increase in direct international sales is
partially offset by a slowing in the growth of export sales from the United
States. The increases in export sales of 2%, 5% and 13% in 1995, 1994 and 1993
respectively, reflect the transfer of sales to the new international offices.
Metal sales increased 11.6%, 30.4%, and 24.8% for 1995, 1994 and 1993,
respectively. Average selling prices increased 6% in 1995 after increasing 2%
in both 1994 and 1993, all in response to higher raw material costs. Excluding
the effect of higher prices, the slower growth in 1995 resulted from slowing
construction demand. The higher growth rates in 1994 and 1993 were due to
increased volume from stronger construction demand and the acquisition of
Circle AW in June 1993 which provided one-third of the 1994 gain and one-half
of the 1993 increase.
Cost of products sold was 46.7%, 47.6%, and 45.5% of sales in 1995, 1994 and
1993, respectively. The decrease in 1995 is due to increased utilization of
new facilities, productivity gains, a higher proportion of sales of
manufactured chemical products and higher selling prices for metal products.
As a result of these improvements, the cost of chemical products sold
increased by 10.6% and the cost of metal products sold increased by 10.5% in
1995, compared to sales increases of 13.0% and 11.6%, respectively. The
increase in the cost level for 1994 was due to higher costs for new chemical
products, product mix changes, higher metal costs and faster growth in metal
sales that have higher product costs than chemicals. The cost of chemical
products sold increased by 16.1% in 1994 due to the higher costs of new
diagnostic products, more sales of purchased products rather than produced
products and increased costs from operating new manufacturing facilities.
The cost of metal products sold rose by 37.1% in 1994 as higher steel
material costs were not fully recovered through price increases.
Selling, general and administrative expenses were 32.1%, 32.4%, and 32.1% of
sales in 1995, 1994 and 1993, respectively. The decrease in 1995 reflects
ongoing efforts to effectively manage staffing levels and control other
significant operating expenses. Net interest costs declined in 1995 by $1.5
million, reflecting a substantial increase in cash and temporary cash
investments provided by operations and a reduced level of capital
expenditures. In 1994, net interest costs increased by $1.1 million,
reflecting the additional borrowing for the Supelco and Circle AW acquisitions
and higher interest rates in 1994. In 1995, the control of significant
operating expenses and decline in net interest costs were partially offset by
an increase in deferred compensation expense from a credit of $1.8 million in
1994 to an expense of $4.1 million in 1995. The expense in 1995 was due to
improved operating results and increases in the Company's stock price compared
to the omission of deferred compensation awards for 1994 due to lower earnings
growth and a decline in the market price of the stock in 1994.
Management expects future sales growth from the continued introduction of new
products, more effective distribution of catalogs and added promotional and
marketing programs, including the addition of a sales and marketing unit to
actively promote sales of research chemicals. Additionally, 1996 sales will
benefit from new sales offices added in Norway and South Africa early in the
year.
Liquidity and Capital Resources
In 1995, cash and temporary cash investments increased $74.2 million while
short-term borrowings were reduced by $11.4 million. At December 31, 1995,
there were $4.9 million of borrowings outstanding under the Company's credit
arrangements, which provide for borrowing up to $100 million. In 1994, cash
and temporary cash investments remained relatively stable while short-term
borrowings were reduced by $18.0 million.
Cash provided by operating activities was $161.3 million in 1995, an increase
of $51.2 million from 1994. The improvement resulted mainly from a $21.3
million increase in net income in 1995 and a reduction in the incremental cash
required for accounts receivable and inventories from $38.7 million in 1994 to
$22.2 million in 1995. Cash generated by operations and available from credit
facilities continues to provide sufficient liquidity for present and future
operating and capital needs.
Cash currently available and expected to be generated in 1996 will be invested
on a temporary basis. Longer term, excess funds are expected to be reinvested
in the business to expand production and distribution capacity. Also,
depending on opportunities and market conditions, funds may be used to acquire
new businesses, as well as other possible uses. These investments will enable
the Company to continue to grow sales and profits.
During 1995, $60.2 million of capital expenditures were made to increase
production and distribution capabilities and improve plant efficiencies.
Significant expenditures in 1995 included the construction of production
facilities in the United States, the United Kingdom and Israel. Capital
expenditures are expected to increase in 1996 to complete construction of the
production facilities in the U.S., U.K. and Israel and to continue to expand
international operations as well as invest in selected domestic improvements.
The Company has not made any other significant commitments for, or
acquisitions of, capital facilities early in 1996.
(Five bar graphs appear on pages 12-13 depicting the following data)
1995 1994 1993
------ ------ ------
Chemical sales (millions of dollars) $775.8 $686.3 $613.1
Metal sales (millions of dollars) 184.0 164.9 126.3
Cost of Products Sold (percent of sales) 46.7% 47.6% 45.5%
Selling, General and Administrative
Expenses (percent of sales) 32.1% 32.4% 32.1%
Capital Expenditures (millions of dollars) $60.2 $72.5 $75.2
(Page 14 of 1995 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(in thousands except per share data)
Years Ended December 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales $959,822 $851,190 $739,435
Cost of products sold 447,898 405,110 336,639
-------- -------- --------
Gross profit 511,924 446,080 402,796
Selling, general and administrative expenses 307,764 275,771 237,179
-------- -------- --------
Income before provision for income taxes and cumulative
effect of accounting changes 204,160 170,309 165,617
Provision for income taxes 72,477 59,969 58,463
-------- ------- -------
Income before cumulative effect of accounting changes 131,683 110,340 107,154
Cumulative effect of accounting changes -- -- (10,806)
-------- ------- -------
Net income $131,683 $110,340 $96,348
======== ======== =======
Weighted average number of shares outstanding 49,857 49,829 49,802
======== ======== =======
Income per share before cumulative effect of accounting
changes $2.64 $2.21 $2.15
Cumulative effect of accounting changes -- -- (0.22)
-------- -------- -------
Net income per share $2.64 $2.21 $1.93
======== ======== =======
The accompanying notes are an integral part of these statements.
</TABLE>
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, 1995 and 1994, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. 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 audits 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, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Notes 7 and 11 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 LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
February 16, 1996
(Page 15 of 1995 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
---------------------------
(in thousands)
December 31,
-----------------------
1995 1994
------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary cash investments $ 83,969 $ 9,745
Accounts receivable, less allowance for
doubtful accounts of $8,838 and $7,763,
respectively 144,661 134,893
Inventories 346,388 330,333
Other current assets 34,983 27,374
------- -------
Total current assets 610,001 502,345
------- -------
Property, plant and equipment:
Land 29,365 28,512
Buildings and improvements 211,805 195,101
Machinery and equipment 301,314 232,497
Construction in progress 30,086 50,609
Less - Accumulated depreciation (244,649) (204,030)
-------- --------
Net property, plant and equipment 327,921 302,689
-------- --------
Other assets 47,266 46,939
-------- --------
$985,188 $851,973
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 7,306 $ 18,671
Current maturities of long-term debt 459 650
Accounts payable 57,087 53,832
Accrued payroll and other expenses 34,062 27,304
Accrued income taxes 9,097 4,580
------- -------
Total current liabilities 108,011 105,037
------- -------
Long-term debt 13,834 14,478
------- -------
Deferred postretirement benefits 29,910 27,257
------- -------
Deferred compensation 8,699 5,696
------- -------
Stockholders' equity:
Common stock 49,877 49,832
Capital in excess of par value 11,455 10,004
Retained earnings 744,370 631,634
Cumulative translation adjustments 19,032 8,035
-------- --------
Total stockholders' equity 824,734 699,505
-------- --------
$985,188 $851,973
======== ========
The accompanying notes are an integral part of these balance sheets.
</TABLE>
(Page 16 of 1995 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDER'S 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, 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)
Net income -- -- -- 110,340 --
Dividends ($.3375 per share) -- -- -- (16,817) --
Awards under deferred
compensation plan 19 19 898 -- --
Exercise of stock options 8 8 223 -- --
Translation adjustment -- -- -- -- 13,694
------ ------ ------ ------- ------
Balance, December 31, 1994 49,832 49,832 10,004 631,634 8,035
Net income -- -- -- 131,683 --
Dividends ($.38 per share) -- -- -- (18,947) --
Awards under deferred
compensation plan 18 18 564 -- --
Exercise of stock options 27 27 887 -- --
Translation adjustment -- -- -- -- 10,997
------ ------- ------- -------- -------
Balance, December 31, 1995 49,877 $49,877 $11,455 $744,370 $19,032
====== ======= ======= ======== =======
The accompanying notes are an integral part of this statement.
</TABLE>
(Page 17 of 1995 Annual Report to Shareholders)
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(in thousands)
Years Ended December 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $131,683 $110,340 $96,348
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of accounting changes -- -- 10,806
Depreciation and amortization 40,872 36,655 32,505
Deferred income taxes 1,037 (613) (252)
Postretirement benefits expense 3,584 3,547 2,789
Deferred compensation expense (credit) 4,111 (1,757) 3,244
Deferred compensation payments (526) (740) (810)
Increase in accounts receivable (8,910) (18,592) (12,604)
Increase in inventories (13,328) (20,090) (34,144)
Increase in other current assets (7,384) (5,222) (2,537)
Increase in accounts payable 1,182 6,883 9,949
Increase (decrease) in accrued payroll and other expenses 5,350 400 (3,900)
Increase (decrease) in accrued income taxes 3,584 (799) (2,663)
------- ------- -------
Net cash provided by operating activities 161,255 110,012 98,731
------- ------- -------
Cash flows from investing activities:
Property, plant and equipment additions (60,224) (72,494) (75,182)
Sale of equipment 2,096 1,203 588
Acquisition of businesses, net of cash acquired -- -- (64,015)
Other, net -- (3,872) (410)
------- ------- --------
Net cash used in investing activities (58,128) (75,163) (139,019)
------- ------- --------
Cash flows from financing activities:
Issuance (repayment) of notes payable (10,850) (18,032) 30,649
Issuance of long-term debt -- -- 1,154
Repayment of long-term debt (1,236) (3,245) (10,087)
Payment of dividends (18,947) (16,817) (14,941)
Exercise of employee stock options 914 231 228
------- ------- ------
Net cash provided by (used in) financing activities (30,119) (37,863) 7,003
------- ------- ------
Effect of exchange rate changes on cash 1,216 2,507 (1,395)
------- ------- -------
Net change in cash and cash equivalents 74,224 (507) (34,680)
Cash and cash equivalents at beginning of year 9,745 10,252 44,932
------- ------ -------
Cash and cash equivalents at end of year $83,969 $9,745 $10,252
======= ====== =======
Supplemental disclosures of cash flow information:
Income taxes paid $68,187 $61,349 $61,187
Interest paid, net of capitalized interest 1,922 3,622 2,320
</TABLE>
The accompanying notes are an integral part of these statements.
(Pages 18-24 of 1995 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.
Reclassifications:
Certain prior years' amounts in the consolidated financial statements have
been reclassified to conform to the presentation used for 1995.
Accounting Changes:
The Company adopted Statements of 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 11 - 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.
The Company has no financial instruments that have a materially different fair
value than the respective instrument's carrying value. Gains and losses on
hedges of existing assets or liabilities are recognized monthly and are
included in selling, general and administrative expenses. See Note 5 -
Financial Derivatives and Risk Management for further information regarding
the Company's hedging activities.
Property, Plant and Equipment:
The cost of property, plant and equipment is depreciated over the estimated
useful lives of the assets using the straight-line method with 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 are translated at weighted average exchange
rates. Resulting translation gains and losses are included as a separate
component of stockholders' equity.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the year. Actual results
could differ from those estimates.
NOTE 2 - Inventories
The principal categories of inventories are (in thousands):
December 31,
---------------------
1995 1994
-------- --------
Finished goods $279,178 $270,341
Work in process 20,382 20,232
Raw materials 46,828 39,760
-------- --------
Total $346,388 $330,333
======== ========
Chemical products are valued at the lower of cost or market. Costs for certain
domestic chemical inventories (22% 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 $8,062,000, $7,410,000, $7,327,000 and
$7,472,000 higher than reported at December 31, 1995, 1994, 1993 and 1992,
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 in May 1996, with two
other facilities of $15,000,000 each expiring in June 1996, or earlier upon
notice by either party. The Company also has two unsecured multi-currency
bank commitments totaling $30,000,000. Both facilities expire in June 1997.
Interest rates for all facilities are based on federal funds, LIBOR, prime or
other rates offered by the lending banks. No borrowings were outstanding under
the domestic arrangements at December 31, 1995. At December 31, 1994,
$9,945,000 of borrowings were outstanding at an average interest rate of
6.2%. Borrowings of $4,934,000 and $6,426,000 under the multi-currency
commitments were outstanding at December 31, 1995 and 1994, respectively,
with average interest rates of 4.7% and 6.2% at December 31, 1995 and 1994,
respectively. The Company intends to renew all of these facilities before
they expire.
Notes payable by international subsidiaries were $2,372,000 and $2,300,000 at
December 31, 1995 and 1994, respectively, and are payable in local currencies
with weighted average interest rates of 3.1% and 3.4% at December 31, 1995 and
1994, respectively.
NOTE 4 - Long-Term Debt
Long-term debt consists of the following (in thousands):
December 31,
---------------------
1995 1994
------- -------
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 485 397
Other 1,783 2,706
------ ------
14,293 15,128
Less-Current
maturities (459) (650)
------- -------
$13,834 $14,478
======= =======
Both the 6.0% and 5.875% Industrial Revenue Bonds are subject to optional
redemption by the Company or bondholders beginning in 1997, at which time the
interest rate will be adjusted and the next interest rate 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
semi-annual redemption at par value by the Company until November 1, 1999.
At December 31, 1995 and 1994, SFr. 500,000 was borrowed from the pension fund
of Fluka Chemie AG, a wholly-owned subsidiary. The interest rate on this debt
was 5.5% at both December 31, 1995 and 1994. There is no specified repayment
schedule for this borrowing.
Total interest expense incurred by the Company, net of immaterial amounts
capitalized, was $1,647,000, $2,910,000 and $2,442,000 in 1995, 1994 and 1993,
respectively.
NOTE 5 - Financial Derivatives And Risk Management
The Company operates internationally, giving rise to exposure resulting from
changes in foreign currency exchange rates. Derivative financial instruments
are utilized by the Company to reduce the financial impact of those exposures;
however, the Company does not hold or issue such financial instruments for
trading purposes.
The Company enters into forward exchange contracts to hedge certain
receivables and payables denominated in foreign currencies (principally the
British pound sterling, German mark, French franc and Swiss franc). Some of
the contracts involve the exchange of two foreign currencies, according to the
requirements of international subsidiaries. The purpose of the Company's
hedging activities is to protect the Company from the risk that the receipts
resulting from product sales to customers outside the United States and
payments for purchases from vendors outside the United States will be adversely
affected by changes in exchange rates from the original transaction date. The
amount of open forward exchange contracts at December 31, 1995 and 1994 was
$130.9 million and $128.7 million, respectively. The terms of the contracts
are generally less than six months.
The Company's contracts are with large, reputable commercial banks and,
accordingly, the Company expects all counterparties to meet their
obligations.
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 2022. Rent charged to operations was $8,322,000, $9,875,000 and
$8,222,000 in 1995, 1994 and 1993, respectively. Minimum rental commitments
for non-cancelable leases in effect at December 31, 1995, are as follows (in
thousands):
1996 $7,359
1997 4,938
1998 3,197
1999 1,359
2000 1,168
2001-2022 1,746
NOTE 7 - Income Taxes
The provision for income taxes consists of the following (in thousands):
1995 1994 1993
------- ------- -------
Current:
Federal $55,721 $50,089 $50,470
State 6,399 5,882 4,654
International 9,320 4,611 3,591
------ ------ ------
Total current 71,440 60,582 58,715
------ ------ ------
Deferred:
Federal (394) (1,946) 904
State (74) (293) (48)
International 1,505 1,626 (1,108)
------ ------- -------
Total deferred 1,037 (613) (252)
------- ------- -------
Total provision for income taxes $72,477 $59,969 $58,463
======= ======= =======
A reconciliation of statutory and effective tax rates is as follows:
1995 1994 1993
----- ----- -----
Statutory tax rate 35.0% 35.0% 35.0%
FSC benefits (1.7) (1.5) (1.7)
State income taxes,
net of federal benefits 2.0 2.1 2.0
International taxes (.5) .3 (1.6)
Other, net .7 (.7) 1.6
----- ----- -----
35.5% 35.2% 35.3%
===== ===== =====
The Company adopted Statement of Financial Accounting Standards 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, which are included in other
assets on the consolidated balance sheets, result from the following temporary
differences (in thousands):
1995 1994
------- -------
Gross deferred
assets:
Inventories $16,668 $14,472
Pension and
postretirement
benefit plans 13,320 11,398
------ ------
Total 29,988 25,870
------ ------
Gross deferred
liabilities:
Depreciation (20,432) (17,644)
Other (5,856) (3,489)
-------- --------
Total (26,288) (21,133)
-------- --------
Net deferred
tax assets $3,700 $4,737
======== ========
At December 31, 1995 and 1994, no valuation allowance for the deferred tax
assets was required.
United States taxes are not provided on unremitted earnings and related
cumulative translation adjustments of international subsidiaries
(approximately $100,700,000 at December 31, 1995) because the Company intends
to reinvest the earnings indefinitely. The estimated amount of 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 U.S.
NOTE 8 - Insurance
The Company's general and products liability insurance coverage, which
provides for risks up to $200 million, was renewed during 1995. The current
policies provide limited coverage for environmental
damage and are written on a claims-made basis.
NOTE 9 - 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 1995, 1994 and 1993, 17,900, 18,700 and 20,800 shares of common stock,
respectively, were issued under this plan. At December 31, 1995, 52,917 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 825,855
shares remain to be awarded.
In 1995, the Company adopted the Share Option Plan of 1995. This plan replaces
the Share Option Plan of 1987. The plan permits the granting of incentive
stock options or non-qualified options to purchase up to 2,000,000 shares of
the Company's common stock through 2005. 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 and expire ten years after the grant date. In 1995, the Company
granted stock options under the plan to purchase 16,000 shares at an average
price of $46.83 per share. These options become exercisable in 1996. Options
to purchase 1,984,000 shares of the Company's common stock under this plan
remain to be granted at December 31, 1995.
The Company's Share Option Plan of 1987, which permitted 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, was succeeded by the Share
Option Plan of 1995. Options granted had an option price equal to the market
value of the shares at the date of the grant. Options are generally
exercisable one year following the grant date, however, options granted in
1994 and 1993 to purchase 160,000 and 130,000 shares, respectively, become
exercisable ratably over a five year period. No further options will be issued
under the Share Option Plan of 1987 and the balance of the shares that had
been reserved for issuance under this plan were released.
Changes in the number of shares subject to option under the Share Option Plan
of 1987 are as follows:
Shares Subject
Price Range to Option
--------------- ----------
Balance, December 31, 1993 $20.38 - $55.25 536,790
Options granted 36.25 - 40.00 419,000
Options exercised 20.38 - 46.75 (8,800)
Options cancelled 50.25 - 55.25 (42,000)
-------
Balance, December 31, 1994 $20.38 - $55.25 904,990
Options granted 36.25 5,000
Options exercised 20.38 - 46.75 (27,350)
Options cancelled 36.25 - 53.75 (30,452)
------ ------ -------
Balance, December 31, 1995 $20.38 - $55.25 852,188
====== ====== =======
NOTE 10 - 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 include sales to international markets as follows (in
thousands):
Year Amount
---- --------
1995 $107,255
1994 104,825
1993 99,876
The Company's operations by industry segment are as follows (in thousands):
<TABLE>
Net sales to unaffiliated customers: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Chemical Products $775,862 $686,325 $613,083
Metal Products 183,960 164,865 126,352
-------- -------- --------
Total $959,822 $851,190 $739,435
======== ======== ========
Income before provision for income taxes
and cumulative effect of accounting changes:
Chemical Products $177,334 $149,444 $148,491
Metal Products 27,916 23,501 18,649
Interest expense, net of interest income (1,090) (2,636) (1,523)
-------- -------- --------
Total $204,160 $170,309 $165,617
======== ======== ========
Depreciation:
Chemical Products $33,312 $29,404 $26,063
Metal Products 4,239 4,076 3,616
------- ------- -------
Total $37,551 $33,480 $29,679
======= ======= =======
Capital expenditures:
Chemical Products $45,397 $68,059 $65,767
Metal Products 14,827 4,435 9,415
------- ------- -------
Total $60,224 $72,494 $75,182
======= ======= =======
Identifiable assets at December 31:
Chemical Products $789,058 $746,887 $658,393
Metal Products 112,161 95,341 84,786
Cash and cash equivalents 83,969 9,745 10,252
-------- -------- --------
Total $985,188 $851,973 $753,431
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
The Company's operations by geographic segment are as follows (in thousands):
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States $641,167 $602,573 $530,133
International 318,655 248,617 209,302
Net intercompany sales between geographic areas:
United States 125,652 92,752 85,521
International 36,735 32,782 27,276
Eliminations (162,387) (125,534) (112,797)
-------- -------- --------
Total $959,822 $851,190 $739,435
======== ======== ========
Income before provision for income taxes
and cumulative effect of accounting changes:
United States $172,308 $156,380 $158,908
International 36,760 16,803 9,096
Eliminations (4,908) (2,874) (2,387)
-------- -------- --------
Total $204,160 $170,309 $165,617
======== ======== ========
Identifiable assets at December 31:
United States $695,326 $612,721 $551,736
International 307,902 256,563 225,035
Eliminations (18,040) (17,311) (23,340)
-------- -------- --------
Total $985,188 $851,973 $753,431
======== ======== ========
</TABLE>
NOTE 11 - Pension And Other Postretirement Benefit Plans
Pension and Retirement Savings Plans
The Company and its subsidiaries have several retirement plans covering
substantially all U.S. employees and certain employees of international
subsidiaries. The Company's defined benefit plans provide all eligible
employees with a retirement benefit based upon compensation and years of
service with the Company.
The net periodic pension cost for the Company's defined benefit plans is as
follows (in thousands):
<TABLE>
December 31,
---------------------------------------------------------
United States International
---------------------------- --------------------------
1995 1994 1993 1995 1994 1993
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Service cost $1,673 $1,669 $1,429 $1,997 $2,336 $1,580
Interest cost 2,391 2,196 1,956 2,123 1,760 1,264
Actual return on plan assets (6,918) 329 (2,419) (3,508) (1,422) (2,565)
Net amortization and deferral 4,280 (2,515) 652 790 (897) 936
------ ------ ------ ------ ------ ------
Net periodic pension cost $1,426 $1,679 $1,618 $1,402 $1,777 $1,215
====== ====== ====== ====== ====== ======
</TABLE>
The Company's funding policy for its U.S. defined benefit plan is to
contribute amounts that meet minimum funding requirements but which do not
exceed the maximum funding limits as currently determined under applicable tax
regulations. International plans are funded at a level to maintain the
solvency of the plans as defined by local law. At December 31, 1995, 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.
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):
<TABLE>
December 31,
--------------------------------------------
United States International
-------------------- -------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested $37,692 $25,317 $35,445 $26,496
======= ======= ======= =======
Accumulated $39,954 $26,837 $35,445 $26,496
======= ======= ======= =======
Projected $41,396 $28,986 $44,325 $35,033
Plan assets at fair value 41,024 33,975 46,286 38,045
------- ------- ------- -------
Excess (deficiency) of plan assets over projected
benefit obligations (372) 4,989 1,961 3,012
Unrecognized net (gain) loss 1,165 641 (761) (1,904)
Unrecognized prior service cost 6,921 2,610 1,828 1,250
Unrecognized net transition asset (817) (908) (284) (327)
------- ------- ------- -------
Prepaid pension cost $ 6,897 $ 7,332 $ 2,744 $ 2,031
======= ======= ======= =======
</TABLE>
Assumptions used in the preceding determinations, which reflect average
long-term expectations and may not represent current experience, are as
follows:
<TABLE>
December 31,
-------------------------------
United States International
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate in determining benefit obligations 7.0% 8.0% 5.1% 5.3%
Compensation rate increase 5.0% 6.0% 4.3% 5.5%
Return on plan assets 8.5% 8.5% 6.6% 6.8%
</TABLE>
The Company's 401(k) retirement savings plan provides eligible, U.S. 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 this plan. The cost for this plan was $2,829,000, $2,337,000, and
$2,032,000 for the years ended December 31, 1995, 1994 and 1993, 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.
Statement of 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 components of net postretirement benefit cost for 1995, 1994, and 1993
were as follows (in thousands):
1995 1994 1993
------ ------ ------
Service
cost $1,346 $1,414 $1,039
Interest
cost 2,238 2,133 1,750
------ ------ ------
Net post-
retirement
benefit
cost $3,584 $3,547 $2,789
====== ====== ======
Future benefit costs were estimated assuming medical costs increase at a 12.0%
annual rate in 1995 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, 1995 by $2,920,000 and 1995 postretirement benefit
expense by $380,000. The weighted average discount rate used to estimate the
accumulated postretirement benefit obligation at December 31, 1995 is 7.0%.
Benefits are funded as claims are paid. The accounting change does not impact
the Company's cash flows.
A reconciliation of the plan's funded status to the accrued postretirement
benefit liability included in the consolidated balance sheets at December 31,
is a follows (in thousands):
<TABLE>
1995 1994
-------- --------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 9,320 $ 8,690
Active- fully eligible 6,416 5,083
Active- other 18,582 14,519
-------- --------
Total 34,318 28,292
Plan assets at fair value -- --
-------- --------
Unfunded postretirement benefit obligation 34,318 28,292
Unrecognized net loss (3,443) (223)
-------- --------
Accrued postretirement benefit liability 30,875 28,069
Less-Current portion included in accrued payroll
and other expenses (965) (812)
-------- -------
Deferred postretirement benefits liability $29,910 $27,257
======== =======
</TABLE>
NOTE 12 - 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 balances included in other assets in the consolidated balance
sheets. 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 1993. 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, 1993.
Year Ended
December 31, 1993
--------
Net sales $765,519
Net income $107,825*
Net income per share $2.17*
*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 Chemicals Ltd. (Israel)
(E) Sigma-Aldrich Chemie Holding GmbH (Germany)
(F) Sigma-Aldrich Chemie GmbH (Germany)
(G) Sigma-Aldrich Marketing, Inc. (Missouri)
2. Aldrich Chemical Company, Inc. (Delaware)
(A) Sigma-Aldrich N.V./S.A. (Belgium)
(B) Sigma Chemie B.V. (The Netherlands)
(C) Aldrich-Chemie Verwaltungs GmbH (Germany)
(D) Aldrich-Chemie GmbH & Co. K.G. (Germany)
(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)
5. Sigma-Aldrich Foreign Sales Corporation (Barbados)
6. Fluka Chemie AG (Switzerland)
(A) Fluka Chemical Corporation (New Jersey)
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. (Czech Republic)
(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)
(I) Sigma-Aldrich Sp.zo.o (Poland)
(J) LabKemi AB (Sweden)
(K) Sigma-Aldrich Japan KK (Japan)
(L) Sigma-Aldrich Korea, Ltd. (Korea)
(M) Sigma-Aldrich Pte., Ltd. (Singapore)
(N) Sigma-Aldrich (Pty.) Ltd. (South Africa)
(O) Sigma-Aldrich India (New Delhi and Hyderbad)
8. Supelco, Inc. (Delaware)
9. Sigma-Aldrich Chimie S.N.C. (France)
(A) Sigma-Aldrich Chimie France S.a.r.l. (France)
All subsidiaries are directly or indirectly 100% owned.
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 33-24415
and 33-62541.
/s/ Arthur Anderson LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 83969
<SECURITIES> 0
<RECEIVABLES> 153499
<ALLOWANCES> 8838
<INVENTORY> 346388
<CURRENT-ASSETS> 610001
<PP&E> 572570
<DEPRECIATION> 244649
<TOTAL-ASSETS> 985188
<CURRENT-LIABILITIES> 108011
<BONDS> 13834
<COMMON> 49877
0
0
<OTHER-SE> 774857
<TOTAL-LIABILITY-AND-EQUITY> 985188
<SALES> 959822
<TOTAL-REVENUES> 959822
<CGS> 447898
<TOTAL-COSTS> 447898
<OTHER-EXPENSES> 307764
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1647
<INCOME-PRETAX> 204160
<INCOME-TAX> 72477
<INCOME-CONTINUING> 131683
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131683
<EPS-PRIMARY> 2.64
<EPS-DILUTED> 2.64
</TABLE>
