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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, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _________________
Commission file number 0-8135
SIGMA-ALDRICH CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 43-1050617
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3050 Spruce Street, St. Louis, Missouri 63103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-771-5765
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
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant:
$2,038,610,275 March 3, 2000
Value Date of Valuation
Number of shares of the registrant's common stock, $1.00 par value,
outstanding as of March 3, 2000 was 90,353,918.
The following documents are incorporated by reference in the Parts of Form 10-K
indicated below:
Documents Incorporated by Reference Parts of Form 10-K into which Incorporated
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Pages 16-32 of the Annual Report to
Shareholders for the year ended
December 31, 1999 Parts I, II and IV
Proxy Statement for the 2000 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F-3 of this report.
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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 regulations applicable to the
Company's business, the effectiveness of the Company's further implementation of
its global software system, SAP, the highly competitive environment in which the
Company operates, the impact of fluctuation in interest rates and foreign
currency exchange rates and the Company's decision to sell its B-Line Systems
metal business. 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 ("the Company") develops, manufactures and
distributes the broadest range of high quality biochemicals, organic chemicals,
chromatography products and diagnostic reagents available in the world. These
products are used in high technology research and development in the life
sciences, at universities and in industry, for the diagnosis of disease, and as
specialty chemicals for pharmaceutical and other manufacturing purposes in more
than 160 countries. The Company's 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 June 16, 1997, the Company purchased a 75% interest in Riedel-de Haen.
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. On March 31, 1999,
the Company purchased the remaining 25% interest in Riedel-de Haen.
B-Line Systems manufactures and markets a complete line of metal products
used in the installation and retrofitting of electrical, mechanical and
telecommunications applications. The metal operations are accounted for as
discontinued operations, and accordingly, operating results and net assets are
segregated in the Consolidated Statements of Income and Consolidated Balance
Sheets.
On March 27, 2000, the Company announced it has reached agreement to sell its
B-Line Systems business to Cooper Industries, Inc. for approximately $425
million. The closing
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is subject to regulatory approval and other closing conditions and is expected
to take place no later than June 30, 2000.
(a) Chemical Products.
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1) Products:
The Company distributes more than 85,000 chemical products for use in life
science research, laboratory applications, pharmaceutical manufacturing, and as
diagnostic reagents. The Company's life science products are used in many
techniques and disciplines including molecular biology, cell biology, cell
culture, protein analysis and chromatography. The acquisition of Genosys in
December 1998 added custom synthetic DNA products, synthetic peptides and genes
to the life science product categories. Products for laboratory applications are
used in university, governmental and agency research and consist of
biochemicals, organic and inorganic compounds, solvents, buffers and related
equipment. The Company also markets bulk quantities of organic, inorganic and
biochemicals to pharmaceutical and industrial customers. Diagnostic reagents,
controls and instrumentation are marketed to hospitals and clinical
laboratories.
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 ongoing reviews 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); Houston, Texas (Sigma);
Bellefonte, Pennsylvania (Supelco); Germany (Aldrich Chemie GmbH & Co. K.G., RdH
Laborchemikalien GmbH); Israel (Sigma Israel Chemicals Ltd.); Switzerland (Fluka
Chemie GmbH, "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.
There are more than 85,000 products listed in the Sigma, Aldrich, Fluka,
Riedel-de Haen and Supelco catalogs, of which the Company produced approximately
40,000, or approximately 50% of the net sales of chemical products for the year
ended December 31, 1999. 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 more 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 290 chemists and lab technicians utilizing sophisticated
scientific equipment.
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3) Distribution and Sales:
The Company markets its chemical products through sales and marketing units
for life science, lab products, fine chemicals and diagnostics and distributes
over 2,100,000 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.
During the year ended December 31, 1999, 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 1999. The Company also packages 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 8% of the Company's sales of chemical products in the year
ended December 31, 1999. During the year ended December 31, 1999, 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 (www.sigma-aldrich.com) for technical staff
consultation or for placing orders. Order processing, shipping, invoicing and
product inventory are computerized. Shipments are made six days a week from St.
Louis, Milwaukee, the 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, 1999, 55% of the Company's net sales of
chemical products were to customers located in foreign countries. These sales
were made directly by the Company, through distributors and by subsidiaries
(noted in Exhibit 21) 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, Portugal, Russia, Singapore, South Africa, South
Korea, Spain, Sweden, Switzerland and United Kingdom.
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 United States 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, 1999, approximately 12% of
the Company's United States operations' chemical purchases were from
international suppliers. Additional information regarding
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international operations is included in Note 12 to the consolidated financial
statements on page 29 of the 1999 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
registered 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.
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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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On November 22, 1999, the Company announced its strategic decision to seek
a buyer for its B-Line Systems metal business. The sale of the metal operations
is expected to be completed during fiscal year 2000.
Components for strut, cable tray and pipe support systems are manufactured
by B-Line at its facilities in Highland and Troy, Illinois, Norcross, Georgia
and Reno, Nevada. 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, Sherman, Texas, and Aurora, Colorado.
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
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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 two regional warehouses 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 many 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. Additionally, the Company is experiencing
competition from marketers on e-commerce.
The Company believes its B-Line subsidiary to be among the five 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 7,322 persons as of December 31, 1999. Of these, 5,768
were engaged in production and distribution of chemical products. The B-Line
subsidiary employs 1,554 persons. The total number of persons employed within
the United States was 4,807, with the balance employed by the international
subsidiaries. The Company employs 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
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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, 2004. B-Line's production workers
at the Norcross, Georgia facility are members of the United Food and Commercial
Workers Union(AFL-CIO). The labor agreement covering these employees expires
June 15, 2002.
(e) Back-log of Orders.
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, 1999 and 1998, 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, 1999
back-log will be shipped during 2000.
On December 31, 1999 and 1998, the back-log of orders at B-Line was not
significant. B-Line expects that substantially all of the December 31, 1999
back-log will be shipped during 2000.
(f) Information as to Geographic Segments.
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Information concerning geographic segments for the years ended December 31,
1999, 1998 and 1997, is located in Note 12 to the consolidated financial
statements on page 29 of the 1999 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 for warehousing. Also in St. Louis, the Company owns 30 acres
upon which is located a 287,000 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
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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 1999.
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 information for the years ended December 31, 1999 and 1998
is located on page 32 of the 1999 Annual Report which is incorporated herein by
reference.
As of March 3, 2000, there were 1,600 record holders of the Registrant's
Common Stock.
Items 6 through 8. Selected Financial Data, Management's Discussion and Analysis
of Financial Condition and Results of Operations, Qualitative and Quantitative
Disclosures about Market Risk and Financial Statements and Supplementary Data.
The information required by Items 6 through 8 is incorporated herein by
reference to pages 16-32 of the 1999 Annual Report. See Index to Financial
Statements and Schedules on page F-1 of this report. Those pages of the
Company's 1999 Annual Report
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listed in such Index or referred to in Items 1(a)(4), 1(f) and 5 are
incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
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Not applicable.
PART III
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Item 10. Directors and Executive Officers of the Registrant.
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Information under the captions "Nominees for Board of Directors" and
"Security Ownership of Directors, Executive Officers and Principal Beneficial
Owners" of the 2000 Proxy Statement is incorporated herein by reference.
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The executive officers of the Registrant are:
<TABLE>
<CAPTION>
Name of Executive Officer Age Positions and Offices Held
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<S> <C> <C>
Thomas E. Briggs 54 Vice President and President, B-Line
Larry S. Blazevich 52 Vice President and Chief Information Officer
Terry R. Colvin 44 Vice President, Human Resources
Carl T. Cori 63 Chairman of the Board
David R. Harvey 60 President and Chief Executive Officer
Michael R. Hogan 47 Vice President, Chief Financial Officer, Chief
Administrative Officer and Secretary
David W. Julien 45 President, Life Sciences
Rodney Kelley 45 Vice President, Safety
James W. Meteer 49 Vice President, Quality
Karen J. Miller 42 Controller
Robert Monaghan 53 President, Sigma Diagnostics
Jai Nagarkatti 52 President, Fine Chemicals
Kirk A. Richter 53 Treasurer
Frank D. Wicks 46 President, Laboratory Products
</TABLE>
There is no family relationship between any of the officers.
Mr. Briggs has been Vice-President and 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 and Chief
Information Officer in June 1996. Previously, Mr. Blazevich was employed with
Thomas and Betts, an electrical manufacturing company, 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 of the Board of the Company for more than five years.
He served as Chief Executive Officer for more than five years until November
1999 and President of the Company for more than five years until March 1995.
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Dr. Harvey has been Chief Executive Officer of the Company since November 1999.
He served as the Chief Operating Officer of the Company for more than five years
until November 1999. He was elected President of the Company in March 1995,
after serving as Executive Vice President for more than five years.
Mr. Hogan joined Sigma-Aldrich in April 1999 as Vice President and Chief
Financial Officer. Since then, his duties have been expanded to include
leadership of the Human Resources, Information Systems and Quality functions
when he was named Chief Administrative Officer in November 1999. Before joining
the Company, Mr. Hogan served as Corporate Vice President and Controller of
Monsanto Company from January of 1996 through March of 1999. Prior to joining
Monsanto, he held a number of senior management positions for ten years at
General American Life Insurance Company, he served as Chairman and Chief
Executive Officer of Cova Corp. from January through December 1995 and as
President of GenCare Health Systems, Inc. from March 1990 through January 1995.
Mr. Julien was named President of the Life Science division in November 1999.
Previously he served as President of Sigma from August 1998 to November 1999. He
served as Vice-President of Sigma from January 1998 to August 1998 and as
Vice-President of Marketing from November 1995 to January 1998. Previously, Mr.
Julien served as Director of Biotechnology Facilities Design at Jacobs
Engineering Group from more than four year until November 1995.
Mr. Kelley was elected Vice President of Safety in August of 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. He held several positions within
Supelco/Rohm & Haas from 1988-1993.
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. Nagarkatti was named President of the Fine Chemical division in November
1999. Previously, he had served as President of Aldrich for more than five
years.
Mr. Richter was elected Treasurer in May 1997 after serving as Controller for
more than five years.
Mr. Wicks was named President of the Laboratory Products division in November
1999. He served as Vice President of Operations from August 1998 until November
1999. 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 2000 Proxy Statement is
incorporated herein by reference.
11
<PAGE>
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 2000 Proxy Statement is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
- --------------------------------------------------------------------------------
Information under the caption "Director Compensation and Transactions" of
the 2000 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 1999 Annual Report listed in such
Index or referred to in Items 1(a)(4), 1(f) and 5 are incorporated
herein by reference.
2. Financial Statement Schedules.
See Index to Financial Statements and Schedules on page F-1 of this
report.
3. Exhibits.
See Index to Exhibits on page F-3 of this report.
(b) Reports on Form 8-K:
A current report on Form 8-K was filed on December 22, 1999, to announce
under Item 5 the Company amended its By-laws on December 20, 1999 to, among
other things, amend advance notice provisions relating to the proposal of
business and nominations of directors at meetings of shareholders.
12
<PAGE>
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 30, 2000
-------------------------------------- --------------
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 Michael R. Hogan 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 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 30, 2000
----------------------------------------- --------------
Carl T. Cori, Director, Chairman of the Date
Board
By /s/ David R. Harvey March 30, 2000
------------------------------------------ --------------
David R. Harvey, Director, President and Date
Chief Executive Officer
By /s/ Karen J. Miller March 30, 2000
------------------------------------------ --------------
Karen J. Miller, Controller Date
By /s/ Kirk A. Richter March 30, 2000
------------------------------------------ --------------
Kirk A. Richter, Treasurer Date
By /s/ Michael R. Hogan March 30, 2000
------------------------------------------ --------------
Michael R. Hogan, Vice President, Chief Date
Financial Officer, Chief Administrative
Officer and Secretary
By /s/ David M. Kipnis March 30, 2000
------------------------------------------ --------------
David M. Kipnis, Director Date
By /s/ Andrew E. Newman March 30, 2000
------------------------------------------ --------------
Andrew E. Newman, Director Date
By /s/ Jerome W. Sandweiss March 30, 2000
------------------------------------------- --------------
Jerome W. Sandweiss, Director Date
13
<PAGE>
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page Number
Reference
---------------
Annual Report
to Shareholders
---------------
<S> <C>
Annual financial data for the years
1999, 1998, 1997, 1996 and 1995 32
Management's discussion and analysis 16
Market Risk Disclosure 18
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 1999 and 1998 21
Consolidated statements for the years
ended December 31, 1999, 1998 and 1997
Income 20
Stockholders' Equity 22
Cash Flows 23
Notes to consolidated financial statements 24
Report of independent public accountants 20
</TABLE>
FINANCIAL STATEMENT SCHEDULES:
All 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.
F-1
<PAGE>
INDEX TO EXHIBITS
These Exhibits are numbered in accordance with the Exhibit Table of Item 6.01 of
Regulation S-K:
<TABLE>
<CAPTION>
Exhibit Reference
------- ---------
<S> <C>
(3) Certificate of Incorporation and By-Laws:
(a) Certificate of Incorporation and Amendments Incorporated by reference to
Exhibit 3(a) of Form 10-Q
Filed for the quarter ended
September 30, 1996, Commission
File Number 0-8135.
(b) By-Laws as amended December 1999 Incorporated by reference to
Exhibit 3.1 of Form 8-K filed
On December 22, 1999.
Commission File Number 0-8135.
(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 December 1999 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 to Exhibit
of the Incentive Stock Bonus Plan* 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.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(e) Employment Agreement with Carl T. Cori* Incorporated by reference to Exhibit
(Similar Employment Agreements also 10 (f) of Form 10-K filed for the
exist with Thomas E. Briggs, Larry S. year ended December 31, 1992,
Blazevich, Terry R. Colvin, David R. Commission File Number 0-8135.
Harvey, Michael R. Hogan, David W.
Julien, Rodney L. Kelley, James W. Meteer,
Karen J. Miller, Robert Monaghan, Jai P.
Nagarkatti, Kirk A. Richter, and
Frank D. Wicks)
(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.
(i) Consulting Agreement and Release with Incorporated by reference to
Floyd Worley Exhibit 10(i) of Form 10-K filed for
the year ended December 31, 1998,
Commission File Number 0-8135.
(j)Share Option Plan of 2000* Incorporated by reference to
Appendix A of the Company's
Definitive Proxy Statement filed
March 30, 2000, Commission File
Number 0-8135.
(11) Statement Regarding Computation of Per Incorporated by reference to the
Share Earnings information on net income per share
included in Note 15 to the
Company's 1999 financial
statements filed as Exhibit 13
below.
(13) Pages 16-32 of the Annual Report to See Exhibit 13.
Shareholders for the year ended
December 31, 1999
(21) Subsidiaries of Registrant See Exhibit 21.
(23) Consent of Independent Public Accountants Page F-2 of this report.
(27) Financial Data Schedule See Exhibit 27.
</TABLE>
*Represents management contract or compensatory plan or arrangement required to
be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
<PAGE>
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, 33-64661 and 333-30528.
ARTHUR ANDERSEN LLP
St. Louis, Missouri
March 29, 2000
<PAGE>
Exhibit 13
Management's Discussion and Analysis
(in millions, except per share data)
The following should be read in conjunction with the consolidated financial
statements and related notes.
HIGHLIGHTS
Net income increased 3.6% to $172.3 for 1999 compared to $166.3 in 1998. Net
income per share in 1999 is $1.71 on a basic and diluted basis, compared to
$1.65 and $1.64, respectively, in 1998. Net income from continuing operations
for 1999 increased 2.6% to $148.6 from $144.8 in 1998. Net income per basic and
diluted share was $1.47 in 1999 compared to $1.44 and $1.43, respectively, in
1998. This increase in net income resulted from higher sales levels in 1999, the
acquisition of Genosys Biotechnologies, Inc. in December 1998 and improvement in
operating cost levels. Unusual items increased net income from continuing
operations by $2.6 or $.02 per basic and diluted share in 1999 and $4.1 or $.04
per basic and diluted share in 1998.
The following unusual items increased net income from continuing operations by
$2.6 in 1999: a tax benefit of $9.8 for research and development and other tax
credits, offset by net after tax charges of $4.0 for an additional provision for
bad debts, $2.6 for restructuring to reorganize the Company and a one-time after
tax charge of $0.6 associated with the realignment of our European legal
structure. The following unusual items increased net income from continuing
operations by $4.1 in 1998: a tax benefit of $7.0 from our enhanced research and
development activities over the last several years, offset by a charge of $2.9
relating to in-process research and development acquired with Sigma-Genosys.
On November 22, 1999, the Company decided to seek a buyer for its B-Line Systems
metal business. Accordingly, results for metal operations are reflected as net
income from discontinued operations and amounted to $23.7 and $21.5 for 1999 and
1998, respectively.
ITEMS AFFECTING COMPARABILITY OF RESULTS
The following items affect the comparability of our results:
o The metal operations are accounted for as discontinued operations and
accordingly, operating results and net assets are segregated in the
accompanying Consolidated Statements of Income and Consolidated Balance
Sheets.
o On March 31, 1999 the Company purchased the remaining 25% interest in
Riedel-de Haen.
o On December 23, 1998 the Company purchased Genosys Biotechnologies, Inc.
o On June 16, 1997 the Company purchased a 75% interest in Riedel-de Haen.
OPERATING RESULTS FROM CONTINUING OPERATIONS
Sales
Chemical sales increased 7.5%, 7.1% and 8.3% in 1999, 1998 and 1997,
respectively. The sales growth is attributed to selected price increases, the
annual addition of new products, acquisitions of Genosys and Riedel-de Haen and
the opening of new international sales offices. Price increases for products
listed in the general chemical sales catalogs averaged 3.0%, 3.0% and 3.5% in
1999, 1998 and 1997, respectively. New product sales, while not material in the
year introduced, contribute to sales growth in subsequent years. Acquisitions
contributed 2.9%, 2.4% and 3.3% to the 1999, 1998 and 1997 sales increases,
respectively. The effect of translating foreign currency sales into U.S. dollars
reduced the 1999, 1998, and 1997 sales growth by 0.8%, 1.8% and 4.4%,
respectively. Sales increases for laboratory and life science products were in
line with the overall Company growth rate. This growth benefited from an
expanded life science product line through the addition of Sigma-Genosys in
December 1998 and new product introductions. Sales gains were also aided by the
continuing expansion of e-commerce sales, which contributed 5% of U.S. based
research sales in the fourth quarter of 1999. Increased demand from
pharmaceutical customers provided above average increases in Fine Chemical
sales. Diagnostic sales were in line with 1998 levels as gains in reagent sales
were offset by fewer instrument placements. International direct sales increased
13.8%, 19.3% and 30.6% in 1999, 1998 and 1997, respectively, after eliminating
the effect of changes in currency exchange rates. The increase in international
direct sales is partially offset by slowing export sales in the United States.
Export sales
<PAGE>
Exhibit 13
declined 39.8%, 28.6% and 22.0% in 1999, 1998 and 1997, respectively, reflecting
the continued transfer of those sales to both our existing and new international
offices.
Cost of Products Sold
Cost of Products Sold was 46.2%, 44.1% and 43.4% in 1999, 1998 and 1997,
respectively. The decline in the gross profit rate in 1999 reflects the
continuing investment in research and development that will benefit new product
offerings for the next several years, higher costs of new facilities, inventory
revaluation charges, and product mix changes to lower margin business. Overall,
the cost of products sold increased 12.4% compared to a sales increase of 7.5%
in 1999.
Selling, General and Administrative Expenses
Excluding unusual items, selling, general and administrative expenses were
33.1%, 34.0% and 32.7% of sales in 1999, 1998 and 1997, respectively. In 1999,
selling, general and administrative expenses excluding unusual items decreased
0.9% as a percent of sales as process improvements and cost controls were only
partially offset by higher costs of new systems. In 1998, selling, general and
administrative expenses excluding unusual items increased 1.3% as a percent of
sales primarily 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. Net interest income contributed $3.7, $2.9 and $4.8 to pretax earnings
in 1999, 1998 and 1997, respectively.
Income Taxes
Excluding unusual items, income taxes, which include federal, state and
international taxes, were 31.9%, 33.4% and 33.8% of pretax income from
continuing operations in 1999, 1998 and 1997, respectively. The reduction in the
income tax rate from 1998 to 1999 is a result of an increase in the Foreign
Sales Corporation ("FSC") benefit derived on export sales and a decrease in
state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Cash flow from operations is the Company's primary source of liquidity. Cash
provided by operating activities was $230.9 in 1999, an increase of $68.9 or
42.5% from 1998. The increase resulted from higher net income of $5.9, slower
growth in inventories and accounts receivable of $29.4 and $25.6, respectively,
and higher depreciation and amortization of $5.1 in 1999 compared to 1998.
Investing Activities
Cash used in investing activities was $98.7 in 1999 compared to $175.2 in 1998
and $157.9 for 1997. In 1999, the cash used is primarily for capital
expenditures of $91.8. The higher level of capital expenditures in 1998 of
$130.4 is primarily due to significant expenditures 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 Biotechnologies, Inc., for $39.5. During 2000 we expect capital
spending of approximately $75 to continue to enhance distribution and production
facilities and information systems and begin construction on a new research and
development facility for Life Sciences.
Financing Activities
In 1999, the Company used cash in financing activities primarily for payments of
dividends and common stock repurchases. The Board of Directors authorized the
purchase of ten million shares of Company stock, of which approximately 2.6
million shares were repurchased by December 31, 1999. These outflows totaled
$29.7 and $77.8
<PAGE>
Exhibit 13
for dividend payments and stock repurchases, respectively, in 1999 compared to
dividends paid of $28.4 and $25.8 for 1998 and 1997, respectively. Subsequent to
December 31, 1999, the Company completed the repurchase of the ten million
shares and the Board of Directors has authorized the repurchase of an additional
ten million shares. The Company expects to continue the repurchase of the
additional shares authorized, however, the timing of the repurchases and the
number of shares repurchased will depend upon market conditions and other
factors. At December 31, 1999, the Company had credit facilities totaling $100,
of which $86.5 was unused. In January 2000, the the Board of Directors
authorized an increase in short term borrowing capacity to $500 of which $300 is
currently in place. These facilities can be used to fund acquisitions,
repurchase shares or for general corporate purposes.
Total debt as a percentage of total capitalization was 1.7% and 2.5% for 1999
and 1998, respectively.
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 the 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,
including updating certain information technology systems and evaluating
currency risk, impacts on financial transactions and competitive activity. The
cost associated with addressing the Euro conversion is not expected to be
material. The Company believes the conversion to the Euro will not have a
material impact on its financial condition or results of its operations.
ENVIRONMENTAL MATTERS
The operations of the Company, like those of other companies engaged in similar
lines of business, are subject to various federal, state, foreign and local laws
and regulations intended to protect the public health and the environment. These
regulations primarily relate to worker safety, air and water quality, and waste
handling. The Company believes it is in compliance with these regulations.
INFLATION
Management recognizes that inflationary pressures may have an adverse effect on
the Company through higher asset replacement costs and related depreciation and
higher material costs. The Company tries to minimize these effects through cost
reductions and productivity improvements as well as price increases to maintain
reasonable profit margins. It is management's view, however, that inflation has
not had a significant impact on operations in the three years ended December 31,
1999.
MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS
The market risk inherent in the Company's financial instruments and positions
represents the potential loss arising from adverse changes in interest rates and
foreign currency exchange rates.
Interest Rates
At December 31, 1999, the Company's outstanding debt represents less than 5% of
total capitalization. Cash flows from operations and available credit facilities
are sufficient to meet the working capital requirements of the Company. It is
management's view that market risk or variable interest rate risk would not
significantly impact the Company's results of operations.
<PAGE>
Exhibit 13
Foreign Currency Exchange Rates
The Company uses forward currency 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 either partially or completely by transaction
gains and losses, with any net gains and losses included in selling, general and
administrative expenses. The market risk of foreign currency rate changes
represents the potential loss in fair value of net currency positions for
outstanding foreign currency contracts at year end due to an adverse change in
foreign currency exchange rates. The Company does not enter into foreign
currency contracts for speculative trading purposes. The market risk of the
Company's foreign currency positions at December 31, 1999, assuming a
hypothetical 10% change in foreign currency exchange rates, would be $2.9.
RESTRUCTURING ACTIVITIES
In 1999, the Company recorded charges for restructuring in the amount of $3.9
($2.6 after taxes or $.03 per basic and diluted share). These charges relate
primarily to termination costs associated with the reorganization of the
company.
YEAR 2000
As of March 15, 2000, the Company has not encountered any significant business
disruptions as a result of internal or external Year 2000 issues. However, while
no such occurrence has developed, Year 2000 issues may arise that may not be
immediately apparent. The Company will continue to monitor and work to remediate
any issues that may arise. Although the Company expects no material impact, such
future events cannot be known with certainty.
DISCONTINUED OPERATIONS
Results from discontinued operations represent the activity of the B-Line
Systems metal business. Metal sales increased 10.6%, 1.3% and 11.8% for 1999,
1998 and 1997, respectively. The growth in 1999 is attributed to strong demand
for telecommunications and enclosure products. The slower growth in 1998
reflects the weakness in the industrial construction market which was only
partially offset by the fast-growing demand for the telecommunications and
enclosures products. The annual pretax profit margin of 14.9% for 1999 is equal
to the prior year level, but reflects reduced selling prices due to market
conditions offset by process improvements.
FORWARD-LOOKING STATEMENTS
The discussion and analysis and other sections of the Annual Report to
shareholders 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 statements that are preceded
by, followed by, or that include 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 upon 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 government health care reform, government regulations applicable to
the Company's business, the effectiveness of the Company's further
implementation of its global software system, SAP, the highly competitive
environment in which the Company operates, the impact of
<PAGE>
Exhibit 13
fluctuations in interest rates and foreign currency exchange rates and the
Company's decision to sell its B-Line Systems metal business. 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 occurrence of unanticipated
events.
<PAGE>
Exhibit 13
Consolidated Statements of Income
(in thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,037,945 $965,927 $901,701
Cost of products sold 479,406 426,354 391,644
- -----------------------------------------------------------------------------------------
Gross profit 558,539 539,573 510,057
Selling, general and administrative expenses 350,922 331,031 294,426
Provision for restructuring 3,900 -- --
- -----------------------------------------------------------------------------------------
Income from continuing operations before provision
for income taxes 203,717 208,542 215,631
Provision for income taxes 55,112 63,646 72,960
- -----------------------------------------------------------------------------------------
Net income from continuing operations 148,605 144,896 142,671
Net income from discontinued operations 23,665 21,451 23,388
- -----------------------------------------------------------------------------------------
Net income $172,270 $166,347 $166,059
- -----------------------------------------------------------------------------------------
Weighted average number of shares outstanding - Basic 100,672 100,540 100,210
Weighted average number of shares outstanding -
Diluted 100,984 101,188 102,804
Net income per share - Basic:
Net income from continuing operations $1.47 $1.44 $1.43
Net income from discontinued operations .24 .21 .23
- -----------------------------------------------------------------------------------------
Net income $1.71 $1.65 $1.66
- -----------------------------------------------------------------------------------------
Net income per share-Diluted:
Net income from continuing operations $1.47 $1.43 $1.39
Net income from discontinued operations .24 .21 .23
- -----------------------------------------------------------------------------------------
Net income $1.71 $1.64 $1.62
- -----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
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 as of December 31, 1999
and 1998, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999. 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 audit. We conducted our audit in accordance with
auditing standards generally accepted in the United States. Those standards
require that we plan and perform the audit 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
audit provides 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN, LLP
St. Louis, Missouri
February 14, 2000
<PAGE>
Exhibit 13
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
December 31,
1999 1998
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 43,847 $ 24,345
Accounts receivable, less allowance for doubtful accounts of
$9,695 and $6,473, respectively 193,471 194,063
Inventories 408,518 414,559
Other current assets 59,774 54,135
Net current assets of discontinued operations 68,961 69,792
- -------------------------------------------------------------------------------------------
Total current assets 774,571 756,894
- -------------------------------------------------------------------------------------------
Property, plant and equipment:
Land 34,534 29,891
Buildings and improvements 328,275 291,937
Machinery and equipment 427,820 384,666
Construction in progress 53,636 79,252
Less -- accumulated depreciation (362,529) (324,420)
- -------------------------------------------------------------------------------------------
Net property, plant and equipment 481,736 461,326
- -------------------------------------------------------------------------------------------
Goodwill, net 90,938 101,484
Other assets 18,569 27,175
Net noncurrent assets of discontinued operations 66,187 69,793
- -------------------------------------------------------------------------------------------
Total assets $ 1,432,001 $ 1,416,672
===========================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 20,665 $ 29,598
Current maturities of long-term debt 143 624
Accounts payable 41,995 54,001
Accrued payroll and payroll taxes 20,890 14,264
Other accrued expenses 21,919 27,722
- -------------------------------------------------------------------------------------------
Total current liabilities 105,612 126,209
- -------------------------------------------------------------------------------------------
Long-term debt 205 415
Deferred postretirement benefits 42,931 40,663
Deferred compensation 6,128 7,894
Other liabilities 17,774 25,111
- -------------------------------------------------------------------------------------------
Total liabilities 172,650 200,292
- -------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 100,905 100,623
Capital in excess of par value 35,783 29,238
Common stock in treasury, at cost, 2,613 shares in 1999 (77,785) --
Retained earnings 1,240,184 1,097,653
Accumulated other comprehensive loss (39,736) (11,134)
- -------------------------------------------------------------------------------------------
Total stockholders' equity 1,259,351 1,216,380
- -------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 1,432,001 $ 1,416,672
===========================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Exhibit 13
<PAGE>
Exhibit 13
Consolidated Statement of Stockholders' Equity
(in thousands, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Common Stock Capital in Compre- Compre-
200,000 Shares Authorized Excess of Common Stock Retained hensive hensive
($1.00 Par) Par Value in Treasury Earnings Income/(Loss) Income
- ------------------------------------------------------------------------------------------------------------------------------------
Shares
Issued Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 100,044 $ 100,044 $ 17,002 $ -- $ 819,467 $ 5,761
Net income -- -- -- -- 166,059 -- $166,059
Other comprehensive loss-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)
Net income -- -- -- -- 172,270 -- $172,270
Other comprehensive loss-foreign
currency translation -- -- -- -- -- (28,602) (28,602)
--------
Comprehensive income -- -- -- -- -- -- $143,668
========
Dividends ($.2950 per share) -- -- -- -- (29,739) --
Awards under deferred compensation plan 29 29 848 -- -- --
Exercise of stock options 253 253 5,697 -- -- --
Stock repurchase -- -- -- (77,785) -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 100,905 $ 100,905 $ 35,783 $ (77,785) $ 1,240,184 $ (39,736)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
Exhibit 13
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 172,270 $ 166,347 $ 166,059
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 66,919 61,827 48,053
Deferred income taxes 7,086 11,111 4,994
Postretirement benefits expense 4,695 4,072 3,792
Deferred compensation, net (1,766) (3,349) 2,809
Changes in assets and liabilities:
Increase in accounts receivable (12,342) (37,917) (30,077)
Increase in inventories (7,016) (36,401) (63,390)
Other 1,083 (3,620) (163)
- -------------------------------------------------------------------------------------------------
Net cash provided by operating activities 230,929 162,070 132,077
- -------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Property, plant and equipment additions (91,810) (130,378) (108,740)
Sale of equipment 990 2,383 1,963
Acquisition of businesses, net of cash acquired -- (39,500) (51,083)
Other, net (7,913) (7,700) --
- -------------------------------------------------------------------------------------------------
Net cash used in investing activities (98,733) (175,195) (157,860)
- -------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Issuance (repayment) of notes payable (10,093) 23,211 4,155
Issuance (repayment) of long-term debt (160) 57 (11,895)
Payment of dividends (29,739) (28,411) (25,809)
Stock repurchase (77,785) -- --
Exercise of employee stock options 5,950 3,798 6,794
- -------------------------------------------------------------------------------------------------
Net cash used in financing activities (111,827) (1,345) (26,755)
- -------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (867) (7,413) (4,919)
- -------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 19,502 (21,883) (57,457)
Cash and cash equivalents at beginning of year 24,345 46,228 103,685
- -------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 43,847 $ 24,345 $ 46,228
=================================================================================================
Supplemental disclosures of cash flow information:
Income taxes paid $ 65,818 $ 81,497 $ 74,518
Interest paid, net of capitalized interest 1,765 926 783
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
Exhibit 13
Notes to Consolidated Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations:
Sigma-Aldrich Corporation ("the Company") develops, manufactures and distributes
the broadest range of high quality biochemicals, organic chemicals,
chromatography products and diagnostic reagents available in the world. These
products are used in high tech research and development in the life sciences, at
universities and in industry, for the diagnosis of disease, and as specialty
chemicals for pharmaceutical and other manufacturing purposes in more than 160
countries.
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 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 7 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. Accumulated Goodwill
amortization at December 31, 1999 and 1998 was $12,060,000 and $7,147,000
respectively.
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.
Reclassifications:
The accompanying consolidated financial statements for prior years contain
certain reclassifications to conform with the presentation used in 1999. The
consolidated financial statements have been restated to reflect the Company's
B-Line Systems metal business as a discontinued operation.
<PAGE>
Exhibit 13
Effect of New Accounting Standards:
The Financial Accounting Standards Board (FASB) issued 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 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. The FASB has
delayed the effective date of SFAS No. 133 to fiscal periods beginning after
June 15, 2000. 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: ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts for the years ended December 31,
1999, 1998 and 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 6,473 $ 6,325 $ 6,891
Additions to reserves 10,968 1,829 429
Deductions from reserves 7,746 1,681 995
- --------------------------------------------------------------------------------
Balance, end of year $ 9,695 $ 6,473 $ 6,325
================================================================================
</TABLE>
NOTE 3: INVENTORIES
The principal categories of inventories are (in thousands):
<TABLE>
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $342,351 $344,235
Work in process 18,556 17,565
Raw materials 47,611 52,759
- --------------------------------------------------------------------------------
Total $408,518 $414,559
================================================================================
</TABLE>
Chemical products are valued at the lower of cost or market. Costs for certain
domestic chemical inventories (24% 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
$1,627,000, $3,161,000, $3,252,000 and $6,538,000 higher than reported at
December 31, 1999, 1998, 1997 and 1996, respectively.
NOTE 4: DISCONTINUED OPERATIONS
On November 22, 1999, the Company announced its strategic decision to seek a
buyer for its B-Line Systems metal business. B-Line Systems manufactures and
markets a complete line of metal products used in the installation and
retrofitting of electrical, mechanical and telecommunications applications. The
sale of the metal operations is expected to be completed during fiscal year
2000. The metal operations are accounted for as discontinued operations, and
accordingly, operating results and net assets are segregated in the accompanying
Consolidated Statements of Income and Consolidated Balance Sheets.
The net current assets of this discontinued operation are primarily accounts
receivable, inventory, accounts payable and accrued expenses. Net noncurrent
assets are primarily property, plant and equipment and goodwill. Operating
results for the metal business are included in the Consolidated Statements of
Income as net income from discontinued operations for all periods presented.
Results for discontinued operations are as follows (in thousands):
<PAGE>
Exhibit 13
<TABLE>
<CAPTION>
Years ended December 31,
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $252,587 $228,363 $225,383
- --------------------------------------------------------------------------------
Income before income taxes $ 37,563 $ 34,048 $ 37,123
Provision for income taxes 13,898 12,597 13,735
- --------------------------------------------------------------------------------
Net income $ 23,665 $ 21,451 $ 23,388
- --------------------------------------------------------------------------------
</TABLE>
NOTE 5: NOTES PAYABLE
At December 31, 1999 the Company had credit facilities totaling $100,000,000.
Borrowings under these facilities of $13,500,000 at a weighted average interest
rate of 5.9% and $25,250,000 at a weighted average interest rate of 5.5% were
outstanding at December 31, 1999 and 1998, respectively. Part of the credit
facilities contain financial covenants related to working capital and net worth.
The Company is in full compliance with these covenants. In January 2000, the
Company increased its credit facilities with various commercial banks to
$300,000,000 expiring at different times through December 15, 2000. The Company
intends to renew these facilities as they expire or substitute similar
facilities for any that are not renewed. All of these facilities may be
terminated before their expiration dates upon notice by either party. Interest
rates for all facilities are based on federal funds, LIBOR, prime, eurocurrency
or other rates offered by the lending banks.
Notes payable by international subsidiaries were $7,165,000 and $4,348,000 at
December 31, 1999 and 1998, respectively. The notes are payable in local
currencies with weighted average interest rates of 2.2% and 5.3% at December 31,
1999 and 1998, respectively.
NOTE 6: LONG TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Total $ 348 $ 1,039
Less-Current maturities (143) (624)
- --------------------------------------------------------------------------------
$ 205 $ 415
- --------------------------------------------------------------------------------
</TABLE>
Total interest expense incurred by the Company, net of immaterial amounts
capitalized, was $918,000, $920,000 and $734,000 in 1999, 1998 and 1997,
respectively.
NOTE 7: FINANCIAL DERIVATIVES & RISK MANAGEMENT
The Company transacts business in many parts 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, the Euro, German mark,
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, 1999 and 1998 was
$335.2 million and $294.5 million, respectively.
<PAGE>
Exhibit 13
NOTE 8: LEASE COMMITMENTS
The Company and its subsidiaries lease manufacturing, office and warehouse
facilities and computer equipment under non-cancelable leases expiring at
various dates. Rent charged to operations was $13,764,000, $11,253,000 and
$8,225,000 in 1999, 1998 and 1997, respectively. Minimum rental commitments for
non-cancelable leases in effect at December 31, 1999, are as follows (in
thousands):
<TABLE>
<S> <C>
2000..................$10,234
2001....................7,131
2002....................4,903
2003....................3,341
2004....................2,531
2005 and thereafter....17,095
</TABLE>
NOTE 9: INCOME TAXES
The provision for income taxes for continuing operations consists of the
following (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 34,110 $ 39,017 $ 53,392
State 2,410 3,163 5,547
International 12,519 11,613 9,107
- -------------------------------------------------------------------------------
Total current 49,039 53,793 68,046
- -------------------------------------------------------------------------------
Deferred:
Federal 6,320 7,290 4,458
State 479 588 631
International (726) 1,975 (175)
- -------------------------------------------------------------------------------
Total deferred 6,073 9,853 4,914
- -------------------------------------------------------------------------------
Provision for income taxes $ 55,112 $ 63,646 $ 72,960
- -------------------------------------------------------------------------------
</TABLE>
A reconciliation of statutory and effective tax rates is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
FSC benefits (2.7) (2.1) (2.3)
State income taxes, net of federal benefits 1.1 1.3 1.9
Research and development credits (2.9) (4.1) --
International taxes (3.1) .2 (1.1)
Other, net (.3) .2 .3
- -------------------------------------------------------------------------------
Total effective tax rate on continuing operations 27.1% 30.5% 33.8%
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 13
The research and development credit is a benefit of the Company's commitment of
resources to new and enhanced products. The international tax rate reduction of
3.1% in 1999 is a benefit from international restructuring. 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 liabilities in the
consolidated balance sheets, results from the following temporary differences
(in thousands):
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Gross deferred assets:
Inventories $ 20,600 $ 17,377
Pension and postretirement
benefit plans 12,806 12,645
- --------------------------------------------------------------------------------
Total 33,406 30,022
Gross deferred liabilities:
Depreciation (35,501) (31,335)
Other (19,314) (13,010)
- --------------------------------------------------------------------------------
Total (54,815) (44,345)
- --------------------------------------------------------------------------------
Net deferred tax liability $(21,409) $(14,323)
- --------------------------------------------------------------------------------
</TABLE>
United States taxes are not provided on unremitted earnings and related
cumulative translation adjustments of international subsidiaries 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 10: CONTINGENT LIABILITIES AND COMMITMENTS
At December 31, 1999, there were no known contingent liabilities (including
guarantees, pending litigation, taxes and other claims) that management believes
will be material in relation to the Company's financial position, nor were there
any material commitments outside the normal course of business.
NOTE 11: COMMON STOCK
The Company's deferred compensation plan provides for cash and common stock
payments to certain key employees. Under this plan, a bonus pool is calculated
by a formula based on the amount of increase in profitability. Bonus units are
then awarded. Bonus units are distributed five years after being awarded in the
form of one share of common stock for each bonus unit. In addition, the Company
makes cash payments equal to the amount of Federal income taxes the employee
would be required to pay for the receipt of such stock and cash at the highest
marginal Federal income tax rate. Expenses for this plan are recorded during the
period for which the calculation is made. During 1999, 1998 and 1997, 28,700,
38,200 and 23,000 shares of common stock, respectively, were issued under this
plan. At December 31, 1999, 88,750 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.
The Company has a Directors' Non-Qualified Share Option Plan. 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. Options were granted in the
amount of 14,000 shares and 84,000 shares for 1999 and 1998, respectively, at
prices ranging from $33.125 to $40.13. Options for 302,000 shares remain to be
granted at December 31, 1999.
<PAGE>
Exhibit 13
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 1999, 1998 and 1997 to purchase 312,000, 235,000
and 160,000 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 371,732 shares of the Company's common stock
under this plan remain to be granted at December 31, 1999.
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. The options expire
no later than 2005. 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 stock option plans
been determined based on the fair value at the grant date for awards in 1999,
1998 and 1997 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):
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro-forma net income $ 164,326 $ 164,368 $ 157,478
Net income per share - Basic $ 1.63 $ 1.63 $ 1.57
Net income per share - Diluted $ 1.63 $ 1.62 $ 1.53
</TABLE>
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 1999: dividend yield of .86%, expected volatility of 24.2%,
risk-free interest rate of 6.69% and expected life based on historical exercise
periods of 6.0 years. The weighted-average assumptions for 1998 and 1997 were as
follows: dividend yield of .80% and .70%, expected volatility of 23.7% and
17.9%, risk-free interest rate of 4.68% and 5.75% and expected life based on
historical exercise periods of 6.0 years and 6.5 years, respectively.
The following table summarizes information about stock options outstanding at
December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------- ---------------------------------------
Number Wtd. Avg. Wtd. Avg. Wtd.Avg.
Outstanding Remaining Exercise Number Exercisable Exercise
Range of Exercise Prices at 12/31/99 Contractual Life Price at 12/31/99 Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$16.25 to $24.00 501,450 51.2 months $19.59 501,450 $19.59
$24.875 to $31.25 2,235,561 88.8 months 26.90 1,051,061 26.71
$31.75 to $36.00 908,000 94.2 months 35.49 886,000 35.56
$36.875 to $40.75 253,000 97.7 months 38.30 253,000 38.30
- ------------------------------------------------------------------------------------------------------------------------------------
3,898,011 85.8 months 28.67 2,691,511 29.35
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
A summary of the combined activity and balances for the Company's stock options
for the plans as of December 31, 1999, 1998 and 1997 and changes during the
years ended on those dates is as follows:
<PAGE>
Exhibit 13
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- ---------------------- -------------------
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 3,242,257 $29.05 3,228,698 $27.91 2,396,636 $23.43
Options granted 1,240,000 27.16 362,000 34.95 1,170,000 35.42
Options exercised (253,114) 23.47 (286,709) 21.02 (310,388) 22.17
Options cancelled (331,132) 32.70 (61,732) 28.95 (27,550) 24.17
- -------------------------------------------------------------------------------------------------
Options outstanding, end of
year 3,898,011 28.67 3,242,257 29.05 3,228,698 27.91
- -------------------------------------------------------------------------------------------------
Options exercisable at
year-end 2,691,511 29.35 2,880,257 28.48 2,066,702 23.64
Weighted average fair value
of options granted during
the year $9.69 $10.77 $11.16
</TABLE>
NOTE 12: COMPANY OPERATIONS BY GEOGRAPHIC SEGMENT
The United States sales to unaffiliated customers presented in the summary below
include sales to international markets as follows (in thousands):
Year Amount Year Amount Year Amount
1999 $33,754 1998 $56,078 1997 $78,576
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers:
United States $ 499,647 $ 486,951 $ 486,685
International 538,298 478,976 415,016
Net intercompany sales between geographic areas:
United States 214,904 199,438 190,952
International 41,796 52,337 42,252
Eliminations (256,700) (251,775) (233,204)
- --------------------------------------------------------------------------------------------
Total $ 1,037,945 $ 965,927 $ 901,701
- --------------------------------------------------------------------------------------------
Income before provision for income taxes:
United States $ 164,603 $ 166,726 $ 188,095
International 40,261 40,412 31,689
Eliminations (1,147) 1,404 (4,153)
- --------------------------------------------------------------------------------------------
Total $ 203,717 $ 208,542 $ 215,631
- --------------------------------------------------------------------------------------------
Identifiable assets at December 31:
United States $ 815,133 $ 823,292 $ 685,876
International 534,684 552,930 448,054
Eliminations (52,964) (99,135) (42,784)
Net assets from discontinued operations 135,148 139,585 134,964
- --------------------------------------------------------------------------------------------
Total $ 1,432,001 $ 1,416,672 $ 1,226,110
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
NOTE 13: RESTRUCTURING ACTIVITIES Exhibit 13
On November 22, 1999, the Company announced plans to reorganize the chemical
business based upon an evaluation of competitive conditions in the market.
Accordingly, the Company recorded a restructuring charge of $3,900,000, of which
$400,000 was paid through December 31, 1999. The major component of the
restructuring charge relates to severance packages for positions eliminated in
the reorganization.
NOTE 14: PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company maintains several retirement plans covering substantially all U.S.
employees who are not members of a collective bargaining unit and employees of
certain international subsidiaries. Pension benefits are generally based on
years of service and compensation. The Company also maintains postretirement
health and welfare benefit plans covering most of its U.S. employees who are not
members of a collective bargaining unit. 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.
<PAGE>
Exhibit 13
<TABLE>
<CAPTION>
Pension Plans
------------------------------------------------- Postretirement medical
United States International benefit plans
- -----------------------------------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
---------------------------------------------------------------------------
<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 $ 60,090 $ 52,372 $ 50,564 $ 45,655 $ 38,078 $ 35,898
Service cost 3,634 3,350 2,532 2,614 1,908 1,628
Interest cost 4,188 3,939 2,561 2,484 2,788 2,444
Plan participant contributions -- -- 1,158 1,201 -- --
Amendments -- -- 598 -- -- --
Foreign currency exchange
rate changes -- -- (4,572) 1,211 -- --
Actuarial (gains)/losses (2,718) 4,448 259 (1,725) (4,392) (767)
Benefits paid (6,414) (4,019) (948) (876) (1,479) (1,125)
- -----------------------------------------------------------------------------------------------------------
Ending obligations 58,780 60,090 52,152 50,564 36,903 38,078
- -----------------------------------------------------------------------------------------------------------
Changes in plans' assets
Beginning fair value 72,818 59,188 58,693 50,629 -- --
Actual return on plans' assets 14,497 8,693 5,334 4,499 -- --
Foreign currency exchange
rate exchanges -- -- (5,150) 1,317 -- --
Employer contributions 3,650 8,956 1,872 1,923 1,479 1,125
Plan participant contributions -- -- 1,158 1,201 -- --
Benefits paid (6,414) (4,019) (948) (876) (1,479) (1,125)
- -----------------------------------------------------------------------------------------------------------
Ending fair value 84,551 72,818 60,959 58,693 -- --
- -----------------------------------------------------------------------------------------------------------
Balance sheet amount
Funded status 25,771 12,728 8,807 8,129 (36,903) (38,078)
Unrecognized net actuarial gain (14,204) (3,670) (6,221) (5,375) (5,736) (1,344)
Unrecognized prior service cost 8,634 9,424 1,763 1,366 -- --
Unrecognized net transition asset (454) (545) (127) (173) -- --
- -----------------------------------------------------------------------------------------------------------
Net balance sheet
asset/(liability) $ 19,747 $ 17,937 $ 4,222 $ 3,947 $(42,639) $(39,422)
- -----------------------------------------------------------------------------------------------------------
Weighted average assumptions as
of December 31
Discount rate 8.00% 6.75% 5.50% 5.30% 8.00% 6.75%
Expected return on plan assets 9.50% 9.50% 7.00% 6.90% n/a n/a
Compensation rate increase 5.50% 4.25% 4.40% 4.30% n/a n/a
</TABLE>
<PAGE>
Exhibit 13
The components of the net periodic benefit costs are as follows (in thousands):
<TABLE>
<CAPTION>
Pension plans
--------------------------------------------------------------- Postretirement medical
United States International benefit plans
---------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost $ 3,634 $ 3,350 $ 3,159 $ 2,532 $ 2,614 $ 2,149 $ 1,908 $ 1,628 $ 1,436
Interest cost 4,188 3,939 3,765 2,561 2,484 2,269 2,787 2,444 2,362
Expected return on
plan assets (6,680) (5,630) (4,557) (3,823) (3,641) (3,169) -- -- --
Amortization 699 699 699 (12) (17) 62 -- -- (6)
- --------------------------------------------------------------------------------------------------------------------
Net periodic benefit
cost $ 1,841 $ 2,358 $ 3,066 $ 1,258 $ 1,440 $ 1,311 $ 4,695 $ 4,072 $ 3,792
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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 6.5% in 1999, 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 $262,000 and $1,958,000,
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 $281,000 and $2,120,000, 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 $5,831,000,
$6,008,000 and $5,798,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
NOTE 15: EARNINGS PER SHARE
A reconciliation of basic and diluted earnings per share, together with the
related shares outstanding is as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income available to common shareholders
Net income from continuing operations ............. $ 148,605 $ 144,896 $ 142,671
Net income from discontinued operations ........... 23,665 21,451 23,388
- -----------------------------------------------------------------------------------------------
Net income ........................................ $ 172,270 $ 166,347 $ 166,059
- -----------------------------------------------------------------------------------------------
Weighted average shares
Basic shares ...................................... 100,672 100,540 100,210
Effect of dilutive securities - options outstanding 312 648 2,594
- -----------------------------------------------------------------------------------------------
Diluted shares .................................... 100,984 101,188 102,804
- -----------------------------------------------------------------------------------------------
Net income per share - Basic
Net income from continuing operations ............. $ 1.47 $ 1.44 $ 1.43
Net income from discontinued operations ........... .24 .21 .23
- -----------------------------------------------------------------------------------------------
Net income ........................................ $ 1.71 $ 1.65 $ 1.66
- -----------------------------------------------------------------------------------------------
Net income per share - Diluted
Net income from continuing operations ............. $ 1.47 $ 1.43 $ 1.39
Net income from discontinued operations ........... .24 .21 .23
- -----------------------------------------------------------------------------------------------
Net income ........................................ $ 1.71 $ 1.64 $ 1.62
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 13
Selected Financial Data
(unaudited)
- --------------------------------------------------------------------------------
Common Stock Data: (per share)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 Price Range 1998 Price Range Dividends
-------------------------------------------------------------------
High Low High Low 1999 1998
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter ... $30-3/4 $24-1/2 $42-3/4 $35-3/4 $ .0725 $ .0700
Second Quarter .. 35-1/4 28-5/8 41-5/8 32-9/16 .0725 .0700
Third Quarter ... 35-1/4 30-3/8 36 25-3/4 .0725 .0700
Fourth Quarter .. 33-3/16 26-9/16 33-3/4 27-11/16 .0775 .0725
</TABLE>
The common stock is traded on the National Market System ("NMS") of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). The
trading symbol is SIAL. Options in the Company's common stock are traded on the
Chicago Board Options Exchange.
Annual Financial Data: (in millions, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales ........................................ $ 1,037.9 $ 965.9 $ 901.7 $ 833.0 $ 775.8
Net income from continuing operations ............ 148.6 144.8 142.7 128.3 114.3
Per share:
Net income from continuing operations - Basic . 1.47 1.44 1.43 1.28 1.15
Net income from continuing operations - Diluted 1.47 1.43 1.39 1.26 1.13
Dividends ..................................... .2950 .2825 .2575 .2275 .1900
Total assets ..................................... 1,432.0 1,416.7 1,226.2 1,080.2 967.0
Long-term debt ................................... .2 .4 .6 3.8 7.7
</TABLE>
Quarterly Financial Data: (in millions, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 Quarter Ended
------------------
March 31 June 30 Sept. 30 Dec. 31
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales ............................................... $ 272.3 $ 256.4 $ 257.1 $ 252.1
Gross profit ............................................ 149.8 141.6 140.0 127.1
Net income from continuing operations ................... 39.1 38.8 38.0 32.7
Net income per share from continuing operations - Basic . .39 .38 .38 .33
Net income per share from continuing operations - Diluted .39 .38 .38 .33
1998 Quarter Ended
------------------
March 31 June 30 Sept. 30 Dec.31
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales ............................................... $ 249.9 $ 234.5 $ 241.8 $ 239.7
Gross profit ............................................ 138.3 132.4 133.3 135.6
Net income from continuing operations ................... 38.2 35.0 36.1 35.5
Net income per share from continuing operations - Basic . .38 .35 .36 .35
Net income per share from continuing operations - Diluted .37 .34 .36 .35
</TABLE>
<PAGE>
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) Sigma-Aldrich Laborchemikalien GmbH (Germany)
(2) Sigma-Aldrich Producktions 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) Sigma-Aldrich Business Holdings, Inc. (Delaware)
(1) Sigma-Aldrich Research Biochemicals, Inc. (Massachusetts)
(M) Sigma-Aldrich Lancaster, Inc. (Missouri)
(1) Carbolabs, Inc. (Connecticut)
(2) Techcare Systems, Inc. (California)
(N) Sigma Diagnostics, Inc.(Missouri)
(O) B-Line Systems Manufacturing, Inc.(Delaware)
2) B-Line Systems, Inc. (Illinois)
3) Sigma-Aldrich, Inc. (Wisconsin)
4) Sigma-Aldrich & Subs Foreign Sales Corporation (Barbados)
5) Fluka Holding AG (Switzerland)
(A) Fluka Chemie GmbH
(B) Fluka Production GmbH
(C) Fluka GmbH
6) Sigma-Aldrich Company, Ltd. (United Kingdom)
(A) Sigma-Genosys Limited
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 Spol. 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 Ireland Ltd. (Ireland)
(L) Sigma-Aldrich (OM) Ltd. (Greece)
(M) Sigma-Aldrich de Argentina, S.A. (Argentina)
(N) Sigma-Aldrich (Pty.) Ltd. (South Africa)
(O) Sigma-Aldrich Pte. Ltd. (Singapore)
F-5
<PAGE>
Exhibit 21
(P) Sigma-Aldrich Korea Ltd. (Korea)
(Q) Sigma-Aldrich Sweden AB (Sweden)
(R) Sigma-Aldrich Norway AS (Norway)
(S) Sigma-Aldrich A/S (Denmark)
(T) Ya-Kemia Oy (Finland)
(U) Sigma-Aldrich Financial Services Limited (Ireland)
8) Sigma-Aldrich Finance Co. (Missouri)
F-6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 43,847
<SECURITIES> 0
<RECEIVABLES> 193,471
<ALLOWANCES> 9,695
<INVENTORY> 408,518
<CURRENT-ASSETS> 774,571
<PP&E> 844,265
<DEPRECIATION> 362,529
<TOTAL-ASSETS> 1,432,001
<CURRENT-LIABILITIES> 105,612
<BONDS> 205
0
0
<COMMON> 100,905
<OTHER-SE> 1,158,446
<TOTAL-LIABILITY-AND-EQUITY> 1,432,001
<SALES> 1,037,945
<TOTAL-REVENUES> 1,037,945
<CGS> 479,406
<TOTAL-COSTS> 479,406
<OTHER-EXPENSES> 350,922
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 844
<INCOME-PRETAX> 203,717
<INCOME-TAX> 55,112
<INCOME-CONTINUING> 148,605
<DISCONTINUED> 23,665
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 172,270
<EPS-BASIC> 1.71
<EPS-DILUTED> 1.71
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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> 194,063
<ALLOWANCES> 6,473
<INVENTORY> 414,559
<CURRENT-ASSETS> 756,894
<PP&E> 786,106
<DEPRECIATION> 324,420
<TOTAL-ASSETS> 1,423,819
<CURRENT-LIABILITIES> 126,209
<BONDS> 415
0
0
<COMMON> 100,623
<OTHER-SE> 1,216,380
<TOTAL-LIABILITY-AND-EQUITY> 1,416,672
<SALES> 965,927
<TOTAL-REVENUES> 965,927
<CGS> 426,355
<TOTAL-COSTS> 426,355
<OTHER-EXPENSES> 331,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 881
<INCOME-PRETAX> 208,542
<INCOME-TAX> 63,646
<INCOME-CONTINUING> 144,896
<DISCONTINUED> 21,451
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166,347
<EPS-BASIC> 1.65
<EPS-DILUTED> 1.64
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 46,226
<SECURITIES> 0
<RECEIVABLES> 151,284
<ALLOWANCES> 0
<INVENTORY> 371,742
<CURRENT-ASSETS> 689,488
<PP&E> 661,233
<DEPRECIATION> 276,558
<TOTAL-ASSETS> 1,226,110
<CURRENT-LIABILITIES> 102,293
<BONDS> 205
0
0
<COMMON> 100,377
<OTHER-SE> 959,957
<TOTAL-LIABILITY-AND-EQUITY> 1,226,110
<SALES> 901,701
<TOTAL-REVENUES> 901,701
<CGS> 391,644
<TOTAL-COSTS> 391,644
<OTHER-EXPENSES> 294,426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 625
<INCOME-PRETAX> 215,631
<INCOME-TAX> 72,960
<INCOME-CONTINUING> 142,671
<DISCONTINUED> 23,388
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 166,059
<EPS-BASIC> 1.66
<EPS-DILUTED> 1.62
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 51,385
<SECURITIES> 0
<RECEIVABLES> 215,144
<ALLOWANCES> 0
<INVENTORY> 412,463
<CURRENT-ASSETS> 807,748
<PP&E> 796,198
<DEPRECIATION> 332,614
<TOTAL-ASSETS> 1,459,765
<CURRENT-LIABILITIES> 160,035
<BONDS> 785
0
0
<COMMON> 100,778
<OTHER-SE> 1,137,490
<TOTAL-LIABILITY-AND-EQUITY> 1,459,765
<SALES> 272,250
<TOTAL-REVENUES> 272,250
<CGS> 122,416
<TOTAL-COSTS> 122,416
<OTHER-EXPENSES> 91,969
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 57,865
<INCOME-TAX> 18,811
<INCOME-CONTINUING> 39,054
<DISCONTINUED> 5,548
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,602
<EPS-BASIC> .44
<EPS-DILUTED> .44
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 44,418
<SECURITIES> 0
<RECEIVABLES> 180,414
<ALLOWANCES> 0
<INVENTORY> 378,757
<CURRENT-ASSETS> 729,951
<PP&E> 682,911
<DEPRECIATION> 285,211
<TOTAL-ASSETS> 1,278,728
<CURRENT-LIABILITIES> 120,708
<BONDS> 1,044
0
0
<COMMON> 100,503
<OTHER-SE> 993,131
<TOTAL-LIABILITY-AND-EQUITY> 1,278,728
<SALES> 249,910
<TOTAL-REVENUES> 249,910
<CGS> 111,593
<TOTAL-COSTS> 111,593
<OTHER-EXPENSES> 80,866
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 57,481
<INCOME-TAX> 19,193
<INCOME-CONTINUING> 38,258
<DISCONTINUED> 5,902
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,160
<EPS-BASIC> .44
<EPS-DILUTED> .43
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 31,423
<SECURITIES> 0
<RECEIVABLES> 214,433
<ALLOWANCES> 0
<INVENTORY> 410,113
<CURRENT-ASSETS> 779,570
<PP&E> 809,962
<DEPRECIATION> 342,481
<TOTAL-ASSETS> 1,428,605
<CURRENT-LIABILITIES> 101,707
<BONDS> 358
0
0
<COMMON> 100,799
<OTHER-SE> 1,166,950
<TOTAL-LIABILITY-AND-EQUITY> 1,428,605
<SALES> 528,648
<TOTAL-REVENUES> 528,648
<CGS> 237,136
<TOTAL-COSTS> 237,136
<OTHER-EXPENSES> 176,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 114,788
<INCOME-TAX> 36,911
<INCOME-CONTINUING> 77,877
<DISCONTINUED> 11,151
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,028
<EPS-BASIC> .88
<EPS-DILUTED> .88
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 18,560
<SECURITIES> 0
<RECEIVABLES> 186,631
<ALLOWANCES> 0
<INVENTORY> 390,920
<CURRENT-ASSETS> 720,218
<PP&E> 715,103
<DEPRECIATION> 295,618
<TOTAL-ASSETS> 1,298,136
<CURRENT-LIABILITIES> 103,423
<BONDS> 1,020
0
0
<COMMON> 100,588
<OTHER-SE> 1,030,322
<TOTAL-LIABILITY-AND-EQUITY> 1,298,136
<SALES> 484,384
<TOTAL-REVENUES> 484,384
<CGS> 213,732
<TOTAL-COSTS> 213,732
<OTHER-EXPENSES> 160,735
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 109,947
<INCOME-TAX> 36,686
<INCOME-CONTINUING> 78,231
<DISCONTINUED> 12,029
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 85,260
<EPS-BASIC> .85
<EPS-DILUTED> .84
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 90,821
<SECURITIES> 0
<RECEIVABLES> 215,320
<ALLOWANCES> 0
<INVENTORY> 416,379
<CURRENT-ASSETS> 836,283
<PP&E> 835,661
<DEPRECIATION> 357,957
<TOTAL-ASSETS> 1,492,132
<CURRENT-LIABILITIES> 116,075
<BONDS> 362
0
0
<COMMON> 100,889
<OTHER-SE> 1,215,558
<TOTAL-LIABILITY-AND-EQUITY> 1,492,132
<SALES> 785,814
<TOTAL-REVENUES> 785,814
<CGS> 354,338
<TOTAL-COSTS> 354,338
<OTHER-EXPENSES> 260,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 170,495
<INCOME-TAX> 54,572
<INCOME-CONTINUING> 115,923
<DISCONTINUED> 17,351
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 133,274
<EPS-BASIC> 1.32
<EPS-DILUTED> 1.32
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 25,077
<SECURITIES> 0
<RECEIVABLES> 205,380
<ALLOWANCES> 0
<INVENTORY> 406,770
<CURRENT-ASSETS> 750,552
<PP&E> 752,470
<DEPRECIATION> 313,367
<TOTAL-ASSETS> 1,356,625
<CURRENT-LIABILITIES> 105,799
<BONDS> 1,020
0
0
<COMMON> 100,614
<OTHER-SE> 1,085,828
<TOTAL-LIABILITY-AND-EQUITY> 1,356,625
<SALES> 726,178
<TOTAL-REVENUES> 726,178
<CGS> 322,213
<TOTAL-COSTS> 322,213
<OTHER-EXPENSES> 239,748
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 164,247
<INCOME-TAX> 54,842
<INCOME-CONTINUING> 109,375
<DISCONTINUED> 17,291
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,666
<EPS-BASIC> 1.26
<EPS-DILUTED> 1.25
</TABLE>
