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, 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
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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. [ ]
Aggregate market value of the voting stock held by non-affiliates
of the Registrant:
$3,101,903,230 March 7, 1997
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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 7, 1997 was 100,099,885.
The following documents are incorporated by reference in the Parts of
Form 10-K indicated below:
Documents Incorporated by Reference Parts of Form 10-K into which Incorporated
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Pages 11-24 of the Annual Report to
Shareholders for the year ended
December 31, 1996 Parts I, II and IV
Proxy Statement for the 1997 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F-3 of this report.
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, 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.
The Company also offers, through a partnership with Amelung (a German
manufacturer), analyzers that measure blood clotting. 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 71,500 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 31,000
which accounted for 47% of the net sales of chemical products for the
year ended December 31, 1996. 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, fine chemicals and diagnostics and
distributes over 2,700,000 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 sales and technical representatives with customers.
For customer convenience, Sigma packages approximately 330
combinations of certain individual products in diagnostic kit form. A
diagnostic kit contains products which, when used in a series of manual
and/or automated testing procedures, aid 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, 1996.
During the year ended December 31, 1996, 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 $250. 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 1996. During the year ended
December 31, 1996, 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) or via our homepage on the World Wide Web 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, 1996, 55% 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, Norway, Poland, Russia,
Singapore, South Africa, 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, 1996, 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 1996 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", "Sigma-Aldrich Fine Chemicals" 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 500 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. Electrical and
electronic enclosures are manufactured at facilities in Aurora, Colorado;
Portland, Oregon and Modesto, California. Components and complete
systems used to support telecommunications apparatus and cabling are
manufactured at the plant in Reno, Nevada.
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 and electronic 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; Modesto, California; Sherman, Texas; and Aurora,
Colorado plants, from one regional warehouse and 44 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 5,984 persons as of December 31, 1996. Of
these, 4,706 were engaged in production and distribution of chemical
products. The B-Line subsidiary employed 1,278 persons. The total
number of persons employed within the United States was 4,265, with the
balance employed by the international subsidiaries. The Company employed
over 1,800 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, 1996 and 1995, 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, 1996 back-log will be
shipped during 1997.
On December 31, 1996 and 1995, the back-log of orders at B-Line
was not significant. B-Line expects that substantially all of the
December 31, 1996 back-log will be shipped during 1997.
(f) Information as to Industry Segments.
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Information concerning industry segments for the years ended
December 31, 1996, 1995 and 1994, is located in Note 10 to the
consolidated financial statements on pages 21 and 22 of the 1996 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
328,000 square foot building used for manufacturing, a complex of
buildings aggregating 383,000 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 45,000 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 178,000 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 619,000 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 332,000 square feet for production and
packaging. Fluka owns an 11 acre site in Buchs, Switzerland, upon which
are located its primary production facilities. Approximately 242,000
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; Modesto, California; and Aurora, Colorado. B-Line
owns a 270,000 square foot building in Highland, Illinois, 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 and a 120,000 square foot facility in
Aurora, Colorado.
The Company also owns a 173,000 square foot warehouse and
distribution facility in Allentown, Pennsylvania, and leases a warehouse
in Chicago, Illinois under a short-term lease. 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 1996.
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,
1996 and 1995, is located on page 11 of the 1996 Annual Report which is
incorporated herein by reference.
As of March 7, 1997, there were 2,086 record holders of the
Registrant's Common Stock.
Items 6 through 8. Selected Financial Data, Management's Discussion and
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Analysis of Financial Condition and Results of Operations, and Financial
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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 1996 Annual Report. See Index
to Financial Statements and Schedules on page F-1 of this report. Those
pages of the Company's 1996 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
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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 1997 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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Larry S. Blazevich 49 Vice President, Information
Services
Carl T. Cori 60 Chairman of the Board and
Chief Executive Officer
Peter A. Gleich 51 Vice President, Treasurer and
Chief Financial Officer
David R. Harvey 57 President and Chief Operating
Officer
James W. Meteer 46 Vice President, Quality
Kirk A. Richter 50 Controller
Thomas M. Tallarico 52 Vice President and Secretary
There is no family relationship between any of the officers.
Mr. Blazevich joined Sigma-Aldrich in April 1996 as Director of
Information Services and was elected Vice President, Information Services
in June 1996. Previously, Mr. Blazevich was employed with Thomas and
Betts for sixteen years where he served as Vice President of Information
Services from 1988-1996.
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 and Chief Financial Officer
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. Meteer was elected Vice President, Quality in September 1996 after
serving as Director of Quality since 1995. Previously, Mr. Meteer was
a Vice President of Supelco from 1993-1995. He held several positions
within Supelco/Rohm & Haas from 1988-1993.
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
and Chief Financial Officer 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
1997 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 1997 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 1997 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 1996 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
(Registrant)
By /s/ Peter A. Gleich March 28, 1997
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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, 1997
------------------------------------------ --------------
Carl T. Cori, Director, Chairman of the Date
Board and Chief Executive Officer
By /s/ David R. Harvey March 28, 1997
------------------------------------------ --------------
David R. Harvey, Director, President and Date
Chief Operating Officer
By /s/ Peter A. Gleich March 28, 1997
------------------------------------------ --------------
Peter A. Gleich, Vice President, Treasurer Date
and Chief Financial Officer
By /s/ Kirk A. Richter March 28, 1997
------------------------------------------ --------------
Kirk A. Richter, Controller Date
By /s/ Thomas M. Tallarico March 28, 1997
------------------------------------------ --------------
Thomas M. Tallarico, Vice President and Date
Secretary
By /s/ David M. Kipnis March 28, 1997
------------------------------------------ --------------
David M. Kipnis, Director Date
By /s/ Andrew E. Newman March 28, 1997
----------------------------------------- --------------
Andrew E. Newman, Director Date
By /s/ Jerome W. Sandweiss March 28, 1997
----------------------------------------- --------------
Jerome W. Sandweiss, Director Date
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
- -------------------------------------------------------------------------------
Page Number
Reference
-------------
Annual Report
to Shareholders
---------------
Annual financial data for the years
1996, 1995, 1994, 1993 and 1992 11
Management's discussion of financial
condition and results of operations 12
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 1996 and 1995 15
Consolidated statements for the years
ended December 31, 1996, 1995 and 1994
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 June 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 June 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 refence to Exhibit
Stock Bonus Plan* 10(c) of Form 10-K filed for the
year ended December 31, 1992,
Commission File Number 0-8135.
(d) Third Amendment and See Exhibit 10(d).
Restatement of the Incentive
Stock Bonus Plan*
(e) 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.
(f) First Amendment to Share Option Incorporated by refence to Exhibit
Plan of 1987* 10(e) of Form 10-K filed for the
year ended December 31, 1992,
Commission File Number 0-8135.
(g) Second Amendment to Share Incorporated by reference to
Option Plan of 1987* 10(f) of Form 10-K filed for the
year ended December 31, 1994,
Commission File Number 0-8135.
(h) Employment Agreement with Incorporated by reference to
Carl T. Cori* (Similar Employment Exhibit 10 (f) of Form 10-K filed
Agreements also exist with Larry for the year ended December 31, 1992
S. Blazevich, Peter A. Gleich, Commission File Number 0-8135.
David R. Harvey, James W. Meteer,
Kirk A. Richter and Thomas M.
Tallarico)
(i) Letter re: Consultation Services Incorporated by reference to Exhibit
with Dr. David M. Kipnis* 10 (g) of Form 10-K filed for the
year ended December 31, 1992,
Commission File Number 0-8135.
(j) 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
1996 financial statements filed as
Exhibit 13 below.
(13) Pages 11-24 of the Annual Report See Exhibit 13.
for the year ended December 31,
1996
(21) Subsidiaries of Registrant Page F-23 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.
* Amended by Board resolution of 1/27/76.
** 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 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.
** Added by Board resolution of 2/16/93.
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.
* Amended by Board resolution of 11/25/80.
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.
(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 nine who shall be
elected by the shareholders at the annual meeting of shareholders.
*Amended by Board resolution 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, 2/20/96 and 6/14/96.
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.
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
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.
* Added by Board resolution of 2/16/93.
ARTICLE IV. OFFICERS *
* Restated pursuant to Board action of 5/3/83 and amended by Board
resolutions of 11/8/94 and 3/6/95.
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 of Directors and shareholders
at which he is present. He may sign and execute 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.
** 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.
* 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.
* Amended by Board resolution of 3/6/95.
** 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 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.
* Amended by Board resolution of 11/8/94.
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.
** Amended by Board resolution of 7/28/81, then restated pursuant to Board
action of 5/3/83.
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.
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.
* Amended by Board resolution of 7/28/81.
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 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.
Exhibit 10(d)
THIRD AMENDMENT AND RESTATEMENT OF THE SIGMA-ALDRICH CORPORATION
INCENTIVE STOCK BONUS PLAN
WHEREAS, Sigma-Aldrich Corporation (the "Corporation") previously established
the Sigma-Aldrich Corporation Incentive Stock Bonus Plan ("Plan"); and
WHEREAS, the Corporation reserved the right to amend the Plan pursuant to
Paragraph 15 thereof; and
WHEREAS, the Corporation desires to amend and restate the Plan effective
January 1, 1996;
NOW, THEREFORE, effective January 1, 1996, the Plan is amended and restated as
follows:
1. Purpose
The purpose of the Incentive Stock Bonus Plan (the "Plan") is to provide a
means by which Sigma-Aldrich Corporation (the "Corporation") and/or its
subsidiary corporations shall be able to attract and retain competent key
employees (including officers and directors who are employees) and provide
such personnel with incentives in addition to current compensation reflecting
their efforts, initiative and skill.
2. Administration
a. The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the
Corporation (the "Board") as such Committee may be constituted from
time to time. The Committee shall consist of at least three members
of the Board selected by the Board all of whom shall be both
"Disinterested Persons" as defined in Rule 16b-3 under The Securities
Exchange Act of 1934, and "Outside Directors" as defined in
Regulations promulgated under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
b. All determinations of the Committee shall be made by
all of its members unless specifically approved, authorized or
ratified by the Board, in which event a determination by a majority
of its members shall be sufficient. Any decision or determination
reduced to writing and signed by all of the members of the Committee
shall be fully effective as if it had been made by a vote at a
meeting duly called and held.
c. Subject to the express provisions of the Plan, the
Committee also shall have complete authority to interpret the Plan,
to prescribe, amend and rescind rules and regulations relating to it,
and to make all other determinations necessary or advisable for the
administration of the Plan. The determinations of the Committee on
the matters referred to in this Paragraph 2 shall be conclusive.
d. Participants in the Plan shall be selected by the
Committee from key executive employees of the Corporation or any
subsidiary of the Corporation who hold less than two percent (2%) of
the outstanding stock of the Corporation (the "Participants"). It is
intended that Participants include only those top executives whose
responsibilities and activities have a substantial and direct impact
on total corporate performance.
e. The Committee shall designate Participants each year
and such Participants may, but need not, be the same as those who
were designated in any preceding year; that is to say, employees
designated as Participants in one year may be omitted in any and all
subsequent years; new or additional Participants may be designated in
any year.
3. Stock Bonus Pool
(a) The maximum amount of the Bonus Pool for any given year shall be
determined as follows: if the increase in the Corporation's pre-tax operating
income for the year shall have exceeded by at least 10% but less than 12-1/2%
the greater of (a) the prior year's pre-tax operating income or (b) an amount
of pre-tax operating income which would represent a 10% per year cumulative
increase through the prior year over fiscal year 1977, the maximum amount
shall be 3% of the dollar amount of such increase; if the increase in pre-tax
operating income for the year shall have exceeded by at least 12-1/2% but less
than 15% the greater of (a) the prior year's pre-tax operating income or
(b) an amount of pre-tax operating income which would represent a 12-1/2% per
year cumulative increase through the prior year over fiscal year 1977, the
maximum amount shall be 4% of the dollar amount of such increase; and if the
increase in pre-tax operating income for the year shall have exceeded by at
least 15% the greater of (a) the prior year's pre-tax operating income or
(b) an amount of pre-tax operating income which would represent a 15% per year
cumulative increase through the prior year over fiscal year 1977, the maximum
amount shall be 5% of the dollar amount of such increase.
(b) In the event any additional business shall be acquired by the
Corporation as the result of any merger or acquisition, then the percentage
increase shall be determined by including the pre-tax operating income of the
merged or acquired business or businesses for all of the years involved in
determining the maximum Bonus Pool.
(c) In the event any portion of the Corporation's business shall be
discontinued, sold or otherwise transferred, then the percentage increase
shall be determined by excluding the pre-tax operating income of the
discontinued, sold or transferred business for all of the years involved in
determining the maximum Bonus Pool.
4. Awards of Incentive Stock Bonus Units
(a) Within the first 90 days of each calendar year, the Committee shall
set the maximum dollar amount of incentive stock bonus units ("Incentive Stock
Bonus Units") and tax offset bonus units ("Tax Offset Bonus Units") which may
be awarded to the Corporation's Chief Executive Officer ("CEO") and Chief
Operating Officer ("COO"), respectively.
(b) After the end of each calendar year but prior to the award of units,
the Committee shall certify, in writing, whether the Corporation's pre-tax
operating income for the year has exceeded one or more of the levels set in
Paragraph 3(a). If, and only if, pre-tax operating income for the year shall
have reached a level sufficient to generate a Bonus Pool under Section 3, the
Committee shall allocate Incentive Stock Bonus Units and Tax Offset Bonus
Units for the CEO and COO. The value of the Incentive Stock Bonus Units and
Tax Offset Bonus Units awarded to the CEO and COO can be less than, but cannot
exceed, the maximum dollar amount fixed by the Committee during the first 90
days of the calendar year.
(c) After the Committee has determined the Units to be awarded to the
CEO and COO, the Committee shall subtract from the Bonus Pool determined under
Section 3 the dollar value of the Incentive Stock Bonus Units awarded to the
CEO and COO. If a positive value remains in the Bonus Pool after such
subtraction, the remaining dollar value of Incentive Stock Bonus Units shall
be awarded by the Committee to Participants (other than the CEO and COO)
designated by it, in such proportions as the Committee believes appropriate
based upon each Participant's relative contribution to the year's performance.
Incentive Stock Bonus Units (and Tax Offset Bonus Units) shall initially be
valued at the last price or closing price of the Corporation's shares of
common stock on the day before the date of the awards, as reported in the
Midwest Edition of The Wall Street Journal or such other source as the
Committee shall determine properly reflects the market price.
(d) All awards shall be made within thirty (30) days after the end of
the first quarter of the year following the year for which the awards are
earned.
5. Discontinuance
The Board may discontinue the Committee's authority to award said Incentive
Stock Bonus Units and Tax Offset Bonus Units or discontinue the Plan at any
time. Notice of termination shall be given to all members of the Committee
and all previous Participants still in the employ of the Corporation prior to
April 30 of the year for which such termination shall become effective.
6. Delivery and Payment
(a) Conditioned upon the Participant's continued employment by the
Corporation and/or its subsidiaries for five (5) full years after the year for
which the award is made, or upon the Participant's earlier death, permanent
and total disability or retirement after the age of 65 (or prior thereto with
the consent of the Board of Directors) or after the occurrence of a change in
control, as defined in subparagraph (c) below, of the Corporation, the
Corporation within ninety (90) days after the occurrence of any of such
events, shall issue to the Participant (or the personal representative or
heirs of a deceased Participant) that number of shares of the Corporation's
common stock which equals the number of Incentive Stock Bonus Units previously
awarded the Participant which have vested as a result of such event; and that
amount of cash equivalent to the value of that number of shares of common
stock equal to the number of Tax Offset Bonus Units awarded the CEO and COO
which have vested as a result of such event. At that time, it shall also pay
to any Participant receiving shares (other than the CEO and COO) that amount
of cash which is equal to the amount of Federal taxes which such Participant
will be required to pay, during such year of payment, by reason of his receipt
of such stock and cash if he were subject to the highest marginal Federal
income tax rate.
For example, if, in the year of payment, the market value of
the stock is $100,000 and the highest Federal income tax rate
is 40%, then subtract 40% from 100% yielding 60% and divide
the market value of the stock issued ($100,000) by 60% which
equals $166,666. Then subtract the market value of the stock
($100,000) leaving the sum of $66,666, which is the amount of
cash to be paid.
The market value of the shares and cash issued to him shall be based upon the
last price or closing price of the Corporation's stock on the day before the
date of issuance and/or payment as reported in the Midwest Edition of The Wall
Street Journal or such other source as the Committee shall determine is
representative of the market price (or in the event the shares of the
Corporation are listed on any exchange, based upon the closing price on the
day before the date of issuance); provided, however, that if the Participant's
employment shall have been terminated by the Corporation prior to the
expiration of said five year period and the Board of Directors shall determine
that his interest in the Plan to the extent awarded during the five years
prior to such termination or any portion thereof shall continue, then and in
that event, he shall receive all or such portion of the awards previously made
to him at such time and in such amounts as the Board of Directors may in its
absolute discretion determine; provided further, that the Committee may reduce
the amount of cash payable to the CEO and/or COO under a Tax Offset Bonus Unit
if the Committee determines that such reduction is appropriate in light of the
marginal Federal income tax rate in effect at the time such cash is to be
paid.
(b) When some or all of the shareholders of the Corporation receive
stock pursuant to a transaction resulting in a change of control, that new stock
shall be issued to the Participant in lieu of the Corporation's stock which
would have otherwise been issued under this Paragraph 6 and in the same ratio
as received by the Corporation's other shareholders for their shares.
(c) "Change in control", as used in this Paragraph 6, shall be deemed
to have occurred if any individual, corporation, partnership or other person or
entity, together with its Affiliates and Associates, acquires as the
Beneficial Owner more than thirty-five percent (35%) in the aggregate of the
outstanding shares of the Corporation entitled to vote in the election of
Directors, and within a 400-day period thereafter a majority of Directors
elected to the Board, or a majority of the persons constituting a group
authorized to hire or terminate employment of officers, if other than the
Board, are different from the Directors or persons constituting the Board or
group just prior to the start of such period or a group other than the Board
is created to hire or terminate employment of officers. The term "Affiliate,"
"Associate" and "Beneficial Owner" as used in this subparagraph (c) shall be
defined by reference to the Securities Exchange Act of 1934 and rules in
effect thereunder as of the date of the amendment of this Paragraph 6.
7. Forfeiture
In the event of the Participant's termination of employment with the
Corporation and its subsidiaries for any reason other than death, permanent
and total disability or retirement after the age of 65, any rights under this
Plan, except shares and cash theretofore issued and paid or required to have
been issued and paid, shall be forfeited, except as otherwise determined by
the Board of Directors as provided in 6, above.
8. Nature of Rights
The Incentive Stock Bonus Units and Tax Offset Bonus Units shall be used
solely as a device for measurement and determination of the amount of shares
and cash to be issued and paid to Participants as provided in the Plan. The
Incentive Stock Bonus Units and Tax Offset Bonus Units shall not constitute
nor be treated as property or as a trust fund of any kind. All amounts at any
time attributable to the Incentive Stock Bonus Units and Tax Offset Bonus
Units shall be treated as property of the Corporation and the Participant's
rights hereunder are limited to the rights to receive cash and shares of
common stock of the Corporation as herein provided. The award of Incentive
Stock Bonus Units and Tax Offset Bonus Units shall not entitle Participants to
any rights as shareholders but only such rights as are specified in the Plan.
9. Securities Act of 1933
Upon issuance of common stock of the Corporation to the Participant (or the
personal representative or heirs of a deceased Participant) the recipient of
such stock shall represent that the shares of stock are taken for investment
and not resale and make such other representations as may be necessary to
qualify the issuance of the shares as exempt from the Securities Act of 1933
or to permit registration of the shares and shall represent that the recipient
shall not dispose of such shares in violation of the Securities Act of 1933.
The Corporation reserves the right to place a legend on any stock certificate
issued pursuant to the Plan to assure compliance with this Paragraph 9. No
shares of common stock of the Corporation shall be required to be distributed
until the Corporation shall have taken such action, if any, as is then
required to comply with the provisions of the Securities Act of 1933 or any
other then applicable securities law.
10. Maximum Shares Issued
The aggregate number of shares of common stock of the Corporation which may be
issued under the Plan shall not exceed 1,200,000. The initial number of
shares authorized under the Plan in 1978 was 100,000. Giving effect to stock
splits since the Plan's inception, the number of shares covered by the Plan is
1,200,000 as of the effective date of this Third Amendment and Restatement.
Prior to 1996, 374,145 units have been awarded, leaving a balance of 825,855
units. On and after the effective date of this Amendment, a person may be
awarded under this Plan up to a maximum of 400,000 Incentive Stock Bonus Units
(and an equal number of Tax Offset Bonus Units). The Corporation shall, from
time to time, purchase its own shares on the open market for treasury shares
in such amounts as may be necessary for the purpose of carrying out the terms
of this Plan; provided, however, upon a two-thirds (2/3) affirmative vote of
the Board, the Corporation may issue its unissued shares of common stock in
lieu of such treasury shares.
11. Withholding of Tax
There shall be deducted from any compensation due any Participant under the
Plan, whether in the form of cash or stock distribution, cash in the amount of
any tax required by any governmental authority to be withheld and paid over by
the Corporation to such governmental authority for the account of the person
entitled to such distribution.
12. Effective Date
This Amendment shall become effective for the year 1996; provided, however,
that no Participant shall be entitled to any distribution of shares or cash
thereunder unless and until this Third Amendment shall have been ratified by
the affirmative vote of the holders of a majority of the shares of common
stock of the Corporation represented at any meeting thereof at which a quorum
is present.
13. Dilution
In the event of a stock split, stock dividend, reclassification,
reorganization or other capital adjustment of shares of common stock of the
Corporation, the number of Incentive Stock Bonus Units and Tax Offset Bonus
Units of a Participant shall be adjusted in the same manner as shares of the
Corporation's common stock reflected by such Incentive Stock Bonus Unit or Tax
Offset Bonus Unit would be adjusted.
14. Transferability
Any rights arising under the Plan shall not be transferable otherwise than by
will or the laws of descent and distribution.
15. Termination, Amendment or Extension of Plan
Unless the Plan or authority of the Committee has been discontinued by the
Board as provided in Paragraph 5 above, the Committee may, but need not, make
awards under the Plan so long as the maximum number of shares authorized in
Paragraph 10 shall not have been reserved and/or awarded. The Committee may
modify the Plan at any time; provided, however, that (a) such modification
shall not materially change the Corporation's obligations under the Plan
unless approved by the Board; (b) such modification shall not reduce the
benefits to which any Participant would be entitled under awards previously
made without his consent in writing; and (c) in the event any modification
shall increase the aggregate maximum number of shares to be issued under the
Plan beyond those authorized in Paragraph 10 or shall change the manner in
which the maximum amount of the Bonus Pool for any given year is determined
under Paragraph 3 or the class of employees eligible to participate as
provided in Section 2(d), such amendment shall be subject to ratification by
the affirmative vote of the shareholders in the same manner as provided in
Paragraph 12 hereof with respect to the original ratification of the Plan.
(Page 11 of 1996 Annual Report to Shareholders)
SELECTED FINANCIAL DATA (UNAUDITED)
(PER SHARE DATA RESTATED FOR TWO-FOR-ONE STOCK SPLIT)
<TABLE>
<CAPTION>
COMMON STOCK DATA:
(per share)
Price Range
--------------------------------------------
1996 1995 Dividends
------------------- -------------------- --------------------
High Low High Low 1996 1995
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $30-1/8 $24-5/8 $21-1/4 $16-1/4 $.0550 $.0450
Second Quarter 30 25-1/8 24-3/4 19-1/8 .0550 .0450
Third Quarter 28-3/4 23-3/4 25-7/8 23-3/8 .0550 .0450
Fourth Quarter 32-1/16 28 25-1/4 22-1/8 .0625 .0550
</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>
ANNUAL FINACIAL DATA:
(in millions, except per share data)
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net sales $1,034.6 $959.8 $851.2 $739.4 $654.4
Income before cumulative effect of accounting changes 147.9 131.7 110.3 107.1 95.5
Net income 147.9 131.7 110.3 96.3 95.5
Per share:
Income before cumulative effect of accounting changes 1.48 1.32 1.11 1.08 .96
Net income 1.48 1.32 1.11 .97 .96
Dividends .2275 .1900 .1688 .1500 .1300
Total assets 1,100.0 985.2 852.0 753.4 615.8
Long-term debt 13.1 13.8 14.5 17.3 18.7
</TABLE>
Note - In 1993, the Company acquired the net assets and business of Supelco,
Inc. and all of the stock of Circle AW Products Company.
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA:
(in millions, except per share data)
1996 QUARTER ENDED
--------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Net sales $262.4 $258.8 $255.8 $257.6
Gross profit 141.4 138.2 137.2 141.6
Net income 36.7 37.0 37.0 37.2
Net income per share .37 .37 .37 .37
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 .33 .34 .33 .32
</TABLE>
(Pages 12-13 of 1996 Annual Report to Shareholders)
MANAGEMENT'S DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
During the three years ended December 31, 1996, the Company's sales and earnings
continued to grow.
Chemical sales increased 7.4%, 13.0%, and 11.9% for 1996, 1995 and 1994,
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 1996 and 1995 and 5.0% in 1994. New product
sales, while not material in the year introduced, contribute to sales growth
in subsequent years. The effect of translating foreign currency sales into
the U.S. dollar reduced the 1996 sales growth by 1.3%, contributed 3.5% of
the 1995 sales growth and had only a slightly positive impact on 1994 sales
growth. Chemical sales for 1996 and 1995 also benefited from aggressive
marketing and closer customer contacts, partially offsetting the effect of
reduced growth in research funding in all major markets. Sales gains for 1994
reflect a benefit from the acquisition of Supelco in May 1993. Emphasis on
international markets and new sales offices helped achieve growth in
international direct sales of 14% in 1996, 18% in 1995 and 16% in 1994, 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. A 1% decrease in export sales in 1996,
following increases in export sales of 2% and 5% in 1995 and 1994 respectively,
reflect the continuing transfer of sales to both our existing and new
international offices, together with the impact of the stronger U.S. dollar
in 1996.
Metal sales increased 9.6%, 11.6%, and 30.4% for 1996, 1995 and 1994,
respectively. Average selling prices decreased 2% in 1996 after increasing 6%
in 1995 and 2% in 1994, all in response to changes in raw material costs.
Excluding the effect of price changes in the two most recent years, the growth
rate in 1996 improved, due in part to the addition of electronic enclosures to
the product line. Slower growth in 1995 resulted from slower construction
demand. The higher growth rate in 1994 was due to increased volume from
stronger construction demand and the acquisition of Circle AW in June of
1993, which provided one-third of the 1994 gain.
Cost of products sold was 46.0%, 46.7%, and 47.6% of sales in 1996, 1995 and
1994, respectively. The continuing improvement is due to increased utilization
of new facilities, productivity gains, a higher proportion of sales of
manufactured chemical products, product mix changes and, in 1995 and 1994,
higher selling prices for metal products. Price decreases for metal products
in 1996 partially offset the positive effect of the improvements. The cost of
chemical products sold increased by 5.0% and the cost of metal products sold
increased by 10.8% in 1996, compared to sales increases of 7.4% and 9.6%,
respectively.
Selling, general and administrative expenses were 31.8%, 32.1%, and 32.4% of
sales in 1996, 1995 and 1994, respectively. The decrease in 1996 and 1995
reflects ongoing efforts to effectively manage staffing levels and control
other significant operating expenses. Additionally, in 1996, net interest
income increased pretax earnings by $6.3 million over 1995, reflecting
higher average cash balances. Net interest costs declined in 1995 by $1.5
million, due to a substantial increase in cash and temporary cash investments
provided by operations and a reduced level of capital expenditures. 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 continuing introduction of
new products, more effective distribution of catalogs and added promotional
and marketing programs, the continuing expansion of a sales and marketing
unit to actively promote sales of research chemicals, and the extension of
our new coagulation programs into Europe. Additionally, 1997 sales will
benefit from new sales offices.
Liquidity and Capital Resources
- -------------------------------
In 1996, cash and temporary cash investments increased $19.7 million while
short-term borrowings were reduced by $4.7 million. At December 31, 1996,
there were no borrowings outstanding under the Company's credit arrangements,
which provide for borrowing up to $100 million. In 1995, cash and temporary
cash investments increased by $74.2 million while short-term borrowings were
reduced by $11.4 million.
Cash provided by operating activities was $153.4 million in 1996, a decrease of
$7.8 million from 1995. The change resulted mainly from a $16.2 million
increase in net income in 1996 offset by an increase in accounts receivable
and inventories of $42.1 million in 1996 compared to $22.2 million in 1995.
The increase in receivables is due primarily to the stronger sales growth in
the fourth quarter of 1996. Inventory has grown at a lower rate than sales and
the Company continues to improve its management of this asset through utilizing
better forecasting methods. 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 1997 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 should enable the
Company to continue to grow sales and profits.
During 1996, a total of $93.9 million was invested, with significant
expenditures made in support of distribution and production expansions in the
U.S., UK, Israel and Switzerland.
During 1997, we expect capital investments of between $90 to $110 million for
distribution, warehousing and production, both domestically and internationally.
Projects for increased production capacity should be completed and begin
operation in the U.S. and UK. Distribution projects should be completed in the
U.S. The Company has not made any other significant commitments for, or
acquisitions of, capital facilities early in 1997.
The preceding discussion should be read in conjunction with the consolidated
financial statements and notes thereto. Except for historical information, the
statements in this discussion may constitute forward looking statements 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.
(Five bar graphs appear on pages 12-13 depicting the following data)
<TABLE>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Chemical Sales (millions of dollars) $832.9 $775.8 $686.3
Metal Sales (millions of dollars) 201.7 184.0 164.9
Cost of Products Sold (percent of sales) 46.0% 46.7% 47.6%
Selling, General and Administrative
Expenses (percent of sales) 31.8% 32.1% 32.4%
Capital Expenditures (millions of dollars) $93.9 $60.2 $72.5
</TABLE>
(Page 14 of 1996 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Years Ended December 31,
--------------------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
Net sales $1,034,565 $959,822 $851,190
Cost of products sold 476,120 447,898 405,110
---------- -------- --------
Gross profit 558,445 511,924 446,080
Selling, general and administrative expenses 328,761 307,764 275,771
---------- -------- --------
Income before provision for income taxes 229,684 204,160 170,309
Provision for income taxes 81,828 72,477 59,969
---------- -------- --------
Net income $ 147,856 $131,683 $110,340
========== ======== ========
Weighted average number of shares outstanding 99,930 99,714 99,658
========== ======== ========
Net income per share $1.48 $1.32 $1.11
========== ======== ========
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, 1996 and 1995, and the related consolidated statements of income,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1996. 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, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
February 14, 1997
(Page 15 of the 1996 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31,
------------------------
1996 1995
---------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary cash investments $103,685 $83,969
Accounts receivable, less allowance for doubtful
accounts of $7,338 and $8,838, respectively 165,511 144,661
Inventories 362,784 346,388
Other current assets 34,657 34,983
---------- --------
Total current assets 666,637 610,001
---------- --------
Property, plant and equipment:
Land 32,276 29,365
Buildings and improvements 233,684 211,805
Machinery and equipment 338,531 301,314
Construction in progress 54,927 30,086
Less - Accumulated depreciation (280,323) (244,649)
---------- --------
Net property, plant and equipment 379,095 327,921
---------- --------
Other assets 54,226 47,266
---------- --------
$1,099,958 $985,188
LIABILITIES AND STOCKHOLDERS' EQUITY ========== =========
Current liabilities:
Notes payable $2,615 $7,306
Current maturities of long-term debt 9,454 459
Accounts payable 60,881 57,087
Accrued payroll and payroll taxes 11,571 8,909
Other accrued expenses 16,689 25,153
Accrued income taxes 9,107 9,097
---------- --------
Total current liabilities 110,317 108,011
---------- --------
Long-term debt 3,787 13,834
---------- --------
Deferred postretirement benefits 32,918 29,910
---------- --------
Deferred compensation 10,662 8,699
---------- --------
Stockholders' equity:
Common stock 100,044 49,877
Capital in excess of par value 17,002 11,455
Retained earnings 819,467 744,370
Cumulative translation adjustments 5,761 19,032
---------- --------
Total stockholders' equity 942,274 824,734
---------- --------
$1,099,958 $985,188
========== ========
The accompanying notes are an integral part of these balance sheets.
</TABLE>
(Page 16 of the 1996 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY (IN THOUSANDS, EXCEPT PER SHARE DATA)
Common Stock
200,000 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, 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 ($.38 per share) -- -- -- (18,947) --
Awards under deferred
compensation plan 18 18 564 -- --
Exercise of stock options 27 27 887 -- --
Translation adjustment -- -- -- -- 10,997
-------- -------- -------- --------- --------
Balance, December 31, 1995 49,877 49,877 11,455 744,370 19,032
Net income -- -- -- 147,856 --
Dividends ($.2275 per share) -- -- -- (22,738) --
Awards under deferred
compensation plan 8 8 384 -- --
Exercise of stock options 138 138 5,163 -- --
Stock split (2 for 1) 50,021 50,021 -- (50,021) --
Translation adjustment -- -- -- -- (13,271)
-------- --------- --------- --------- ---------
Balance, December 31, 1996 100,044 $100,044 $17,002 $819,467 $5,761
======== ========= ========= ========= =========
Share and per share information prior to the December 1996 stock split have not been restated.
The accompanying notes are an integral part of this statement.
</TABLE>
(Page 17 of 1996 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Years Ended December 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $147,856 $131,683 $110,340
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 45,213 40,872 36,655
Deferred income taxes 1,918 1,037 (613)
Postretirement benefits expense 3,739 3,584 3,547
Deferred compensation expense (credit) 2,762 4,111 (1,757)
Deferred compensation payments (407) (526) (740)
Increase in accounts receivable (22,726) (8,910) (18,592)
Increase in inventories (19,361) (13,328) (20,090)
Increase in other current assets (1,297) (7,384) (5,222)
Increase in accounts payable 2,847 1,182 6,883
Increase (decrease) in accrued payroll and payroll taxes 2,435 (1,212) 276
Increase (decrease) in other accrued expenses (8,904) 6,562 124
Increase (decrease) in accrued income taxes (655) 3,584 (799)
-------- -------- --------
Net cash provided by operating activities 153,420 161,255 110,012
-------- -------- --------
Cash flows from investing activities:
Property, plant and equipment additions (93,888) (60,224) (72,494)
Sale of equipment 1,228 2,096 1,203
Acquisition of businesses, net of cash acquired (13,629) -- --
Other, net (1,500) -- (3,872)
-------- -------- --------
Net cash used in investing activities (107,789) (58,128) (75,163)
-------- -------- --------
Cash flows from financing activities:
Repayment of notes payable (4,419) (10,850) (18,032)
Repayment of long-term debt (1,036) (1,236) (3,245)
Payment of dividends (22,738) (18,947) (16,817)
Exercise of employee stock options 5,301 914 231
-------- -------- --------
Net cash used in financing activities (22,892) (30,119) (37,863)
-------- -------- --------
Effect of exchange rate changes on cash (3,023) 1,216 2,507
-------- -------- --------
Net change in cash and cash equivalents 19,716 74,224 (507)
Cash and cash equivalents at beginning of year 83,969 9,745 10,252
-------- -------- --------
Cash and cash equivalents at end of year $103,685 $83,969 $9,745
======== ======== ========
Supplemental disclosures of cash flow information:
Income taxes paid $81,802 $68,187 $61,349
Interest paid, net of capitalized interest 1,390 1,922 3,622
The accompanying notes are an integral part of these statements.
</TABLE>
(Pages 18-24 of 1996 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.
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 after giving retroactive effect to the
stock split described in Note 9 - Common Stock.
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,
--------------------
1996 1995
-------- --------
Finished goods $288,293 $279,178
Work in process 22,132 20,382
Raw materials 52,359 46,828
-------- --------
Total $362,784 $346,388
======== ========
Chemical products are valued at the lower of cost or market. Costs for certain
domestic chemical inventories (23% 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 $6,538,000, $8,062,000, $7,410,000, and
$7,327,000 higher than reported at December 31, 1996, 1995, 1994 and
1993, 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 1997, with
two other facilities of $15,000,000 each expiring in June 1997, or earlier
upon notice by either party. The Company also has two unsecured multi-
currency bank commitments totaling $30,000,000. One facility expires in June
1997, the other in June 1998. 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, 1996 or 1995 or under the multi-currency facility at December 31, 1996.
Borrowings of $4,934,000 under the multi-currency commitments were
outstanding at December 31, 1995, with an average interest rate of 4.7%.
The Company intends to renew all of these facilities before they expire.
Notes payable by international subsidiaries were $2,615,000 and $2,372,000
at December 31, 1996 and 1995, respectively, and are payable in local
currencies with weighted average interest rates of 8.3% and 3.1% at
December 31, 1996 and 1995, respectively.
NOTE 4 - Long-Term Debt
Long-term debt consists of the following (in thousands):
December 31,
-----------------
1996 1995
------ ------
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
Other 1,216 2,268
------ ------
13,241 14,293
Less-Current
maturities (9,454) (459)
------- -------
$3,787 $13,834
======= =======
Both the 6.0% and 5.875% Industrial Revenue Bonds are subject to optional
redemption by the Company in 1997. If the bonds are not redeemed by the
Company, the interest rate will be adjusted and a new interest rate
calculation period will be determined. At that time, the bondholders have
the option of continuing to hold the bonds or redeeming them at par value.
Holders of the 6.0% bonds have been notified that the new interest rate is
4.5%. The Company does not intend to reissue any of the 6.0% or 5.875%
bonds that are redeemed by the current holders and accordingly, the amount
outstanding is included in current maturities.
Holders of the 5.875% bonds will be notified of the new rate in May, 1997.
The 7.0% Industrial Revenue Bonds are subject to optional semi-annual
redemption at par value by the Company until November 1, 1999.
Total interest expense incurred by the Company, net of immaterial amounts
capitalized, was $1,824,000, $1,647,000 and $2,910,000 in 1996, 1995 and
1994, 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. 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, 1996 and 1995 was $159.1 million and $130.9 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 $8,676,000, $8,322,000,
and $9,875,000 in 1996, 1995 and 1994, respectively. Minimum rental
commitments for non-cancelable leases in effect at December 31, 1996, are as
follows (in thousands):
1997 $9,001
1998 7,161
1999 3,419
2000 1,492
2001 1,090
2002-2022 1,767
NOTE 7 - Income Taxes
The provision for income taxes consists of the following (in thousands):
1996 1995 1994
------- ------- -------
Current:
Federal $58,376 $55,721 $50,089
State 6,609 6,399 5,882
International 14,925 9,320 4,611
------ ------ ------
Total current 79,910 71,440 60,582
------ ------ ------
Deferred:
Federal 1,833 (394) (1,946)
State 482 (74) (293)
International (397) 1,505 1,626
------- ------- -------
Total deferred 1,918 1,037 (613)
------- ------- -------
Total provision for income taxes $81,828 $72,477 $59,969
======= ======= =======
A reconciliation of statutory and effective tax rates is as follows:
1996 1995 1994
---- ---- ----
Statutory tax rate 35.0% 35.0% 35.0%
FSC benefits (1.4) (1.7) (1.5)
State income taxes,
net of federal benefits 1.9 2.0 2.1
International taxes .2 (.5) .3
Other, net (.1) .7 (.7)
----- ----- -----
35.6% 35.5% 35.2%
===== ===== =====
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):
1996 1995
------- -------
Gross deferred assets:
Inventories $18,367 $16,668
Pension and postretirement
benefit plans 13,794 13,320
------- -------
Total 32,161 29,988
------- -------
Gross deferred liabilities:
Depreciation (19,867) (20,432)
Other (10,512) (5,856)
------- -------
Total (30,379) (26,288)
------- -------
Net deferred tax assets $1,782 $3,700
======= =======
At December 31, 1996 and 1995, 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 $127,514,000 at December 31, 1996) 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 1996. The current
policies provide limited coverage for environmental damage and are written
on a claims-made basis.
NOTE 9 - Common Stock
In November 1996, the Company declared a two-for-one common stock split
effected in the form of a 100% stock dividend to stockholders of record
on December 16, 1996. Since the par value of the common stock remains
unchanged, the increased shares effected by the stock split resulted in
a transfer from retained earnings to common stock during 1996. Unless
otherwise noted, all share and per share information has been restated
to reflect this stock split.
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 1996, 1995 and 1994, 57,900, 35,800, and 37,400 shares of
common stock, respectively, were issued under this plan. At December
31, 1996, 148,200 bonus units were awarded but not distributed. This plan
permits issuance of a maximum of 2,400,000 shares of the Company's common
stock, of which 1,593,810 shares remain to be awarded.
The Company's Share Option Plan of 1995, which replaced the share option plan
of 1987, permits the granting of incentive stock options or non-qualified
options to purchase up to 4,000,000 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. Options granted in 1996 to purchase
249,000 shares become exercisable over a one to five year period. Options
granted in 1995 to purchase 22,000 shares become exercisable over a one to
two year period. Options to purchase 2,984,000 shares of the Company's
common stock under this plan remain to be granted at December 31, 1996.
The Company's Share Option Plan of 1987 permitted 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 1997. 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. Options
granted in 1994 and 1993 to purchase 320,000 and 260,000 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.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for
the stock option plans. Had compensation cost for the Company's two stock
option plans been determined based on the fair value at the grant date
for awards in 1996 and 1995 consistent with the provisions of this statement,
the Company's net income and net income per share would have been as
follows (in thousands, except net income per share):
1996 1995
-------- --------
Net income $141,562 $131,290
Net income per share $1.42 $1.32
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1996 and 1995: dividend
yield of .74%, expected volatility of 17.6%, risk-free interest rate of
6.50% and expected life based on historical exercise periods of 5.75 years.
A summary of the combined activity and balances for the Company's stock
options for the two plans as of December 31, 1996, 1995 and 1994 and
changes during the years ended on those dates is as follows:
<TABLE>
1996 1995 1994
---------------------- --------------------- ---------------------
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
--------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 1,736,376 $21.31 1,809,980 $21.22 1,073,580 $23.97
Options granted 984,000 25.69 42,000 22.15 838,000 18.15
Options exercised (279,740) 19.41 (54,700) 16.71 (17,600) 15.43
Options cancelled (44,000) 21.83 (60,904) 23.13 (84,000) 26.77
--------- --------- ---------
Options outstanding,
end of year 2,396,636 23.43 1,736,376 21.31 1,809,980 21.22
========= ========= =========
Options exercisable at year-end 1,419,436 21.70 1,692,176 21.29 969,780 23.87
Weighted average fair value of
options granted during the year $8.02 $6.85
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1996:
<TABLE>
Options Outstanding Options Exercisable
--------------------------------------------- --------------------------
Number Wtd. Avg. Wtd. Avg. Number Wtd. Avg.
Outstanding Remaining Exercise Exercisable Exercise
Range of Exercise Prices at 12/31/96 Contractual Life Price at 12/31/96 Price
- ------------------------ ----------- ---------------- ------- ----------- --------
<S> <C> <C> <C> <C> <C>
$10.1875 to $14.5625 71,160 19.6 months $10.65 71,160 $10.65
$16.25 to $24.00 863,180 93.3 months 19.49 863,180 19.49
$24.875 to $31.25 1,462,296 96.0 months 26.36 485,096 27.20
--------- ---------
2,396,636 90.5 months 23.43 1,419,436 21.70
========= =========
</TABLE>
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 and electronics 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
---- --------
1996 $106,154
1995 107,255
1994 104,825
The Company's operations by industry segment are as follows (in thousands):
<TABLE>
1996 1995 1994
Net sales to unaffiliated customers: ---------- -------- --------
<S> <C> <C> <C>
Chemical Products $832,924 $775,862 $686,325
Metal Products 201,641 183,960 164,865
---------- -------- --------
Total $1,034,565 $959,822 $851,190
========== ======== ========
Income before provision for income taxes:
Chemical Products $193,075 $177,334 $149,444
Metal Products 31,395 27,916 23,501
Interest income (expense), net 5,214 (1,090) (2,636)
-------- -------- --------
Total $229,684 $204,160 $170,309
======== ======== ========
Depreciation:
Chemical Products $36,221 $33,312 $29,404
Metal Products 5,007 4,239 4,076
------- ------- -------
Total $41,228 $37,551 $33,480
======= ======= =======
Capital expenditures:
Chemical Products $77,541 $45,397 $68,059
Metal Products 16,347 14,827 4,435
------- ------- -------
Total $93,888 $60,224 $72,494
======= ======= =======
Identifiable assets at December 31:
Chemical Products $860,676 $789,058 $746,887
Metal Products 135,597 112,161 95,341
Cash and temporary cash investments 103,685 83,969 9,745
---------- -------- --------
Total $1,099,958 $985,188 $851,973
========== ======== ========
</TABLE>
The Company's operations by geographic segment are as follows (in thousands):
<TABLE>
1996 1995 1994
-------- -------- --------
Net sales to unaffiliated customers:
<S> <C> <C> <C>
United States $683,810 $641,167 $602,573
International 350,755 318,655 248,617
Net intercompany sales between geographic areas:
United States 146,202 125,652 92,752
International 39,268 36,735 32,782
Eliminations (185,470) (162,387) (125,534)
---------- -------- --------
Total $1,034,565 $959,822 $851,190
========== ======== ========
Income before provision for income taxes:
United States $192,415 $172,308 $156,380
International 41,664 36,760 16,803
Eliminations (4,395) (4,908) (2,874)
-------- -------- --------
Total $229,684 $204,160 $170,309
======== ======== ========
Identifiable assets at December 31:
United States $783,699 $695,326 $612,721
International 348,732 307,902 256,563
Eliminations (32,473) (18,040) (17,311)
---------- -------- --------
Total $1,099,958 $985,188 $851,973
========== ======== ========
</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
------------------------- --------------------------
1996 1995 1994 1996 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Service cost $2,928 $1,673 $1,669 $2,082 $1,997 $2,336
Interest cost 3,284 2,391 2,196 2,169 2,123 1,760
Actual return on plan assets (5,254) (6,918) 329 (3,247) (3,508) (1,422)
Net amortization and deferral 2,908 4,280 (2,515) 358 790 (897)
------ ------ ------ ------ ------ ------
Net periodic pension cost $3,866 $1,426 $1,679 $1,362 $1,402 $1,777
====== ====== ====== ====== ====== ======
</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, 1996, assets of the Company's defined benefit plans were invested in
listed common stocks, common trust 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
---------------- -----------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested $38,796 $37,692 $35,489 $35,445
======= ======= ======= =======
Accumulated $40,829 $39,954 $35,489 $35,445
======= ======= ======= =======
Projected $47,387 $41,396 $44,320 $44,325
Plan assets at fair value 52,372 41,024 47,353 46,286
------- ------- ------- -------
Excess (deficiency) of plan assets over projected
benefit obligations 4,985 (372) 3,033 1,961
Unrecognized net (gain) loss (2,767) 1,165 (1,346) (761)
Unrecognized prior service cost 11,003 6,921 1,649 1,828
Unrecognized net transition asset (726) (817) (268) (284)
------- ------ ------ ------
Prepaid pension cost $12,495 $6,897 $3,068 $2,744
======= ====== ====== ======
</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
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Discount rate in determining benefit obligations 7.5% 7.0% 4.6% 5.1%
Compensation rate increase 5.5% 5.0% 3.7% 4.3%
Return on plan assets 9.0% 8.5% 6.8% 6.6%
</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 $5,504,000, $2,829,000,
and $2,337,000, for the years ended December 31, 1996, 1995 and 1994,
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.
The components of net postretirement benefit cost for 1996, 1995, and 1994 are
as follows (in thousands):
1996 1995 1994
------ ------ ------
Service cost $1,544 $1,346 $1,414
Interest cost 2,195 2,238 2,133
------ ------ ------
Net post-retirement
benefit cost $3,739 $3,584 $3,547
====== ====== ======
A reconciliation of the plan's funded status to the accrued postretirement
benefit liability included in the consolidated balance sheets at December 31,
is as follows (in thousands):
1996 1995
------ ------
Accumulated postretirement benefit obligation:
Retirees $8,078 $9,320
Active - fully eligible 6,471 6,416
Active - other 16,175 18,582
------- -------
Total 30,724 34,318
Plan assets at fair value -- --
------- -------
Unfunded postretirement benefit obligation 30,724 34,318
Unrecognized net gain (loss) 3,042 (3,443)
------- -------
Accrued postretirement benefit liability 33,766 30,875
Less-Current portion included in
other accrued expenses (848) (965)
------- -------
Deferred postretirement benefits liability $32,918 $29,910
======= =======
Future benefit costs were estimated assuming medical costs increase at a
9.5% annual rate in 1996 decreasing ratably until the year 2000 to a
5.5% growth rate and remaining at 5.5% per year thereafter. A 1.0% increase
in this annual trend rate would have increased the accumulated postretirement
benefit obligation at December 31, 1996 by $2,740,000 and 1996 postretirement
benefit expense by $410,000. The weighted average discount rate used to
estimate the accumulated postretirement benefit obligation at December 31,
1996 is 7.5%. Benefits are funded as claims are paid.
Exhibit 21
SIGMA-ALDRICH CORPORATION
PRINCIPAL SUBSIDIARIES
Sigma-Aldrich Corporation (Delaware), the Registrant:
1. Sigma Chemical Company (Delaware)
(A) Sigma Redevelopment Corporation (Missouri)
(B) Sigma Second Street Redevelopment Corporation (Missouri)
(C) Sigma Israel Chemicals Ltd. (Israel)
(D) Sigma-Aldrich Chemie Holding GmbH (Germany)
(E) Sigma-Aldrich Chemie GmbH (Germany)
(F) 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)
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. (South Korea)
(M) Sigma-Aldrich Pte., Ltd. (Singapore)
(N) Sigma-Aldrich (Pty.) Ltd. (South Africa)
(O) Sigma-Aldrich India (New Delhi and Hyderbad)
(P) Inq. F. Heidenreich AS (Norway)
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 Andersen LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
March 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 103685
<SECURITIES> 0
<RECEIVABLES> 172849
<ALLOWANCES> 7338
<INVENTORY> 362784
<CURRENT-ASSETS> 666637
<PP&E> 659418
<DEPRECIATION> 280323
<TOTAL-ASSETS> 1099958
<CURRENT-LIABILITIES> 110317
<BONDS> 3787
<COMMON> 100044
0
0
<OTHER-SE> 842230
<TOTAL-LIABILITY-AND-EQUITY> 1099958
<SALES> 1034565
<TOTAL-REVENUES> 1034565
<CGS> 476120
<TOTAL-COSTS> 476120
<OTHER-EXPENSES> 328761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1824
<INCOME-PRETAX> 229684
<INCOME-TAX> 81828
<INCOME-CONTINUING> 147856
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147856
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
</TABLE>
