SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-8135
SIGMA-ALDRICH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
43-1050617
(I.R.S. Employer Identification No.)
3050 Spruce Street, St. Louis, Missouri 63103
(Address of principal executive office)
(Registrant's telephone number, including area code) (314) 771-5765
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
There were 49,968,610 shares of the Company's $1.00 par value
common stock outstanding on July 31, 1996.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Sigma-Aldrich Corporation
Consolidated Statements of Income (unaudited)
(in thousands except per share amounts)
<CAPTION> Three Months Six Months
Ended June 30, Ended June 30,
----------------------- ----------------------
1996 1995 1996 1995
----------------------- ----------------------
<S> <C> <C> <C> <C>
Net sales $258,832 $243,325 $521,231 $488,127
Cost of products sold 120,598 114,450 241,593 229,226
-------- -------- -------- --------
Gross profit 138,234 128,875 279,638 258,901
Selling, general and administrative expenses 80,925 76,961 165,388 156,226
-------- -------- -------- --------
Income before income taxes 57,309 51,914 114,250 102,675
Provision for income taxes 20,345 18,430 40,559 36,450
-------- -------- -------- --------
Net income $ 36,964 $ 33,484 $ 73,691 $ 66,225
======== ======== ======== ========
Net income per share $ 0.74 $ 0.67 $ 1.48 $ 1.33
======== ======== ======== ========
Weighted average number of shares outstanding 49,953 49,852 49,942 49,851
======== ======== ======== ========
Dividends per share $ 0.11 $ 0.09 $ 0.22 $ 0.18
======== ======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Balance Sheets
(in thousands)
<CAPTION> June 30, December 31,
Assets 1996 1995
------------- -------------
<S> <C> <C>
Current assets: (unaudited)
Cash and temporary cash investments $ 86,328 $ 83,969
Accounts receivable, net of allowance for doubtful
accounts 170,604 144,661
Inventories 346,246 346,388
Other current assets 37,365 34,983
----------- ----------
Total current assets 640,543 610,001
----------- ----------
Property, plant and equipment:
Land 30,280 29,365
Buildings and improvements 212,804 211,805
Machinery and equipment 311,052 301,314
Construction in progress 45,674 30,086
Less-Accumulated depreciation (262,025) (244,649)
----------- ----------
Net property, plant and equipment 337,785 327,921
----------- ----------
Other assets 56,679 47,266
----------- ----------
$1,035,007 $ 985,188
=========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 2,683 $ 7,306
Current maturities of long-term debt 202 459
Accounts payable 43,757 57,087
Accrued payroll and other expenses 42,556 34,062
Accrued income taxes 5,788 9,097
----------- ----------
Total current liabilities 94,986 108,011
----------- ----------
Long-term debt 14,030 13,834
----------- ----------
Deferred postretirement benefits 33,488 29,910
----------- ----------
Deferred compensation 9,796 8,699
----------- ----------
Stockholders' equity:
Common stock, $1.00 par value, 100,000 shares authorized,
49,967 and 49,877 shares outstanding, respectively 49,967 49,877
Capital in excess of par value 14,815 11,455
Retained earnings 807,073 744,370
Cumulative translation adjustments 10,852 19,032
----------- ----------
Total stockholders' equity 882,707 824,734
----------- ----------
$1,035,007 $ 985,188
=========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<CAPTION> Six Months
Ended June 30,
-----------------------------
1996 1995
Cash flows from operating activities: -----------------------------
<S> <C> <C>
Net income $ 73,691 $ 66,225
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 23,174 21,081
Postretirement benefits expense 1,843 1,811
Deferred tax provision 1,281 609
Deferred compensation expense 1,918 2,999
Deferred compensation payments (331) (454)
Increase in accounts receivable (27,181) (23,449)
Increase in inventories (1,059) (17,058)
Increase in other current assets (3,171) (796)
Decrease in accounts payable (14,647) (13,095)
Increase in accrued payroll and other expenses 10,093 15,790
Increase (decrease) in accrued income taxes (3,589) 2,328
--------- --------
Net cash provided by operating activities 62,022 55,991
--------- --------
Cash flows from investing activities:
Property, plant and equipment additions (31,005) (22,245)
Sale of property, plant and equipment 538 27
Acquisition of businesses (13,629) --
Other, net (1,500) --
--------- --------
Net cash used in investing activities (45,596) (22,218)
--------- --------
Cash flows from financing activities:
Repayment of notes payable (4,513) (16,359)
Repayment of long-term debt (57) (889)
Payment of dividends (10,989) (8,973)
Exercise of employee stock options 3,058 110
--------- ---------
Net cash used in financing activities (12,501) (26,111)
--------- ---------
Effect of exchange rate changes on cash (1,566) 1,935
--------- ---------
Net change in cash and cash equivalents 2,359 9,597
Cash and cash equivalents at January 1 83,969 9,745
--------- ---------
Cash and cash equivalents at June 30 $ 86,328 $ 19,342
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 38,214 $ 33,588
Interest paid, net of capitalized interest $ 531 $ 1,149
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Sigma-Aldrich Corporation
Notes to Consolidated Financial Statements
(in thousands)
Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X and,
accordingly, do not include all information and footnotes required
by generally accepted accounting principles for complete financial
statements. For further information, refer to the notes to
consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
In the opinion of Management, all adjustments, consisting of
normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the six
months ended June 30, 1996, are not necessarily indicative of
the results that may be expected for the year ending December 31,
1996.
Net Income per Share
Net income per share is based on the weighted average number of
shares outstanding during each period.
Inventories
The principal categories of consolidated inventories were:
June 30, December 31,
1996 1995
-------- --------
Finished goods $272,567 $279,178
Work in process 21,371 20,382
Raw materials 52,308 46,828
-------- --------
$346,246 $346,388
======== ========
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(in thousands)
Results of Operations
For the quarter ended June 30, sales increased 6.4% to $258.8 million from
$243.3 million in 1995. Chemical sales grew 6.4% in the second quarter and
6.6% for the six months. Sales continued to grow in all of the Company's
worldwide markets even though the impact of currency exchange rates reduced the
quarterly and year-to-date gains by 2.5% and 1.3%, respectively. All chemical
divisions contributed to the sales growth. The growth pace for research sales
was maintained due to agressive sales and marketing programs in a competitive
marketplace. Bulk sales continued to grow worldwide, leveraging the Company's
broad manufacturing and sourcing capabilities. Diagnostic sales were only
slightly higher due to the ending of an instrument distribution agreement in
mid-1995. Currency exchange rates may continue to moderate the Company's
chemical growth rates for the remainder of 1996. Metal sales grew 6.4% to
$49.5 million in the second quarter and 7.7% for the six months. This sales
growth reflects a continuing strong demand for the Company's expanding line
of electrical, mechanical and telecommunication support products and
enclosures.
Cost of sales was $241.6 million, representing 46.4% of sales, compared to
$229.2 million, or 47.0% of sales for the first six months of 1995. For the
quarter, cost of sales was 46.6% of sales compared to 47.0% in 1995. The
fluctuation in gross profit percentage for both periods resulted from a change
in the chemical sales mix. Gross margins for metal products were comparable to
1995 levels as selling price declines were offset by lower raw material costs
and continued productivity improvements.
Selling, general and administrative expenses for the six months ended June 30,
1996, were $165.4 million, or 31.7% of sales compared to $156.2 million or 32.0%
of sales in 1995. The percentage decrease in selling, general and
administrative expenses is attributable to the adjusting of staff levels and
controls over other expenses.
Net income for the second quarter grew by 10.4% to $37.0 million from $33.5
million in 1995, while net income for the first half of 1996 grew by 11.3% to
$73.7 million from $66.2 million in 1995. Profit margins improved from more
recent quarters as a result of steps taken to adjust staffing levels, improve
productivity and control other expenses.
Liquidity and Capital Resources
Net cash flows totalled $2.4 million for the six months ended June 30, 1996 as
presented in the Consolidated Statements of Cash Flows (unaudited). The
primary source of cash was net cash provided by operating activities of
$62.0 million, an increase of $6.0 million from 1995. The increase is
primarily due to higher net income and fluctuations in working capital
accounts. The major uses of cash were property, plant and equipment
additions of $31.0 million, acquisition of businesses of $13.6 million and
payment of dividends totalling $11.0 million. Although net cash flows provided
by operating activities vary from year to year, it is anticipated that future
increases should be in line with sales growth.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on May 7, 1996. The
matters for which a vote of security holders was held included election
of the Board of Directors, an amendment to the Certificate of Incorporation
to increase the number of shares of the Company's authorized common stock from
100,000,000 to 200,000,000 shares and an amendment and restatement of the
Incentive Stock Bonus Plan.
Following are the results of the votes for the election of the Board of
Directors:
Votes Votes
Nominee For Withheld
- ----------------------- ------------- --------------
Carl T. Cori 39,726,476 4,097,868
David R. Harvey 42,523,709 1,300,635
David M. Kipnis 39,354,628 4,469,716
Andrew E. Newman 39,686,804 4,137,540
William C. O'Neil, Jr. 39,725,586 4,098,758
Jerome W. Sandweiss 39,328,463 4,495,881
D. Dean Spatz 42,520,054 1,304,290
Thomas N. Urban 39,360,434 4,463,910
Following are the results of the votes for the amendment to the Certificate of
Incorporation and the amendment and restatement of the Incentive Stock Bonus
Plan:
Votes Votes
For Against Abstain
---------- ---------- ----------
Amendment to Certificate
of Incorporation 40,518,583 3,243,547 62,214
Amendment and Restatement
of the Incentive Stock
Bonus Plan 39,339,635 4,312,776 171,933
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Certificate of Incorporation and By-Laws:
(a) Certificate of Incorporation and Amendments-
-------------------------------------------
Incorporated by reference to Exhibit 3(a) of Form
10-K filed for the year ended December 31, 1991,
Commission File Number 0-8135.
(b) By-Laws as amended February 1996
--------------------------------
Incorporated by reference to Exhibit 3(b) of Form
10-K filed for the year ended December 31, 1995,
Commission File Number 0-8135.
(27) Financial Data Schedule
(b) No reports were filed on Form 8-K during the period for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIGMA-ALDRICH CORPORATION
-------------------------
(Registrant)
By /s/ Kirk A. Richter August 13, 1996
--------------------------------------------- ---------------
Kirk A. Richter, Controller Date
(on behalf of the Company as Controller and
as Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 86,328
<SECURITIES> 0
<RECEIVABLES> 170,604
<ALLOWANCES> 0
<INVENTORY> 346,246
<CURRENT-ASSETS> 640,543
<PP&E> 599,810
<DEPRECIATION> 262,025
<TOTAL-ASSETS> 1,035,007
<CURRENT-LIABILITIES> 94,986
<BONDS> 0
<COMMON> 49,967
0
0
<OTHER-SE> 832,740
<TOTAL-LIABILITY-AND-EQUITY> 1,035,007
<SALES> 521,231
<TOTAL-REVENUES> 521,231
<CGS> 241,593
<TOTAL-COSTS> 241,593
<OTHER-EXPENSES> 165,388
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 114,250
<INCOME-TAX> 40,559
<INCOME-CONTINUING> 73,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,691
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
</TABLE>
