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 March 31, 1997
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) (Zip Code)
(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 100,117,715 shares of the Company's $1.00 par value common stock
outstanding on April 30, 1997.
<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
Ended March 31,
-----------------------
1997 1996
-----------------------
<S> <C> <C>
Net sales $ 279,060 $ 262,399
Cost of products sold 128,597 120,995
--------- ---------
Gross profit 150,463 141,404
Selling, general and administrative expenses 87,517 84,463
--------- ---------
Income before income taxes 62,946 56,941
Provision for income taxes 21,590 20,214
--------- ---------
Net income $ 41,356 $ 36,727
========= =========
Net income per share $0.41 $0.37
========= =========
Weighted average number of shares outstanding 100,090 99,839
========= =========
Dividends per share $ 0.0625 $ 0.0550
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Balance Sheets
(in thousands)
<CAPTION> March 31, December 31,
1997 1996
------------ -----------
<S> <C> <C>
Assets (unaudited)
Current assets:
Cash and temporary cash investments $ 94,266 $ 103,685
Accounts receivable, net of allowance
for doubtful accounts 196,630 165,511
Inventories 359,103 362,784
Other current assets 39,951 34,657
----------- -----------
Total current assets 689,950 666,637
----------- -----------
Property, plant and equipment:
Land 30,910 32,276
Buildings and improvements 234,118 233,684
Machinery and equipment 335,153 338,531
Construction in progress 64,295 54,927
Less-Accumulated depreciation (286,646) (280,323)
----------- -----------
Net property, plant and equipment 377,830 379,095
----------- -----------
Other assets 51,335 54,226
----------- -----------
$ 1,119,115 $ 1,099,958
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 2,632 $ 2,615
Current maturities of long-term debt 3,610 9,454
Accounts payable 48,009 60,881
Accrued payroll and other expenses 32,454 28,260
Accrued income taxes 20,012 9,107
----------- -----------
Total current liabilities 106,717 110,317
----------- -----------
Long-term debt 4,174 3,787
----------- -----------
Deferred postretirement benefits 34,669 32,918
----------- -----------
Deferred compensation 10,502 10,662
----------- -----------
Stockholders' equity:
Common stock, $1.00 par value, 200,000 shares
authorized, 100,112 and 100,044 shares
outstanding, respectively 100,112 100,044
Capital in excess of par value 18,466 17,002
Retained earnings 854,566 819,467
Cumulative translation adjustments (10,091) 5,761
----------- -----------
Total stockholders' equity 963,053 942,274
----------- -----------
$ 1,119,115 $ 1,099,958
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<CAPTION> Three Months
Ended March 31,
-------------------------
1997 1996
-------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 41,356 $ 36,727
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 12,512 11,503
Postretirement benefits expense 935 921
Deferred income taxes 1,470 1,016
Deferred compensation expense 1,066 1,209
Deferred compensation payments (520) (293)
Increase in accounts receivable (36,576) (23,106)
Decrease in inventories 713 364
Increase in other current assets (5,125) (3,867)
Decrease in accounts payable (11,760) (14,488)
Increase in accured payroll and other expenses 5,371 7,081
Increase in accrued income taxes 11,442 12,490
--------- ---------
Net cash provided by operating activities 20,884 29,557
--------- ---------
Cash flows from investing activities:
Property, plant and equipment additions (17,329) (12,838)
Other, net - (2,492)
--------- ---------
Net cash used in investing activities (17,329) (15,330)
--------- ---------
Cash flows from financing activities:
Repayment of notes payable (5,414) (2,014)
Issuance of long-term debt 123 441
Payment of dividends (6,256) (5,492)
Exercise of employee stock options 824 2,618
--------- ---------
Net cash used in financing activities (10,723) (4,447)
--------- ---------
Effect of exchange rate changes on cash (2,251) 778
--------- ---------
Net change in cash and cash equivalents (9,419) 10,558
Cash and cash equivalents at January 1 103,685 83,969
--------- ---------
Cash and cash equivalents at March 31 $ 94,266 $ 94,527
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 8,671 $ 1,999
Interest paid, net of capitalized interest $ 406 $ 120
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, 1996. 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 three
months ended March 31, 1997, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997.
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:
March 31, December 31,
1997 1996
------------ ------------
Finished goods $ 284,244 $ 288,293
Work in process 23,153 22,132
Raw materials 51,706 52,359
------------ ------------
$ 359,103 $ 362,784
============ ============
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto. This Quarterly Report on Form 10-Q
may be deemed to include forward looking statments within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 that involve risk and uncertainty, including financial,
business environment and projections. Although the company believes its
expectations are based on reasonable assumptions, it can give no assurance
that its goals will be achieved. The important factors that could cause
actual results to differ materially from those in the forward looking
statements herein include, without limitation, reduced growth in research
funding, uncertainties surrounding possible government health care reform,
government regulation applicable to the Company's business, the highly
competitive environment in which the Company competes and the impact of
fluctuations in foreign currency exchange rates.
Results of Operations
For the three months ended March 31, 1997, sales increased 6.3% to $279.1
million from $262.4 million in 1996. Chemical sales for the quarter increased
4.5% to $223.9 million, with the impact of the strong dollar reducing the gain
by 3.4%. Both domestic and international sales volume exceeded levels achieved
in 1996 due to our increased worldwide sales and integrated marketing efforts.
Our Research and Fine Chemicals divisions both contributed to the sales
growth, while Diagnostic sales reflected above average gains from the expansion
of our coagulation program into Europe. Metal sales for the quarter grew
14.7% to $55.2 million, reflecting continuing demand for our electrical,
mechanical and support products and enclosures with higher growth for our
telecommunications products.
Cost of sales for the quarter totaled $128.6 million, compared to $121.0 million
for the first three months of 1996, each representing 46.1% of sales. The gross
profit percentage was unchanged from the first quarter last year as the impact
of improved productivity and sales mix changes in the chemical business were
offset by the additional cost of a new plant and sales mix changes in the metal
business.
Selling, general and administrative expenses for the three months ended
March 31, 1997, were $87.5 million, or 31.4% of sales, compared to $84.5
million, or 32.2% of sales in 1996. The decrease in selling, general and
administrative expenses as a percentage of sales are attributable to the
Company's continued managing of staffing levels and control of other expenses.
Net income for the quarter grew by 12.6% to $41.4 million from $36.7 million in
1996. Net income grew at a greater rate than sales as the effect of currency
exchange rates were more than offset by productivity gains and an ongoing lower
effective tax rate.
Liquidity and Capital Resources
Cash balances declined $9.4 million in the three months ended March 31, 1997 as
presented in the Consolidated Statements of Cash Flows (unaudited). The
primary source of cash was net cash provided by operating activities of
$20.9 million, a decrease of $8.7 million from 1996. The decrease resulted from
higher net income offset by changes in working capital accounts. The major
uses of cash were property, plant and equipment additions of $17.3 million and
payment of dividends totaling $6.3 million. Although net cash flows vary from
year to year, it is anticipated that future increases should be in line with
sales growth.
PART II - OTHER INFORMATION
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 June 1996 - Incorporated by reference to
Exhibit 3(b) of Form 10-K filed for the year ended
December 31, 1996, 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/ Peter A. Gleich May 14, 1997
------------------------- --------------
Peter A. Gleich, Vice President and Chief Financial Officer Date
(on behalf of the Company as Principal Financial Officer)
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<PERIOD-END> MAR-31-1997
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</TABLE>
