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, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-8135
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
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
Aggregate market value of the voting stock held by
non-affiliates of the Registrant:
$2,698,881,606 March 5, 1999
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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 5, 1999 was 100,662,804.
The following documents are incorporated by reference in the Parts
of Form 10-K indicated below:
Parts of Form 10-K into
Documents Incorporated by Reference which Incorporated
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Pages 12-28 of the Annual Report to
Shareholders for the year ended
December 31, 1998 Parts I, II and IV
Proxy Statement for the 1999 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F-3 of this report.
This document contains 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, as well as any
statements preceded by, followed by, or that include the words
"believes," "expects," "anticipates" or similar expressions, and other
statements contained herein regarding matters that are not historical
facts. 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
effectiveness of the Company's further implementation of its global
software system, SAP, the status and effectiveness of the Company's Year
2000 efforts, the highly competitive environment in which the Company
operates and the impact of fluctuations in foreign currency exchange
rates. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by such cautionary statements. The Company
does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or uncertainties after
the date hereof or to reflect the occurrence of unanticipated events.
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.
On 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. Effective December 23, 1998, the Company acquired the net
assets and business of Genosys Biotechnologies, Inc. ("Genosys"), a
leading supplier of custom synthetic DNA products, which are essential in
gene research.
(a) Chemical Products.
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1) Products:
The Company distributes approximately 85,000 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. Genosys offers custom synthetic DNA
products,synthetic peptides and genes for life science research, all of which
will support the Company's efforts to penetrate the molecular biology
market. In June 1997 Sigma-Aldrich entered into a partnership with
AlliedSignal (75% Sigma-Aldrich, 25% AlliedSignal), whereby Sigma-Aldrich
agreed to sell and market Riedel-de Haen laboratory chemicals. Riedel-de
Haen is a major European supplier of laboratory products. These products
complement the Company's existing range of high quality research
products.
Aldrich also offers approximately 80,000 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 periodic review of technical literature,
along with regular communications with customers, the Company's goal is
to keep 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., RdH
Laborchemikalien GmbH and 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 85,000 products listed in the Sigma, Aldrich,
Fluka, Riedel-de Haen and Supelco catalogs, the Company produced
approximately 39,000 which accounted for 44% of the net sales of chemical
products for the year ended December 31, 1998. 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 greater than 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, although
no assurance can be given that shortages will not occur in the future.
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 280 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 2,400,000 comprehensive catalogs for the Sigma, Aldrich,
Fluka, Riedel-de Haen 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 200
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, 1998.
During the year ended December 31, 1998, products were sold to
approximately 151,000 customers, including hospitals, universities,
pharmaceutical companies 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 $300. 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 1998. During the year
ended December 31, 1998, no one customer and no one product accounted for more
than 2% 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, 1998, 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, Riedel-de Haen
and Supelco, through distributors and by subsidiaries organized in
Argentina, Australia, Austria, Belgium, Brazil, Canada, Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, India, Ireland,
Israel, Italy, Japan, Malaysia, 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 certain risks such as changes in the legal and regulatory
policies of foreign jurisdictions, local political and economic
developments, currency fluctuations, exchange controls, changes in tariff
restrictions, royalty and tax increases, export and import 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, 1998, 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 24 and 25 of the 1998 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", "Riedel-de Haen", "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 1,000 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 200 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; Modesto, California; and Sherman, Texas. 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 used in commercial
installations as well as 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 27 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 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, cable tray
component systems and enclosures, 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 7,162 persons as of December 31, 1998. Of
these, 5,739 were engaged in production and distribution of chemical
products. The B-Line subsidiary employed 1,423 persons. The total
number of persons employed within the United States was 4,748, with the
balance employed by the international subsidiaries. The Company employed
over 2,000 persons who have degrees in chemistry, biochemistry,
engineering or other scientific disciplines, including approximately 260
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 15, 2002.
(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, 1998 and 1997, 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, 1998 back-log will be
shipped during 1999.
On December 31, 1998 and 1997, the back-log of orders at B-Line was
not significant. B-Line expects that substantially all of the December
31, 1998 back-log will be shipped during 1999.
(f) Information as to Industry Segments.
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Information concerning industry segments for the years ended
December 31, 1998, 1997 and 1996, is located in Note 10 to the
consolidated financial statements on pages 24 and 25 of the 1998 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 391,000 square feet which is 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, a
98,000 square foot building used for production, quality control and
packaging and a 19,000 square foot production facility. The Company owns
a 280,000 square foot building in St. Louis which is being partially
utilized to provide additional quality control and warehousing capacity.
Also in St. Louis, the Company owns 30 acres upon which is located a
286,000 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 100,000 square foot building which is used for
additional manufacturing and warehousing and a complex of buildings
aggregating 322,000 square feet which is used primarily for warehousing
and distribution. Also in Milwaukee, the Company owns a 152,000 square
foot building which is used for warehousing, a 56,000 square foot
administration facility and a 627,000 square foot distribution facility.
The Company also owns 513 acres in Sheboygan, Wisconsin, upon which are
located multiple buildings totaling 332,000 square feet for production and
packaging. The Company also owns a 30,000 square foot administration,
production and warehousing facility in Natick, Massachusetts. Fluka owns a
13 acre site in Buchs,Switzerland, upon which are located its primary
production facilities. Approximately 357,000 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 71 acres near
Bellefonte, Pennsylvania, upon which is located a 153,000 square foot
building used for manufacturing, warehousing, research and administration.
Riedel-de Haen leases a 200,000 square foot production facility and an
administration building in Seelze, Germany.
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 273,000 square foot building in Highland, Illinois, a 115,000
square foot building in Troy, Illinois, a 115,000 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 102,000 square foot
building in Modesto, California. B-Line leases a 100,000 square foot
facility in Norcross, Georgia and a 113,000 square foot facility in
Aurora, Colorado.
The Company also owns a 173,000 square foot warehouse and
distribution facility in Allentown, Pennsylvania, leases a 20,000 square foot
administration and production facility in The Woodlands, Texas and leases
warehouses in Chicago, Illinois and in Bethany, Connecticut under short-term
leases. Manufacturing and/or warehousing facilities are also owned or leased in
the United Kingdom, Australia, Canada, Denmark, Finland, France, Germany,
Israel, Japan, Mexico, Norway, Scotland, South Korea, Sweden 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
expects to 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 1998.
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, 1998 and
1997, is located on page 28 of the 1998 Annual Report which is
incorporated herein by reference.
As of March 5, 1999, there were 1,858 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, Qualitative
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and Quantitative Market Risk Disclosure and Financial Statements and
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Supplementary Data.
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The information required by Items 6 through 8 is incorporated herein
by reference to pages 12-27 of the 1998 Annual Report. See Index to
Financial Statements and Schedules on page F-1 of this report. Those
pages of the Company's 1998 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 1999 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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Karsten Bode 45 Vice President and President,
Riedel-de Haen
Thomas E. Briggs 53 Vice President and President, B-Line
Larry S. Blazevich 51 Vice President, Information Services
Terry R. Colvin 43 Vice President, Human Resources
Carl T. Cori 62 Chairman of the Board and Chief
Executive Officer
J. Russel Gant 48 Vice President and President, Supelco
David R. Harvey 59 President and Chief Operating Officer
David W. Julien 44 Vice President and President, Sigma
Rodney L. Kelley 44 Vice President, Safety
James W. Meteer 48 Vice President, Quality
Karen J. Miller 41 Controller
Robert Monaghan 52 Vice President and President,
Sigma Diagnostics
Richard G. Morris 50 Vice President and President,
Sigma-Aldrich Research
Jai P. Nagarkatti 51 Vice President and President, Aldrich
Phillip Ottiger 56 Vice President and President,
Sigma-Aldrich Fine Chemicals
Kirk A. Richter 52 Treasurer
Thomas M. Tallarico 54 Vice President and Secretary
Herbert Vuilleumier 52 Vice President and President, Fluka
Frank D. Wicks 45 Vice President, Operations
There is no family relationship between any of the officers.
Mr. Bode was elected President of Riedel-de Haen in July 1997 after
serving as head of the Logistics/Technique Department for Fluka for more
than 3 years.
Mr. Briggs has been President of B-Line for more than five years.
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.
Mr. Colvin was elected Vice President, Human Resources of the Company in
March 1998. He served as Vice President, Human Resources at Sigma from
January 1995 to February 1998 and as Director of Human Resources at B-
Line from January 1987 to December 1994.
Dr. Cori has been Chairman and Chief Executive Officer of the Company for
more than five years. He served as President of the Company for more
than five years until March 1995.
Dr. Gant was elected President of Supelco in December 1995. He served as
Vice President of Supelco from May 1993 to December 1995.
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. Julien was elected President of Sigma in August 1998. He served as
Vice President of Sigma from November 1995 to July 1998. Previously, Mr.
Julien served as Director of Biotechnology Facilities Design at Jacobs
Engineering Group.
Mr. Kelley was elected Vice President of Safety in August 1998. He
served as Director of Safety for over four years prior to August 1998.
Mr. Meteer was elected Vice President, Quality of the Company in
September 1996 after serving as Director of Quality since 1995.
Previously, Mr. Meteer was a Vice President of Supelco from 1993-1995.
Ms. Miller was elected Controller of the Company in May 1997.
Previously, Ms. Miller was employed as Controller of several divisions at
Allergan, Inc. for more than five years until February 1997.
Mr. Monaghan joined Sigma-Aldrich in July 1998 as President of Sigma
Diagnostics. Previously, Mr. Monaghan was employed as Vice President of
Dade Behring and Vice President of Behring Diagnostics from October 1997
to July 1998 and from April 1991 to October 1997, respectively.
Dr. Morris joined Sigma-Aldrich in February 1995 as President of Sigma-
Aldrich Research. Previously, Mr. Morris served as Vice President for
world-wide sales at Molecular Dynamics.
Dr. Nagarkatti has been President of Aldrich for more than five years.
Mr. Ottiger has been President of Sigma-Aldrich Fine Chemicals for more
than five years.
Mr. Richter was elected Treasurer in May 1997 after serving as Controller
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.
Dr. Vuilleumier has been President of Fluka for more than five years.
Dr. Wicks was elected Vice President of Operations in August of 1998.
Previously, he served as President of Sigma for five years.
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.
- --------------------------------------------------------------------------------
Information under the captions "Director Compensation and
Transactions" and "Information Concerning Executive Compensation" of the
1999 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------------------------
Information under the caption "Security Ownership of Directors,
Executive Officers and Principal Beneficial Owners" of the 1999 Proxy
Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------------------------------
Information under the caption "Director Compensation and
Transactions" of the 1999 Proxy Statement is incorporated herein by
reference.
PART IV
- --------------------------------------------------------------------------------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- --------------------------------------------------------------------------------
(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 1998 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-5 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
- --------------------------------------------------------------------------------
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/ Karen J. Miller March 31, 1999
--------------------------------- --------------
Karen J. Miller, Controller Date
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Carl T. Cori, David R. Harvey,
Karen J. Miller, 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 31, 1999
----------------------------------------- --------------
Carl T. Cori, Director, Chairman of the Date
Board and Chief Executive Officer
By /s/ David R. Harvey March 31, 1999
----------------------------------------- --------------
David R. Harvey, Director, President and Date
Chief Operating Officer
By /s/ Karen J. Miller March 31, 1999
----------------------------------------- --------------
Karen J. Miller, Controller Date
By /s/ Kirk A. Richter March 31, 1999
----------------------------------------- --------------
Kirk A. Richter, Treasurer Date
By /s/ Thomas M. Tallarico March 31, 1999
----------------------------------------- --------------
Thomas M. Tallarico, Vice President and Date
Secretary
By /s/ David M. Kipnis March 31, 1999
----------------------------------------- --------------
David M. Kipnis, Director Date
By /s/ Andrew E. Newman March 31, 1999
----------------------------------------- --------------
Andrew E. Newman, Director Date
By /s/ William C. O'Neil, Jr. March 31, 1999
----------------------------------------- --------------
William C. O'Neil, Jr., 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
1998, 1997, 1996, 1995 and 1994 28
Management's discussion of financial
condition and results of operations 12
Market Risk Disclosure 15
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 1998 and 1997 17
Consolidated statements for the years
ended December 31, 1998, 1997 and 1996
Income 16
Stockholders' Equity 18
Cash Flows 19
Notes to consolidated financial statements 20
Report of independent public accountants 16
Form 10-K
---------
FINANCIAL STATEMENT SCHEDULES:
Schedule II - Valuation and Qualifying Accounts F-3
All other schedules are omitted as they are
not applicable, not required or the information
is included in the consolidated financial
statements or related notes to the consolidated
financial statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Stockholders of Sigma-Aldrich Corporation:
We have audited in accordance with generally accepted auditing
standards, the financial statements included in Sigma-Aldrich
Corporation's 1998 Annual Report to Shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 16, 1999. Our audit was made for the purpose of forming an
opinion on those statements taken as a whole. Schedule II included in
this Form 10-K is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
February 16, 1999
<TABLE>
<CAPTION>
SIGMA-ALDRICH CORPORATION AND SUBSIDARIES
SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
For the Years Ended December 31
(In Thousands)
- --------------------------------------------------------------------------------
Balance at Deductions Balance at
Description: Beginning of Additions from End of the
Fiscal Year Year to Reserves Reserves Year
- -------------- ------------ ----------- ---------- ----------
Allowance for
Doubtful Accounts:
<S> <C> <C> <C> <C>
1998 $6,532 $2,039 $1,822 $6,749
1997 7,338 620 1,427 6,532
1996 8,838 91 1,591 7,338
</TABLE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our report incorporated by references in this Form 10-
K, into the Company's previously filed registration statement on Form S-
3, file number 33-74163 and on Form S-8, file numbers 33-24415, 33-
62541 and 33-64661.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
March 29, 1999
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 Amendments Incorporated by
reference to Exhibit
3(a) of Form 10-K filed
for the year ended
December 31, 1991,
Commission File
Number 0-8135.
(b) By-Laws as amended May 1997 See Exhibit 3(b).
(4) Instruments Defining the Rights of
Shareholders, Including Indentures:
(a) Certificate of Incorporation and Amendments See Exhibit 3(a) above.
(b) By-Laws as amended May 1997 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) Third Amendment and Restatement Incorporated by reference
Incentive Stock Bonus Plan* to Exhibit of the 10(d)
of Form 10-K filed for
the year ended
December 31, 1996,
Commission File Number
0-8135.
(b) 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.
(c) First Amendment to Share Option Incorporated by reference
to Exhibit Plan of 1987*
10(e) of Form 10-K filed
for the year ended
December 31, 1992,
Commission File Number
0-8135.
(d) Second Amendment to Share Option Incorporated by reference
to Exhibit Plan of 1987*
10(f) of Form 10-K filed
for the year ended
December 31, 1994,
Commission File Number
0-8135.
(e) Employment Agreement with Carl T. Cori* Incorporated by reference
(Similar Employment Agreements also 10 (f) of For 10-K filed
exist with Karsten Bode, Thomas E. Briggs, for the year ended
Larry S. Blazevich, Terry R. Colvin, December 31, 1992,
J. Russel Gant, David R. Harvey, David W. Commission File Number
Julien, Rodney L. Kelley, James W. Meeter, 0-8135.
Karen J. Miller, Robert Monaghan,
Richard G. Morris, Jai P. Nagarkatti,
Phillip Ottiger, Kirk A. Richter,
Thomas M. Tallarico, Herbert Vuilleumier,
and Frank D. Wicks)
(f) Letter re: Consultation Services with Incorporated by reference
Dr. David M. Kipnis* to Exhibit 10 (g) of Form
10-K filed for the year
ended December 31, 1992,
Commission File Number
0-8135.
(g) 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.
(h) Separation Agreement and See Exhibit 10(h).
Release with Peter Gleich
(i) Consulting Agreement and Release See Exhibit 10(i).
with Floyd Worley
(11) Statement Regarding Computation of Per Incorporated by reference
Share Earnings to the information on net
income per share included
in Note 1 to the
Company's 1998 financial
statements filed as
Exhibit 13.
(13) Pages 12-28 of the Annual Report to Shareholders See Exhibit 13.
for the year ended December 31, 1998
(21) Subsidiaries of Registrant See Exhibit 21.
(23) Consent of Independent Public Accountants Page F-4 of this report.
(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.
Exhibit 10(h)
SEPARATION AGREEMENT AND RELEASE
--------------------------------
This Agreement is made between Sigma-Aldrich Corporation,
including its divisions, subsidiaries, affiliated companies, successors
and assigns ("SIAL"), and Peter Gleich ("Gleich").
WHEREAS, Gleich desires to retire from his employment and settle
all legal rights and obligations resulting from Gleich's employment
with SIAL.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations and undertakings of the parties set forth
herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Gleich has elected to retire from his employment with SIAL
with an effective date as set forth in Paragraph 3.
2. In consideration for Gleich's execution of this Separation
Agreement and Release (hereinafter "Agreement"), SIAL agrees:
(a) To pay Gleich a severance payment in the amount of
$750,000.00 less deductions required by law. This amount shall be
payable as follows: one-third payable January 5, 1998, one-third
payable March 31, 1998 and one-third payable June 30, 1998.
(b) To continue to cover Gleich under SIAL's group medical
insurance plan through March 26, 2000. The parties acknowledge and
agree that the effective date of Gleich's retirement shall constitute
the qualifying event for purposes of COBRA. Should Gleich exercise his
right to elect COBRA continuation coverage, SIAL agrees to pay for such
coverage, provided such coverage does not extend beyond March 26, 2000.
Effective March 26, 2000, Gleich shall be eligible to participate,
should he so apply/elect, in SIAL's retiree health benefit program.
(c) To pay Gleich on January 5, 1998, the amount of $268,228.00
less deductions required by law. This amount represents payment for
4,500 Sigma Aldrich incentive stock bonus units within the deferred
stock program, which value was calculated as of the close of business
on November 25, 1997 and increased as appropriate for tax
considerations.
(d) To allow Gleich ninety (90)days from the effective date of
his retirement to exercise all stock options, with all stock options to
be considered fully vested, in accordance with the terms of SIAL's
Stock Option Plan.
(e) If, in accordance with the Sigma-Aldrich Incentive Stock
Plan, Gleich will be eligible for an award in 1997, in lieu of such
stock award, Gleich will be provided a cash payout in an amount equal
to the value of the award and increased as appropriate for tax
considerations. Such payment to Gleich will be made one week after the
awards have been made.
(f) To allow Gleich to retain his Company car, car phone and
computer, thereby releasing all claims of title/ownership thereto or
thereof.
(g) To reimburse Gleich for reasonable legal fees, accounting
fees or consulting fees concerning this Agreement.
3. Gleich's retirement shall become effective upon SIAL's
selection and hire of a Chief Financial Officer or June 30, 1998,
whichever occurs first.
4. Gleich has elected to delay the effective date of retirement
(as noted in Paragraph 3) and continue to provide his services to SIAL
in a professional and responsible manner. Based upon this additional
promise of Gleich, SIAL agrees, in addition to the foregoing, to
compensate Gleich at an annualized salary rate of $295,000.00, less
deductions required by law, until June 30, 1998. Such payments will be
made in accordance with the Company's normal payroll dates following
execution of this Agreement.
5. The parties agree that the compensation and benefits
described above provided Gleich by SIAL represents additional
compensation and benefits to which Gleich would not be entitled absent
this Agreement. The parties further agree that the compensation and
benefits described above constitute the total understanding of all
compensation and benefits payable by SIAL to Gleich with regard to his
employment by SIAL and the termination thereof, and that no other
compensation, bonuses, stock options, vacation, benefits or payments of any
kind will be paid other than the amounts set forth above.
6. SIAL hereby waives and releases Gleich from any claims of
breach of fiduciary duty and/or claims arising out of the performance
of Gleich's duties.
7. Gleich hereby waives and releases SIAL, its officers,
directors, representatives, and employees from any and all claims made,
or which could have been made, of whatever nature, as a consequence of
his employment or the termination of his employment relationship with
SIAL pursuant to this Agreement, or arising out of any known or unknown
fact, condition, or incident occurring prior to the date of this
Agreement, including, but not limited to, all claims of discrimination
under local, state or federal law, regulation or executive order,
including, but not limited to, all claims under the Age Discrimination
in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Employee Retirement Income Security Act, the
Americans with Disabilities Act, the Missouri Human Rights Act, City of
St. Louis Ordinance No. 62710, all claims in contract or tort, all
claims for lost wages, bonuses, stock options, benefits, expenses,
severance, re-employment, service letters, compensatory or punitive
damages, attorney's fees and all claims for any other type of damage
relief. Gleich further waives all rights to future employment with
SIAL. Nothing contained in this Agreement shall be construed as a
waiver or release of any claim(s) of breach of contract arising out of
performance of this Agreement.
Notwithstanding the foregoing release, nothing contained in this
Agreement shall limit Gleich's rights to indemnification from SIAL or
his rights to coverage under SIAL's D&O coverage (or other insurance
coverage) for acts or omissions as an officer of SIAL that he would be
covered for under the terms of existing indemnification policies and
insurance policies.
8. Gleich covenants not to sue SIAL or any other party released
herein with respect to any claim released pursuant to this Agreement.
9. Gleich agrees not to disclose the terms or details of this
Agreement to any person other than his attorney, accountant, income tax
preparer, spouse and children or pursuant to court order or as
otherwise required by law. Gleich agrees to ensure said individuals
maintain such confidentiality.
10. SIAL agrees to insure that those employees of SIAL or members
of the Board of Directors having knowledge of this Agreement will not
disclose the terms or details of this Agreement except on a need to
know basis, as required to comply with applicable securities
requirements, pursuant to court order or as otherwise required by law.
SIAL further agrees to insure that those employees of SIAL or members
of the Board of Directors having knowledge of this Agreement will not
defame Gleich or make defamatory comments concerning his job
performance.
11. By execution of this document, Gleich expressly waives any
and all rights to claims under the Age Discrimination in Employment Act
of 1967, 29 U.S.C. 621, et seq.:
(a) Gleich acknowledges that his waiver of rights or claims
refers to rights or claims arising under the Age Discrimination in
Employment Act of 1967, is in writing and is understood by Gleich;
(b) Gleich expressly understands that by execution of this
document, Gleich does not waive any rights or claims that may arise
after the date the waiver is executed;
(c) Gleich acknowledges that the waiver of his rights or claims
arising under the Age Discrimination in Employment Act is in exchange
for the consideration outlined in this Agreement which is above and
beyond that to which Gleich is entitled and that this waiver is not
requested in connection with an existing incentive or other employment
termination program;
(d) Gleich acknowledges that SIAL expressly advised him on
November 26, 1997, to consult an attorney of his choosing prior to
executing this document and that he has been given a period of not less
that twenty-one (21) days within which to consider this document;
(e) Gleich acknowledges he has been advised by SIAL that he is
entitled to revoke (in the event he executes this document) his waiver
of rights or claims arising under the Age Discrimination in Employment
Act within seven (7) days after executing this document or on or before
January 2, 1998, whichever is later, and that said waiver will not and
does not become effective or enforceable until this revocation period
has expired. Gleich agrees that payment of monies due under this
executed and unrevoked waiver shall not be payable until this
revocation period has expired.
The parties further agree as follows:
12.1 That the covenants of this Agreement are severable and that
if a clause(s) shall be found unenforceable, the entire document shall
not fail but shall be construed and enforced without any severed
clause(s) in accordance with the terms of this document;
12.2 That this Agreement shall supersede all other oral or written
agreements or understandings between the parties with the exception
that Gleich shall continue to be bound by the Agreement between SIAL
and Gleich executed by him during employment by SIAL and attached
hereto as Appendix A;
12.3 That this Agreement contains the entire understanding of the
parties and that this Agreement shall not be modified, altered or
changed except upon the express written consent of the parties hereto;
12.4 That SIAL's failure to exercise any of its rights in the
event Gleich breaches any of the separate and distinct promises in this
Agreement shall not be construed as a waiver of such breach or prevent
SIAL from later enforcing strict compliance with any and all promises
in this Agreement;
12.5 SIAL and the other parties released herein specifically deny
that they have violated any statute, regulation, or any other legal
duty governing their relationship with Gleich. It is understood that
the payments and other consideration provided by this Agreement are not
and shall not be construed to be an admission of guilt or liability on
the part of any party hereby released.
13. Gleich acknowledges he has read this Agreement, that he has
had a reasonable amount of time to consider its terms, that the only
consideration for him signing this Agreement are the terms stated
above, that no other promise, agreement, statement or representation of
any kind has been made to him by any person or entity to cause him to
sign this Agreement, that he is competent to execute this Agreement,
that he has had an adequate opportunity to discuss this Agreement with
an attorney and he has done so or he has voluntarily elected not to do
so, that he fully understands the meaning and intent of this Agreement
and that he is voluntarily executing it of his own free will after good
faith negotiations with SIAL concerning its terms.
AGREED TO AND ACCEPTED:
/s/ Peter Gleich
_____________________________
Peter Gleich
STATE OF MISSOURI )
) ss.
CITY OF ST. LOUIS )
COMES NOW Peter Gleich, who states to me that he has read and understands
the foregoing Agreement and agrees to and accepts its terms and conditions as a
free act of his own volition.
Subscribed and sworn to before me this 15th day of December, 1997.
/s/ Sandi J. Lucido
------------------------------
Notary Public
My Commission Expires:
8/6/2001
SIGMA-ALDRICH CORPORATION
By: /s/ Tom Cori
--------------------------
Date: 12/11/97
------------------------
Appendix "A"
[Company Logo]
AGREEMENT between SIGMA CHEMICAL COMPANY and
- --------------------------------------------
Peter A. Gleich
-----------------------------------------------
In consideration of the compensation and other benefits of my employment or
continued employment by Sigma Chemical Company (the Company) and of other
valuable consideration, I agree as follows:
CONFIDENTIAL INFORMATION
I recognize that the Company is engaged in the business of research,
development, manufacture and sale of chemicals, chemical products and allied
activities, which business requires for its successful operation the fullest
security of its Confidential Information of which I will acquire knowledge
during the course of my employment.
As used in this agreement, "Confidential Information" means all technical
and business information of the Company, or which is learned or acquired by the
Company from others with whom the Company has a business relationship in which,
and as a result of which, similar information is revealed to the Company,
whether patentable or not, which is of a confidential, trade secret and/or
proprietary character and which is either developed by me (alone or with others)
or to which I shall have had access during my employment. Confidential
Information shall include all data, designs, plans, notes, memoranda, work
sheets, formulas, processes, patents, customer and supplier lists.
I shall use my best efforts and diligence both during and after my employment
with the Company to protect the confidential, trade secret and/or proprietary
character of all Confidential Information. I shall not, directly or indirectly,
use (for myself or another) or disclose any Confidential Information, for so
long as it shall remain proprietary or protectible as confidential or trade
secret information, except as may be necessary for the performance of my duties
for the Company.
I shall promptly deliver to the Company, at the termination of my employment
or at any other time at the Company's request, without retaining any copies, all
documents and other material in my possession relating, directly or indirectly,
to any Confidential Information.
Each of my obligations in this section shall also apply to the confidential,
trade secret and proprietary information learned or acquired by me during my
employment from others with whom the Company has a business relationship.
COMPETITIVE ACTIVITY
I shall not, directly or indirectly (whether as owner, partner, consultant,
employee or otherwise), at any time during the period of my employment by the
Company and for a period of two years following termination for any reason of my
employment with the Company engage in or contribute my knowledge to any work or
activity that involves a product, process, service or development which is then
competitive with and the same as or similar to a product, process, service or
development on which I worked or with respect to which I had access to
Confidential Information while with the Company. However, I shall be permitted
to engage in such proposed work or activity, and the Company shall furnish me a
written consent to that effect signed by an officer, if I shall have furnished
to the Company clear and convincing written evidence, including assurances from
me and my new employer, that the fulfillment of my duties in such proposed work
or activity would not cause me to disclose, base judgements upon, or use any
Confidential Information, including information relating to the identity of or
products supplied to or purchased from the customers or suppliers of
the Company.
Following expiration of said two-year period, I shall continue to be
obligated under the "Confidential Information" section of this Agreement not to
use or to disclose Confidential Information so long as it shall remain
proprietary or protectible as confidential or trade secret information.
Following termination of my employment for any reason, I agree to advise the
Company of my new employer within ten days after accepting new employment. I
further agree to keep the Company so advised of any change in my employment for
two years following termination of my employment with the Company.
I understand that it is not the intention of this Agreement to prevent me
from earning a livelihood utilizing my general purchasing, sales, professional
or technical skills in any of the hospitals, businesses, research or
manufacturing facilities of companies which are not directly or indirectly in
competition with the Company.
IDEAS, INVENTIONS, DISCOVERIES
I shall promptly disclose to the Company all ideas, inventions or
discoveries, whether or not patentable, which I may conceive or make (alone or
with others) during my employment , whether or not during working hours, and
which, directly or indirectly,
(a) relate to matters within the scope of my duties or field of
responsibility during my employment with the Company; or
(b) are based on my knowledge of the actual or anticipated business or
interest of the Company; or
(c) are aided by the use of time, materials, facilities or information of
the Company.
I hereby assign to the Company or its designee, without further compensation,
all of my right, title and interest in all such ideas, inventions or discoveries
in all countries of the world.
Without further compenstation but at the Company's expense, I shall give all
testimony and execute all patent applications, rights of priority, assignments
and other documents and in general do all lawful things requested of me by the
Company to enable the Company to obtain, maintain and enforce protection of such
ideas, inventions and dicoveries for and in the name of the Company or its
designee (as the case may be) in all countries of the world. However, should I
render any of these services during a two-year period following termination of
my employment, I shall be compensated at a rate per hour equal to the basic
salary I revceived from the Company at the time of termination and shall be
reimbursed for reasonable out-of-pocket expenses incurred in rendering
the services.
GENERAL
If I am employed by an affiliate of the Company and have not entered into a
superseding agreement with my new employer covering the subject matter of this
Agreement, then this Agreement shall continue in effect and my new employer
shall be termed "the Company" for all pruposes hereunder and shall have the
right to enforce this Agreement as my employer. In the event of any
subsequent employment by the Company or any other affiliate, my new employer
shall succeed to all rights under this Agreement so long as such employer
shall be an affiliate of the Company and so long as this Agreement has not
been superseded.
As used in this Agreement, an "affiliate" of the Company shall mean any
parent of subsidiary of the Company, any company owned or controlled by any
parent of the Company as well as any subsidiary of such companies and any
company or corporation with which the Company has a contractual or ongoing
business relationship which requires the Company and such other company or
corporation to agree to noncompetition or non-disclosure covenants similar to
or the same as those contained herein.
The Company and I shall have the right to terminate my employment at any time
by giving at least 30 days written notice to the other party; provided, however,
the Company may terminate my employment without notice at any time for any cause
deemed by it to be a breach of my employment duties or of any of my obligations
under this Agreement. The Company, at its option, may elect to pay my salary
for the notice period instead of continuing my active employment during that
period.
I hereby acknowledge that damages for the violation of the provisions
contained in this Agreement will not give fill and sufficient relief to the
Company, and I agree that in the event of any violation of any of said
provisions the Company shall be entitled to injunctive relief against violation
thereof, in addition to any other rights it may have by reason of said
violation.
This Agreement shall be interpreted under the laws of the State of Missouri.
If any provision of this Agreement is held invalid in any respect, it shall not
affect the validity of any other provision of this Agreement. If any provision
of this Agreement is held to be unreasonable as to time, scope or otherwise, it
shall be construed by limiting and reducing it so as to be enforceable under
then applicable law.
This agreement shall supercede any and all previous employment agreements
between the company and me.
This Agreement is signed in duplicate, as of the 30th day of August, 1982.
SIGMA CHEMICAL COMPANY
By /s/ Carl T. Cori /s/ Peter A. Gleich
------------------------------------ --------------------------------------
Signature of Employee
Carl T. Cori Peter A. Gleich
- -------------------------------------- --------------------------------------
Typed Name and Title Typed Name of Employee
Exhibit 10(i)
CONSULTING AGREEMENT AND RELEASE
--------------------------------
This Agreement is made between B-Line Systems, Inc., including any
subsidiaries, parent, affiliated or related companies, their successors
and assigns (hereinafter collectively referred as "B-Line"), and Floyd
Worley ("Worley").
WHEREAS, Worley desires to retire from his employment and settle
all legal rights and obligations resulting from Worley's employment
with B-Line; and
WHEREAS, Worley has been employed by B-Line and is intimately
familiar with its business; and
WHEREAS, B-Line desires to retain Worley as an independent
contractor to render consulting and advisory services to B-Line, and to
assist in the conduct of its business; and
WHEREAS, Worley desires to be so retained and render such
consulting and advisor services to B-Line, all on the terms and subject
to the conditions herein provided;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations and undertakings of the parties set forth
herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Worley agrees to voluntarily retire from his employment with
B-Line effective December 31, 1998 and agrees to be available to
perform services as a consultant for B-Line for the compensation set
forth below for the eighteen (18) month period from January 1, 1999
through June 30, 2000, when Worley will cease to be a consultant or
associated with B-Line in any capacity. Worley further agrees to
resign as an officer of Sigma/Aldrich Corporation ("Sigma/Aldrich")
effective December 31, 1998.
2. In consideration for Worley's execution of this Separation
Agreement and Release (hereinafter "Agreement"), B-Line agrees:
(a) To continue to pay Worley his regular salary up to and
including December 31, 1998.
(b) To pay Worley the sum of Eleven Thousand Dollars
($11,000) per month, as compensation for the eighteen (18) month
period, January 1, 1999 through June 30, 2000, that Worley agrees to
serve as a consultant to B-Line pursuant to this Agreement. Worley
understands and agrees that said payments are made for services as an
independent contractor and he agrees to pay all taxes due on said
payments.
(c) To continue to cover Worley under B-Line's group
medical insurance plan through June 30, 2000. The parties
acknowledge and agree that the effective date of Worley's retirement
shall constitute the qualifying event for purposes of COBRA. Should
Worley exercise his right to elect COBRA continuation coverage, B-
Line agrees to pay for such coverage, provided such coverage does
not extend beyond June 30, 2000. Effective June 30, 2000, Worley
shall be eligible to participate, should he so apply/elect, in B-
Line's retiree health benefit program.
(d) To pay Worley on January 4, 1999, less deductions
required by law for 10,200 Sigma/Aldrich incentive stock bonus units
within the Sigma/Aldrich Incentive Stock Bonus Plan, which value
will be calculated using the highest closing price of Sigma/Aldrich
stock on the NASDAQ Exchange on any trading day between November 24,
1998 and December 31, 1998 and increased as appropriate for tax
considerations. A schedule of said incentive stock bonus units is
attached hereto as Schedule 1.
(e) To allow Worley ninety (90) days from the effective
date of his resignation to exercise all stock options, with all
stock options to be considered fully vested in accordance with the
terms of the Sigma/Aldrich Stock Option Plan. A schedule of said
stock options is attached hereto and incorporated herein as Schedule
2.
(f) To transfer title of Worley's company car to Worley
effective December 31, 1998.
3. The parties agree that the compensation and benefits
described above provided Worley by B-Line represents additional
compensation and benefits to which Worley would not be entitled
absent this Agreement. The parties further agree that the
compensation and benefits described above constitute the total
understanding of all compensation and benefits payable by B-Line to
Worley with regard to his employment by B-Line, the resignation
thereof, and his services as a consultant, and that no other
compensation, bonuses, incentive stock bonus units, stock options,
vacation, benefits or payments of any kind will be paid other than
the amounts set forth above.
4. (a) B-Line agrees to retain Worley as a consultant, and
Worley agrees to serve as a consultant to B-Line, during the period
January 1, 1999 through June 30, 2000. Worley agrees to provide
reasonable advisory and consulting services to B-Line on such
matters relating to the business of B-Line as B-Line from time to
time may request. These consulting services will be within the
experience and vocational capabilities of Worley and reasonable
notice and deadlines for accomplishment of services by Worley will
be provided by B-Line. All requests for the consulting services of
Worley will be issued by Carl T. (Tom) Cori, Chief Executive
Officer, Sigma/Aldrich Corporation, who will specify the question to
be answered and/or the matter to be addressed, leaving the means,
methods and details of performance to Worley's independent judgment
and discretion consistent with the law and common business ethics
and standards of conduct.
(b) For and during the term of Worley's consulting
services, Worley will be deemed to be, and will be acting as, an
independent contractor with respect to any consulting services
requested pursuant to this Agreement. Nothing contained in this
Agreement shall be construed to create the relation of
employer/employee between Worley and B-Line. Worley will be free to
exercise his own judgment as to the means and details by which he
will accomplish the performance of any consulting services performed
under this Agreement. Worley's authority is limited to providing
consulting services, and he shall have no authority whatsoever to
incur any obligation or liability, or make any contract, agreement,
or any other commitment on behalf of B-Line or any subsidiaries or
affiliates thereof, without the express prior written consent of
Carl T. (Tom) Cori, Chief Executive Officer, Sigma/Aldrich
Corporation.
5. Worley hereby waives and releases B-Line, its officers,
directors, representatives, and employees from any and all claims
made, or which could have been made, of whatever nature, as a
consequence of his employment or the termination of his employment
relationship with B-Line pursuant to this Agreement, or arising out
of any known or unknown fact, condition, or incident occurring
prior to the date of this Agreement, including, but not limited to,
all claims of discrimination under local, state or federal law,
regulation or executive order, including, but not limited to, all
claims under the Age Discrimination in Employment Act, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Employee Retirement Income Security Act, the Americans With
Disabilities Act, any other federal, state or local law, ordinance
or regulation regarding discrimination in employment or termination
of employment, any claims for breach of contract, wrongful
termination, promissory estoppel, detrimental reliance, negligent or
intentional infliction of emotional distress, or any other common
law claims in contract or tort, all claims for lost wages, bonuses,
commissions, benefits, stock options, incentive stock options,
expenses, severance, re-employment, compensatory or punitive
damages, attorneys' fees and all claims for any other type of damage
relief. Worley further waives all rights to future employment with
B-Line and agrees not to apply for employment with B-Line subsequent
to the effective date of his retirement.
Notwithstanding the foregoing Release, nothing contained in
this Agreement shall limit Worley's rights to indemnification from
Sigma/Aldrich or his rights to coverage under Sigma/Aldrich's D&O
coverage (or other insurance coverage) for acts or omissions as an
officer of Sigma/Aldrich that he would be covered for under the
terms of existing indemnification policies and insurance policies.
6. Worley agrees to return all B-Line property in his
possession including, without limitation, computer, telephone and
facsimile machine, on or immediately following the effective date of
his retirement.
7. Worley covenants not to sue B-Line or any other party
released herein with respect to any claim released pursuant to this
Agreement.
8. Worley agrees not to disclose the terms or details of this
Agreement to any person other than his attorney, accountant, income
tax preparer, spouse and children. Worley agrees to ensure said
individuals maintain such confidentiality.
9. By execution of this document, Worley expressly waives any
and all rights to claims under the Age Discrimination in Employment
Act of 1967, 29 U.S.C. 621, et seq.:
(a) Worley acknowledges that his waiver of rights or
claims refers to rights or claims arising under the Age
Discrimination in Employment Act of 1967, is in writing and is
understood by Worley;
(b) Worley expressly understands that by execution of
this document, Worley does not waive any rights or claims that may
arise under the Age Discrimination in Employment Act of 1967, after
the date the waiver is executed;
(c) Worley acknowledges that the waiver of his rights or
claims arising under the Age Discrimination in Employment Act is in
exchange for the consideration outlined in this Agreement which is
above and beyond that to which Worley is entitled and that this
waiver is not requested in connection with an existing incentive or
other employment termination program;
(d) Worley acknowledges that B-Line expressly advised him
on November 24, 1998 to consult an attorney of his choosing prior to
executing this document and that he has been given a period of not
less than twenty-one (21) days within which to consider this
document;
(e) Worley acknowledges he has been advised by B-Line
that he is entitled to revoke (in the event he executes this
document) his waiver of rights or claims arising under the Age
Discrimination in Employment Act within seven (7) days after
executing this document and that said waiver will not and does not
become effective or enforceable until the seven (7) day revocation
period has expired. Worley agrees that payment of monies due under
this executed and unrevoked waiver shall not be payable until the
seven (7) day revocation period has expired.
10. The parties further agree as follows:
10.1 That the covenants of this Agreement are severable and
that if a clause(s) shall be found unenforceable, the entire
document shall not fail but shall be construed and enforced without
any severed clause(s) in accordance with the terms of this document;
10.2 That this Agreement shall supersede all other oral or
written agreements including, without limitation, Worley's
employment agreement dated April 9, 1990 or understandings between
the parties with the exception that Worley shall continue to be
bound by the Agreement between B-Line and Worley executed by him
during employment by B-Line and attached hereto as Exhibit A.
10.3 That this Agreement contains the entire understanding of
the parties and that this Agreement shall not be modified, altered
or changed except upon the express written consent of the parties
hereto;
10.4 That B-Line's failure to exercise any of its rights in the
event Worley breaches any of the separate and distinct promises in
this Agreement shall not be construed as a waiver of such breach or
prevent B-Line from later enforcing strict compliance with any and
all promises in this Agreement;
10.5 B-Line and the other parties released herein specifically deny
that they have violated any statute, regulation, or any other legal duty
governing their relationship with Worley. It is understood that the
payments and other consideration provided by this Agreement are not and
shall not be construed to be an admission of guilt or liability on the
part of any party hereby released.
11. Worley acknowledges he has read this Agreement, that he has had
a reasonable amount of time to consider its terms, that the only
consideration for him signing this Agreement are the terms stated above,
that no other promise, agreement, statement or representation of any kind
has been made to him by any person or entity to cause him to sign this
Agreement, that he is competent to execute this Agreement, that he has
had an adequate opportunity to discuss this Agreement with an attorney
and he has done so or he has voluntarily elected not to do so, that he
fully understands the meaning and intent of this Agreement and that he is
voluntarily executing it of his own free will after good faith
negotiations with B-Line concerning its terms.
AGREED TO AND ACCEPTED:
/s/ Floyd Worley
- ------------------------------------
FLOYD WORLEY
STATE OF Missouri )
)ss.
CITY OF St. Louis )
COMES NOW Floyd Worley, who states to me that he has read and
understands the foregoing Agreement and agrees to and accepts its terms
and conditions as a free act of his own volition.
Subscribed and sworn to before me this 10th day of December, 1998.
/s/ Janet L. Bohnstadt
---------------------------------
Notary Public
My Commission Expires:
8/26/2001
B-LINE SYSTEMS, INC.
By: /s/ David R. Harvey
----------------------------------------
Date: 12/10/98
--------------------------------------
SCHEDULE 1
----------
SIGMA/ALDRICH CORPORATION
INCENTIVE STOCK BONUS PLAN
YEAR STOCK BONUS UNITS OUTSTANDING
---- -----------------------------
1993 2,400
1994 -0-
1995 4,000
1996 2,300
1997 1,500
SCHEDULE 2
----------
SIGMA/ALDRICH CORPORATION
STOCK OPTION GRANTS
Number of
Year Price Shares
---- --------- ------------
1990 $14.5625 7,000
1992 $23.375 6,000
1993 $27.625 40,000
1994 $18.125 40,000
1995 0
1996 0
1997 $36.00 20,000
All share prices and grant amounts prior to 1997 have been adjusted for
January, 1997 stock dividends.
EXHIBIT "A"
AGREEMENT between SIGMA CHEMICAL COMPANY and
- --------------------------------------------
-----------------------------------------------
In consideration of the compensation and other benefits of my employment or
continued employment by Sigma Chemical Company (the Company) and of other
valuable consideration, I agree as follows:
CONFIDENTIAL INFORMATION
I recognize that the Company is engaged in the business of research,
development, manufacture and sale of chemicals, chemical products and allied
activities, which business requires for its successful operation the fullest
security of its Confidential Information of which I will acquire knowledge
during the course of my employment.
As used in this agreement, "Confidential Information" means all technical and
business information of the Company, or which is learned or acquired by the
Company from others with whom the Company has a business relationship in which,
and as a result of which, similar information is revealed to the Company,
whether patentable or not, which is of a confidential, trade secret and/or
proprietary character and which is either developed by me (alone or with others)
or to which I shall have had access during my employment. Confidential
Information shall include all data, designs, plans, notes, memoranda, work
sheets, formulas, processes, patents, customer and supplier lists.
I shall use my best efforts and diligence both during and after my employment
with the Company to protect the confidential, trade secret and/or proprietary
character of all Confidential Information. I shall not, directly or indirectly,
use (for myself or another) or disclose any Confidential Information, for so
long as it shall remain proprietary or protectible as confidential or trade
secret information, except as may be necessary for the performance of my duties
for the Company.
I shall promptly deliver to the Company, at the termination of my employment
or at any time at the Company's request, without retaining any copies, all
documents and other material in my possession relating, directly or indirectly,
to any Confidential Information.
Each of my obligations in this section shall also apply to the confidential,
trade secret and proprietary information learned or acquired by me during my
employment from others with whom the Company has a business relationship.
COMPETITIVE ACTIVITY
I shall not, directly or indirectly (whether as owner, partner, consultant,
employee or otherwise), at any time during the period of my employment by the
Company and for a period of two years following termination for any reason of my
employment with the Company engage in or contribute my knowledge to any work or
activity that involves a product, process, service or development which is then
competitive with and the same or similar to a product, process, service or
development on which I worked or with respect to which I had access to
Confidential Information while with the Company. However, I shall be permitted
to engage in such proposed work or activity, and the Company shall furnish me a
written consent to that effect signed by an officer, if I shall have furnished
to the Company clear and convincing written evidence, including assurances from
me and my new employer, that the fulfillment of my duties in such proposed work
or activity would not cause me to disclose, base judgements upon, or use any
Confidential Information, including information relating to the identity of or
product supplied to or pruchased from the customers or suppliers of the Company.
Following expiration of said two-year period, I shall continue to be
obligated under the "Confidential Information" section of this Agreement not to
use or to disclose Confidential Information so long as it shall remain
proprietary or protectible as confidential or trade secret information.
Following termination of my employment for any reason, I agree to advise the
Company of my new employer within ten days after accepting new employment. I
further agree to keep the Company so advised of any change in my employment for
two years following termination of my employment with the Company.
I understand that it is not the intention of the Agreement to prevent me from
earning a livelihood utilizing my general purchasing, sales, professional or
technical skills in any of the hospitals, businesses, research or manufacturing
facilities of companies which are not directly or indirectly in competition with
the Company.
IDEAS, INVENTIONS, DISCOVERIES
I shall promptly disclose to the Company all ideas, inventions or
discoveries, whether or not patentable, which I may conceive or make (alone or
with others) during my employment, whether or not during working hours, and
which, directly or indirectly,
(a) relate to matters within the scope of my duties or field of
responsibility during my employment with the Company; or
(b) are based on my knowledge of the actual or anticipated business or
interest of the Company; or
(c) are aided by the use of time, materials, facilities or information of
the Company.
I herby assign to the Company or its designee, without further compensation,
all of my right, title and interst in all such ideas, inventions or discoveries
in all countries of the world.
Without further compensation but at the Company's expense, I shall give all
testimony and execute all patent applications, rights of priority, assignments
and other documents and in general do all lawful things requested of me by the
Company to enable the Company to obtain, maintain and enforce protection of such
ideas, inventions and discoveries for and in the name of the Company or its
designee (as the case may be) in all countries of the world. However, should I
render any of these services during a two-year period following termination of
my employment, I shall be compensated at a rate per hour equal to the basic
salary I received from the Company at the time of termination and shall be
reimbursed for reasonable out-of-pocket expenses incurred in rendering the
services.
GENERAL
If I am employed by an affiliate of the Company and have not entered into a
superseding agreement with my new employer covering the subject matter of this
Agreement, then this Agreement shall continue in effect and my new employer
shall be termed "the Company" for all purposes hereunder and shall have the
right to enforce this Agreement as my employer. In the event of any subsequent
employment by the Company or any other affiliate, may new employer shall succeed
to all rights under this Agreement so long as such employer shall be an
affiliate of the Company and so long as this Agreement has not been superseded.
As used in this Agreement, an "affiliate" of the Company shall mean any
parent or subsidiary of the Company, any company owned or controlled by any
parent of the Company as well as any subsidiary of such companies and any
company or corporation with which the Company has a contractual or ongoing
business relationship which requires the Company and such other company or
coporation to agree to noncompetition or non-disclosure covenants similar to or
the same as those contained herein.
The Company and I shall have the right to terminate my employment at any time
by giving at least days written notice to the other party; provided,
however, the Company may terminate my employment without notice at any time for
any cause deemed by it to be a breach of my employment duties or of any of my
obligations under this Agreement. The Company, at its option, any elect to pay
my salary for the notice period instead of continuing my active employment
during that period.
I hereby acknowledge that damages for the violation of the provisions
contained in this Agreement will not give full and sufficient relief to the
Company, and I agree that in the event of any violation of any of said
provisions the Company shall be entitled to injunctive relief against violation
thereof, in addition to any other rights it may have by reason of said
violation.
This Agreement shall be interpreted under the laws of the State of Missouri.
If any provison of this Agreement is held invalid in any respect, it shall not
affect the validity of any other provision of this Agreement. If any provision
of the Agreement is held to be unreasonable as to time, scope or otherwise, it
shall be construed by limiting and reducing it so as to be enforceable under
then applicable law.
This Agreement is signed in duplicate, as of the 29th day of March, 1990.
SIGMA CHEMICAL COMPANY
By /s/ Carl T. Cori /s/ Floyd L. Worley
---------------------------------- ----------------------------------------
Signature of Employee
Carl T. Cori Floyd L. Worley
- ------------------------------------ ----------------------------------------
Typed Name and Title Typed Name of Employee
(Pages 12-14 of the 1998 Annual Report to Shareholders)
------------------------------------
Management's Discussion of Financial
Condition and Results of Operations
---------------------
Results of Operations
During the three years ended December 31, 1998, the Company's sales
and net income continued to grow.
Chemical sales increased 7.1%, 8.3%, and 7.4% for 1998, 1997 and 1996,
respectively. This sales growth is attributed to selective price
increases, the annual addition of new products, acquisitions,
including Genosys in December of 1998 and Riedel-de Haen in June of
1997, and the opening of new international sales offices. Price
increases for products listed in the general chemical catalogs
averaged 3.0%, 3.5% and 4.5% in 1998, 1997 and 1996, respectively. New
product sales, while not material in the year introduced, contribute
to sales growth in subsequent years. Acquisitions contributed 2.5% and
3.0% to the 1998 and 1997 sales increases, respectively. The effect of
translating foreign currency chemical sales into the U.S. dollar
reduced the 1998, 1997 and 1996 sales growth by 1.8%, 4.4% and 1.3%,
respectively. Both Research and Fine Chemicals sales continued to grow
in 1998 while Diagnostic sales declined slightly due to competitive
pressures. Chemical sales, in particular Research, were affected by
disruptions to service during the installation of new customer service
and warehouse systems. System conversions in the future are expected
to proceed more smoothly. Emphasis on international markets and new
sales offices, together with the addition of Riedel-de Haen products,
helped achieve growth in international direct sales of 19.3% in 1998,
30.6% in 1997 and 14.0% in 1996, after eliminating the effect of
changes in currency exchange rates. The increase in direct
international sales is partially offset by a slowing in export sales
from the United States. Export sales declined 32.2%, 22.0% and 1.0% in
1998, 1997 and 1996, respectively, reflecting the continued transfer
of sales to both our existing and new international offices.
Metal sales increased 1.3%, 11.8% and 9.6% for 1998, 1997 and 1996,
respectively. Average selling prices decreased 1.5%, 2.2% and 2.0% in
1998, 1997 and 1996, respectively, due to competitive markets and
lower costs for raw materials. The slower growth in 1998 reflects the
weakness in the industrial construction market which was only
partially offset by the fast-growing demand for telecommunications and
enclosures products. The growth in 1997 and 1996 also came mainly from
the telecommunications and enclosures market.
Cost of products sold was 46.7% in 1998 and 46.0% in 1997 and 1996.
The decline in the gross profit rate in 1998 is due to a higher
proportion of lower margin business, costs of new production
facilities, increased investment in R & D in the Molecular Biology
area and competitive pricing pressures. The cost of chemical products
sold increased by 8.9% and the cost of metal products sold increased
by 3.5% in 1998, compared to sales increases of 7.1% and 1.3%,
respectively.
Selling, general and administrative expenses were 33.0%, 31.6% and
31.8% of sales in 1998, 1997 and 1996, respectively. The increase in
1998 is due to incremental expenses associated with new systems, sales
offices and additional warehouse facilities, offset by ongoing efforts
to effectively manage staffing levels and control other significant
operating expenses. Also included in 1998 is a $2.9 million charge for
acquired research and development related to the acquisition of
Genosys. In 1998, 1997 and 1996, net interest income contributed $2.9
million, $4.8 million and $5.2 million, respectively, to pretax
earnings, reflecting lower average cash balances in 1998.
Net income benefited from a tax credit of $7.0 million from our
enhanced research and development activities over the last several
years. The effect of changes in currency exchange rates reduced net
income by $ .06, $ .05 and $ .01 per share in 1998, 1997 and 1996,
respectively.
Management expects future sales growth from the continuing
introduction of new products, promotion and marketing programs, new
sales offices and businesses added during 1998. The Company will
benefit from investments in new systems, products and facilities
designed to enhance customer service.
Liquidity and
Capital Resources
In 1998, cash and temporary cash investments decreased $21.9 million
while short-term borrowings increased by $23.2 million to $30.0
million. In 1997, cash and temporary cash investments decreased by
$57.5 million while short-term borrowings were increased by $4.1
million.
Cash provided by operating activities was $162.1 million in 1998, an
increase of $30.0 million from 1997. The change resulted primarily
from slower growth in inventories of $36.4 million in 1998 compared to
$63.4 million in 1997 and higher depreciation and amortization of
$13.8 million in 1998 compared to 1997. The higher growth of
inventories in 1997 resulted from acquisitions and further deployment
of inventory to new locations. 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 1999 will be
invested on a temporary basis. Longer term, excess funds are expected
to be reinvested in the business. Also, depending on opportunities and
market conditions, funds may be used to acquire new businesses. These
investments should enable the Company to continue to grow sales and
profits.
During 1998, a total of $130.4 million was invested in property, plant
and equipment. Significant expenditures were made in support of new
customer service and warehouse systems and distribution and production
facility expansions, both domestically and internationally. Also in
1998, the Company acquired Genosys, a leading supplier of synthetic
DNA products, for $39.5 million to strengthen our position in Life
Science research.
During 1999, we expect capital spending of approximately $75 million
to continue to enhance distribution, production and information
systems. The Company has not made any other significant commitments
for, or acquisitions of, capital facilities early in 1999.
Year 2000
In 1997, the Company began a comprehensive worldwide program to
evaluate and mitigate the risks associated with the Year 2000 problem.
The program consists of evaluating traditional computer systems such
as order taking, inventory control and finance and systems supporting
the business such as plant machinery controls and the phone systems.
A number of the Company's computer systems, primarily in Europe, are
Year 2000 capable. Year 2000 system changes to other systems began in
1997. In an effort to upgrade the Company's major computer systems,
the implementation of SAP, a global enterprise resource planning
software system, began in 1997.The SAP system is Year 2000 capable and
has eliminated the need to update approximately 50% of the Company's existing
computer systems. The Company expects that all systems requiring
updates will either be converted to SAP or made Year 2000 capable by the
end of 1999. Approximately 70% of the Company's systems have been
converted to SAP or are currently Year 2000 capable.
The Company is not presently aware of any Year 2000 issues encountered
by its business partners that would materially impact the Company's
operations. There can be no assurance that the Company will not
experience operational difficulties as a result of Year 2000 issues
either arising out of internal systems or caused by its business
partners which may have a material adverse effect on its business
operations.
The implementation of SAP software systems has reduced the need to
update many of the Company's systems to be Year 2000 capable.
Excluding costs related to SAP, approximately $1.5 million has been
incurred in the Company's effort to achieve Year 2000 capable systems
through December 31, 1998. Total costs to achieve Year 2000 capable
systems are estimated at $3.0 million.
In planning for the most reasonably likely worst case scenario, all
major elements in the Company's comprehensive program have been
addressed. The Company's systems are expected to be Year 2000 capable.
No known event, trend or uncertainty is likely to have a material
adverse impact on the Company's results of operations, liquidity or
financial condition. Contingency plans have been developed to ensure
critical systems will function in the event of any occurrences of
unremediated or unresolved Year 2000 issues.
Year 2000 (continued)
The Company is preparing for the risk that certain business partners
may experience Year 2000 issues. While the Company values the
established relationships with its business partners, alternate
sources for some products and services are available. The Company also
recognizes the risk of other key partners such as utilities,
communications companies and delivery services in evaluating Year 2000
issues and is developing plans to mitigate the potential adverse
impacts of these risks. If certain key partners experience Year 2000
failures, the Company could experience material adverse effects on the
results of its operations and financial condition.
Euro
On January 1, 1999, eleven member countries of the European Community
established fixed conversion rates between their existing currencies
and the European Economic and Monetary Union's new common currency,
the Euro. The transition period for the introduction of the Euro is
January 1, 1999 through January 1, 2002. During this transition
period, payment and billing may be conducted in the Euro or the
relevant legacy currency.
The Company is currently developing and implementing plans to address
the conversion to the Euro such as updating certain information
technology systems and evaluating currency risk, impacts on financial
transactions and competitive activity. The costs associated with
addressing the Euro conversion are not expected to be material. The
Company believes the conversion to the Euro will not have a material
impact on the Company's financial condition or results of its
operations.
Forward-Looking Statements
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, as well as any
statements preceded by, followed by, or that include the words
"believes," "expects," "anticipates" or similar expressions, and other
statements contained herein regarding matters that are not historical
facts. 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
effectiveness of the Company's further implementation of its global
software system, SAP, the status and effectiveness of the Company's
Year 2000 efforts, the highly competitive environment in which the
Company operates and the impact of fluctuations in foreign currency
exchange rates. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on it's
behalf are expressly qualified in their entirety by such cautionary
statements. The Company does not undertake any obligation to release
publicly any revisions to such forward-looking statement to reflect
events or uncertainties after the date hereof or to reflect the
occurrence of unanticipated events.
(Five bar graphs appear on pages 12-14 depicting the following data)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Chemical Sales (millions of dollars) 965.9 901.7 832.9
Metal Sales (millions of dollars) 228.4 225.4 201.7
Cost of Products Sold (percent of sales) 46.7 46.0 46.0
Selling, General and Administrative
Expenses (percent of sales) 33.0 31.6 31.8
Capital Expenditures (millions of dollars) 130.4 108.7 93.9
</TABLE>
(Page 15 of the 1998 Annual Report to Shareholders)
Exchange Rate Sensitivity
The Company uses forward exchange contracts to hedge certain
receivables and payables denominated in foreign currencies. Most of
the contracts are single currency. Gains and losses on these hedges,
based on the difference in the contract rate and the spot rate at the
end of each month for all contracts still in force are typically offset by
transaction gains and losses, with net gains and losses included in
selling, general and administrative expenses. While contract terminations
are infrequent, gains and losses on terminations are recognized in the
month of execution in the same manner.
The table below provides information about the Company's derivative
financial instruments and related balance sheet items by currency and
presents such information in U.S. dollar equivalents. The table
summarizes information on the derivative instruments and related
underlying transactions that are sensitive to foreign currency
exchange rates, including foreign currency forward exchange contracts
and receivables and payables in other than a unit's local currency.
The net amount that is exposed to changes in foreign currency rates is
then subjected to a 10% appreciation and depreciation in the value of
the foreign currency versus the U.S. dollar. The effect of changes in
foreign currency rates on the Company's net exposed derivative
financial instrument position would not be material.
<TABLE>
<CAPTION>
December 31, 1998
(unaudited, in millions)
Foreign Foreign
U.S. Dollar Net Underlying Net Exposed Exchange Impact Exchange Impact
Value of Net Foreign Currency Long/(Short) From 10% From 10%
Foreign Exchange Transaction Currency Appreciation of Depreciation of
Contracts Exposure Position U.S. Dollar U.S. Dollar
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
German Mark $ 69.0 $ 68.5 $ (0.5) $ (.05) $ .05
British Pound 33.6 30.8 (2.8) (.28) .28
Swiss Franc (39.5) (29.3) 10.2 1.02 (1.02)
French Franc 33.3 20.5 (12.8) (1.28) 1.28
Japanese Yen 19.8 20.3 0.5 .05 (.05)
Canadian Dollar 12.9 12.8 (0.1) (.01) .01
Italian Lira 9.9 9.1 (0.8) (.08) .08
Others 24.5 18.3 (6.2) (.62) .62
- -----------------------------------------------------------------------------------------------------
Total $163.5 $151.0 $(12.5) $(1.25) $1.25
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(Page 16 of the 1998 Annual Report to Shareholders)
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
Years Ended December 31,
1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,194,290 $1,127,084 $1,034,565
Cost of products sold 557,864 518,711 476,120
- ----------------------------------------------------------------------------------------------
Gross profit 636,426 608,373 558,445
Selling, general and administrative expenses 393,836 355,619 328,761
- ----------------------------------------------------------------------------------------------
Income before provision for income taxes 242,590 252,754 229,684
Provision for income taxes 76,243 86,695 81,828
- ----------------------------------------------------------------------------------------------
Net income $ 166,347 $ 166,059 $ 147,856
- ----------------------------------------------------------------------------------------------
Weighted average number of shares outstanding - Basic 100,540 100,210 99,930
Weighted average number of shares outstanding - Diluted 101,188 102,804 101,715
Net income per share - Basic $1.65 $1.66 $1.48
Net income per share - Diluted $1.64 $1.62 $1.45
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, 1998 and 1997, and the related
consolidated statements of income, stockholders' equity and cash flows
for each of the three years in the period ended December 31, 1998.
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, 1998 and 1997,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
February 16, 1999
(Page 17 of the 1998 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(In Thousands)
December 31,
1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and temporary cash investments $ 24,345 $ 46,228
Accounts receivable, less allowance for doubtful
accounts of $6,749 and $6,531, respectively 229,486 186,847
Inventories 464,035 420,809
Other current assets 54,815 52,790
- ----------------------------------------------------------------------------
Total current assets 772,681 706,674
- ----------------------------------------------------------------------------
Property, plant and equipment:
Land 32,623 31,594
Buildings and improvements 318,073 252,388
Machinery and equipment 456,506 381,771
Construction in progress 84,463 90,831
Less - accumulated depreciation (372,926) (317,706)
- ----------------------------------------------------------------------------
Net property, plant and equipment 518,739 438,878
- ----------------------------------------------------------------------------
Goodwill, net 113,737 83,261
Other assets 27,678 15,009
- ----------------------------------------------------------------------------
Total assets $1,432,835 $1,243,822
- ----------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 30,019 $ 6,751
Current maturities of long-term debt 624 649
Accounts payable 63,520 53,257
Accrued payroll and payroll taxes 17,025 13,453
Other accrued expenses 30,312 28,816
Accrued income taxes 872 16,553
- --------------------------------------------------------------------------
Total current liabilities 142,372 119,479
- --------------------------------------------------------------------------
Long-term debt 415 552
Deferred postretirement benefits 40,663 35,475
Deferred compensation 7,894 12,766
Other liabilities 25,111 15,216
- --------------------------------------------------------------------------
Total liabilities 216,455 183,488
- --------------------------------------------------------------------------
Stockholders' equity:
Common stock 100,623 100,377
Capital in excess of par value 29,238 24,168
Retained earnings 1,097,653 959,717
Accumulated other comprehensive loss (11,134) (23,928)
- ---------------------------------------------------------------------------
Total stockholders' equity 1,216,380 1,060,334
- ---------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,432,835 $1,243,822
- ---------------------------------------------------------------------------
The accompanying notes are an integral part of these balance sheets.
</TABLE>
(Page 18 of the 1998 Annual Report to Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Data)
Common Stock Accumulated
200,000 Shares Authorized Capital in Other
($1.00 Par) Excess of Retained Comprehensive Comprehensive
Shares Amount Par Value Earnings Income/(Loss) Income
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 49,877 $ 49,877 $11,455 $ 744,370 $ 19,032
Net income - - - 147,856 - $147,856
Other comprehensive income-
foreign currency translation - - - - (13,271) (13,271)
---------
Comprehensive income - - - - - $134,585
Dividends ($.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) -
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1996 100,044 100,044 17,002 819,467 5,761
Net income - - - 166,059 - $166,059
Other comprehensive income-
foreign currency translation - - - - (29,689) (29,689)
---------
Comprehensive income - - - - - $136,370
---------
Dividends ($.2575 per share) - - - (25,809) -
Awards under deferred
compensation plan 23 23 682 - -
Exercise of stock options 310 310 6,484 - -
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1997 100,377 100,377 24,168 959,717 (23,928)
Net income - - - 166,347 - $166,347
Other comprehensive income-
foreign currency translation - - - - 12,794 12,794
---------
Comprehensive income - - - - - $179,141
---------
Dividends ($.2825 per share) - - - (28,411) -
Awards under deferred
compensation plan 38 38 1,480 - -
Shares exchanged for options (79) (79) - - -
Exercise of stock options 287 287 3,590 - -
- ------------------------------------------------------------------------------------------------
Balance, December 31, 1998 100,623 $100,623 $29,238 $1,097,653 $(11,134)
- ------------------------------------------------------------------------------------------------
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 19 of the 1998 Annual Report of the Shareholders)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Years Ended December 31,
1998 1997 1996
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $166,347 $166,059 $147,856
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 61,827 48,053 45,213
Deferred income taxes 11,111 4,994 1,918
Postretirement benefits expense 4,072 3,792 3,739
Deferred compensation expense (income) (2,244) 3,437 2,762
Deferred compensation payments (1,105) (628) (407)
Increase in accounts receivable (37,917) (30,077) (22,726)
Increase in inventories (36,401) (63,390) (19,361)
Increase in other current assets (1,044) (18,513) (1,297)
Increase (decrease) in accounts payable 9,373 (7,534) 2,847
Increase in accrued payroll and payroll taxes 3,363 2,155 2,435
Increase (decrease) in other accrued expenses 1,053 16,547 (8,904)
Increase (decrease) in accrued income taxes (16,365) 7,182 (655)
- ----------------------------------------------------------------------------------------
Net cash provided by operating activities 162,070 132,077 153,420
- ----------------------------------------------------------------------------------------
Cash flows from investing activities:
Property, plant and equipment additions (130,378) (108,740) (93,888)
Sale of equipment 2,383 1,963 1,228
Acquisition of businesses, net of cash acquired (39,500) (51,083) (13,629)
Other, net (7,700) - (1,500)
- ----------------------------------------------------------------------------------------
Net cash used in investing activities (175,195) (157,860) (107,789)
- ----------------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance (repayment) of notes payable 23,211 4,155 (4,419)
Issuance (repayment) of long-term debt 57 (11,895) (1,036)
Payment of dividends (28,411) (25,809) (22,738)
Exercise of employee stock options 3,798 6,794 5,301
- ----------------------------------------------------------------------------------------
Net cash used in financing activities (1,345) (26,755) (22,892)
- ----------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (7,413) (4,919) (3,023)
- ----------------------------------------------------------------------------------------
Net change in cash and cash equivalents (21,883) (57,457) 19,716
Cash and cash equivalents at beginning of year 46,228 103,685 83,969
- ----------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 24,345 $ 46,228 $103,685
- ----------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Income taxes paid $ 81,497 $ 74,518 $ 81,802
Interest paid, net of capitalized interest 926 783 1,390
The accompanying notes are an integral part of these statements.
</TABLE>
(Page 20-27 of the 1998 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.
Goodwill:
Goodwill arising from acquisitions made by the Company is
capitalized and amortized over a period of five to forty years.
Net Income Per Share:
Net income per share is based on the weighted average number of
shares outstanding during each period.
Foreign Currency Translation:
Foreign currency assets and liabilities are translated at current
exchange rates and profit and loss accounts are translated at
weighted average exchange rates. Resulting translation gains and
losses are included as a separate component of stockholders' equity,
as accumulated other comprehensive income or loss.
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.
Effect of New Accounting Standards:
In June 1998, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133). SFAS
No. 133 establishes accounting and reporting standards requiring
that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded in the balance
sheet as either an asset or liability measured at its fair value and
that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains
and losses to offset related results on the hedged item in the
income statement, and requires that a company formally document,
designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 is effective for fiscal years
beginning after June 15, 1999. The Company has not yet quantified
the effects of adopting SFAS No. 133 on its consolidated financial
statements nor has it determined the timing or method of its
adoption of SFAS No. 133. However, SFAS No. 133 could increase
volatility in earnings and other comprehensive income.
Note 2 - Inventories
<TABLE>
<CAPTION>
The principal categories of inventories are (in thousands):
December 31,
1998 1997
- ---------------------------------------------------------------
<S> <C> <C>
Finished goods $374,578 $336,295
Work in process 25,627 24,269
Raw materials 63,830 60,245
- ---------------------------------------------------------------
Total $464,035 $420,809
- ---------------------------------------------------------------
</TABLE>
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 $3,161,000, $3,252,000, $6,538,000 and
$8,062,000 higher than reported at December 31, 1998, 1997, 1996 and
1995, respectively.
Note 2 - Inventories (continued)
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 revolving credit facilities with domestic banks
totaling $81,000,000. A facility for $40,000,000 expires in May
1999, two other facilities totaling $40,000,000 expire in June 1999
and one facility for $1,000,000 expires in December 1999. All
facilities may be terminated earlier upon notice by either party.
The Company also has an unsecured multi-currency bank commitment in
the amount of $15,000,000 expiring in November 1999. Interest rates
for all facilities are based on federal funds, LIBOR, prime or other
rates offered by the lending banks. At December 31, 1998 borrowings
of $25,250,000 were outstanding under these facilities, with an
average interest rate of 5.5%. No borrowings were outstanding at
December 31, 1997. The company intends to renew these facilities as
they expire or substitute similar facilities for any which are not
renewed.
Notes payable by international subsidiaries were $4,769,000 and
$6,751,000 at December 31, 1998 and 1997, respectively, and are
payable in local currencies with weighted average interest rates of
5.3% at both December 31, 1998 and 1997.
Note 4 - Long-Term Debt
<TABLE>
<CAPTION>
Long-term debt consists of the following (in thousands):
December 31,
1998 1997
- -----------------------------------------------------------
<S> <C> <C>
Total $1,039 $1,201
Less-Current maturities (624) (649)
- -----------------------------------------------------------
$ 415 $ 552
- -----------------------------------------------------------
</TABLE>
Total interest expense incurred by the Company, net of immaterial
amounts capitalized, was $920,000, $734,000 and $1,824,000 in 1998,
1997 and 1996, respectively.
Note 5 - Financial Derivatives And
Risk Management
The Company transacts business in virtually every part of the world
and is subject to risks associated with changing foreign exchange
rates. The Company's objective is to minimize the impact of foreign
exchange rate changes during the period of time between the original
transaction date and its cash settlement. Accordingly, the Company
enters into forward currency contracts in order to stabilize the
value of receivables and payables denominated in foreign currencies.
The Company does not enter into foreign currency transactions for
speculative trading purposes. The Company's policy is to maintain
hedge coverage only on existing receivables, payables and
commitments. The gains and losses on these contracts offset changes
in the value of the related exposures.
The principal currencies hedged are the British pound, Italian lira,
German mark, French franc, Swiss franc, Japanese yen and Canadian
dollar. The duration of the hedge contracts typically does not
exceed six months. The counterparties to the contracts are large,
reputable commercial banks and, accordingly, the Company expects all
counterparties to meet their obligations.
The amount of open forward exchange contracts at December 31, 1998
and 1997 was $294.5 million and $243.4 million, respectively.
Note 6 - Lease Commitments
The Company and its subsidiaries lease manufacturing and warehouse
facilities and computer equipment under non-cancelable leases
expiring at various dates through 2022. Rent charged to operations
was $13,281,000, $10,054,000, and $8,676,000 in 1998, 1997 and 1996,
respectively. Minimum rental commitments for non-cancelable leases
in effect at December 31, 1998, are as follows (in thousands):
1999 $15,125
2000 9,801
2001 3,924
2002 2,263
2003 1,436
2004-2022 15,029
Note 7 - Income Taxes
<TABLE>
<CAPTION>
The provision for income taxes consists of the following (in
thousands):
1998 1997 1996
- -------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $49,818 $65,630 $58,376
State 3,664 6,141 6,609
International 11,650 9,930 14,925
- --------------------------------------------------------------
Total current 65,132 81,701 79,910
- --------------------------------------------------------------
Deferred:
Federal 8,514 4,554 1,833
State 622 615 482
International 1,975 (175) (397)
- ---------------------------------------------------------------
Total deferred 11,111 4,994 1,918
- ---------------------------------------------------------------
Total provision for
income taxes $76,243 $86,695 $81,828
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
A reconciliation of statutory and effective tax rates is
as follows:
1998 1997 1996
- ---------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
FSC benefits (1.9) (2.0) (1.4)
State income taxes,
net of federal benefits 1.3 1.7 1.9
Research and
development credits (3.7) - -
International taxes 0.2 (0.6) 0.2
Other, net 0.5 0.2 (0.1)
- -------------------------------------------------------------
31.4% 34.3% 35.6%
- -------------------------------------------------------------
</TABLE>
The 3.7% tax rate reduction in 1998 is a result of the Company's
enhanced research and development activities over the last several
years.
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 liability at December 31,
which is included in other assets or other liabilities in the
consolidated balance sheets, results from the following temporary
differences (in thousands):
<TABLE>
<CAPTION>
1998 1997
- -----------------------------------------------------------------
<S> <C> <C>
Gross deferred assets:
Inventories $17,377 $18,856
Pension and postretirement
benefit plans 12,645 14,624
- ----------------------------------------------------------------
Total 30,022 33,480
- ----------------------------------------------------------------
Gross deferred liabilities:
Depreciation (31,335) (24,700)
Other (13,010) (11,992)
- ----------------------------------------------------------------
Total (44,345) (36,692)
- ----------------------------------------------------------------
Net deferred tax liability $(14,323) $ (3,212)
- ----------------------------------------------------------------
</TABLE>
At December 31, 1998 and 1997, 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 $159 million at December 31, 1998)
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 U.S.
export sales.
Note 8 - Insurance
The Company's general and products liability insurance coverage,
which provides for risks up to $200 million, was renewed during
1998. 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 1998, 1997 and 1996, 38,200, 23,000 and 15,534
shares of common stock, respectively, were issued under this plan.
At December 31, 1998, 135,400 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 1,521,010 shares
remain to be awarded.
Note 9 - Common Stock (continued)
On February 17, 1998, the Company adopted the
Directors' Non-Qualified Share Option Plan of 1998. This plan
permits the award of non-qualified stock options to purchase up to
400,000 shares of the Company's common stock to those members of the
Board of Directors who are not employees of the Company. Under this
plan, the seven non-employee directors received an initial option to
purchase 10,000 shares of common stock. Additional awards of options
to purchase 2,000 shares are made to each eligible director on the
day after each annual shareholder's meeting, beginning in 1998. As
of December 31, 1998, 84,000 shares were awarded at prices ranging
from $39.88 to $40.13, with 316,000 shares remaining.
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 1998, 1997 and 1996 to
purchase 235,000, 160,000 and 249,000 shares, respectively, become
exercisable over a one to five year period. Options granted in 1998
for 25,000 shares become exercisable over a ten year period. Options
to purchase 1,597,732 shares of the Company's common stock under
this plan remain to be granted at December 31, 1998.
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. 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 1998, 1997 and 1996 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):
1998 1997 1996
- ---------------------------------------------------------------------
Net income $164,368 $157,478 $141,562
Net income per share - Basic $1.63 $1.57 $1.42
Net income per share - Diluted $1.62 $1.53 $1.39
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 for 1998: dividend yield of
.80%, expected volatility of 23.7%, risk-free interest rate of 4.68%
and expected life based on historical exercise periods of 6.0 years.
The weighted-average assumptions for 1997 and 1996 were as follows:
dividend yield of .70% and .74%, expected volatility of 17.9% and
17.6%, risk-free interest rate of 5.75% and 6.5% and expected life
based on historical exercise periods of 6.5 years and 5.75 years,
respectively.
A summary of the combined activity and balances for the Company's
stock options for the two plans as of December 31, 1998, 1997 and
1996 and changes during the years ended on those dates is as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------
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 3,228,698 $27.91 2,396,636 $23.43 1,736,376 $21.31
Options granted 278,000 34.95 1,170,000 35.42 984,000 25.69
Options exercised (286,709) 21.02 (310,388) 22.17 (279,740) 19.41
Options cancelled (61,732) 28.95 (27,550) 24.17 (44,000) 21.83
- ---------------------------------------------------------------------------------------------------------------
Options outstanding, end of year 3,158,257 29.05 3,228,698 27.91 2,396,636 23.43
- ---------------------------------------------------------------------------------------------------------------
Options exercisable at year-end 2,880,257 28.48 2,066,702 23.64 1,419,436 21.70
Weighted average fair value of
options granted during the year $10.77 $11.16 $8.02
</TABLE>
Note 9 - Common Stock (continued)
<TABLE>
<CAPTION>
The following table summarizes information about stock options
outstanding at December 31, 1998:
Options Outstanding Options Exercisable
- -------------------------------------------------------------------------------------------------------
Number Wtd. Avg. Wtd. Avg. Number Wtd. Avg.
Outstanding Remaining Exercise Exercisable Exercise
Range of Exercise Prices at 12/31/98 Contractual Life Price at 12/31/98 Price
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$10.1875 to $14.5625 7,000 16.0 months $14.56 7,000 $14.56
$16.25 to $24.00 601,800 63.6 months 19.39 601,800 19.39
$24.875 to $31.25 1,268,457 75.7 months 26.66 1,183,457 26.53
$31.75 to $36.00 1,088,000 105.6 months 35.68 1,088,000 35.68
$36.875 to 40.75 193,000 109.0 months 37.81 - -
- ------------------------------------------------------------------------------------------------------
3,158,257 80.7 months $29.05 2,880,257 $28.48
- ------------------------------------------------------------------------------------------------------
</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 electronic 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 below include sales to international markets as follows (in
thousands):
Year Amount
------------------
1998 $ 60,160
1997 82,824
1996 106,154
<TABLE>
<CAPTION>
The Company's operations by geographic segment are as follows (in thousands):
1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States $ 709,282 $ 705,978 $ 683,810
International 485,008 421,106 350,755
Net intercompany sales between geographic areas:
United States 203,432 195,115 146,202
International 52,337 42,252 39,268
Eliminations (255,769) (237,367) (185,470)
- -------------------------------------------------------------------------------------------
Total $1,194,290 $ 1,127,084 $1,034,565
- -------------------------------------------------------------------------------------------
Income before provision for income taxes:
United States $ 232,019 $ 245,586 $ 192,415
International 41,290 31,553 41,664
Eliminations (30,719) (24,385) (4,395)
- -------------------------------------------------------------------------------------------
Total $ 242,590 $ 252,754 $ 229,684
- -------------------------------------------------------------------------------------------
Identifiable assets at December 31:
United States $ 976,867 $ 836,524 $ 783,699
International 555,103 450,082 348,732
Eliminations (99,135) (42,784) (32,473)
- -------------------------------------------------------------------------------------------
Total $1,432,835 $1,243,822 $1,099,958
- -------------------------------------------------------------------------------------------
</TABLE>
NOTE 10 - Company Operations By Segment (continued)
<TABLE>
<CAPTION>
The Company's operations by industry segment are as follows (in thousands):
1998 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers:
Chemical Products $ 965,927 $ 901,701 $ 832,924
Metal Products 228,363 225,383 201,641
- ----------------------------------------------------------------------------------
Total $1,194,290 $1,127,084 $1,034,565
- ----------------------------------------------------------------------------------
Income before provision for income taxes:
Chemical Products $ 205,609 $ 214,282 $ 193,075
Metal Products 34,087 33,717 31,395
Interest income, net 2,894 4,755 5,214
- ----------------------------------------------------------------------------------
Total $ 242,590 $ 252,754 $ 229,684
- ----------------------------------------------------------------------------------
Depreciation:
Chemical Products $ 48,574 $ 37,441 $ 36,221
Metal Products 7,987 6,056 5,007
- ----------------------------------------------------------------------------------
Total $ 56,561 $ 43,497 $ 41,228
- ----------------------------------------------------------------------------------
Capital expenditures:
Chemical Products $ 119,158 $ 96,228 $ 77,541
Metal Products 11,220 12,512 16,347
- ----------------------------------------------------------------------------------
Total $ 130,378 $ 108,740 $ 93,888
- ----------------------------------------------------------------------------------
Identifiable assets at December 31:
Chemical Products $1,255,500 $1,044,806 $ 860,676
Metal Products 152,990 152,788 135,597
Cash and temporary cash investments 24,345 46,228 103,685
- ----------------------------------------------------------------------------------
Total $1,432,835 $1,243,822 $1,099,958
- ----------------------------------------------------------------------------------
Income Tax Expense:
Chemical Products $ 63,639 $ 72,859 $ 68,981
Metal Products 12,604 13,836 12,847
- ----------------------------------------------------------------------------------
Total $ 76,243 $ 86,695 $ 81,828
- ----------------------------------------------------------------------------------
Net intercompany sales:
Chemical Products $ 251,775 $ 233,204 $ 182,204
Metal Products 3,994 4,163 3,266
- ----------------------------------------------------------------------------------
Total $ 255,769 $ 237,367 $ 185,470
- ----------------------------------------------------------------------------------
</TABLE>
Note 11 - Pension And Other Postretirement Benefit Plans
The Company maintains several retirement plans. Retirement benefits
are generally based on years of service and compensation. The
Company also maintains postretirement health and welfare benefit
plans. Benefits are subject to deductibles, co-payment provisions
and coordination with benefits available under Medicare. The Company
may amend the plans periodically.
The following chart summarizes the balance sheet impact, as well as
the benefit obligation, assets, funded status and rate assumptions
associated with the pension and postretirement medical benefit
plans.
<TABLE>
<CAPTION>
Pension Plans
-------------------------------------------------- Postretirement Medical
United States International Benefit Plans
-------------------------------------------------- --------------------------
1998 1997 1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Reconciliation of funded status of the plans
and the amounts included in the Company's
consolidated balance sheets (in thousands):
Change in benefit obligations:
Beginning obligations $52,372 $47,387 $45,655 $44,320 $ 35,898 $ 30,724
Service cost 3,350 3,159 2,614 2,149 1,628 1,436
Interest cost 3,939 3,765 2,484 2,269 2,444 2,362
Plan participant contributions - - 1,201 1,080 - -
Foreign currency exchange rate changes - - 1,211 (3,183) - -
Actuarial (gains)/losses 4,448 2,784 (1,725) (265) (767) 2,459
Benefits paid (4,019) (4,723) (876) (715) (1,125) (1,083)
- ------------------------------------------------------------------------------------------------------------------------
Ending obligations 60,090 52,372 50,564 45,655 38,078 35,898
- ------------------------------------------------------------------------------------------------------------------------
Changes in plans' assets:
Beginning fair value 59,188 52,372 50,629 47,353 - -
Actual return on plans' assets 8,693 11,539 4,499 3,816 - -
Foreign currency exchange rate changes - - 1,317 (2,736) - -
Employer contributions 8,956 - 1,923 1,831 1,125 1,083
Plan participant contributions - - 1,201 1,080 - -
Benefits paid (4,019) (4,723) (876) (715) (1,125) (1,083)
- -----------------------------------------------------------------------------------------------------------------------
Ending fair value 72,818 59,188 58,693 50,629 0 0
- -----------------------------------------------------------------------------------------------------------------------
Balance sheet amount:
Funded status 12,728 6,816 8,129 4,974 (38,078) (35,898)
Unrecognized net actuarial gain (3,670) (5,054) (5,375) (2,822) (1,344) (577)
Unrecognized prior service cost 9,424 10,213 1,366 1,443 - -
Unrecognized net transition asset (545) (636) (173) (215) - -
- -----------------------------------------------------------------------------------------------------------------------
Net balance sheet asset/(liability) $17,937 $11,339 $ 3,947 $ 3,380 $(39,422) $(36,475)
- -----------------------------------------------------------------------------------------------------------------------
Weighted average assumptions as of December 31:
Discount rate 6.75% 7.00% 5.30% 5.40% 6.75% 7.00%
Expected return on plan assets 9.50% 9.00% 6.90% 6.80% n/a n/a
Compensation rate increase 4.25% 5.00% 4.30% 4.30% n/a n/a
Components of net periodic benefit cost:
Service cost $ 3,350 $ 3,159 $ 2,614 $ 2,149 $ 1,628 $ 1,436
Interest cost 3,939 3,765 2,484 2,269 2,444 2,362
Expected return on plan assets (5,630) (4,557) (3,641) (3,169) - -
Amortization 699 699 (17) 62 - (6)
- -----------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ 2,358 $ 3,066 $ 1,440 $ 1,311 $ 4,072 $ 3,792
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note 11 - Pension And Other Postretirement Benefit Plans (continued)
Assumed health care cost trend rates have a significant effect on
the amounts reported for the postretirement health and welfare
benefit plans. Medical costs were assumed to increase at an annual
rate of 7% in 1998, decreasing ratably to a growth rate of 5% in
2002 and remaining at 5% per year thereafter. The effects of a one
percentage point decrease in the assumed health care cost trend
rates on the aggregate service and interest cost components and on
the postretirement benefit obligations are decreases of $200,000 and
$1,800,000, respectively. The effects of a one percentage point
increase on the aggregate service and interest cost components and
on the postretirement benefit obligations are increases of $200,000
and $1,840,000, respectively. Benefits are funded as claims are
paid.
The Company's 401(k) retirement savings plan provides retirement
benefits to eligible U.S. employees in addition to those provided by
the defined benefit plan. The plan permits participants to
voluntarily defer up to 15% of their compensation, subject to
Internal Revenue Code limitations. The Company also contributes a
fixed amount per year to the account of each eligible employee plus
a percentage of the employee's salary deferral. The Company's policy
is to fully fund this plan. The cost for this plan was $6,008,000,
$5,798,000 and $5,504,000 for the years ended December 31, 1998,
1997 and 1996, respectively.
Note 12 - Earnings Per Share
The Company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share," effective December 15, 1997. As a result,
the Company's earnings per share for 1996 was restated. A
reconciliation of basic and diluted earnings per share, together
with the related shares outstanding, and the effect of this change
on previously reported earnings per share (EPS) is as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Reconciliation of Earnings and Shares
Per-Share
Income Shares Amount
- ----------------------------------------------------------------------
<S> <C> <C> <C>
For the Year Ended 1996
Basic Earnings per Share
Net income available to
common shareholders $147,856 99,930 $1.48
Options outstanding - 1,785
- ----------------------------------------------------------------------
Diluted Earnings per Share
Net income available to
common shareholders $147,856 101,715 $1.45
- ----------------------------------------------------------------------
For the Year Ended 1997
Basic Earnings per Share
Net income available to
common shareholders $166,059 100,210 $1.66
Options outstanding - 2,594
- --------------------------------------------------------
Diluted Earnings per Share
Net income available to
common shareholders $166,059 102,804 $1.62
- ---------------------------------------------------------------------
For the Year Ended 1998
Basic Earnings per Share
Net income available to
common shareholders $166,347 100,540 $1.65
Options outstanding - 648
- -------------------------------------------------------
Diluted Earnings per Share
Net income available to
common shareholders $166,347 101,188 $1.64
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Effect on Previously Reported EPS
1996
- --------------------------------------------------------------------
<S> <C>
Per share amounts
Primary EPS as reported $1.48
Effect of SFAS No. 128 -
- --------------------------------------------------------------------
Basic EPS as restated $1.48
- --------------------------------------------------------------------
Fully diluted EPS as reported $1.48
Effect of SFAS No. 128 (0.03)
- --------------------------------------------------------------------
Diluted EPS as restated $1.45
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA (unaudited)
Common Stock Data: (per share)
- ---------------------------------------------------------------------------------------
1998 Price Range 1997 Price Range Dividends
High Low High Low 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $42-3/4 $35-3/4 $33 $28-7/8 $ .0700 $.0625
Second Quarter 41-5/8 32-9/16 36 26-7/8 .0700 .0625
Third Quarter 36 25-3/4 35-3/4 31-3/8 .0700 .0625
Fourth Quarter 33-3/4 27-11/16 41-1/8 31-3/4 .0725 .0700
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>
(Page 28 of the 1998 Annual Report to Shareholders)
<TABLE>
<CAPTION>
Annual Financial Data: (in millions, except per share data)
- ----------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $1,194.3 $1,127.1 $1,034.6 $959.8 $851.2
Net income 166.3 166.1 147.9 131.7 110.3
Per share:
Net income - Basic 1.65 1.66 1.48 1.32 1.11
Net income - Diluted 1.64 1.62 1.45 1.30 1.09
Dividends .2825 .2575 .2275 .1900 .1688
Total assets 1,432.8 1,243.8 1,100.0 985.2 852.0
Long-term debt .4 .6 3.8 13.8 14.5
</TABLE>
<TABLE>
<CAPTION>
Quarterly Financial Data: (in millions, except per share data)
- -----------------------------------------------------------------------------
1998 Quarter Ended
March 31 June 30 Sept. 30 Dec. 31
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $306.2 $294.6 $300.4 $293.1
Gross profit 163.1 158.2 157.6 157.5
Net income 44.2 41.1 41.4 39.6
Net income per share - Basic .44 .41 .41 .39
Net income per share - Diluted .43 .41 .41 .39
1997 Quarter Ended
March 31 June 30 Sept. 30 Dec. 31
- -----------------------------------------------------------------------------
Net sales $279.1 $278.6 $286.0 $283.4
Gross profit 150.5 151.7 151.4 154.8
Net income 41.4 40.7 41.8 42.2
Net income per share - Basic .41 .41 .42 .42
Net income per share - Diluted .40 .40 .41 .41
</TABLE>
Exhibit 21
SIGMA-ALDRICH CORPORATION
PRINCIPAL SUBSIDIARIES
-------------------------
Sigma-Aldrich Corporation (Delaware), the Registrant:
1. Sigma-Aldrich Co. (Illinois)
(A) Sigma Chemical Company (Missouri)
(B) Sigma Israel Chemicals, Ltd. (Israel)
(C) Sigma-Aldrich Chemie Holding GmbH (Germany)
(1) Sigma-Aldrich Chemie GmbH (Germany)
(a) RdH Laborchemikalien GmbH & Co. (Germany)
(2) Sigma-Aldrich Produktions GmbH (Germany)
(D) Aldrich Chemical Company, Inc. (Delaware)
(E) Sigma-Aldrich N.V./S.A. (Belgium)
(1) Sigma Chemie B.V. (The Netherlands)
(F) Aldrich-Chemie GmbH & Co. K.G. (Germany)
(G) Aldrich-Chemie Verwaltungs GmbH (Germany)
(H) Sigma-Aldrich S.r.l. (Italy)
(I) Sigma-Aldrich Chimie S.N.C. (France)
(1) Sigma-Aldrich Chemie S.a.r.l. (France)
(J) Supelco, Inc. (Delaware)
(K) Genosys Biotechnologies, Inc. (Texas)
(L) Research Biochemicals, Inc. (Delaware)
(M) Carbolabs, Inc. (Connecticut)
(N) Techcare Systems, Inc. (California)
2. B-Line Systems, Inc. (Illinois)
3. Sigma-Aldrich, Inc. (Wisconsin)
4. Sigma-Aldrich & Subs Foreign Sales Corporation (Barbados)
5. Fluka Chemie AG (Switzerland)
6. Sigma-Aldrich Company, Ltd. (United Kingdom)
7. Sigma-Aldrich Foreign Holding Co. (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 Quimica Brasil Ltda. (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) Sigma-Aldrich Japan KK (Japan)
(K) Sigma-Aldrich India (India)
(L) Sigma-Aldrich Ireland Ltd. (Ireland)
(M) Sigma-Aldrich E.P.E. (Greece)
(N) Sigma-Aldrich de Argentina, S.A. (Argentina)
(O) Sigma-Aldrich (Pty.) Ltd. (South Africa)
(P) Sigma-Aldrich Pte. Ltd. (Singapore)
(Q) Sigma-Aldrich Korea Ltd. (Korea)
(R) LabKemi AB (Sweden)
(S) Ing F. Heidenreich AS (Norway)
(T) Sigma-Aldrich A/S (Denmark)
(U) Sigma-Aldrich (M) Sdn. Bhd (Malaysia)
(V) Ya-Kemia Oy (Finland)
(W) Sigma-Aldrich Finance, Ltd. (UK)
8. Sigma-Aldrich Finance Co. (Missouri)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 24,345
<SECURITIES> 0
<RECEIVABLES> 236,235
<ALLOWANCES> 6,749
<INVENTORY> 464,035
<CURRENT-ASSETS> 772,681
<PP&E> 891,665
<DEPRECIATION> 372,926
<TOTAL-ASSETS> 1,432,835
<CURRENT-LIABILITIES> 142,372
<BONDS> 415
0
0
<COMMON> 100,623
<OTHER-SE> 1,115,757
<TOTAL-LIABILITY-AND-EQUITY> 1,432,835
<SALES> 1,194,290
<TOTAL-REVENUES> 1,194,290
<CGS> 557,864
<TOTAL-COSTS> 557,864
<OTHER-EXPENSES> 393,836
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 920
<INCOME-PRETAX> 242,590
<INCOME-TAX> 76,243
<INCOME-CONTINUING> 166,347
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166,347
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.64
</TABLE>
