SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q/A
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from TO
Commission file number 0-8135
SIGMA-ALDRICH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
43-1050617
(I.R.S. Employer Identification No.)
3050 Spruce Street, St. Louis, Missouri 63103
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) 314-771-5765
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
There were 85,239,585 shares of the Company's $1.00 par value common stock
outstanding on April 28, 2000.
FORM 10 - Q/A
AMENDMENT NO. 1
The undersigned registrant hereby amends income from continuing operations
before income taxes due to a transposition for the three months ended
March 31, 1999.
In order to facilitate the efficient review of this report, as amended, all
other items included in the original Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2000 are filed herewith.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Sigma-Aldrich Corporation
Consolidated Statements of Income (unaudited)
(in thousands except per share amounts)
<CAPTION>
Three Months
Ended March 31,
-----------------------
2000 1999
-----------------------
<S> <C> <C>
Net sales $ 283,950 $ 272,250
Cost of products sold 126,623 122,416
--------- ---------
Gross profit 157,327 149,834
Selling, general and administrative expenses 96,871 91,969
--------- ---------
Income from continuing operations before income taxes 60,456 57,865
Provision for income taxes 18,742 18,811
--------- ---------
Net income from continuing operations 41,714 39,054
Net income from discontinued operations 7,809 5,548
--------- ---------
Net income $ 49,523 $ 44,602
========= =========
Net income per share - Basic and Diluted
Net income from continuing operations $0.45 $0.39
Net income from discontinued operations 0.08 0.05
--------- ---------
Net income $0.53 $0.44
========= =========
Weighted average number of shares outstanding - Basic 92,705 100,670
========= =========
Weighted average number of shares outstanding - Diluted 92,872 100,994
========= =========
Dividends per share $ 0.0775 $ 0.0725
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Balance Sheets
(in thousands)
<CAPTION> March 31, December 31,
2000 1999
------------ -----------
<S> <C> <C>
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 39,882 $ 43,847
Accounts receivable, net of allowance
for doubtful accounts 212,021 193,471
Inventories 404,747 408,518
Other current assets 61,073 59,774
Net current assets of discontinued
operations 83,963 68,961
----------- -----------
Total current assets 801,686 774,571
----------- -----------
Property, plant and equipment:
Land 34,098 34,534
Buildings and improvements 325,649 328,275
Machinery and equipment 438,337 427,820
Construction in progress 46,435 53,636
Less-Accumulated depreciation (371,102) (362,529)
----------- -----------
Net property, plant and equipment 473,417 481,736
----------- -----------
Goodwill, net 87,971 90,938
Other assets 18,326 18,569
Net noncurrent assets of discontined
operations 65,840 66,187
----------- -----------
Total assets $ 1,447,240 $ 1,432,001
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Notes payable $ 273,702 $ 20,665
Current maturities of long-term debt 131 143
Accounts payable 47,286 41,995
Accrued payroll and payroll taxes 23,460 20,890
Accrued income taxes 13,572 --
Other accrued expenses 28,005 21,919
----------- -----------
Total current liabilities 386,156 105,612
----------- -----------
Long-term debt 190 205
Deferred postretirement benefits 43,860 42,931
Deferred compensation 6,752 6,128
Other liabilities 14,804 17,774
Stockholders' equity:
Common stock, $1.00 par value, 200,000 shares
authorized, 100,985 and 100,905 shares
issued, respectively 100,985 100,905
Capital in excess of par value 37,530 35,783
Common stock in treasury, at cost, 12,732 and
2,613 shares, respectively (376,395) (77,785)
Retained earnings 1,282,660 1,240,184
Accumulated other comprehensive loss (49,302) (39,736)
----------- -----------
Total stockholders' equity 995,478 1,259,351
----------- -----------
Total liabilities and
stockholders' equity $ 1,447,240 $ 1,432,001
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Sigma-Aldrich Corporation
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<CAPTION> Three Months
Ended March 31,
-------------------------
2000 1999
-------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 49,523 $ 44,602
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 18,711 17,194
Deferred income taxes (2,934) (820)
Postretirement benefits expense 1,200 1,250
Deferred compensation, net 600 502
Changes in assets and liabilities:
Increase in accounts receivable (31,188) (31,610)
Increase in inventories (4,548) (4,424)
Other 31,739 20,780
--------- ---------
Net cash provided by operating activities 63,103 47,474
--------- ---------
Cash flows from investing activities:
Property, plant and equipment additions,net (12,455) (23,766)
Other, net (1,544) (8,568)
--------- ---------
Net cash used in investing activities (13,999) (32,334)
--------- ---------
Cash flows from financing activities:
Issuance of notes payable 252,774 9,070
Repayment of long-term debt (5) (43)
Payment of dividends (7,051) (7,298)
Stock repurchases (298,610) --
Exercise of employee stock options 1,827 2,934
--------- ---------
Net cash (used in) provided by financing
activities (51,065) 4,663
--------- ---------
Effect of exchange rate changes on cash (2,004) 7,238
--------- ---------
Net change in cash and cash equivalents (3,965) 27,041
Cash and cash equivalents at January 1 43,847 24,345
--------- ---------
Cash and cash equivalents at March 31 $ 39,882 $ 51,386
========= =========
Supplemental disclosures of cash flow information:
Income taxes paid $ 12,264 $ 177
Interest paid, net of capitalized interest $ 2,636 $ 484
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
Sigma-Aldrich Corporation
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)
Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X and, accordingly, do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the notes to consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the three months
ended March 31, 2000, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000.
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>
Reconciliation of Earnings and Shares
<CAPTION> Three Months
Ended March 31,
--------------------------
2000 1999
----------- -----------
Net income available to common shareholders
<S> <C> <C>
Net income from continuing operations $ 41,714 $ 39,054
Net income from discontinued operations 7,809 5,548
----------- -----------
Net Income $ 49,523 $ 44,602
=========== ===========
Weighted average shares
Basic shares 92,705 100,670
Effect of dilutive securities - options
outstanding 167 324
----------- -----------
Diluted shares 92,872 100,994
=========== ===========
Net income per share - basic and diluted
Net income from continuing operations $ 0.45 $ 0.39
Net income from discontinued operations 0.08 0.05
----------- -----------
Net income $ 0.53 $ 0.44
=========== ===========
</TABLE>
Inventories
The principal categories of inventories are (in thousands):
March 31, December 31,
2000 1999
--------- -----------
Finished goods $335,237 $342,351
Work in process 19,351 18,556
Raw materials 50,159 47,611
--------- ----------
Total $404,747 $408,518
========= ==========
Comprehensive Income
Comprehensive income is the total of all components of comprehensive
income and other comprehensive income, including net income. Other
comprehensive income refers to revenues, expenses, gains and losses that
under GAAP are excluded from net income. For the Company, the only
element of other comprehensive income is cumulative translation
adjustments arising from the translation of foreign operating units from
their local currency to the reporting currency.
For the quarter ended March 31, 2000 and 1999, comprehensive income was
$40.0 million and $26.4 million, respectively.
Company Operations By Geographic Segment
The Company's operations by geographic segment are as follows:
<TABLE>
<CAPTION> Three Months Ended
March 31,
-----------------------
2000 1999
--------- ---------
<S> <C> <C>
Net sales to unaffiliated customers:
United States $ 134,266 $ 129,511
International 149,684 142,739
Net intercompany sales between
geographic areas:
United States 63,159 58,185
International 11,256 8,545
Eliminations (74,415) (66,730)
---------- ----------
Total $283,950 $272,250
========== ==========
Income before provision for income
taxes:
United States $ 48,268 $ 44,094
International 12,788 14,603
Eliminations (600) (832)
---------- ----------
Total $ 60,456 $ 57,865
========== ==========
Identifiable assets:
United States $ 823,492 $ 843,342
International 541,491 518,790
Eliminations (59,702) (41,936)
Net assets from discontinued
operations 141,959 139,569
---------- ----------
Total $1,447,240 $1,459,765
========== ==========
1999 amounts have been reclassified to conform to the
2000 presentation.
</TABLE>
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. On March 27, 2000, the
Company reached an agreement to sell B-Line Systems to Cooper
Industries, Inc. On May 1, 2000, the Company completed the sale to
Cooper Industries, Inc. for $425 million, subject to certain
closing adjustments. A portion of the funds received from the sale
reduced short-term borrowings. Additional funds will be used to
continue share repurchases, for acquisitions and other general
corporate purposes.
The metal operations are accounted for as discontinued operations,
and accordingly, its 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
comprised of 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. Operating results from discontinued operations for
the three months ending March 31, 2000 and 1999 are as follows
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
2000 1999
-------- --------
<S> <C> <C>
Net Sales $ 75,681 $ 60,711
======== ========
Income before income taxes $ 12,395 $ 8,806
Income taxes 4,586 3,258
-------- --------
Net income $ 7,809 $ 5,548
======== ========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto. This
Quarterly Report on Form 10-Q may be deemed to include forward
looking 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
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
government health care reform, government regulation applicable to
the Company's business, the effectiveness of the Company's further
implementation of its global software system, SAP, the highly
competitive environment in which the Company operates, the impact
of fluctuations in interest rates and foreign currency exchange
rates. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by such cautionary statements.
The Company does not undertake any obligation to release publicly
any revisions to such forward-looking statements to reflect events
or uncertainties after the date hereof or to reflect the occurrence
of unanticipated events.
Results of Operations
Results for chemical and metal businesses are reported as continuing
and discontinued operations, respectively, as a result of the
Company's decision in November 1999 to seek a buyer for the metal
business and the March 2000 agreement to sell this business to Cooper
Industries, Inc. On May 1, 2000 the Company completed the sale to
Cooper Industries, Inc. for $425 million subject to certain closing
adjustments. For the three months ended March 31, 2000, net income
increased 11.0% to $49.5 million from $44.6 million in 1999 as
chemical margins returned to levels achieved early in 1999 and metal
income benefited from strong sales growth. Diluted net income per
share rose 20.5% to $.53 per share from $.44 in 1999, reflecting
improved net income growth and a reduction in outstanding shares from
the Company's share repurchase program.
For the three months ended March 31, 2000, chemical sales increased
4.3% to $284.0 million. Excluding the impact of currency exchange
rates, sales grew 7.7%. Sales growth for laboratory products, life
science products and fine chemicals, which represent 90% of the
combined chemical business, exceeded the overall growth rate.
Results benefited from early successes in implementing a wide array
of strategic initiatives aimed at sharpening customer and life science
focus, including increased prices to reflect market conditions,
proactive customer contact by reorganized sales forces and continued
growth in orders through our award-winning web site. Competitive
pricing and fewer instrument placements reduced diagnostic sales.
Cost of sales for the first three months of 2000 was $126.6 million
compared to $122.4 million for the first three months of 1999,
representing 44.6% and 45.0% of sales, respectively. The improvement
in the gross profit rate in 2000 benefited from price increases and
process improvements, partially offset by increased spending in
research and development and higher costs of new facilities.
Selling, general and administrative expenses for the first three
months of 2000 were $96.9 million, or 34.1% of sales, compared to
$92.0 million, or 33.8% of sales in 1999. Interest expense related to
short-term borrowings for share repurchases was the primary reason for
the increase in 2000.
Net income from continuing operations was $41.7 million compared to
$39.1 million, a 6.6% gain, reflecting improved operating margins
resulting from the elimination of costs through restructuring and
process improvement activities and a reduced tax rate of 31.0% as a
result of the Company's ongoing ability to use research and
development and other tax credits.
Metal sales increased 24.7% to $75.7 million. Strong demand for
telecommunications and enclosure products was helped by gains in
industrial construction sales in the quarter. Improved pretax profit
margins of 16.4% reflect economies of scale from the strong sales
growth.
Liquidity and Capital Resources
The primary source of cash for the first three months of 2000 was
net cash provided by operating activities of $63.1 million, an
increase over the same period last year of $15.6 million. The
increase resulted from a $4.9 million increase in net income and an
increase in other of $11.0 million, which is primarily a result of
an increase in accounts payable.
Investing activities reduced cash by approximately $14.0 million in
the first three months of 2000 compared to $32.3 million in the same
period last year. Reduced levels of spending on investing activities
is a result of the purchase of the remaining 25% interest in Riedel-
de Haen in the prior year and a reduction in capital expenditures by
approximately $11.3 million in 2000.
Financing activities decreased cash by $51.1 million in the current
quarter. The primary contributors were the purchase of treasury stock
of $298.6 million that was offset by an increase in short-term
borrowings of $243.7 million over the same period last year. At
March 31, 2000, 12.7 million shares had been acquired. At April 28,
2000 an additional 3.1 million shares had been acquired bringing the
total shares repurchased to 15.8 million. In January 2000 the Board
of Directors authorized an increase in short-term borrowing capacity of
$500 million of which $370 million is currently in place. The Company
intends to renew these facilities as they expire or substitute similar
facilities for any that are not renewed. At April 28, 2000 the Company
had $345 million of short-term financing outstanding which was paid down
with the funds received from the sale of the B-Line Systems metal
business on May 1, 2000.
Year 2000
As of April 28, 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.
Euro
On January 1, 1999, eleven member countries of the European
Community established fixed conversion rates between their existing
currencies and the European Economic and Monetary Union's new
common currency, the Euro. The transition period for the
introduction of the Euro is January 1, 1999 through January 1,
2002. During this transition period, payment and billing may be
conducted in the Euro or the relevant legacy currency.
The Company is currently developing and implementing plans to
address the conversion to the Euro such as updating certain
information technology systems, evaluating currency risk, impacts
on financial transactions and competitive activity. The costs
associated with addressing the Euro conversion are not expected to
be material. The Company believes the conversion to the Euro will
not have a material impact on the Company's financial condition or
results of its operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Financial Derivatives
The Company transacts business in many parts of the world and is
subject to risks associated with changing foreign exchange rates.
It is the Company's objective 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 uses forward exchange contracts to hedge certain
receivables and payables denominated in foreign currencies in order
to stabilize the value of receivables and payables.
Most of the contracts are single currency. Gains and losses on
these hedges, based on the difference in the contract rate and
the spot rate at the end of each month for all contracts still in
force are typically offset by transaction gains and losses, with net
gains and losses included in selling, general and administrative
expenses. The market risk of foreign currency rate changes represents
the potential loss in fair value of net currency positions due to
adverse change in foreign currency exchange rates. The Company does
not enter into foreign currency contracts for speculative trading
purposes.
In June 1998, the Financial Accounting Standards Board (FASB)
adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
(SFAS No. 133). SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the derivative's
fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gains and losses to offset
related results on the hedged item in the income statement, and
requires that a company formally document, designate, and assess
the effectiveness of transactions that receive hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15,
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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2) Plan of acquisition, reorganization, arrangement,
liquidation, or succession:
(a) Sale and Purchase Agreement dated March 27, 2000 by and
among Sigma-Aldrich Corp., a Delaware corporation ("SIAL"),
Sigma-Aldrich Co., an Illinois corporation ("SAC"), Sigma-
Aldrich Canada Ltd., a corporation organized under the laws
of Canada ("Sigma Canada"), Sigma-Aldrich Company Ltd., a
corporation organized under the laws of the United Kingdom
("Sigma UK"), Sigma-Aldrich Chemie GmbH, a corporation
organized under the laws of Germany ("Sigma Germany"),
Cooper Industries, Inc., an Ohio corporation ("Cooper"),
CBL Acquisition Corp., a Delaware corporation ("CBL") and
Cooper Technologies Company, a Delaware corporation ("CTC",
and with SIAL, SAC, Sigma Canada, Sigma UK, Sigma Germany,
Cooper and CBL, the "Parties") Sigma-Aldrich Corporation,
Sigma-Aldrich Co., Sigma-Aldrich Canada Ltd., Sigma-Aldrich
Company Ltd., Sigma-Aldrich Chemie GmbH, as sellers and
Cooper Industries, Inc., CBL Acquisition Corp., Cooper
Technologies Company, as buyers (schedules omitted).
Schedules omitted will be furnished to the Securities and
Exchange Commission upon request.
(b) First Amendment to the Sale and Purchase Agreement - an
amendment to the certain Sale and Purchase Agreement ("the
Agreement") dated March 27, 2000.
(3) Certificate of Incorporation and By-Laws:
(a) Certificate of Incorporation, as Amended - Incorporated by
reference to Exhibit 3(a) of Form 10-Q filed for the period
ended September 30, 1996, Commission File Number 0-8135.
(b) By-Laws as Amended - Incorporated by reference to Exhibit
3(a) of Form 8-K filed on December 22, 1999, Commission File
Number 0-8135.
(10) Material Contracts
(j) Share Option Plan 2000 - Incorporated by reference to
Appendix A of the Company's Definitive Proxy Statement filed
March 30, 2000, Commission File number 0-8135.
(27) Financial Data Schedule
(b) A Form 8-K was filed on on May 15, 2000 to announce the sale
of its B-Line Systems metal business unit to Cooper Industries,
Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SIGMA-ALDRICH CORPORATION
(Registrant)
By /s/ Karen J. Miller June 1, 2000
---------------------------- ----------------
Karen J. Miller, Controller Date
(on behalf of the Company and as Principal Accounting Officer)
