-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EWC/5Zv7bW8ZHuSA9SN/9cAozzqa0fMohbPQqQ9CerRilyP98OEbtQl4NMCbeano bTMa0wm0Cv4sQ466u36+yQ== 0000090185-97-000004.txt : 19970328 0000090185-97-000004.hdr.sgml : 19970328 ACCESSION NUMBER: 0000090185-97-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIGMA ALDRICH CORP CENTRAL INDEX KEY: 0000090185 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-CHEMICALS & ALLIED PRODUCTS [5160] IRS NUMBER: 431050617 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08135 FILM NUMBER: 97564704 BUSINESS ADDRESS: STREET 1: 3050 SPRUCE ST CITY: ST LOUIS STATE: MO ZIP: 63103 BUSINESS PHONE: 3147715765 MAIL ADDRESS: STREET 1: 3050 SPRUCE STREET CITY: ST LOUIS STATE: MO ZIP: 63103 FORMER COMPANY: FORMER CONFORMED NAME: SIGMA INTERNATIONAL LTD DATE OF NAME CHANGE: 19750925 FORMER COMPANY: FORMER CONFORMED NAME: ALDRICH CHEMICAL CO INC DATE OF NAME CHANGE: 19750908 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-8135 SIGMA-ALDRICH CORPORATION - ------------------------------------------------------------------------------- (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: $3,101,903,230 March 7, 1997 - ---------------------------------- ------------------------------ Value Date of Valuation Number of shares of the registrant's common stock, $1.00 par value, outstanding as of March 7, 1997 was 100,099,885. The following documents are incorporated by reference in the Parts of Form 10-K indicated below: Documents Incorporated by Reference Parts of Form 10-K into which Incorporated - ----------------------------------- ------------------------------------------ Pages 11-24 of the Annual Report to Shareholders for the year ended December 31, 1996 Parts I, II and IV Proxy Statement for the 1997 Annual Meeting of Shareholders Part III The Index to Exhibits is located on page F-3 of this report. PART I - ------------------------------------------------------------------------------- Item 1. Business. - ------------------------------------------------------------------------------- Sigma-Aldrich Corporation (hereinafter referred to as the "Company", which term includes all consolidated subsidiaries of the Company) has two lines of business: the production and sale of a broad range of biochemicals, organic and inorganic chemicals, radiolabeled chemicals, diagnostic reagents, chromatography products and related products (hereinafter referred to as "chemical products"), and the manufacture and sale of metal components for strut, cable tray, pipe support, telecommunication systems and electrical enclosures (hereinafter referred to as "metal products" or "B-Line"). Its principal executive offices are located at 3050 Spruce Street, St. Louis, Missouri 63103. The Company was incorporated under the laws of the State of Delaware in May 1975. Effective July 31, 1975 ("Reorganization"), the Company succeeded, as a reporting company, Sigma International, Ltd., the predecessor of Sigma Chemical Company ("Sigma"), and Aldrich Chemical Company, Inc. ("Aldrich"), both of which had operated continuously for more than 20 years prior to the Reorganization. Effective December 9, 1980, B-Line Systems, Inc.("B-Line"), previously a subsidiary of Sigma, became a subsidiary of the Company. Effective May 5, 1993, the Company acquired the net assets and business of Supelco, Inc.("Supelco"), a worldwide supplier of chromatography products used in chemical research and production, from Rohm and Haas Company. (a) Chemical Products. - ------------------------------------------------------------------------------- 1) Products: The Company distributes approximately 80,000 chemical products for use primarily in research and development, in the diagnosis of disease, and as specialty chemicals for manufacturing. In laboratory applications, the Company's products are used in the fields of biochemistry, synthetic chemistry, quality control and testing, immunology, hematology, pharmacology, microbiology, neurology and endocrinology and in the studies of life processes. Sigma diagnostic products are used in the detection of heart, liver and kidney diseases and various metabolic disorders. Certain of these diagnostic products are used in measuring concentrations of various naturally occurring substances in the blood, indicative of certain pathological conditions. The diagnostic products are used in manual, semi-automated and automated testing procedures. The Company also offers, through a partnership with Amelung (a German manufacturer), analyzers that measure blood clotting. Supelco offers a full line of chromatography products and application technologies for analyzing and separating complex chemical mixtures. The line includes items for the collection and preparation of various samples for further chemical analysis, gas and liquid chromatography, reference standards and related laboratory products. Aldrich also offers approximately 71,500 esoteric chemicals as a special service to customers interested in screening them for application in many areas (such as medicine and agriculture). This area accounts for less than 1% of the Company's sales. Because of continuing developments in the field of research, there can be no assurance of a continuing market for each of the Company's products. However, through a continuing review of technical literature, along with constant communications with customers, the Company keeps abreast of the trends in research and diagnostic techniques. This information, along with its own research technology, determines the Company's development of improved and/or additional products. 2) Production and Purchasing: The Company has chemical production facilities in Milwaukee and Sheboygan, Wisconsin (Aldrich); St. Louis, Missouri (Sigma); Bellefonte, Pennsylvania (Supelco); Germany (Aldrich Chemie GmbH & Co. K.G.); Israel (Sigma Israel Chemicals Ltd.); Switzerland (Fluka Chemie AG, "Fluka") and the United Kingdom (Sigma-Aldrich Company Ltd.). A minor amount of production is done by some of the Company's other subsidiaries. Biochemicals and diagnostic reagents are primarily produced by extraction and purification from yeasts, bacteria and other naturally occurring animal and plant sources. Organic and inorganic chemicals and radiolabeled chemicals are primarily produced by synthesis. Chromatography media and columns are produced using proprietary chemical synthesis and proprietary preparation processes. Similar processes are used for filtration and sample collection processes. Of the approximately 80,000 products listed in the Sigma, Aldrich, Fluka and Supelco catalogs, the Company produced approximately 31,000 which accounted for 47% of the net sales of chemical products for the year ended December 31, 1996. The remainder of products were purchased from a large number of sources either under contract or in the open market. No one supplier accounts for as much as 10% of the Company's chemical purchases. The Company has generally been able to obtain adequate supplies of products and materials to meet its needs. Whether a product is produced by the Company or purchased from outside suppliers, it is subjected to quality control procedures, including the verification of purity, prior to final packaging. This is done by a combined staff of approximately 290 chemists and lab technicians utilizing sophisticated scientific equipment. 3) Distribution and Sales: The Company markets its chemical products through separate sales and marketing units for research, fine chemicals and diagnostics and distributes over 2,700,000 comprehensive catalogs for the Sigma, Aldrich, Fluka and Supelco brands to customers and potential customers throughout the world. This is supplemented by certain specialty catalogs, by advertising in chemical and other scientific journals, by direct mail distribution of in-house publications and special product brochures and by personal visits by sales and technical representatives with customers. For customer convenience, Sigma packages approximately 330 combinations of certain individual products in diagnostic kit form. A diagnostic kit contains products which, when used in a series of manual and/or automated testing procedures, aid in detecting particular conditions or diseases. Diagnostic products accounted for approximately 10% of the Company's sales of chemical products in the year ended December 31, 1996. During the year ended December 31, 1996, products were sold to approximately 138,000 customers, including hospitals, universities and clinical laboratories as well as private and governmental research laboratories. The majority of the Company's sales are small orders in laboratory quantities averaging approximately $250. The Company also makes its chemical products available in larger-than-normal laboratory quantities for use in manufacturing. Sales of these products accounted for approximately 15% of chemical sales in 1996. During the year ended December 31, 1996, no one customer and no one product accounted for more than 1% of the net sales of chemical products. Customers and potential customers, wherever located, are encouraged to contact the Company by telephone ("collect" or on "toll-free" WATS lines) or via our homepage on the World Wide Web for technical staff consultation or for placing orders. Order processing, shipping, invoicing and product inventory are computerized. Shipments are made seven days a week from St. Louis, six days a week from Milwaukee, United Kingdom, Germany, Israel and Japan and five days a week from all other locations. The Company strives to ship its products to customers on the same day an order is received and carries significant inventories to maintain this policy. 4) International Operations: In the year ended December 31, 1996, 55% of the Company's net sales of chemical products were to customers located in foreign countries. These sales were made directly by Sigma, Aldrich, Fluka and Supelco, through distributors and by subsidiaries organized in Australia, Austria, Belgium, Brazil, Canada, Czech Republic, France, Germany, Hungary, India, Israel, Italy, Japan, Mexico, The Netherlands, Norway, Poland, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland and United Kingdom. Several foreign subsidiaries also have production facilities. For sales with final destinations in an international market, the Company has a Foreign Sales Corporation ("FSC") subsidiary which provides certain Federal income tax advantages. The effect of the tax rules governing the FSC is to lower the effective Federal income tax rate on export income. The Company intends to continue to comply with the provisions of the Internal Revenue Code relating to FSCs. The Company's international operations and domestic export sales are subject to currency revaluations, changes in tariff restrictions and restrictive regulations of foreign governments, among other factors inherent in these operations. The Company is unable to predict the extent to which its business may be affected in the future by these matters. During the year ended December 31, 1996, approximately 15% of the Company's domestic operations' chemical purchases were from international suppliers. Additional information regarding international operations is included in Note 10 to the consolidated financial statements on pages 21 and 22 of the 1996 Annual Report which is incorporated herein by reference. 5) Patents and Trademarks: The Company's patents are not material to its operations. The Company's significant trademarks are the brand names, "Sigma", "Aldrich", "Fluka", "Supelco" and "B-Line" and marketing units, "Sigma-Aldrich Research", "Sigma-Aldrich Fine Chemicals" and "Sigma Diagnostics". Their related logos, which have various expiration dates, are expected to be renewed indefinitely. 6) Regulations: The Company engages principally in the business of selling products which are not foods or food additives, drugs or cosmetics within the meaning of the Federal Food, Drug and Cosmetic Act, as amended (the "Act"). A limited number of the Company's products, including in-vitro diagnostic reagents, are subject to labeling, manufacturing and other provisions of the Act. The Company believes it is in compliance in all material respects with the applicable regulations. The Company believes that it is in compliance in all material respects with Federal, state and local regulations relating to the manufacture, sale and distribution of its products. The following are brief summaries of some of the Federal laws and regulations which may have an impact on the Company's business. These summaries are only illustrative of the extensive regulatory requirements of the Federal, state and local governments and are not intended to provide the specific details of each law or regulation. The Clean Air Act (CAA), as amended, and the regulations promulgated thereunder, regulates the emission of harmful pollutants to the air outside of the work environment. Federal or state regulatory agencies may require companies to acquire permits, perform monitoring and install control equipment for certain pollutants. The Clean Water Act (CWA), as amended, and the regulations promulgated thereunder, regulates the discharge of harmful pollutants into the waters of the United States. Federal or state regulatory agencies may require companies to acquire permits, perform monitoring and to treat waste water before discharge to the waters of the United States or a Publicly Owned Treatment Works (POTW). The Occupational Safety and Health Act of 1970 (OSHA), including the Hazard Communication Standard ("Right to Know"), and the regulations promulgated thereunder, requires the labeling of hazardous substance containers, the supplying of Material Safety Data Sheets ("MSDS") on hazardous products to customers and hazardous substances the employee may be exposed to in the workplace, the training of the employees in the handling of hazardous substances and the use of the MSDS, along with other health and safety programs. The Resource Conservation and Recovery Act of 1976 (RCRA), as amended, and the regulations promulgated thereunder, requires certain procedures regarding the treatment, storage and disposal of hazardous waste. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund Amendments and Reauthorization Act of 1986 (SARA), and the regulations promulgated thereunder, require notification of certain chemical spills and notification to state and local emergency response groups of the availability of MSDS and the quantities of hazardous materials in the Company's possession. The Toxic Substances Control Act of 1976 (TSCA), requires reporting, testing and pre-manufacture notification procedures for certain chemicals. Exemptions are provided from some of these requirements with respect to chemicals manufactured in small quantities solely for research and development use. The Department of Transportation (DOT) has promulgated regulations pursuant to the Hazardous Materials Transportation Act, referred to as the Hazardous Material Regulations (HMR), which set forth the requirements for hazard labeling, classification and packaging of chemicals, shipment modes and other goods destined for shipment in interstate commerce. Approximately 900 products, for which sales are immaterial to the total sales of the Company, are subject to control by either the Drug Enforcement Administration ("DEA") or the Nuclear Regulatory Commission ("NRC"). The DEA and NRC have issued licenses to several Company sites to permit importation, manufacture, research, analysis, distribution and export of certain products. The Company screens customer orders involving products regulated by the NRC and the DEA to verify that a license, if necessary, has been obtained. Approximately 500 products, for which sales are immaterial to the total sales of the Company, are subject to control by the Department of Commerce ("DOC"). The DOC has promulgated the Export Administration Regulations pursuant to the Export Administration Act of 1979, as amended, to regulate the export of certain products by requiring a special export license. (b) Metal Products. - ------------------------------------------------------------------------------- Components for strut, cable tray and pipe support systems are manufactured by B-Line at its facilities in Highland and Troy, Illinois; Norcross, Georgia; Reno, Nevada and Sherman, Texas. Electrical and electronic enclosures are manufactured at facilities in Aurora, Colorado; Portland, Oregon and Modesto, California. Components and complete systems used to support telecommunications apparatus and cabling are manufactured at the plant in Reno, Nevada. Strut and pipe support systems are metal frameworks and related accessories used in industry to support pipes, lighting fixtures and conduit. Strut systems can be easily assembled with bolts and spring-loaded nuts, eliminating the necessity of drilling or welding associated with other types of frameworks. B-Line manufactures and sells a wide variety of components for these systems, including steel struts rolled from coils, stamped steel fittings for interconnecting struts, shelf-supporting brackets, pipe and conduit supporting clamps, and accessories for the installation of strut systems on location. Pipe hangers are generally used in conjunction with strut systems to support heavy and light duty piping runs in the mechanical, plumbing and refrigeration industry. The principal materials used by B-Line in manufacturing are coils of steel and extruded aluminum which B-Line purchases from a number of suppliers. No one supplier is essential to B-Line's production. A limited number of components for strut and pipe support systems, including bolts and nuts and certain forged and cast components, are purchased from numerous sources and sold by B-Line as accessories to its own manufactured products. Cable tray systems are continuous networks of ventilated or solid trays used primarily in the routing of power cables and control wiring in power plant or industrial installations. The systems are generally hung from ceilings or supported by strut frameworks. Cable tray is produced from either extruded aluminum or roll-formed steel in various configurations to offer versatility to designers and installers. Non-metallic strut and cable tray products, which are used primarily in corrosive environments, are also available. Telecommunications equipment racks and cable runways are manufactured from aluminum or steel. The systems are installed in the central offices of telephone operating companies. As switching equipment is changed and upgraded, the systems are replaced. Electrical and electronic enclosures are metal enclosure boxes, generally manufactured from steel, that are used to contain and protect electric meters, fuse and circuit breaker boards and electrical panels. These products are used in industrial, commercial and residential installations. B-Line also manufactures a line of lightweight support fasteners to be used in commercial and industrial facilities to attach electrical and acoustical fixtures. B-Line sells primarily to electrical, mechanical and telecommunications wholesalers. Products are marketed directly by district sales offices and by regional sales managers through independent manufacturers' representatives. Products are shipped to customers from the Highland and Troy, Illinois; Norcross, Georgia; Reno, Nevada; Portland, Oregon; Modesto, California; Sherman, Texas; and Aurora, Colorado plants, from one regional warehouse and 44 consigned stock locations. B-Line's products are advertised in trade journals and by circulation of comprehensive catalogs. (c) Competition. - ------------------------------------------------------------------------------- Substantial competition exists in all of the Company's marketing and production areas. Although no comprehensive statistics are available, the Company believes it is a major supplier of organic chemicals and biochemicals for research and for diagnostic testing procedures involving enzymes and of chromatography products for analyzing and separating complex chemical mixtures. A few competitors, like the Company, offer thousands of chemicals and stock and analyze most of their products. While the Company generally offers a larger number of products, some of the Company's products are unusual and have relatively little demand. In addition, there are many competitors who offer a limited quantity of chemicals, and several companies compete with the Company by offering thousands of chemicals, although few of them stock or analyze substantially all of the chemicals they offer for sale. The Company believes its B-Line subsidiary to be among the three largest producers of metal strut framing, pipe hangers and cable tray component systems, although reliable industry statistics are not available. In all product areas the Company competes primarily on the basis of customer service, product quality and price. (d) Employees. - ------------------------------------------------------------------------------- The Company employed 5,984 persons as of December 31, 1996. Of these, 4,706 were engaged in production and distribution of chemical products. The B-Line subsidiary employed 1,278 persons. The total number of persons employed within the United States was 4,265, with the balance employed by the international subsidiaries. The Company employed over 1,800 persons who have degrees in chemistry, biochemistry, engineering or other scientific disciplines, including approximately 220 with Ph.D. degrees. Employees engaged in chemical production, research and distribution are not represented by any organized labor group. B-Line's production workers at the Highland and Troy, Illinois facilities are members of the International Association of Machinists and Aerospace Workers, District No. 9 (AFL-CIO). The labor agreement covering these employees expires November 14, 1999. B-Line's production workers at the Norcross, Georgia facility are members of the United Food and Commercial Workers International (AFL-CIO), Retail Clerks Union Local 1063. The labor agreement covering these employees expires June 13, 1998. (e) Back-log of Orders. - ------------------------------------------------------------------------------- The majority of orders for chemical products in laboratory quantities are shipped from inventory, resulting in no back-log of these orders. However, individual items may occasionally be out of stock. These items are shipped as soon as they become available. Some orders for larger-than-normal laboratory quantities are for future delivery. On December 31, 1996 and 1995, the back-log of firm orders and orders for future delivery of chemical products was not significant. The Company expects that substantially all of the December 31, 1996 back-log will be shipped during 1997. On December 31, 1996 and 1995, the back-log of orders at B-Line was not significant. B-Line expects that substantially all of the December 31, 1996 back-log will be shipped during 1997. (f) Information as to Industry Segments. - ------------------------------------------------------------------------------- Information concerning industry segments for the years ended December 31, 1996, 1995 and 1994, is located in Note 10 to the consolidated financial statements on pages 21 and 22 of the 1996 Annual Report which is incorporated herein by reference. (g) Executive Officers of the Registrant. - ------------------------------------------------------------------------------- Information regarding executive officers is contained in Part III, Item 10, and is incorporated herein by reference. Item 2. Properties. - ------------------------------------------------------------------------------- The Company's primary chemical production facilities are located in St. Louis, Missouri; Milwaukee and Sheboygan, Wisconsin; Bellefonte, Pennsylvania and Buchs, Switzerland. In St. Louis, the Company owns a 328,000 square foot building used for manufacturing, a complex of buildings aggregating 383,000 square feet which is currently being used for warehousing and production, a 75,000 square foot building used for warehousing, a 23,000 square foot building used for warehousing and office space and a 45,000 square foot building used for production, quality control and packaging. The Company owns a 280,000 square foot building in St. Louis which is being partially utilized to provide additional quality control, packaging and warehousing capacity. Also in St. Louis, the Company owns 30 acres upon which is located a 240,000 square foot administration and distribution facility, in which its principal executive offices are located, and a 175,000 square foot diagnostic production and office building. In Milwaukee, the Company owns a 178,000 square foot building which is used for manufacturing, warehousing and offices, a 110,000 square foot building which is used for additional manufacturing and warehousing and a complex of buildings aggregating 331,000 square feet which is used primarily for warehousing and distribution. Also in Milwaukee, the Company owns a 151,000 square foot building which is used for manufacturing and warehousing, a 56,000 square foot administration facility and a 619,000 square foot building which is being renovated for use as a distribution facility. The Company also owns 515 acres in Sheboygan, Wisconsin, upon which are located multiple buildings totaling 332,000 square feet for production and packaging. Fluka owns an 11 acre site in Buchs, Switzerland, upon which are located its primary production facilities. Approximately 242,000 square feet of owned production, warehousing and office facilities are at this site. In Greenville, Illinois, the Company owns 555 acres of land for future development of biochemical production facilities. Supelco owns 72 acres near Bellefonte, Pennsylvania, upon which is located a 160,000 square foot building used for manufacturing, warehousing, research and administration. The Company's B-Line manufacturing business is located in Highland and Troy, Illinois; Norcross, Georgia; Sherman, Texas; Reno, Nevada; Portland, Oregon; Modesto, California; and Aurora, Colorado. B-Line owns a 270,000 square foot building in Highland, Illinois, a 55,000 square foot building in Troy, Illinois, a 68,000 square foot building in Portland, Oregon, a 238,000 square foot building in Sherman, Texas, a 173,000 square foot building in Reno, Nevada and a 125,000 square foot building in Modesto, California. B-Line leases a 101,000 square foot facility in Norcross, Georgia and a 120,000 square foot facility in Aurora, Colorado. The Company also owns a 173,000 square foot warehouse and distribution facility in Allentown, Pennsylvania, and leases a warehouse in Chicago, Illinois under a short-term lease. Manufacturing and/or warehousing facilities are also owned or leased in the United Kingdom, France, Germany, Israel, Japan, Scotland and Switzerland. Sales offices are leased in all other locations. The Company considers the properties to be well maintained, in sound condition and repair, and adequate for its present needs. The Company will continue to expand its production and distribution capabilities in select markets. Item 3. Legal Proceedings. - ------------------------------------------------------------------------------- There are no material pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. - ------------------------------------------------------------------------------- No matters were submitted by the Registrant to the stockholders for a vote during the fourth quarter of 1996. PART II - ------------------------------------------------------------------------------- Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. - ------------------------------------------------------------------------------- Information concerning market price of the Registrant's Common Stock and related shareholder matters for the years ended December 31, 1996 and 1995, is located on page 11 of the 1996 Annual Report which is incorporated herein by reference. As of March 7, 1997, there were 2,086 record holders of the Registrant's Common Stock. Items 6 through 8. Selected Financial Data, Management's Discussion and - ------------------------------------------------------------------------ Analysis of Financial Condition and Results of Operations, and Financial - ------------------------------------------------------------------------ Statements and Supplementary Data. - ---------------------------------- The information required by Items 6 through 8 is incorporated herein by reference to pages 11-24 of the 1996 Annual Report. See Index to Financial Statements and Schedules on page F-1 of this report. Those pages of the Company's 1996 Annual Report listed in such Index or referred to in Items 1(a)(4), 1(f) and 5 are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and - ----------------------------------------------------------------------- Financial Disclosure. - --------------------- Not applicable. PART III - ------------------------------------------------------------------------------- Item 10. Directors and Executive Officers of the Registrant. - ------------------------------------------------------------------------------- Information under the captions "Nominees for Board of Directors" and "Security Ownership of Directors, Executive Officers and Principal Beneficial Owners" of the 1997 Proxy Statement is incorporated herein by reference. The executive officers of the Registrant are: Name of Executive Officer Age Positions and Offices Held ------------------------- --- -------------------------- Larry S. Blazevich 49 Vice President, Information Services Carl T. Cori 60 Chairman of the Board and Chief Executive Officer Peter A. Gleich 51 Vice President, Treasurer and Chief Financial Officer David R. Harvey 57 President and Chief Operating Officer James W. Meteer 46 Vice President, Quality Kirk A. Richter 50 Controller Thomas M. Tallarico 52 Vice President and Secretary There is no family relationship between any of the officers. Mr. Blazevich joined Sigma-Aldrich in April 1996 as Director of Information Services and was elected Vice President, Information Services in June 1996. Previously, Mr. Blazevich was employed with Thomas and Betts for sixteen years where he served as Vice President of Information Services from 1988-1996. Dr. Cori has been Chief Executive Officer of the Company for more than five years. He was elected Chairman of the Board in May 1991 and served as President of the Company for more than five years until March 1995. Mr. Gleich was elected Treasurer and Chief Financial Officer in November 1994. He has been Vice President of the Company for more than five years. He was Secretary of the Company for more than five years until November 1994. He also served as Treasurer and Chief Financial Officer of the Company from 1975 to May 1991. Dr. Harvey has been Chief Operating Officer of the Company for more than five years. He was elected President of the Company in March 1995, after serving as Executive Vice President for more than five years. Mr. Meteer was elected Vice President, Quality in September 1996 after serving as Director of Quality since 1995. Previously, Mr. Meteer was a Vice President of Supelco from 1993-1995. He held several positions within Supelco/Rohm & Haas from 1988-1993. Mr. Richter has held the position indicated for more than five years. Mr. Tallarico was elected Secretary in November 1994. He has been a Vice President of the Company for more than five years and served as Treasurer and Chief Financial Officer of the Company from May 1991 to November 1994. The present terms of office of the officers will expire when the next annual meeting of the Directors is held and their successors are elected. Item 11. Executive Compensation. - ------------------------------------------------------------------------------- Information under the captions "Director Compensation and Transactions" and "Information Concerning Executive Compensation" of the 1997 Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. - ------------------------------------------------------------------------------- Information under the caption "Security Ownership of Directors, Executive Officers and Principal Beneficial Owners" of the 1997 Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. - ------------------------------------------------------------------------------- Information under the caption "Director Compensation and Transactions" of the 1997 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 1996 Annual Report listed in such Index or referred to in Items 1(a)(4), 1(f) and 5 are incorporated herein by reference. 2. Financial Statement Schedules. See Index to Financial Statements and Schedules on page F-1 of this report. 3. Exhibits. See Index to Exhibits on page F-3 of this report. (b) Reports on Form 8-K: No reports on Form 8-K have been filed during the last quarter of the period covered by this report. SIGNATURES - ------------------------------------------------------------------------------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGMA-ALDRICH CORPORATION (Registrant) By /s/ Peter A. Gleich March 28, 1997 ------------------------------------- -------------- Peter A. Gleich, Vice President, Date Treasurer and Chief Financial Officer KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Carl T. Cori, Peter A. Gleich, David R. Harvey, Kirk A. Richter and Thomas M. Tallarico and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this report, and to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ Carl T. Cori March 28, 1997 ------------------------------------------ -------------- Carl T. Cori, Director, Chairman of the Date Board and Chief Executive Officer By /s/ David R. Harvey March 28, 1997 ------------------------------------------ -------------- David R. Harvey, Director, President and Date Chief Operating Officer By /s/ Peter A. Gleich March 28, 1997 ------------------------------------------ -------------- Peter A. Gleich, Vice President, Treasurer Date and Chief Financial Officer By /s/ Kirk A. Richter March 28, 1997 ------------------------------------------ -------------- Kirk A. Richter, Controller Date By /s/ Thomas M. Tallarico March 28, 1997 ------------------------------------------ -------------- Thomas M. Tallarico, Vice President and Date Secretary By /s/ David M. Kipnis March 28, 1997 ------------------------------------------ -------------- David M. Kipnis, Director Date By /s/ Andrew E. Newman March 28, 1997 ----------------------------------------- -------------- Andrew E. Newman, Director Date By /s/ Jerome W. Sandweiss March 28, 1997 ----------------------------------------- -------------- Jerome W. Sandweiss, Director Date SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES - ------------------------------------------------------------------------------- Page Number Reference ------------- Annual Report to Shareholders --------------- Annual financial data for the years 1996, 1995, 1994, 1993 and 1992 11 Management's discussion of financial condition and results of operations 12 FINANCIAL STATEMENTS: Consolidated Balance Sheets December 31, 1996 and 1995 15 Consolidated statements for the years ended December 31, 1996, 1995 and 1994 Income 14 Stockholders' Equity 16 Cash Flows 17 Notes to consolidated financial statements 18 Report of independent public accountants 14 FINANCIAL STATEMENT SCHEDULES: Schedules are not submitted because they are not applicable, not required or because the information is included in the consolidated financial statements or notes thereto. INDEX TO EXHIBITS - ------------------------------------------------------------------------------ These Exhibits are numbered in accordance with the Exhibit Table of Item 6.01 of Regulation S-K: Exhibit Reference ------- --------- (3) Certificate of Incorporation and By-Laws: (a) Certificate of Incorporation and Incorporated by reference to Exhibit Amendments 3(a) of Form 10-K filed for the year ended December 31, 1991, Commission File Number 0-8135. (b) By-Laws as amended June 1996 See Exhibit 3(b). (4) Instruments Defining the Rights of Shareholders, Including Indentures: (a) Certificate of Incorporation and See Exhibit 3(a) above. Amendments (b) By-Laws as amended June 1996 See Exhibit 3(b) above. (c) The Company agrees to furnish to the Securities and Exchange Commission upon request pursuant to Item 601(b)(4)(iii) of Regulation S-K copies of instruments defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries. (10) Material Contracts: (a) Incentive Stock Bonus Plan* Incorporated by reference to Exhibit 10(a) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (b) First Amendment to Incentive Incorporated by reference to Exhibit Stock Bonus Plan* 10(b) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (c) Second Amendment to Incentive Incorporated by refence to Exhibit Stock Bonus Plan* 10(c) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (d) Third Amendment and See Exhibit 10(d). Restatement of the Incentive Stock Bonus Plan* (e) Share Option Plan of 1987* Incorporated by reference to Exhibit 10(d) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (f) First Amendment to Share Option Incorporated by refence to Exhibit Plan of 1987* 10(e) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (g) Second Amendment to Share Incorporated by reference to Option Plan of 1987* 10(f) of Form 10-K filed for the year ended December 31, 1994, Commission File Number 0-8135. (h) Employment Agreement with Incorporated by reference to Carl T. Cori* (Similar Employment Exhibit 10 (f) of Form 10-K filed Agreements also exist with Larry for the year ended December 31, 1992 S. Blazevich, Peter A. Gleich, Commission File Number 0-8135. David R. Harvey, James W. Meteer, Kirk A. Richter and Thomas M. Tallarico) (i) Letter re: Consultation Services Incorporated by reference to Exhibit with Dr. David M. Kipnis* 10 (g) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (j) Share Option Plan of 1995* Incorporated by reference to Appendix A of the Company's Definitive Proxy Statement filed March 30, 1995, Commission File Number 0-8135. (11) Statement Regarding Computation Incorporated by reference to the of Per Share Earnings information on net income per share included in Note 1 to the Company's 1996 financial statements filed as Exhibit 13 below. (13) Pages 11-24 of the Annual Report See Exhibit 13. for the year ended December 31, 1996 (21) Subsidiaries of Registrant Page F-23 of this report. (23) Consent of Independent Public Page F-2 of this report. Accountants (27) Financial Data Schedule See Exhibit 27. *Represents management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. EX-3 2 SIGMA-ALDRICH CORPORATION Exhibit 3(b) (A Delaware Corporation) BY-LAWS ARTICLE I. OFFICES 1.01. Registered Office. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. 1.02. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II. SHAREHOLDERS * 2.01. Annual Meeting. The annual meeting of the shareholders shall be held on the first Tuesday of May of each year commencing in 1976 or on such other date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may properly come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Delaware, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is convenient. * Amended by Board resolution of 1/27/76. ** 2.01A. Notice of Shareholder Business. (a) At an annual meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before the meeting (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any shareholder of the Corporation who is a shareholder of record at the time of giving of the notice provided for in this By-Law, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this By-Law. (b) For a proposal to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 10 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than 30 days from such anniversary date, notice by the shareholder to be timely must be received no later than the close of business on the 10th day preceding the date of the meeting as announced in the notice of the meeting or otherwise publicly disclosed. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting: (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's stock transfer records, of the shareholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder of record and by the beneficial owner, if any, on whose behalf the proposal is made, and (iv) any material interest of such shareholder of record and the beneficial owner, if any, on whose behalf the proposal is made in such business. (c) The Board of Directors may reject any shareholder proposal submitted for consideration at the annual meeting which is not made in accordance with the terms of this By-Law or which is not a proper subject for shareholder action in accordance with provisions of applicable law. Alternatively, if the Board of Directors fails to consider the validity of any shareholder proposal, the presiding officer of the meeting shall, if the facts warrant, determine and declare at the annual meeting that the shareholder proposal was not properly brought before the meeting and in accordance with the procedures prescribed by these By-Laws, and if he should make that determination, he shall so declare at the meeting and any such business or proposal shall not be acted upon. Notwithstanding the foregoing provisions of this By-Law, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this By-Law. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at the meeting unless stated, filed and recorded as herein provided. ** Added by Board resolution of 2/16/93. 2.02. Special Meeting. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Chairman of the Board of Directors, the President or the Board of Directors, or by the person designated in the written request of the holders of not less than a majority in amount of all shares of the Corporation entitled to vote at the meeting. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of shareholders shall be limited to the purpose or purposes stated in the notice. 2.03. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Delaware, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the Corporation, or such other suitable place in the county of such registered office as may be designated by the person calling such meeting, but any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. 2.04. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (unless a longer period is required by law) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or other officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the Corporation, with postage thereon prepaid. 2.05. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. 2.06. Voting Records. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. Upon the willful neglect or refusal of the directors to produce such a list at any meeting for the election of directors they shall be ineligible for election to any office at such meetings. In all other instances, failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. 2.07. Quorum. Except as otherwise provided in the Certificate of Incorporation, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless the vote of a greater number or voting by classes is required by law or the Certificate of Incorporation. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. * 2.08. Conduct of Meeting. The Chairman of the Board, and in his absence, the President, and in his absence, a Vice-President in the order provided under Section 4.07, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the Corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. * Amended by Board resolution of 11/25/80. 2.09. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote in person or by proxy appointed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his proxy shall not of itself constitute a revocation. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10. Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the Certificate of Incorporation. 2.11. Voting of Shares by Certain Holders. (a) Other Corporations. Shares standing in the name of another corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, of the designation of some other person by the board of directors or by the by-laws of such other corporation. (b) Legal Representatives and Fiduciaries. Shares held by any administrator, executor, guardian, conservator, trustee in bankruptcy, receiver, or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his name provided that there is filed with the Secretary before or at the time of meeting proper evidence of his incumbency and the number of shares held. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary, shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. (c) Pledgees. A shareholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the Corporation he has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. (d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote. (e) Minors. Shares held by a minor may be voted by such minor in person or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has received written notice or has actual knowledge that shareholder is a minor. (f) Incompetents and Spendthrifts. Shares held by an incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to a disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of filing of judicial proceedings for appointment of a guardian. (g) Joint Tenants. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (i) no other such individual or his legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the Corporation a contrary written voting authorization or direction or written denial of authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary of the Corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. 2.12. Waiver of Notice by Shareholders. Whenever any notice whatever is required to be given to any shareholder of the Corporation under the Certificate of Incorporation or By-Laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Delaware Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. 2.13. Unanimous Consent Without Meeting. Any action required or permitted by the Certificate of Incorporation or By-Laws or any provision of law to be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE III. BOARD OF DIRECTORS * 3.01. General Powers, Number and Election. The business and affairs of the Corporation shall be managed by its Board of Directors. The number of directors of the Corporation shall be nine who shall be elected by the shareholders at the annual meeting of shareholders. *Amended by Board resolution of 8/23/77, 2/24/81, 2/23/82, 2/19/85, 11/25/85, 11/11/86, 8/12/87, 6/20/89, 2/18/92, 2/20/96 and 6/14/96. 3.02. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected, or until his prior death, resignation or removal. A director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose. A director may resign at any time by filing his written resignation with the Secretary of the Corporation. Directors need not be residents of the State of Delaware or shareholders of the Corporation. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-Law immediately after the annual meeting of shareholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Delaware for the holding of additional regular meetings without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board of Directors, President, Secretary or any two directors. The Chairman of the Board of Directors, President or Secretary calling any special meeting of the Board of Directors called by them, and if no other place is fixed the place of meeting shall be the registered office of the Corporation in the State of Delaware. 3.05. Notice; Waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered personally or mailed or given by telegram to each director at his business address (or at such other address as such director shall have designated in writing filed with the Secretary), in each case not less than five days prior to the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any director of the Corporation under the Certificate of Incorporation or By-Laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation or these By-Laws, a majority of the number of directors as provided in Section 3.01 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the Certificate of Incorporation or these By-Laws. 3.08. Conduct of Meetings. The Chairman of the Board of Directors, and in his absence, the President, or in his absence, a Vice President, in the order provided under Section 4.07, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting. 3.09. Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof. 3.10. Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. 3.11. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 3.12. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of the whole Board may designate one or more committees, each committee to consist of three or more directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise, when the Board of Directors is not in session, the management of the business and affairs of the Corporation, except that no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the shareholders a dissolution of the Corporation or a revocation of a dissolution, amending the By-Laws of the Corporation, declaring dividends to shareholders, authorizing the issuance of stock, or electing the principal officers or the filling of vacancies in the Board of Directors or committees created pursuant to this section. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the President or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. 3.13. Unanimous Consent Without Meeting. Any action required or permitted by the Certificate of Incorporation or By-Laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors then in office. * 3.14. Nomination By-Law. (a) Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible to serve as Directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this By-Law. (b) Nominations by shareholders shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (i) in the case of an annual meeting, not less than 10 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than 30 days from such anniversary date, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day preceding the date of the meeting as announced in the notice of the meeting or otherwise publicly disclosed, and (ii) in the case of a special meeting at which directors are to be elected, not later than the close of business on the 10th day preceding the date of the meeting as announced in the notice of the meeting or otherwise publicly disclosed. Such shareholder's notice to the Secretary shall set forth (i) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities and Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to the shareholder giving the notice (x) the name and address, as they appear on the Corporation's stock transfer records, of such shareholder, (y) the class and number of shares of the Corporation which are beneficially owned by such shareholder and also which are owned of record by such shareholder, and (z) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; and (iii) as to the beneficial owner, if any, on whose behalf the nomination is made, (x) the name and address of such person and (y) the class and number of shares of the Corporation which are beneficially owned by such person. The Corporation may require any proposed nominee to furnish any other information it may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the Corporation. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. (c) Subject to the rights, if any, of holders of any class of capital stock of the Corporation (other than the common stock) then outstanding, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this By-Law. The presiding officer of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these By-Laws, and if he should make that determination, he shall so declare at the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this By-Law, a shareholder shall also comply with all applicable requirements of the Securities and Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this By-Law. * Added by Board resolution of 2/16/93. ARTICLE IV. OFFICERS * * Restated pursuant to Board action of 5/3/83 and amended by Board resolutions of 11/8/94 and 3/6/95. 4.01. Number. The principal officers of the Corporation shall be a Chairman of the Board of Directors, a President, one or more Vice Presidents, a Secretary, a Treasurer and a Controller, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice President. 4.02. Election and Term of Office. The officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election shall not be held at such meeting, such election shall be held as soon thereafter as is convenient. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal. 4.03. Removal. Any officer or agent may be removed by affirmative vote of majority of the whole Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.04. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. ** 4.05. Chairman of the Board of Directors. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors, shall supervise and control the business, property and affairs of the Corporation. The Chairman of the Board of Directors of the Corporation shall preside at all meetings of the Board of Directors and shareholders at which he is present. He may sign and execute all instruments in the name of the Corporation which the Board of Directors has authorized to be executed, except where the execution thereof shall be expressly delegated by the Board of Directors or the By-Laws to another officer or agent of the Corporation, or shall be required by law to be otherwise executed. The Chairman of the Board shall perform all duties incident to the office of Chief Executive Officer and shall be an ex-officio member of all standing committees. ** 4.06. The President. The President shall be the Chief Operating Officer of the Corporation and, subject to the control of the Board of Directors, shall direct the day-to-day operations of the Corporation's businesses and perform such duties as may be delegated to him by the Chairman of the Board of Directors or the Board of Directors. In the absence of the Chairman of the Board, or in the event of his death, inability or refusal to act, the President shall preside at the meetings of the Board of Directors and shareholders at which he is present. He may sign and execute instruments in the name of the Corporation which the Board of Directors has authorized to be executed, except where the execution thereof shall be expressly delegated by the Board of Directors or the By-Laws to another officer or agent of the Corporation, or shall be required by law to be otherwise executed. The President shall perform all duties incident to the office of Chief Operating Officer and shall be an ex-officio member of all standing committees. ** Amended by Board resolutions of 1/27/76 and 11/25/80, restated pursuant to Board action of 5/3/83 and amended by Board resolution of 3/6/95. * 4.07. The Vice Presidents. Subject to the provisions of Section 4.06, in the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impractical for him to act personally, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order or their election, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or the Board of Directors. The execution of any instrument of the Corporation by any Vice President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President. * Amended by Board resolution of 3/6/95. ** 4.08. The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the Chairman of the Board or the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general perform all duties and exercise such authority as from time to time may be delegated or assigned to him by the Chairman of the Board, or the President or by the Board of Directors. ** Amended by Board resolution of 7/28/81, then restated pursuant to Board action of 5/3/83. * 4.09. The Treasurer. The Treasurer shall be the Chief Financial Officer and, subject to the control of the Board of Directors, shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties and exercise such other authority as from time to time may be delegated or assigned to him by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. Whenever required by the Board of Directors so to do, he shall exhibit a true and complete statement of his cash account and of the securities and other funds in his possession, custody and control. He shall at all reasonable times within business hours exhibit his books and accounts to any director. * Amended by Board resolution of 11/8/94. 4.10. The Controller. The Controller shall be in charge of the financial records of the Corporation, and shall, under the general supervision of the Treasurer, be responsible for the accounting and financial services of the Corporation. ** 4.11. Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the Chairman of the Board, or the President or a Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board or the President or the Board of Directors. ** Amended by Board resolution of 7/28/81, then restated pursuant to Board action of 5/3/83. 4.12. Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint any person to act as assistant to any officer, or agent for the Corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he is so appointed to be assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors. 4.13. Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS: SPECIAL CORPORATE ACTS 5.01. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02. Loans. No indebtedness for borrowed money shall be contracted on behalf of the Corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts, or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors. 5.05. Voting of Securities Owned by This Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the President of this Corporation if he be present, or in his absence by any Vice President of this Corporation who may be present, and (b) whenever in the judgment of the President, or in his absence, of any Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the President or one of the Vice Presidents of this Corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or counter signature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation and the same as such shares or other securities might be voted by this Corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER * 6.01. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman of the Board, or the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as provided in Section 6.06. * 6.02. Facsimile Signatures and Seal. The seal of the Corporation on any certificate for shares may be a facsimile. The signature of the Chairman of the Board or the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation. * Amended by Board resolution of 7/28/81. 6.03. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the Corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. ** 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, a new certificate may be issued in place thereof if the owner so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser. When authorizing such issuance of a new certificate the President, Vice President or Secretary of the Corporation shall require the owner of such lost, destroyed or wrongfully taken certificate to file with the Corporation sufficient indemnity bond, and satisfy such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. ** Amended by Board resolution of 2/18/86. 6.07. Consideration for Shares. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation. No certificate shall be issued for any share until such share is fully paid. 6.08. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Delaware as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VII. INDEMNIFICATION 7.01. Mandatory Indemnification. The Corporation shall, to the full extent permitted by the Delaware Corporation Law, indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of any other corporation or enterprise. Such right of indemnification shall inure to the benefit of the heirs, executors, administrators and personal representatives of such a person. 7.02. Permissive Supplementary Benefits. The Corporation may, but shall not be required to, supplement the right of indemnification under Section 7.01 by (a) the purchase of insurance on behalf of any one or more of such persons, whether or not the Corporation would be obligated to indemnify such person Section 7.01, (b) individual or group indemnification agreements with any one or more of such persons and (c) advances for related expenses of such a person. 7.03. Amendment. This Article VII may be amended or repealed only by a vote of the shareholders and not by a vote of the Board of Directors. ARTICLE IX. AMENDMENTS 9.01. By Shareholders. These By-Laws may be altered, amended or appealed and new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the shares present or represented at any annual or special meeting of the shareholders at which a quorum is in attendance. 9.02. By Directors. These By-Laws may also be altered, amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no by-laws adopted by the shareholders shall be amended or repealed by the Board of Directors if the by-law so adopted so provides. 9.03. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the By-Laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the By-Laws so that the By-Laws would be consistent with such action, shall be given the same effect as though the By-Laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-10 3 Exhibit 10(d) THIRD AMENDMENT AND RESTATEMENT OF THE SIGMA-ALDRICH CORPORATION INCENTIVE STOCK BONUS PLAN WHEREAS, Sigma-Aldrich Corporation (the "Corporation") previously established the Sigma-Aldrich Corporation Incentive Stock Bonus Plan ("Plan"); and WHEREAS, the Corporation reserved the right to amend the Plan pursuant to Paragraph 15 thereof; and WHEREAS, the Corporation desires to amend and restate the Plan effective January 1, 1996; NOW, THEREFORE, effective January 1, 1996, the Plan is amended and restated as follows: 1. Purpose The purpose of the Incentive Stock Bonus Plan (the "Plan") is to provide a means by which Sigma-Aldrich Corporation (the "Corporation") and/or its subsidiary corporations shall be able to attract and retain competent key employees (including officers and directors who are employees) and provide such personnel with incentives in addition to current compensation reflecting their efforts, initiative and skill. 2. Administration a. The Plan shall be administered by the Compensation Committee (the "Committee") of the Board of Directors of the Corporation (the "Board") as such Committee may be constituted from time to time. The Committee shall consist of at least three members of the Board selected by the Board all of whom shall be both "Disinterested Persons" as defined in Rule 16b-3 under The Securities Exchange Act of 1934, and "Outside Directors" as defined in Regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended. b. All determinations of the Committee shall be made by all of its members unless specifically approved, authorized or ratified by the Board, in which event a determination by a majority of its members shall be sufficient. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a vote at a meeting duly called and held. c. Subject to the express provisions of the Plan, the Committee also shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan. The determinations of the Committee on the matters referred to in this Paragraph 2 shall be conclusive. d. Participants in the Plan shall be selected by the Committee from key executive employees of the Corporation or any subsidiary of the Corporation who hold less than two percent (2%) of the outstanding stock of the Corporation (the "Participants"). It is intended that Participants include only those top executives whose responsibilities and activities have a substantial and direct impact on total corporate performance. e. The Committee shall designate Participants each year and such Participants may, but need not, be the same as those who were designated in any preceding year; that is to say, employees designated as Participants in one year may be omitted in any and all subsequent years; new or additional Participants may be designated in any year. 3. Stock Bonus Pool (a) The maximum amount of the Bonus Pool for any given year shall be determined as follows: if the increase in the Corporation's pre-tax operating income for the year shall have exceeded by at least 10% but less than 12-1/2% the greater of (a) the prior year's pre-tax operating income or (b) an amount of pre-tax operating income which would represent a 10% per year cumulative increase through the prior year over fiscal year 1977, the maximum amount shall be 3% of the dollar amount of such increase; if the increase in pre-tax operating income for the year shall have exceeded by at least 12-1/2% but less than 15% the greater of (a) the prior year's pre-tax operating income or (b) an amount of pre-tax operating income which would represent a 12-1/2% per year cumulative increase through the prior year over fiscal year 1977, the maximum amount shall be 4% of the dollar amount of such increase; and if the increase in pre-tax operating income for the year shall have exceeded by at least 15% the greater of (a) the prior year's pre-tax operating income or (b) an amount of pre-tax operating income which would represent a 15% per year cumulative increase through the prior year over fiscal year 1977, the maximum amount shall be 5% of the dollar amount of such increase. (b) In the event any additional business shall be acquired by the Corporation as the result of any merger or acquisition, then the percentage increase shall be determined by including the pre-tax operating income of the merged or acquired business or businesses for all of the years involved in determining the maximum Bonus Pool. (c) In the event any portion of the Corporation's business shall be discontinued, sold or otherwise transferred, then the percentage increase shall be determined by excluding the pre-tax operating income of the discontinued, sold or transferred business for all of the years involved in determining the maximum Bonus Pool. 4. Awards of Incentive Stock Bonus Units (a) Within the first 90 days of each calendar year, the Committee shall set the maximum dollar amount of incentive stock bonus units ("Incentive Stock Bonus Units") and tax offset bonus units ("Tax Offset Bonus Units") which may be awarded to the Corporation's Chief Executive Officer ("CEO") and Chief Operating Officer ("COO"), respectively. (b) After the end of each calendar year but prior to the award of units, the Committee shall certify, in writing, whether the Corporation's pre-tax operating income for the year has exceeded one or more of the levels set in Paragraph 3(a). If, and only if, pre-tax operating income for the year shall have reached a level sufficient to generate a Bonus Pool under Section 3, the Committee shall allocate Incentive Stock Bonus Units and Tax Offset Bonus Units for the CEO and COO. The value of the Incentive Stock Bonus Units and Tax Offset Bonus Units awarded to the CEO and COO can be less than, but cannot exceed, the maximum dollar amount fixed by the Committee during the first 90 days of the calendar year. (c) After the Committee has determined the Units to be awarded to the CEO and COO, the Committee shall subtract from the Bonus Pool determined under Section 3 the dollar value of the Incentive Stock Bonus Units awarded to the CEO and COO. If a positive value remains in the Bonus Pool after such subtraction, the remaining dollar value of Incentive Stock Bonus Units shall be awarded by the Committee to Participants (other than the CEO and COO) designated by it, in such proportions as the Committee believes appropriate based upon each Participant's relative contribution to the year's performance. Incentive Stock Bonus Units (and Tax Offset Bonus Units) shall initially be valued at the last price or closing price of the Corporation's shares of common stock on the day before the date of the awards, as reported in the Midwest Edition of The Wall Street Journal or such other source as the Committee shall determine properly reflects the market price. (d) All awards shall be made within thirty (30) days after the end of the first quarter of the year following the year for which the awards are earned. 5. Discontinuance The Board may discontinue the Committee's authority to award said Incentive Stock Bonus Units and Tax Offset Bonus Units or discontinue the Plan at any time. Notice of termination shall be given to all members of the Committee and all previous Participants still in the employ of the Corporation prior to April 30 of the year for which such termination shall become effective. 6. Delivery and Payment (a) Conditioned upon the Participant's continued employment by the Corporation and/or its subsidiaries for five (5) full years after the year for which the award is made, or upon the Participant's earlier death, permanent and total disability or retirement after the age of 65 (or prior thereto with the consent of the Board of Directors) or after the occurrence of a change in control, as defined in subparagraph (c) below, of the Corporation, the Corporation within ninety (90) days after the occurrence of any of such events, shall issue to the Participant (or the personal representative or heirs of a deceased Participant) that number of shares of the Corporation's common stock which equals the number of Incentive Stock Bonus Units previously awarded the Participant which have vested as a result of such event; and that amount of cash equivalent to the value of that number of shares of common stock equal to the number of Tax Offset Bonus Units awarded the CEO and COO which have vested as a result of such event. At that time, it shall also pay to any Participant receiving shares (other than the CEO and COO) that amount of cash which is equal to the amount of Federal taxes which such Participant will be required to pay, during such year of payment, by reason of his receipt of such stock and cash if he were subject to the highest marginal Federal income tax rate. For example, if, in the year of payment, the market value of the stock is $100,000 and the highest Federal income tax rate is 40%, then subtract 40% from 100% yielding 60% and divide the market value of the stock issued ($100,000) by 60% which equals $166,666. Then subtract the market value of the stock ($100,000) leaving the sum of $66,666, which is the amount of cash to be paid. The market value of the shares and cash issued to him shall be based upon the last price or closing price of the Corporation's stock on the day before the date of issuance and/or payment as reported in the Midwest Edition of The Wall Street Journal or such other source as the Committee shall determine is representative of the market price (or in the event the shares of the Corporation are listed on any exchange, based upon the closing price on the day before the date of issuance); provided, however, that if the Participant's employment shall have been terminated by the Corporation prior to the expiration of said five year period and the Board of Directors shall determine that his interest in the Plan to the extent awarded during the five years prior to such termination or any portion thereof shall continue, then and in that event, he shall receive all or such portion of the awards previously made to him at such time and in such amounts as the Board of Directors may in its absolute discretion determine; provided further, that the Committee may reduce the amount of cash payable to the CEO and/or COO under a Tax Offset Bonus Unit if the Committee determines that such reduction is appropriate in light of the marginal Federal income tax rate in effect at the time such cash is to be paid. (b) When some or all of the shareholders of the Corporation receive stock pursuant to a transaction resulting in a change of control, that new stock shall be issued to the Participant in lieu of the Corporation's stock which would have otherwise been issued under this Paragraph 6 and in the same ratio as received by the Corporation's other shareholders for their shares. (c) "Change in control", as used in this Paragraph 6, shall be deemed to have occurred if any individual, corporation, partnership or other person or entity, together with its Affiliates and Associates, acquires as the Beneficial Owner more than thirty-five percent (35%) in the aggregate of the outstanding shares of the Corporation entitled to vote in the election of Directors, and within a 400-day period thereafter a majority of Directors elected to the Board, or a majority of the persons constituting a group authorized to hire or terminate employment of officers, if other than the Board, are different from the Directors or persons constituting the Board or group just prior to the start of such period or a group other than the Board is created to hire or terminate employment of officers. The term "Affiliate," "Associate" and "Beneficial Owner" as used in this subparagraph (c) shall be defined by reference to the Securities Exchange Act of 1934 and rules in effect thereunder as of the date of the amendment of this Paragraph 6. 7. Forfeiture In the event of the Participant's termination of employment with the Corporation and its subsidiaries for any reason other than death, permanent and total disability or retirement after the age of 65, any rights under this Plan, except shares and cash theretofore issued and paid or required to have been issued and paid, shall be forfeited, except as otherwise determined by the Board of Directors as provided in 6, above. 8. Nature of Rights The Incentive Stock Bonus Units and Tax Offset Bonus Units shall be used solely as a device for measurement and determination of the amount of shares and cash to be issued and paid to Participants as provided in the Plan. The Incentive Stock Bonus Units and Tax Offset Bonus Units shall not constitute nor be treated as property or as a trust fund of any kind. All amounts at any time attributable to the Incentive Stock Bonus Units and Tax Offset Bonus Units shall be treated as property of the Corporation and the Participant's rights hereunder are limited to the rights to receive cash and shares of common stock of the Corporation as herein provided. The award of Incentive Stock Bonus Units and Tax Offset Bonus Units shall not entitle Participants to any rights as shareholders but only such rights as are specified in the Plan. 9. Securities Act of 1933 Upon issuance of common stock of the Corporation to the Participant (or the personal representative or heirs of a deceased Participant) the recipient of such stock shall represent that the shares of stock are taken for investment and not resale and make such other representations as may be necessary to qualify the issuance of the shares as exempt from the Securities Act of 1933 or to permit registration of the shares and shall represent that the recipient shall not dispose of such shares in violation of the Securities Act of 1933. The Corporation reserves the right to place a legend on any stock certificate issued pursuant to the Plan to assure compliance with this Paragraph 9. No shares of common stock of the Corporation shall be required to be distributed until the Corporation shall have taken such action, if any, as is then required to comply with the provisions of the Securities Act of 1933 or any other then applicable securities law. 10. Maximum Shares Issued The aggregate number of shares of common stock of the Corporation which may be issued under the Plan shall not exceed 1,200,000. The initial number of shares authorized under the Plan in 1978 was 100,000. Giving effect to stock splits since the Plan's inception, the number of shares covered by the Plan is 1,200,000 as of the effective date of this Third Amendment and Restatement. Prior to 1996, 374,145 units have been awarded, leaving a balance of 825,855 units. On and after the effective date of this Amendment, a person may be awarded under this Plan up to a maximum of 400,000 Incentive Stock Bonus Units (and an equal number of Tax Offset Bonus Units). The Corporation shall, from time to time, purchase its own shares on the open market for treasury shares in such amounts as may be necessary for the purpose of carrying out the terms of this Plan; provided, however, upon a two-thirds (2/3) affirmative vote of the Board, the Corporation may issue its unissued shares of common stock in lieu of such treasury shares. 11. Withholding of Tax There shall be deducted from any compensation due any Participant under the Plan, whether in the form of cash or stock distribution, cash in the amount of any tax required by any governmental authority to be withheld and paid over by the Corporation to such governmental authority for the account of the person entitled to such distribution. 12. Effective Date This Amendment shall become effective for the year 1996; provided, however, that no Participant shall be entitled to any distribution of shares or cash thereunder unless and until this Third Amendment shall have been ratified by the affirmative vote of the holders of a majority of the shares of common stock of the Corporation represented at any meeting thereof at which a quorum is present. 13. Dilution In the event of a stock split, stock dividend, reclassification, reorganization or other capital adjustment of shares of common stock of the Corporation, the number of Incentive Stock Bonus Units and Tax Offset Bonus Units of a Participant shall be adjusted in the same manner as shares of the Corporation's common stock reflected by such Incentive Stock Bonus Unit or Tax Offset Bonus Unit would be adjusted. 14. Transferability Any rights arising under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution. 15. Termination, Amendment or Extension of Plan Unless the Plan or authority of the Committee has been discontinued by the Board as provided in Paragraph 5 above, the Committee may, but need not, make awards under the Plan so long as the maximum number of shares authorized in Paragraph 10 shall not have been reserved and/or awarded. The Committee may modify the Plan at any time; provided, however, that (a) such modification shall not materially change the Corporation's obligations under the Plan unless approved by the Board; (b) such modification shall not reduce the benefits to which any Participant would be entitled under awards previously made without his consent in writing; and (c) in the event any modification shall increase the aggregate maximum number of shares to be issued under the Plan beyond those authorized in Paragraph 10 or shall change the manner in which the maximum amount of the Bonus Pool for any given year is determined under Paragraph 3 or the class of employees eligible to participate as provided in Section 2(d), such amendment shall be subject to ratification by the affirmative vote of the shareholders in the same manner as provided in Paragraph 12 hereof with respect to the original ratification of the Plan. EX-13 4 (Page 11 of 1996 Annual Report to Shareholders) SELECTED FINANCIAL DATA (UNAUDITED) (PER SHARE DATA RESTATED FOR TWO-FOR-ONE STOCK SPLIT)
COMMON STOCK DATA: (per share) Price Range -------------------------------------------- 1996 1995 Dividends ------------------- -------------------- -------------------- High Low High Low 1996 1995 ------- ------- ------- ------- ------- ------- First Quarter $30-1/8 $24-5/8 $21-1/4 $16-1/4 $.0550 $.0450 Second Quarter 30 25-1/8 24-3/4 19-1/8 .0550 .0450 Third Quarter 28-3/4 23-3/4 25-7/8 23-3/8 .0550 .0450 Fourth Quarter 32-1/16 28 25-1/4 22-1/8 .0625 .0550
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 FINACIAL DATA: (in millions, except per share data) 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Net sales $1,034.6 $959.8 $851.2 $739.4 $654.4 Income before cumulative effect of accounting changes 147.9 131.7 110.3 107.1 95.5 Net income 147.9 131.7 110.3 96.3 95.5 Per share: Income before cumulative effect of accounting changes 1.48 1.32 1.11 1.08 .96 Net income 1.48 1.32 1.11 .97 .96 Dividends .2275 .1900 .1688 .1500 .1300 Total assets 1,100.0 985.2 852.0 753.4 615.8 Long-term debt 13.1 13.8 14.5 17.3 18.7
Note - In 1993, the Company acquired the net assets and business of Supelco, Inc. and all of the stock of Circle AW Products Company.
QUARTERLY FINANCIAL DATA: (in millions, except per share data) 1996 QUARTER ENDED -------------------------------------------- March 31 June 30 Sept. 30 Dec. 31 -------- ------- -------- ------- Net sales $262.4 $258.8 $255.8 $257.6 Gross profit 141.4 138.2 137.2 141.6 Net income 36.7 37.0 37.0 37.2 Net income per share .37 .37 .37 .37 1995 QUARTER ENDED -------------------------------------------- March 31 June 30 Sept. 30 Dec. 31 -------- ------- -------- ------- Net sales $244.8 $243.3 $239.1 $232.6 Gross profit 130.0 128.9 126.7 126.3 Net income 32.7 33.5 33.2 32.3 Net income per share .33 .34 .33 .32
(Pages 12-13 of 1996 Annual Report to Shareholders) MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- During the three years ended December 31, 1996, the Company's sales and earnings continued to grow. Chemical sales increased 7.4%, 13.0%, and 11.9% for 1996, 1995 and 1994, respectively. This sales growth is attributed to selective price increases, the annual addition of new products and the opening of new international sales offices. Price increases for products listed in the general chemical catalogs averaged 4.5% in 1996 and 1995 and 5.0% in 1994. New product sales, while not material in the year introduced, contribute to sales growth in subsequent years. The effect of translating foreign currency sales into the U.S. dollar reduced the 1996 sales growth by 1.3%, contributed 3.5% of the 1995 sales growth and had only a slightly positive impact on 1994 sales growth. Chemical sales for 1996 and 1995 also benefited from aggressive marketing and closer customer contacts, partially offsetting the effect of reduced growth in research funding in all major markets. Sales gains for 1994 reflect a benefit from the acquisition of Supelco in May 1993. Emphasis on international markets and new sales offices helped achieve growth in international direct sales of 14% in 1996, 18% in 1995 and 16% in 1994, after eliminating the effect of changes in currency exchange rates. The increase in direct international sales is partially offset by a slowing in the growth of export sales from the United States. A 1% decrease in export sales in 1996, following increases in export sales of 2% and 5% in 1995 and 1994 respectively, reflect the continuing transfer of sales to both our existing and new international offices, together with the impact of the stronger U.S. dollar in 1996. Metal sales increased 9.6%, 11.6%, and 30.4% for 1996, 1995 and 1994, respectively. Average selling prices decreased 2% in 1996 after increasing 6% in 1995 and 2% in 1994, all in response to changes in raw material costs. Excluding the effect of price changes in the two most recent years, the growth rate in 1996 improved, due in part to the addition of electronic enclosures to the product line. Slower growth in 1995 resulted from slower construction demand. The higher growth rate in 1994 was due to increased volume from stronger construction demand and the acquisition of Circle AW in June of 1993, which provided one-third of the 1994 gain. Cost of products sold was 46.0%, 46.7%, and 47.6% of sales in 1996, 1995 and 1994, respectively. The continuing improvement is due to increased utilization of new facilities, productivity gains, a higher proportion of sales of manufactured chemical products, product mix changes and, in 1995 and 1994, higher selling prices for metal products. Price decreases for metal products in 1996 partially offset the positive effect of the improvements. The cost of chemical products sold increased by 5.0% and the cost of metal products sold increased by 10.8% in 1996, compared to sales increases of 7.4% and 9.6%, respectively. Selling, general and administrative expenses were 31.8%, 32.1%, and 32.4% of sales in 1996, 1995 and 1994, respectively. The decrease in 1996 and 1995 reflects ongoing efforts to effectively manage staffing levels and control other significant operating expenses. Additionally, in 1996, net interest income increased pretax earnings by $6.3 million over 1995, reflecting higher average cash balances. Net interest costs declined in 1995 by $1.5 million, due to a substantial increase in cash and temporary cash investments provided by operations and a reduced level of capital expenditures. In 1995, the control of significant operating expenses and decline in net interest costs were partially offset by an increase in deferred compensation expense from a credit of $1.8 million in 1994 to an expense of $4.1 million in 1995. The expense in 1995 was due to improved operating results and increases in the Company's stock price compared to the omission of deferred compensation awards for 1994 due to lower earnings growth and a decline in the market price of the stock in 1994. Management expects future sales growth from the continuing introduction of new products, more effective distribution of catalogs and added promotional and marketing programs, the continuing expansion of a sales and marketing unit to actively promote sales of research chemicals, and the extension of our new coagulation programs into Europe. Additionally, 1997 sales will benefit from new sales offices. Liquidity and Capital Resources - ------------------------------- In 1996, cash and temporary cash investments increased $19.7 million while short-term borrowings were reduced by $4.7 million. At December 31, 1996, there were no borrowings outstanding under the Company's credit arrangements, which provide for borrowing up to $100 million. In 1995, cash and temporary cash investments increased by $74.2 million while short-term borrowings were reduced by $11.4 million. Cash provided by operating activities was $153.4 million in 1996, a decrease of $7.8 million from 1995. The change resulted mainly from a $16.2 million increase in net income in 1996 offset by an increase in accounts receivable and inventories of $42.1 million in 1996 compared to $22.2 million in 1995. The increase in receivables is due primarily to the stronger sales growth in the fourth quarter of 1996. Inventory has grown at a lower rate than sales and the Company continues to improve its management of this asset through utilizing better forecasting methods. Cash generated by operations and available from credit facilities continues to provide sufficient liquidity for present and future operating and capital needs. Cash currently available and expected to be generated in 1997 will be invested on a temporary basis. Longer term, excess funds are expected to be reinvested in the business to expand production and distribution capacity. Also, depending on opportunities and market conditions, funds may be used to acquire new businesses, as well as other possible uses. These investments should enable the Company to continue to grow sales and profits. During 1996, a total of $93.9 million was invested, with significant expenditures made in support of distribution and production expansions in the U.S., UK, Israel and Switzerland. During 1997, we expect capital investments of between $90 to $110 million for distribution, warehousing and production, both domestically and internationally. Projects for increased production capacity should be completed and begin operation in the U.S. and UK. Distribution projects should be completed in the U.S. The Company has not made any other significant commitments for, or acquisitions of, capital facilities early in 1997. The preceding discussion should be read in conjunction with the consolidated financial statements and notes thereto. Except for historical information, the statements in this discussion may constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections. Although the Company believes its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. The important factors that could cause actual results to differ materially from those in the forward looking statements herein include, without limitation, reduced growth in research funding, uncertainties surrounding possible government health care reform, government regulation applicable to the Company's business, the highly competitive environment in which the Company competes and the impact of fluctuations in foreign currency exchange rates. (Five bar graphs appear on pages 12-13 depicting the following data) 1996 1995 1994 ------ ------ ------ Chemical Sales (millions of dollars) $832.9 $775.8 $686.3 Metal Sales (millions of dollars) 201.7 184.0 164.9 Cost of Products Sold (percent of sales) 46.0% 46.7% 47.6% Selling, General and Administrative Expenses (percent of sales) 31.8% 32.1% 32.4% Capital Expenditures (millions of dollars) $93.9 $60.2 $72.5
(Page 14 of 1996 Annual Report to Shareholders)
CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) Years Ended December 31, -------------------------------- 1996 1995 1994 ---------- -------- -------- Net sales $1,034,565 $959,822 $851,190 Cost of products sold 476,120 447,898 405,110 ---------- -------- -------- Gross profit 558,445 511,924 446,080 Selling, general and administrative expenses 328,761 307,764 275,771 ---------- -------- -------- Income before provision for income taxes 229,684 204,160 170,309 Provision for income taxes 81,828 72,477 59,969 ---------- -------- -------- Net income $ 147,856 $131,683 $110,340 ========== ======== ======== Weighted average number of shares outstanding 99,930 99,714 99,658 ========== ======== ======== Net income per share $1.48 $1.32 $1.11 ========== ======== ======== The accompanying notes are an integral part of these statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Sigma-Aldrich Corporation: We have audited the accompanying consolidated balance sheets of Sigma-Aldrich Corporation (a Delaware Corporation) and subsidiaries (the "Company") as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholder's equity and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sigma-Aldrich Corporation and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP St. Louis, Missouri, February 14, 1997 (Page 15 of the 1996 Annual Report to Shareholders)
CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) December 31, ------------------------ 1996 1995 ---------- -------- ASSETS Current assets: Cash and temporary cash investments $103,685 $83,969 Accounts receivable, less allowance for doubtful accounts of $7,338 and $8,838, respectively 165,511 144,661 Inventories 362,784 346,388 Other current assets 34,657 34,983 ---------- -------- Total current assets 666,637 610,001 ---------- -------- Property, plant and equipment: Land 32,276 29,365 Buildings and improvements 233,684 211,805 Machinery and equipment 338,531 301,314 Construction in progress 54,927 30,086 Less - Accumulated depreciation (280,323) (244,649) ---------- -------- Net property, plant and equipment 379,095 327,921 ---------- -------- Other assets 54,226 47,266 ---------- -------- $1,099,958 $985,188 LIABILITIES AND STOCKHOLDERS' EQUITY ========== ========= Current liabilities: Notes payable $2,615 $7,306 Current maturities of long-term debt 9,454 459 Accounts payable 60,881 57,087 Accrued payroll and payroll taxes 11,571 8,909 Other accrued expenses 16,689 25,153 Accrued income taxes 9,107 9,097 ---------- -------- Total current liabilities 110,317 108,011 ---------- -------- Long-term debt 3,787 13,834 ---------- -------- Deferred postretirement benefits 32,918 29,910 ---------- -------- Deferred compensation 10,662 8,699 ---------- -------- Stockholders' equity: Common stock 100,044 49,877 Capital in excess of par value 17,002 11,455 Retained earnings 819,467 744,370 Cumulative translation adjustments 5,761 19,032 ---------- -------- Total stockholders' equity 942,274 824,734 ---------- -------- $1,099,958 $985,188 ========== ======== The accompanying notes are an integral part of these balance sheets.
(Page 16 of the 1996 Annual Report to Shareholders)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (IN THOUSANDS, EXCEPT PER SHARE DATA) Common Stock 200,000 Shares Authorized ($1.00 Par) ------------------ Capital in Cumulative Excess of Retained Translation Shares Amount Par Value Earnings Adjustments ------ ------- --------- -------- ----------- Balance, December 31, 1993 49,805 $49,805 $8,883 $538,111 $(5,659) Net income -- -- -- 110,340 -- Dividends ($.3375 per share) -- -- -- (16,817) -- Awards under deferred compensation plan 19 19 898 -- -- Exercise of stock options 8 8 223 -- -- Translation adjustment -- -- -- -- 13,694 -------- -------- -------- -------- -------- Balance, December 31, 1994 49,832 49,832 10,004 631,634 8,035 Net income -- -- -- 131,683 -- Dividends ($.38 per share) -- -- -- (18,947) -- Awards under deferred compensation plan 18 18 564 -- -- Exercise of stock options 27 27 887 -- -- Translation adjustment -- -- -- -- 10,997 -------- -------- -------- --------- -------- Balance, December 31, 1995 49,877 49,877 11,455 744,370 19,032 Net income -- -- -- 147,856 -- Dividends ($.2275 per share) -- -- -- (22,738) -- Awards under deferred compensation plan 8 8 384 -- -- Exercise of stock options 138 138 5,163 -- -- Stock split (2 for 1) 50,021 50,021 -- (50,021) -- Translation adjustment -- -- -- -- (13,271) -------- --------- --------- --------- --------- Balance, December 31, 1996 100,044 $100,044 $17,002 $819,467 $5,761 ======== ========= ========= ========= ========= Share and per share information prior to the December 1996 stock split have not been restated. The accompanying notes are an integral part of this statement.
(Page 17 of 1996 Annual Report to Shareholders)
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) Years Ended December 31, -------------------------------- 1996 1995 1994 -------- -------- -------- Cash flows from operating activities: Net income $147,856 $131,683 $110,340 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,213 40,872 36,655 Deferred income taxes 1,918 1,037 (613) Postretirement benefits expense 3,739 3,584 3,547 Deferred compensation expense (credit) 2,762 4,111 (1,757) Deferred compensation payments (407) (526) (740) Increase in accounts receivable (22,726) (8,910) (18,592) Increase in inventories (19,361) (13,328) (20,090) Increase in other current assets (1,297) (7,384) (5,222) Increase in accounts payable 2,847 1,182 6,883 Increase (decrease) in accrued payroll and payroll taxes 2,435 (1,212) 276 Increase (decrease) in other accrued expenses (8,904) 6,562 124 Increase (decrease) in accrued income taxes (655) 3,584 (799) -------- -------- -------- Net cash provided by operating activities 153,420 161,255 110,012 -------- -------- -------- Cash flows from investing activities: Property, plant and equipment additions (93,888) (60,224) (72,494) Sale of equipment 1,228 2,096 1,203 Acquisition of businesses, net of cash acquired (13,629) -- -- Other, net (1,500) -- (3,872) -------- -------- -------- Net cash used in investing activities (107,789) (58,128) (75,163) -------- -------- -------- Cash flows from financing activities: Repayment of notes payable (4,419) (10,850) (18,032) Repayment of long-term debt (1,036) (1,236) (3,245) Payment of dividends (22,738) (18,947) (16,817) Exercise of employee stock options 5,301 914 231 -------- -------- -------- Net cash used in financing activities (22,892) (30,119) (37,863) -------- -------- -------- Effect of exchange rate changes on cash (3,023) 1,216 2,507 -------- -------- -------- Net change in cash and cash equivalents 19,716 74,224 (507) Cash and cash equivalents at beginning of year 83,969 9,745 10,252 -------- -------- -------- Cash and cash equivalents at end of year $103,685 $83,969 $9,745 ======== ======== ======== Supplemental disclosures of cash flow information: Income taxes paid $81,802 $68,187 $61,349 Interest paid, net of capitalized interest 1,390 1,922 3,622 The accompanying notes are an integral part of these statements.
(Pages 18-24 of 1996 Annual Report to Shareholders) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - Summary Of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Financial Instruments: The Company considers its temporary cash investments, which have original maturities of three months or less, to be cash equivalents. The Company has no financial instruments that have a materially different fair value than the respective instrument's carrying value. Gains and losses on hedges of existing assets or liabilities are recognized monthly and are included in selling, general and administrative expenses. See Note 5 - Financial Derivatives and Risk Management for further information regarding the Company's hedging activities. Property, Plant and Equipment: The cost of property, plant and equipment is depreciated over the estimated useful lives of the assets using the straight-line method with lives ranging from three to twelve years for machinery and equipment and fifteen to forty years for buildings and improvements. The Company capitalizes interest as part of the cost of constructing major facilities and equipment. Net Income Per Share: Net income per share is based on the weighted average number of shares outstanding during each period after giving retroactive effect to the stock split described in Note 9 - Common Stock. Foreign Currency Translation: Foreign currency assets and liabilities are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders' equity. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. NOTE 2 - Inventories The principal categories of inventories are (in thousands): December 31, -------------------- 1996 1995 -------- -------- Finished goods $288,293 $279,178 Work in process 22,132 20,382 Raw materials 52,359 46,828 -------- -------- Total $362,784 $346,388 ======== ======== Chemical products are valued at the lower of cost or market. Costs for certain domestic chemical inventories (23% of total chemical inventories) are determined using the last-in, first-out method. Costs for other chemical inventories are determined by specific lot using purchase price and cost to manufacture, which includes material, labor and overhead. If the cost of all chemical inventories had been determined using the specific cost method, inventories would have been $6,538,000, $8,062,000, $7,410,000, and $7,327,000 higher than reported at December 31, 1996, 1995, 1994 and 1993, respectively. Metal inventories are valued at the lower of cost or market, cost being determined using the first-in, first-out method, which includes material, labor and overhead. NOTE 3 - Notes Payable The Company has three unsecured domestic bank revolving credit facilities totaling $70,000,000. A $40,000,000 facility expires in May 1997, with two other facilities of $15,000,000 each expiring in June 1997, or earlier upon notice by either party. The Company also has two unsecured multi- currency bank commitments totaling $30,000,000. One facility expires in June 1997, the other in June 1998. Interest rates for all facilities are based on federal funds, LIBOR, prime or other rates offered by the lending banks. No borrowings were outstanding under the domestic arrangements at December 31, 1996 or 1995 or under the multi-currency facility at December 31, 1996. Borrowings of $4,934,000 under the multi-currency commitments were outstanding at December 31, 1995, with an average interest rate of 4.7%. The Company intends to renew all of these facilities before they expire. Notes payable by international subsidiaries were $2,615,000 and $2,372,000 at December 31, 1996 and 1995, respectively, and are payable in local currencies with weighted average interest rates of 8.3% and 3.1% at December 31, 1996 and 1995, respectively. NOTE 4 - Long-Term Debt Long-term debt consists of the following (in thousands): December 31, ----------------- 1996 1995 ------ ------ 6.0% Industrial Revenue Bonds due April 1, 2010 $5,775 $5,775 5.875% Industrial Revenue Bonds due July 1, 2004 3,550 3,550 7.0% Industrial Revenue Bonds due Nov. 1, 2014 2,700 2,700 Other 1,216 2,268 ------ ------ 13,241 14,293 Less-Current maturities (9,454) (459) ------- ------- $3,787 $13,834 ======= ======= Both the 6.0% and 5.875% Industrial Revenue Bonds are subject to optional redemption by the Company in 1997. If the bonds are not redeemed by the Company, the interest rate will be adjusted and a new interest rate calculation period will be determined. At that time, the bondholders have the option of continuing to hold the bonds or redeeming them at par value. Holders of the 6.0% bonds have been notified that the new interest rate is 4.5%. The Company does not intend to reissue any of the 6.0% or 5.875% bonds that are redeemed by the current holders and accordingly, the amount outstanding is included in current maturities. Holders of the 5.875% bonds will be notified of the new rate in May, 1997. The 7.0% Industrial Revenue Bonds are subject to optional semi-annual redemption at par value by the Company until November 1, 1999. Total interest expense incurred by the Company, net of immaterial amounts capitalized, was $1,824,000, $1,647,000 and $2,910,000 in 1996, 1995 and 1994, respectively. NOTE 5 - Financial Derivatives And Risk Management The Company operates internationally, giving rise to exposure resulting from changes in foreign currency exchange rates. Derivative financial instruments are utilized by the Company to reduce the financial impact of those exposures. The Company does not hold or issue such financial instruments for trading purposes. The Company enters into forward exchange contracts to hedge certain receivables and payables denominated in foreign currencies (principally the British pound sterling, German mark, French franc and Swiss franc). Some of the contracts involve the exchange of two foreign currencies, according to the requirements of international subsidiaries. The purpose of the Company's hedging activities is to protect the Company from the risk that the receipts resulting from product sales to customers outside the United States and payments for purchases from vendors outside the United States will be adversely affected by changes in exchange rates from the original transaction date. The amount of open forward exchange contracts at December 31, 1996 and 1995 was $159.1 million and $130.9 million, respectively. The terms of the contracts are generally less than six months. The Company's contracts are with large, reputable commercial banks and, accordingly, the Company expects all counterparties to meet their obligations. NOTE 6 - Lease Commitments The Company's subsidiaries lease manufacturing and warehouse facilities and computer equipment under non-cancelable leases expiring at various dates through 2022. Rent charged to operations was $8,676,000, $8,322,000, and $9,875,000 in 1996, 1995 and 1994, respectively. Minimum rental commitments for non-cancelable leases in effect at December 31, 1996, are as follows (in thousands): 1997 $9,001 1998 7,161 1999 3,419 2000 1,492 2001 1,090 2002-2022 1,767 NOTE 7 - Income Taxes The provision for income taxes consists of the following (in thousands): 1996 1995 1994 ------- ------- ------- Current: Federal $58,376 $55,721 $50,089 State 6,609 6,399 5,882 International 14,925 9,320 4,611 ------ ------ ------ Total current 79,910 71,440 60,582 ------ ------ ------ Deferred: Federal 1,833 (394) (1,946) State 482 (74) (293) International (397) 1,505 1,626 ------- ------- ------- Total deferred 1,918 1,037 (613) ------- ------- ------- Total provision for income taxes $81,828 $72,477 $59,969 ======= ======= ======= A reconciliation of statutory and effective tax rates is as follows: 1996 1995 1994 ---- ---- ---- Statutory tax rate 35.0% 35.0% 35.0% FSC benefits (1.4) (1.7) (1.5) State income taxes, net of federal benefits 1.9 2.0 2.1 International taxes .2 (.5) .3 Other, net (.1) .7 (.7) ----- ----- ----- 35.6% 35.5% 35.2% ===== ===== ===== Deferred income tax provisions reflect the effect of temporary differences between financial statement and tax reporting of income and expense items. The net deferred tax assets at December 31, which are included in other assets on the consolidated balance sheets, result from the following temporary differences (in thousands): 1996 1995 ------- ------- Gross deferred assets: Inventories $18,367 $16,668 Pension and postretirement benefit plans 13,794 13,320 ------- ------- Total 32,161 29,988 ------- ------- Gross deferred liabilities: Depreciation (19,867) (20,432) Other (10,512) (5,856) ------- ------- Total (30,379) (26,288) ------- ------- Net deferred tax assets $1,782 $3,700 ======= ======= At December 31, 1996 and 1995, no valuation allowance for the deferred tax assets was required. United States taxes are not provided on unremitted earnings and related cumulative translation adjustments of international subsidiaries (approximately $127,514,000 at December 31, 1996) because the Company intends to reinvest the earnings indefinitely. The estimated amount of income taxes that would be incurred should such earnings be distributed is not significant due to the availability of foreign tax credits. The Company has a Foreign Sales Corporation ("FSC") subsidiary which is taxed at a lower effective tax rate on its income from export sales from the U.S. NOTE 8 - Insurance The Company's general and products liability insurance coverage, which provides for risks up to $200 million, was renewed during 1996. The current policies provide limited coverage for environmental damage and are written on a claims-made basis. NOTE 9 - Common Stock In November 1996, the Company declared a two-for-one common stock split effected in the form of a 100% stock dividend to stockholders of record on December 16, 1996. Since the par value of the common stock remains unchanged, the increased shares effected by the stock split resulted in a transfer from retained earnings to common stock during 1996. Unless otherwise noted, all share and per share information has been restated to reflect this stock split. The Company's deferred compensation plan provides for cash and common stock payments to certain key employees. Under this plan, a bonus pool is calculated by a formula based on the amount of increase in profitability. Bonus units are then awarded. Bonus units are distributed five years after being awarded in the form of one share of common stock for each bonus unit. In addition, the Company makes cash payments equal to the amount of Federal income taxes the employee would be required to pay for the receipt of such stock and cash at the highest marginal Federal income tax rate. Expenses for this plan are recorded during the period for which the calculation is made. During 1996, 1995 and 1994, 57,900, 35,800, and 37,400 shares of common stock, respectively, were issued under this plan. At December 31, 1996, 148,200 bonus units were awarded but not distributed. This plan permits issuance of a maximum of 2,400,000 shares of the Company's common stock, of which 1,593,810 shares remain to be awarded. The Company's Share Option Plan of 1995, which replaced the share option plan of 1987, permits the granting of incentive stock options or non-qualified options to purchase up to 4,000,000 shares of the Company's common stock through 2005. Incentive stock options may not have an option price of less than the fair market value of the shares at the date of the grant. Options generally become exercisable one year following the grant date and expire ten years after the grant date. Options granted in 1996 to purchase 249,000 shares become exercisable over a one to five year period. Options granted in 1995 to purchase 22,000 shares become exercisable over a one to two year period. Options to purchase 2,984,000 shares of the Company's common stock under this plan remain to be granted at December 31, 1996. The Company's Share Option Plan of 1987 permitted the granting of incentive stock options or non-qualified options to purchase up to 2,000,000 shares of the Company's common stock through 1997. Options granted had an option price equal to the market value of the shares at the date of the grant. Options are generally exercisable one year following the grant date. Options granted in 1994 and 1993 to purchase 320,000 and 260,000 shares, respectively, become exercisable ratably over a five year period. No further options will be issued under the Share Option Plan of 1987 and the balance of the shares that had been reserved for issuance under this plan were released. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Company's two stock option plans been determined based on the fair value at the grant date for awards in 1996 and 1995 consistent with the provisions of this statement, the Company's net income and net income per share would have been as follows (in thousands, except net income per share): 1996 1995 -------- -------- Net income $141,562 $131,290 Net income per share $1.42 $1.32 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 1996 and 1995: dividend yield of .74%, expected volatility of 17.6%, risk-free interest rate of 6.50% and expected life based on historical exercise periods of 5.75 years. A summary of the combined activity and balances for the Company's stock options for the two plans as of December 31, 1996, 1995 and 1994 and changes during the years ended on those dates is as follows: 1996 1995 1994 ---------------------- --------------------- --------------------- Wtd. Avg. Wtd. Avg. Wtd. Avg. Exercise Exercise Exercise Shares Price Shares Price Shares Price --------- -------- --------- -------- -------- -------- Options outstanding, beginning of year 1,736,376 $21.31 1,809,980 $21.22 1,073,580 $23.97 Options granted 984,000 25.69 42,000 22.15 838,000 18.15 Options exercised (279,740) 19.41 (54,700) 16.71 (17,600) 15.43 Options cancelled (44,000) 21.83 (60,904) 23.13 (84,000) 26.77 --------- --------- --------- Options outstanding, end of year 2,396,636 23.43 1,736,376 21.31 1,809,980 21.22 ========= ========= ========= Options exercisable at year-end 1,419,436 21.70 1,692,176 21.29 969,780 23.87 Weighted average fair value of options granted during the year $8.02 $6.85
The following table summarizes information about stock options outstanding at December 31, 1996: Options Outstanding Options Exercisable --------------------------------------------- -------------------------- Number Wtd. Avg. Wtd. Avg. Number Wtd. Avg. Outstanding Remaining Exercise Exercisable Exercise Range of Exercise Prices at 12/31/96 Contractual Life Price at 12/31/96 Price - ------------------------ ----------- ---------------- ------- ----------- -------- $10.1875 to $14.5625 71,160 19.6 months $10.65 71,160 $10.65 $16.25 to $24.00 863,180 93.3 months 19.49 863,180 19.49 $24.875 to $31.25 1,462,296 96.0 months 26.36 485,096 27.20 --------- --------- 2,396,636 90.5 months 23.43 1,419,436 21.70 ========= =========
NOTE 10 - Company Operations By Segment The Chemical Products segment distributes biochemicals, organic chemicals, chromatography products, diagnostic reagents and related products for use in research and development, in the diagnosis of disease and in manufacturing. These products are both manufactured by the Company and purchased for resale. The Metal Products segment manufactures and distributes components for metal frameworks used in industry to support pipes, lighting fixtures and conduit, continuous networks of trays used in routing power and telecommunications cabling, and electrical and electronics enclosures. Sales between these two industry segments are not significant. Cash and temporary cash investments are considered available for general corporate purposes and, accordingly, are not allocated to the identifiable assets of either segment. The United States sales to unaffiliated customers presented in the summary of operations by geographic segment on page 22 include sales to international markets as follows (in thousands): Year Amount ---- -------- 1996 $106,154 1995 107,255 1994 104,825 The Company's operations by industry segment are as follows (in thousands): 1996 1995 1994 Net sales to unaffiliated customers: ---------- -------- -------- Chemical Products $832,924 $775,862 $686,325 Metal Products 201,641 183,960 164,865 ---------- -------- -------- Total $1,034,565 $959,822 $851,190 ========== ======== ======== Income before provision for income taxes: Chemical Products $193,075 $177,334 $149,444 Metal Products 31,395 27,916 23,501 Interest income (expense), net 5,214 (1,090) (2,636) -------- -------- -------- Total $229,684 $204,160 $170,309 ======== ======== ======== Depreciation: Chemical Products $36,221 $33,312 $29,404 Metal Products 5,007 4,239 4,076 ------- ------- ------- Total $41,228 $37,551 $33,480 ======= ======= ======= Capital expenditures: Chemical Products $77,541 $45,397 $68,059 Metal Products 16,347 14,827 4,435 ------- ------- ------- Total $93,888 $60,224 $72,494 ======= ======= ======= Identifiable assets at December 31: Chemical Products $860,676 $789,058 $746,887 Metal Products 135,597 112,161 95,341 Cash and temporary cash investments 103,685 83,969 9,745 ---------- -------- -------- Total $1,099,958 $985,188 $851,973 ========== ======== ========
The Company's operations by geographic segment are as follows (in thousands): 1996 1995 1994 -------- -------- -------- Net sales to unaffiliated customers: United States $683,810 $641,167 $602,573 International 350,755 318,655 248,617 Net intercompany sales between geographic areas: United States 146,202 125,652 92,752 International 39,268 36,735 32,782 Eliminations (185,470) (162,387) (125,534) ---------- -------- -------- Total $1,034,565 $959,822 $851,190 ========== ======== ======== Income before provision for income taxes: United States $192,415 $172,308 $156,380 International 41,664 36,760 16,803 Eliminations (4,395) (4,908) (2,874) -------- -------- -------- Total $229,684 $204,160 $170,309 ======== ======== ======== Identifiable assets at December 31: United States $783,699 $695,326 $612,721 International 348,732 307,902 256,563 Eliminations (32,473) (18,040) (17,311) ---------- -------- -------- Total $1,099,958 $985,188 $851,973 ========== ======== ========
NOTE 11 - Pension And Other Postretirement Benefit Plans Pension and Retirement Savings Plans The Company and its subsidiaries have several retirement plans covering substantially all U.S. employees and certain employees of international subsidiaries. The Company's defined benefit plans provide all eligible employees with a retirement benefit based upon compensation and years of service with the Company. The net periodic pension cost for the Company's defined benefit plans is as follows (in thousands): December 31, -------------------------------------------------------- United States International ------------------------- -------------------------- 1996 1995 1994 1996 1995 1994 ------ ------ ------ ------ ------ ------ Service cost $2,928 $1,673 $1,669 $2,082 $1,997 $2,336 Interest cost 3,284 2,391 2,196 2,169 2,123 1,760 Actual return on plan assets (5,254) (6,918) 329 (3,247) (3,508) (1,422) Net amortization and deferral 2,908 4,280 (2,515) 358 790 (897) ------ ------ ------ ------ ------ ------ Net periodic pension cost $3,866 $1,426 $1,679 $1,362 $1,402 $1,777 ====== ====== ====== ====== ====== ======
The Company's funding policy for its U.S. defined benefit plan is to contribute amounts that meet minimum funding requirements but which do not exceed the maximum funding limits as currently determined under applicable tax regulations. International plans are funded at a level to maintain the solvency of the plans as defined by local law. At December 31, 1996, assets of the Company's defined benefit plans were invested in listed common stocks, common trust funds, government and corporate bonds and money market instruments. No common stock of the Company is held by these plans. The funding status of the Company's defined benefit plans and amounts recognized with respect to these plans in the consolidated balance sheets are as follows (in thousands): December 31, ------------------------------------- United States International ---------------- ----------------- 1996 1995 1996 1995 ------- ------- ------- ------- Actuarial present value of benefit obligations: Vested $38,796 $37,692 $35,489 $35,445 ======= ======= ======= ======= Accumulated $40,829 $39,954 $35,489 $35,445 ======= ======= ======= ======= Projected $47,387 $41,396 $44,320 $44,325 Plan assets at fair value 52,372 41,024 47,353 46,286 ------- ------- ------- ------- Excess (deficiency) of plan assets over projected benefit obligations 4,985 (372) 3,033 1,961 Unrecognized net (gain) loss (2,767) 1,165 (1,346) (761) Unrecognized prior service cost 11,003 6,921 1,649 1,828 Unrecognized net transition asset (726) (817) (268) (284) ------- ------ ------ ------ Prepaid pension cost $12,495 $6,897 $3,068 $2,744 ======= ====== ====== ======
Assumptions used in the preceding determinations, which reflect average long-term expectations and may not represent current experience, are as follows: December 31, ---------------------------------- United States International ------------- ------------- 1996 1995 1996 1995 ---- ---- ---- ---- Discount rate in determining benefit obligations 7.5% 7.0% 4.6% 5.1% Compensation rate increase 5.5% 5.0% 3.7% 4.3% Return on plan assets 9.0% 8.5% 6.8% 6.6%
The Company's 401(k) retirement savings plan provides eligible U.S. employees with retirement benefits in addition to those provided by the defined benefit plan. The plan permits participants to voluntarily contribute up to 15% of their compensation, subject to Internal Revenue Code limitations. The Company also contributes a fixed amount per year for each eligible employee plus a percentage of the employee's contribution. The Company's policy is to fully fund this plan. The cost for this plan was $5,504,000, $2,829,000, and $2,337,000, for the years ended December 31, 1996, 1995 and 1994, respectively. Other Postretirement Benefits Certain employees of U.S. operations who retire on or after attaining age 55 with at least 7 years of service with the Company are entitled to postretirement health, dental and life coverages. These benefits are subject to deductibles, co-payment provisions and coordination with benefits available under Medicare. The Company may amend or change the plan periodically. The components of net postretirement benefit cost for 1996, 1995, and 1994 are as follows (in thousands): 1996 1995 1994 ------ ------ ------ Service cost $1,544 $1,346 $1,414 Interest cost 2,195 2,238 2,133 ------ ------ ------ Net post-retirement benefit cost $3,739 $3,584 $3,547 ====== ====== ====== A reconciliation of the plan's funded status to the accrued postretirement benefit liability included in the consolidated balance sheets at December 31, is as follows (in thousands): 1996 1995 ------ ------ Accumulated postretirement benefit obligation: Retirees $8,078 $9,320 Active - fully eligible 6,471 6,416 Active - other 16,175 18,582 ------- ------- Total 30,724 34,318 Plan assets at fair value -- -- ------- ------- Unfunded postretirement benefit obligation 30,724 34,318 Unrecognized net gain (loss) 3,042 (3,443) ------- ------- Accrued postretirement benefit liability 33,766 30,875 Less-Current portion included in other accrued expenses (848) (965) ------- ------- Deferred postretirement benefits liability $32,918 $29,910 ======= ======= Future benefit costs were estimated assuming medical costs increase at a 9.5% annual rate in 1996 decreasing ratably until the year 2000 to a 5.5% growth rate and remaining at 5.5% per year thereafter. A 1.0% increase in this annual trend rate would have increased the accumulated postretirement benefit obligation at December 31, 1996 by $2,740,000 and 1996 postretirement benefit expense by $410,000. The weighted average discount rate used to estimate the accumulated postretirement benefit obligation at December 31, 1996 is 7.5%. Benefits are funded as claims are paid.
EX-21 5 Exhibit 21 SIGMA-ALDRICH CORPORATION PRINCIPAL SUBSIDIARIES Sigma-Aldrich Corporation (Delaware), the Registrant: 1. Sigma Chemical Company (Delaware) (A) Sigma Redevelopment Corporation (Missouri) (B) Sigma Second Street Redevelopment Corporation (Missouri) (C) Sigma Israel Chemicals Ltd. (Israel) (D) Sigma-Aldrich Chemie Holding GmbH (Germany) (E) Sigma-Aldrich Chemie GmbH (Germany) (F) Sigma-Aldrich Marketing, Inc. (Missouri) 2. Aldrich Chemical Company, Inc. (Delaware) (A) Sigma-Aldrich N.V./S.A. (Belgium) (B) Sigma Chemie B.V. (The Netherlands) (C) Aldrich-Chemie Verwaltungs GmbH (Germany) (D) Aldrich-Chemie GmbH & Co. K.G. (Germany) (E) Sigma-Aldrich, S.r.l. (Italy) 3. B-Line Systems, Inc. (Missouri) 4. Sigma-Aldrich Company, Ltd. (United Kingdom) 5. Sigma-Aldrich Foreign Sales Corporation (Barbados) 6. Fluka Chemie AG (Switzerland) (A) Fluka Chemical Corporation (New Jersey) 7. Sigma-Aldrich Foreign Holding Company (Missouri) (A) Sigma-Aldrich Quimica S.A. (Spain) (B) Sigma-Aldrich Pty., Limited (Australia) (C) Sigma-Aldrich Canada, Ltd. (Canada) (D) Sigma-Aldrich s.r.o. (Czech Republic) (E) Sigma-Aldrich Chemical Representacoes, Ltd. (Brazil) (F) Sigma-Aldrich Quimica S.A. de C.V. (Mexico) (G) Sigma-Aldrich Handels GmbH (Austria) (H) Sigma-Aldrich Kft. (Hungary) (I) Sigma-Aldrich Sp.zo.o (Poland) (J) LabKemi AB (Sweden) (K) Sigma-Aldrich Japan KK (Japan) (L) Sigma-Aldrich Korea, Ltd. (South Korea) (M) Sigma-Aldrich Pte., Ltd. (Singapore) (N) Sigma-Aldrich (Pty.) Ltd. (South Africa) (O) Sigma-Aldrich India (New Delhi and Hyderbad) (P) Inq. F. Heidenreich AS (Norway) 8. Supelco, Inc. (Delaware) 9. Sigma-Aldrich Chimie S.N.C. (France) (A) Sigma-Aldrich Chimie France S.a.r.l. (France) All subsidiaries are directly or indirectly 100% owned. EX-23 6 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report incorporated by reference in this Form 10-K, into the Company's previously filed registration statements on Form S-8, file numbers 33-24415 and 33-62541. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP St. Louis, Missouri, March 28, 1997 EX-27 7
5 1,000 YEAR DEC-31-1996 DEC-31-1996 103685 0 172849 7338 362784 666637 659418 280323 1099958 110317 3787 100044 0 0 842230 1099958 1034565 1034565 476120 476120 328761 0 1824 229684 81828 147856 0 0 0 147856 1.48 1.48
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