-----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, HVuFEz9yoGHxkuSFeVVo6046Gjuj7/f358zCdmE/7XXd0TOj7arIZW18Z7tNoYoZ kYR3OSQuh7CisgKT7nMKpw== 0000090185-99-000005.txt : 19990402 0000090185-99-000005.hdr.sgml : 19990402 ACCESSION NUMBER: 0000090185-99-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 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: SEC FILE NUMBER: 000-08135 FILM NUMBER: 99582018 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, 1998 ------------------------------------------------ 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. [X] Aggregate market value of the voting stock held by non-affiliates of the Registrant: $2,698,881,606 March 5, 1999 - ------------------------------- ------------------------------- Value Date of Valuation Number of shares of the registrant's common stock, $1.00 par value, outstanding as of March 5, 1999 was 100,662,804. The following documents are incorporated by reference in the Parts of Form 10-K indicated below: Parts of Form 10-K into Documents Incorporated by Reference which Incorporated - ----------------------------------- ----------------------- Pages 12-28 of the Annual Report to Shareholders for the year ended December 31, 1998 Parts I, II and IV Proxy Statement for the 1999 Annual Meeting of Shareholders Part III The Index to Exhibits is located on page F-3 of this report. This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as any statements preceded by, followed by, or that include the words "believes," "expects," "anticipates" or similar expressions, and other statements contained herein regarding matters that are not historical facts. Although the Company believes its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. The important factors that could cause actual results to differ materially from those in the forward-looking statements herein include, without limitation, reduced growth in research funding, uncertainties surrounding possible government health care reform, government regulation applicable to the Company's business, the effectiveness of the Company's further implementation of its global software system, SAP, the status and effectiveness of the Company's Year 2000 efforts, the highly competitive environment in which the Company operates and the impact of fluctuations in foreign currency exchange rates. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by such cautionary statements. The Company does not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events. PART I - -------------------------------------------------------------------------------- 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. On May 5, 1993, the Company acquired the net assets and business of Supelco, Inc. ("Supelco"), a worldwide supplier of chromatography products used in chemical research and production, from Rohm and Haas Company. Effective December 23, 1998, the Company acquired the net assets and business of Genosys Biotechnologies, Inc. ("Genosys"), a leading supplier of custom synthetic DNA products, which are essential in gene research. (a) Chemical Products. - -------------------------------------------------------------------------------- 1) Products: The Company distributes approximately 85,000 chemical products for use primarily in research and development, in the diagnosis of disease, and as specialty chemicals for manufacturing. In laboratory applications, the Company's products are used in the fields of biochemistry, synthetic chemistry, quality control and testing, immunology, hematology, pharmacology, microbiology, neurology and endocrinology and in the studies of life processes. Sigma diagnostic products are used in the detection of heart, liver and kidney diseases and various metabolic disorders. Certain of these diagnostic products are used in measuring concentrations of various naturally occurring substances in the blood, indicative of certain pathological conditions. The diagnostic products are used in manual, semi-automated and automated testing procedures. The Company also offers, through a partnership with Amelung (a German manufacturer), analyzers that measure blood clotting. Supelco offers a full line of chromatography products and application technologies for analyzing and separating complex chemical mixtures. The line includes items for the collection and preparation of various samples for further chemical analysis, gas and liquid chromatography, reference standards and related laboratory products. Genosys offers custom synthetic DNA products,synthetic peptides and genes for life science research, all of which will support the Company's efforts to penetrate the molecular biology market. In June 1997 Sigma-Aldrich entered into a partnership with AlliedSignal (75% Sigma-Aldrich, 25% AlliedSignal), whereby Sigma-Aldrich agreed to sell and market Riedel-de Haen laboratory chemicals. Riedel-de Haen is a major European supplier of laboratory products. These products complement the Company's existing range of high quality research products. Aldrich also offers approximately 80,000 esoteric chemicals as a special service to customers interested in screening them for application in many areas(such as medicine and agriculture). This area accounts for less than 1% of the Company's sales. Because of continuing developments in the field of research, there can be no assurance of a continuing market for each of the Company's products. However, through a periodic review of technical literature, along with regular communications with customers, the Company's goal is to keep abreast of the trends in research and diagnostic techniques. This information, along with its own research technology, determines the Company's development of improved and/or additional products. 2) Production and Purchasing: The Company has chemical production facilities in Milwaukee and Sheboygan, Wisconsin (Aldrich); St. Louis, Missouri (Sigma); Bellefonte, Pennsylvania (Supelco); Germany (Aldrich Chemie GmbH & Co. K.G., RdH Laborchemikalien GmbH and Co., K.G.); Israel (Sigma Israel Chemicals Ltd.); Switzerland (Fluka Chemie AG, "Fluka"), and the United Kingdom (Sigma-Aldrich Company Ltd.). A minor amount of production is done by some of the Company's other subsidiaries. Biochemicals and diagnostic reagents are primarily produced by extraction and purification from yeasts, bacteria and other naturally occurring animal and plant sources. Organic and inorganic chemicals and radiolabeled chemicals are primarily produced by synthesis. Chromatography media and columns are produced using proprietary chemical synthesis and proprietary preparation processes. Similar processes are used for filtration and sample collection processes. Of the approximately 85,000 products listed in the Sigma, Aldrich, Fluka, Riedel-de Haen and Supelco catalogs, the Company produced approximately 39,000 which accounted for 44% of the net sales of chemical products for the year ended December 31, 1998. The remainder of products were purchased from a large number of sources either under contract or in the open market. No one supplier accounts for greater than 10% of the Company's chemical purchases. The Company has generally been able to obtain adequate supplies of products and materials to meet its needs, although no assurance can be given that shortages will not occur in the future. Whether a product is produced by the Company or purchased from outside suppliers, it is subjected to quality control procedures, including the verification of purity, prior to final packaging. This is done by a combined staff of approximately 280 chemists and lab technicians utilizing sophisticated scientific equipment. 3) Distribution and Sales: The Company markets its chemical products through separate sales and marketing units for research, fine chemicals and diagnostics and distributes over 2,400,000 comprehensive catalogs for the Sigma, Aldrich, Fluka, Riedel-de Haen and Supelco brands to customers and potential customers throughout the world. This is supplemented by certain specialty catalogs, by advertising in chemical and other scientific journals, by direct mail distribution of in-house publications and special product brochures and by personal visits by sales and technical representatives with customers. For customer convenience, Sigma packages approximately 200 combinations of certain individual products in diagnostic kit form. A diagnostic kit contains products which, when used in a series of manual and/or automated testing procedures, aid in detecting particular conditions or diseases. Diagnostic products accounted for approximately 10% of the Company's sales of chemical products in the year ended December 31, 1998. During the year ended December 31, 1998, products were sold to approximately 151,000 customers, including hospitals, universities, pharmaceutical companies and clinical laboratories as well as private and governmental research laboratories. The majority of the Company's sales are small orders in laboratory quantities averaging approximately $300. The Company also makes its chemical products available in larger-than-normal laboratory quantities for use in manufacturing. Sales of these products accounted for approximately 15% of chemical sales in 1998. During the year ended December 31, 1998, no one customer and no one product accounted for more than 2% of the net sales of chemical products. Customers and potential customers, wherever located, are encouraged to contact the Company by telephone ("collect" or on "toll-free" WATS lines) or via our homepage on the World Wide Web for technical staff consultation or for placing orders. Order processing, shipping, invoicing and product inventory are computerized. Shipments are made seven days a week from St. Louis, six days a week from Milwaukee, United Kingdom, Germany, Israel and Japan and five days a week from all other locations. The Company strives to ship its products to customers on the same day an order is received and carries significant inventories to maintain this policy. 4) International Operations: In the year ended December 31, 1998, 55% of the Company's net sales of chemical products were to customers located in foreign countries. These sales were made directly by Sigma, Aldrich, Fluka, Riedel-de Haen and Supelco, through distributors and by subsidiaries organized in Argentina, Australia, Austria, Belgium, Brazil, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Japan, Malaysia, Mexico, The Netherlands, Norway, Poland, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland and United Kingdom. Several foreign subsidiaries also have production facilities. For sales with final destinations in an international market, the Company has a Foreign Sales Corporation ("FSC") subsidiary which provides certain Federal income tax advantages. The effect of the tax rules governing the FSC is to lower the effective Federal income tax rate on export income. The Company intends to continue to comply with the provisions of the Internal Revenue Code relating to FSCs. The Company's international operations and domestic export sales are subject to certain risks such as changes in the legal and regulatory policies of foreign jurisdictions, local political and economic developments, currency fluctuations, exchange controls, changes in tariff restrictions, royalty and tax increases, export and import restrictions and restrictive regulations of foreign governments, among other factors inherent in these operations. The Company is unable to predict the extent to which its business may be affected in the future by these matters. During the year ended December 31, 1998, approximately 15% of the Company's domestic operations' chemical purchases were from international suppliers. Additional information regarding international operations is included in Note 10 to the consolidated financial statements on pages 24 and 25 of the 1998 Annual Report which is incorporated herein by reference. 5) Patents and Trademarks: The Company's patents are not material to its operations. The Company's significant trademarks are the brand names, "Sigma", "Aldrich", "Fluka", "Riedel-de Haen", "Supelco" and "B-Line" and marketing units, "Sigma-Aldrich Research", "Sigma-Aldrich Fine Chemicals" and "Sigma Diagnostics". Their related logos, which have various expiration dates, are expected to be renewed indefinitely. 6) Regulations: The Company engages principally in the business of selling products which are not foods or food additives, drugs or cosmetics within the meaning of the Federal Food, Drug and Cosmetic Act, as amended (the "Act"). A limited number of the Company's products, including in-vitro diagnostic reagents, are subject to labeling, manufacturing and other provisions of the Act. The Company believes it is in compliance in all material respects with the applicable regulations. The Company believes that it is in compliance in all material respects with Federal, state and local regulations relating to the manufacture, sale and distribution of its products. The following are brief summaries of some of the Federal laws and regulations which may have an impact on the Company's business. These summaries are only illustrative of the extensive regulatory requirements of the Federal, state and local governments and are not intended to provide the specific details of each law or regulation. The Clean Air Act (CAA), as amended, and the regulations promulgated thereunder, regulates the emission of harmful pollutants to the air outside of the work environment. Federal or state regulatory agencies may require companies to acquire permits, perform monitoring and install control equipment for certain pollutants. The Clean Water Act (CWA), as amended, and the regulations promulgated thereunder, regulates the discharge of harmful pollutants into the waters of the United States. Federal or state regulatory agencies may require companies to acquire permits, perform monitoring and to treat waste water before discharge to the waters of the United States or a Publicly Owned Treatment Works (POTW). The Occupational Safety and Health Act of 1970 (OSHA), including the Hazard Communication Standard ("Right to Know"), and the regulations promulgated thereunder, requires the labeling of hazardous substance containers, the supplying of Material Safety Data Sheets ("MSDS") on hazardous products to customers and hazardous substances the employee may be exposed to in the workplace, the training of the employees in the handling of hazardous substances and the use of the MSDS, along with other health and safety programs. The Resource Conservation and Recovery Act of 1976 (RCRA), as amended, and the regulations promulgated thereunder, requires certain procedures regarding the treatment, storage and disposal of hazardous waste. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and the Superfund Amendments and Reauthorization Act of 1986 (SARA), and the regulations promulgated thereunder, require notification of certain chemical spills and notification to state and local emergency response groups of the availability of MSDS and the quantities of hazardous materials in the Company's possession. The Toxic Substances Control Act of 1976 (TSCA), requires reporting, testing and pre-manufacture notification procedures for certain chemicals. Exemptions are provided from some of these requirements with respect to chemicals manufactured in small quantities solely for research and development use. The Department of Transportation (DOT) has promulgated regulations pursuant to the Hazardous Materials Transportation Act, referred to as the Hazardous Material Regulations (HMR), which set forth the requirements for hazard labeling, classification and packaging of chemicals, shipment modes and other goods destined for shipment in interstate commerce. Approximately 1,000 products, for which sales are immaterial to the total sales of the Company, are subject to control by either the Drug Enforcement Administration ("DEA") or the Nuclear Regulatory Commission ("NRC"). The DEA and NRC have issued licenses to several Company sites to permit importation, manufacture, research, analysis, distribution and export of certain products. The Company screens customer orders involving products regulated by the NRC and the DEA to verify that a license, if necessary, has been obtained. Approximately 200 products, for which sales are immaterial to the total sales of the Company, are subject to control by the Department of Commerce ("DOC"). The DOC has promulgated the Export Administration Regulations pursuant to the Export Administration Act of 1979, as amended, to regulate the export of certain products by requiring a special export license. (b) Metal Products. - -------------------------------------------------------------------------------- Components for strut, cable tray and pipe support systems are manufactured by B-Line at its facilities in Highland and Troy, Illinois; Norcross, Georgia; Reno, Nevada and Sherman, Texas. Electrical and electronic enclosures are manufactured at facilities in Aurora, Colorado; Portland, Oregon; Modesto, California; and Sherman, Texas. Components and complete systems used to support telecommunications apparatus and cabling are manufactured at the plant in Reno, Nevada. Strut and pipe support systems are metal frameworks and related accessories used in industry to support pipes, lighting fixtures and conduit. Strut systems can be easily assembled with bolts and spring-loaded nuts, eliminating the necessity of drilling or welding associated with other types of frameworks. B-Line manufactures and sells a wide variety of components for these systems, including steel struts rolled from coils, stamped steel fittings for interconnecting struts, shelf-supporting brackets, pipe and conduit supporting clamps, and accessories for the installation of strut systems on location. Pipe hangers are generally used in conjunction with strut systems to support heavy and light duty piping runs in the mechanical, plumbing and refrigeration industry. The principal materials used by B-Line in manufacturing are coils of steel and extruded aluminum which B-Line purchases from a number of suppliers. No one supplier is essential to B-Line's production. A limited number of components for strut and pipe support systems, including bolts and nuts and certain forged and cast components, are purchased from numerous sources and sold by B-Line as accessories to its own manufactured products. Cable tray systems are continuous networks of ventilated or solid trays used primarily in the routing of power cables and control wiring in power plant or industrial installations. The systems are generally hung from ceilings or supported by strut frameworks. Cable tray is produced from either extruded aluminum or roll-formed steel in various configurations to offer versatility to designers and installers. Non- metallic strut and cable tray products, which are used primarily in corrosive environments, are also available. Telecommunications equipment racks and cable runways are manufactured from aluminum or steel. The systems are used in commercial installations as well as installed in the central offices of telephone operating companies. As switching equipment is changed and upgraded, the systems are replaced. Electrical and electronic enclosures are metal enclosure boxes, generally manufactured from steel, that are used to contain and protect electric meters, fuse and circuit breaker boards and electrical panels. These products are used in industrial, commercial and residential installations. B-Line also manufactures a line of lightweight support fasteners to be used in commercial and industrial facilities to attach electrical and acoustical fixtures. B-Line sells primarily to electrical, mechanical and telecommunications wholesalers. Products are marketed directly by district sales offices and by regional sales managers through independent manufacturers' representatives. Products are shipped to customers from the Highland and Troy, Illinois; Norcross, Georgia; Reno, Nevada; Portland, Oregon; Modesto, California; Sherman, Texas; and Aurora, Colorado plants, from one regional warehouse and 27 consigned stock locations. B-Line's products are advertised in trade journals and by circulation of comprehensive catalogs. (c) Competition. - -------------------------------------------------------------------------------- Substantial competition exists in all of the Company's marketing and production areas. Although no comprehensive statistics are available, the Company believes it is a major supplier of organic chemicals and biochemicals for research and for diagnostic testing procedures involving enzymes and of chromatography products for analyzing and separating complex chemical mixtures. A few competitors offer thousands of chemicals and stock and analyze most of their products. While the Company generally offers a larger number of products, some of the Company's products are unusual and have relatively little demand. In addition, there are many competitors who offer a limited quantity of chemicals, and several companies compete with the Company by offering thousands of chemicals, although few of them stock or analyze substantially all of the chemicals they offer for sale. The Company believes its B-Line subsidiary to be among the three largest producers of metal strut framing, pipe hangers, cable tray component systems and enclosures, although reliable industry statistics are not available. In all product areas the Company competes primarily on the basis of customer service, product quality and price. (d) Employees. - -------------------------------------------------------------------------------- The Company employed 7,162 persons as of December 31, 1998. Of these, 5,739 were engaged in production and distribution of chemical products. The B-Line subsidiary employed 1,423 persons. The total number of persons employed within the United States was 4,748, with the balance employed by the international subsidiaries. The Company employed over 2,000 persons who have degrees in chemistry, biochemistry, engineering or other scientific disciplines, including approximately 260 with Ph.D. degrees. Employees engaged in chemical production, research and distribution are not represented by any organized labor group. B-Line's production workers at the Highland and Troy, Illinois facilities are members of the International Association of Machinists and Aerospace Workers, District No. 9 (AFL-CIO). The labor agreement covering these employees expires November 14, 1999. B-Line's production workers at the Norcross, Georgia facility are members of the United Food and Commercial Workers International (AFL-CIO), Retail Clerks Union Local 1063. The labor agreement covering these employees expires June 15, 2002. (e) Back-log of Orders. - -------------------------------------------------------------------------------- The majority of orders for chemical products in laboratory quantities are shipped from inventory, resulting in no back-log of these orders. However, individual items may occasionally be out of stock. These items are shipped as soon as they become available. Some orders for larger-than-normal laboratory quantities are for future delivery. On December 31, 1998 and 1997, the back-log of firm orders and orders for future delivery of chemical products was not significant. The Company expects that substantially all of the December 31, 1998 back-log will be shipped during 1999. On December 31, 1998 and 1997, the back-log of orders at B-Line was not significant. B-Line expects that substantially all of the December 31, 1998 back-log will be shipped during 1999. (f) Information as to Industry Segments. - -------------------------------------------------------------------------------- Information concerning industry segments for the years ended December 31, 1998, 1997 and 1996, is located in Note 10 to the consolidated financial statements on pages 24 and 25 of the 1998 Annual Report which is incorporated herein by reference. (g) Executive Officers of the Registrant. - -------------------------------------------------------------------------------- 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 391,000 square feet which is used for warehousing and production, a 75,000 square foot building used for warehousing, a 23,000 square foot building used for warehousing and office space, a 98,000 square foot building used for production, quality control and packaging and a 19,000 square foot production facility. The Company owns a 280,000 square foot building in St. Louis which is being partially utilized to provide additional quality control and warehousing capacity. Also in St. Louis, the Company owns 30 acres upon which is located a 286,000 square foot administration and distribution facility, in which its principal executive offices are located, and a 175,000 square foot diagnostic production and office building. In Milwaukee, the Company owns a 178,000 square foot building which is used for manufacturing, warehousing and offices, a 100,000 square foot building which is used for additional manufacturing and warehousing and a complex of buildings aggregating 322,000 square feet which is used primarily for warehousing and distribution. Also in Milwaukee, the Company owns a 152,000 square foot building which is used for warehousing, a 56,000 square foot administration facility and a 627,000 square foot distribution facility. The Company also owns 513 acres in Sheboygan, Wisconsin, upon which are located multiple buildings totaling 332,000 square feet for production and packaging. The Company also owns a 30,000 square foot administration, production and warehousing facility in Natick, Massachusetts. Fluka owns a 13 acre site in Buchs,Switzerland, upon which are located its primary production facilities. Approximately 357,000 square feet of owned production, warehousing and office facilities are at this site. In Greenville, Illinois, the Company owns 555 acres of land for future development of biochemical production facilities. Supelco owns 71 acres near Bellefonte, Pennsylvania, upon which is located a 153,000 square foot building used for manufacturing, warehousing, research and administration. Riedel-de Haen leases a 200,000 square foot production facility and an administration building in Seelze, Germany. The Company's B-Line manufacturing business is located in Highland and Troy, Illinois; Norcross, Georgia; Sherman, Texas; Reno, Nevada; Portland, Oregon; Modesto, California; and Aurora, Colorado. B-Line owns a 273,000 square foot building in Highland, Illinois, a 115,000 square foot building in Troy, Illinois, a 115,000 square foot building in Portland, Oregon, a 238,000 square foot building in Sherman, Texas, a 173,000 square foot building in Reno, Nevada and a 102,000 square foot building in Modesto, California. B-Line leases a 100,000 square foot facility in Norcross, Georgia and a 113,000 square foot facility in Aurora, Colorado. The Company also owns a 173,000 square foot warehouse and distribution facility in Allentown, Pennsylvania, leases a 20,000 square foot administration and production facility in The Woodlands, Texas and leases warehouses in Chicago, Illinois and in Bethany, Connecticut under short-term leases. Manufacturing and/or warehousing facilities are also owned or leased in the United Kingdom, Australia, Canada, Denmark, Finland, France, Germany, Israel, Japan, Mexico, Norway, Scotland, South Korea, Sweden and Switzerland. Sales offices are leased in all other locations. The Company considers the properties to be well maintained, in sound condition and repair, and adequate for its present needs. The Company expects to continue to expand its production and distribution capabilities in select markets. Item 3. Legal Proceedings. - -------------------------------------------------------------------------------- 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 1998. 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, 1998 and 1997, is located on page 28 of the 1998 Annual Report which is incorporated herein by reference. As of March 5, 1999, there were 1,858 record holders of the Registrant's Common Stock. Items 6 through 8. Selected Financial Data, Management's Discussion and - ----------------------------------------------------------------------- Analysis of Financial Condition and Results of Operations, Qualitative - ---------------------------------------------------------------------- and Quantitative Market Risk Disclosure and Financial Statements and - -------------------------------------------------------------------- Supplementary Data. - ------------------- The information required by Items 6 through 8 is incorporated herein by reference to pages 12-27 of the 1998 Annual Report. See Index to Financial Statements and Schedules on page F-1 of this report. Those pages of the Company's 1998 Annual Report listed in such Index or referred to in Items 1(a)(4), 1(f) and 5 are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and - ----------------------------------------------------------------------- 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 1999 Proxy Statement is incorporated herein by reference. The executive officers of the Registrant are: Name of Executive Officer Age Positions and Offices Held ------------------------- --- -------------------------- Karsten Bode 45 Vice President and President, Riedel-de Haen Thomas E. Briggs 53 Vice President and President, B-Line Larry S. Blazevich 51 Vice President, Information Services Terry R. Colvin 43 Vice President, Human Resources Carl T. Cori 62 Chairman of the Board and Chief Executive Officer J. Russel Gant 48 Vice President and President, Supelco David R. Harvey 59 President and Chief Operating Officer David W. Julien 44 Vice President and President, Sigma Rodney L. Kelley 44 Vice President, Safety James W. Meteer 48 Vice President, Quality Karen J. Miller 41 Controller Robert Monaghan 52 Vice President and President, Sigma Diagnostics Richard G. Morris 50 Vice President and President, Sigma-Aldrich Research Jai P. Nagarkatti 51 Vice President and President, Aldrich Phillip Ottiger 56 Vice President and President, Sigma-Aldrich Fine Chemicals Kirk A. Richter 52 Treasurer Thomas M. Tallarico 54 Vice President and Secretary Herbert Vuilleumier 52 Vice President and President, Fluka Frank D. Wicks 45 Vice President, Operations There is no family relationship between any of the officers. Mr. Bode was elected President of Riedel-de Haen in July 1997 after serving as head of the Logistics/Technique Department for Fluka for more than 3 years. Mr. Briggs has been President of B-Line for more than five years. Mr. Blazevich joined Sigma-Aldrich in April 1996 as Director of Information Services and was elected Vice President, Information Services in June 1996. Previously, Mr. Blazevich was employed with Thomas and Betts for sixteen years where he served as Vice President of Information Services from 1988-1996. Mr. Colvin was elected Vice President, Human Resources of the Company in March 1998. He served as Vice President, Human Resources at Sigma from January 1995 to February 1998 and as Director of Human Resources at B- Line from January 1987 to December 1994. Dr. Cori has been Chairman and Chief Executive Officer of the Company for more than five years. He served as President of the Company for more than five years until March 1995. Dr. Gant was elected President of Supelco in December 1995. He served as Vice President of Supelco from May 1993 to December 1995. Dr. Harvey has been Chief Operating Officer of the Company for more than five years. He was elected President of the Company in March 1995, after serving as Executive Vice President for more than five years. Mr. Julien was elected President of Sigma in August 1998. He served as Vice President of Sigma from November 1995 to July 1998. Previously, Mr. Julien served as Director of Biotechnology Facilities Design at Jacobs Engineering Group. Mr. Kelley was elected Vice President of Safety in August 1998. He served as Director of Safety for over four years prior to August 1998. Mr. Meteer was elected Vice President, Quality of the Company in September 1996 after serving as Director of Quality since 1995. Previously, Mr. Meteer was a Vice President of Supelco from 1993-1995. Ms. Miller was elected Controller of the Company in May 1997. Previously, Ms. Miller was employed as Controller of several divisions at Allergan, Inc. for more than five years until February 1997. Mr. Monaghan joined Sigma-Aldrich in July 1998 as President of Sigma Diagnostics. Previously, Mr. Monaghan was employed as Vice President of Dade Behring and Vice President of Behring Diagnostics from October 1997 to July 1998 and from April 1991 to October 1997, respectively. Dr. Morris joined Sigma-Aldrich in February 1995 as President of Sigma- Aldrich Research. Previously, Mr. Morris served as Vice President for world-wide sales at Molecular Dynamics. Dr. Nagarkatti has been President of Aldrich for more than five years. Mr. Ottiger has been President of Sigma-Aldrich Fine Chemicals for more than five years. Mr. Richter was elected Treasurer in May 1997 after serving as Controller for more than five years. Mr. Tallarico was elected Secretary in November 1994. He has been a Vice President of the Company for more than five years and served as Treasurer and Chief Financial Officer of the Company from May 1991 to November 1994. Dr. Vuilleumier has been President of Fluka for more than five years. Dr. Wicks was elected Vice President of Operations in August of 1998. Previously, he served as President of Sigma for five years. The present terms of office of the officers will expire when the next annual meeting of the Directors is held and their successors are elected. Item 11. Executive Compensation. - -------------------------------------------------------------------------------- Information under the captions "Director Compensation and Transactions" and "Information Concerning Executive Compensation" of the 1999 Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. - -------------------------------------------------------------------------------- Information under the caption "Security Ownership of Directors, Executive Officers and Principal Beneficial Owners" of the 1999 Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. - -------------------------------------------------------------------------------- Information under the caption "Director Compensation and Transactions" of the 1999 Proxy Statement is incorporated herein by reference. PART IV - -------------------------------------------------------------------------------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. - -------------------------------------------------------------------------------- (a) Documents filed as part of this report: 1. Financial Statements. See Index to Financial Statements and Schedules on page F-1 of this report. Those pages of the Company's 1998 Annual Report listed in such Index or referred to in Items 1(a)(4), 1(f) and 5 are incorporated herein by reference. 2. Financial Statement Schedules. See Index to Financial Statements and Schedules on page F-1 of this report. 3. Exhibits. See Index to Exhibits on page F-5 of this report. (b) Reports on Form 8-K: No reports on Form 8-K have been filed during the last quarter of the period covered by this report. SIGNATURES - -------------------------------------------------------------------------------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGMA-ALDRICH CORPORATION (Registrant) By /s/ Karen J. Miller March 31, 1999 --------------------------------- -------------- Karen J. Miller, Controller Date KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Carl T. Cori, David R. Harvey, Karen J. Miller, Kirk A. Richter and Thomas M. Tallarico and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this report, and to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ Carl T. Cori March 31, 1999 ----------------------------------------- -------------- Carl T. Cori, Director, Chairman of the Date Board and Chief Executive Officer By /s/ David R. Harvey March 31, 1999 ----------------------------------------- -------------- David R. Harvey, Director, President and Date Chief Operating Officer By /s/ Karen J. Miller March 31, 1999 ----------------------------------------- -------------- Karen J. Miller, Controller Date By /s/ Kirk A. Richter March 31, 1999 ----------------------------------------- -------------- Kirk A. Richter, Treasurer Date By /s/ Thomas M. Tallarico March 31, 1999 ----------------------------------------- -------------- Thomas M. Tallarico, Vice President and Date Secretary By /s/ David M. Kipnis March 31, 1999 ----------------------------------------- -------------- David M. Kipnis, Director Date By /s/ Andrew E. Newman March 31, 1999 ----------------------------------------- -------------- Andrew E. Newman, Director Date By /s/ William C. O'Neil, Jr. March 31, 1999 ----------------------------------------- -------------- William C. O'Neil, Jr., Director Date SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES - -------------------------------------------------------------------------------- Page Number Reference ------------- Annual Report to Shareholders --------------- Annual financial data for the years 1998, 1997, 1996, 1995 and 1994 28 Management's discussion of financial condition and results of operations 12 Market Risk Disclosure 15 FINANCIAL STATEMENTS: Consolidated Balance Sheets December 31, 1998 and 1997 17 Consolidated statements for the years ended December 31, 1998, 1997 and 1996 Income 16 Stockholders' Equity 18 Cash Flows 19 Notes to consolidated financial statements 20 Report of independent public accountants 16 Form 10-K --------- FINANCIAL STATEMENT SCHEDULES: Schedule II - Valuation and Qualifying Accounts F-3 All other schedules are omitted as they are not applicable, not required or the information is included in the consolidated financial statements or related notes to the consolidated financial statements. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- To the Stockholders of Sigma-Aldrich Corporation: We have audited in accordance with generally accepted auditing standards, the financial statements included in Sigma-Aldrich Corporation's 1998 Annual Report to Shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated February 16, 1999. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. Schedule II included in this Form 10-K is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP St. Louis, Missouri February 16, 1999
SIGMA-ALDRICH CORPORATION AND SUBSIDARIES SCHEDULE II- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31 (In Thousands) - -------------------------------------------------------------------------------- Balance at Deductions Balance at Description: Beginning of Additions from End of the Fiscal Year Year to Reserves Reserves Year - -------------- ------------ ----------- ---------- ---------- Allowance for Doubtful Accounts: 1998 $6,532 $2,039 $1,822 $6,749 1997 7,338 620 1,427 6,532 1996 8,838 91 1,591 7,338
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- As independent public accountants, we hereby consent to the incorporation of our report incorporated by references in this Form 10- K, into the Company's previously filed registration statement on Form S- 3, file number 33-74163 and on Form S-8, file numbers 33-24415, 33- 62541 and 33-64661. ARTHUR ANDERSEN LLP St. Louis, Missouri March 29, 1999 INDEX TO EXHIBITS ----------------- These Exhibits are numbered in accordance with the Exhibit Table of Item 6.01 of Regulation S-K: Exhibit Reference ----------- ------------- (3) Certificate of Incorporation and By-Laws: (a) Certificate of Incorporation and Amendments Incorporated by reference to Exhibit 3(a) of Form 10-K filed for the year ended December 31, 1991, Commission File Number 0-8135. (b) By-Laws as amended May 1997 See Exhibit 3(b). (4) Instruments Defining the Rights of Shareholders, Including Indentures: (a) Certificate of Incorporation and Amendments See Exhibit 3(a) above. (b) By-Laws as amended May 1997 See Exhibit 3(b) above. (c) The Company agrees to furnish to the Securities and Exchange Commission upon request pursuant to Item 601(b)(4)(iii) of Regulation S-K copies of instruments defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries. (10) Material Contracts: (a) Third Amendment and Restatement Incorporated by reference Incentive Stock Bonus Plan* to Exhibit of the 10(d) of Form 10-K filed for the year ended December 31, 1996, Commission File Number 0-8135. (b) Share Option Plan of 1987* Incorporated by reference to Exhibit 10(d) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (c) First Amendment to Share Option Incorporated by reference to Exhibit Plan of 1987* 10(e) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (d) Second Amendment to Share Option Incorporated by reference to Exhibit Plan of 1987* 10(f) of Form 10-K filed for the year ended December 31, 1994, Commission File Number 0-8135. (e) Employment Agreement with Carl T. Cori* Incorporated by reference (Similar Employment Agreements also 10 (f) of For 10-K filed exist with Karsten Bode, Thomas E. Briggs, for the year ended Larry S. Blazevich, Terry R. Colvin, December 31, 1992, J. Russel Gant, David R. Harvey, David W. Commission File Number Julien, Rodney L. Kelley, James W. Meeter, 0-8135. Karen J. Miller, Robert Monaghan, Richard G. Morris, Jai P. Nagarkatti, Phillip Ottiger, Kirk A. Richter, Thomas M. Tallarico, Herbert Vuilleumier, and Frank D. Wicks) (f) Letter re: Consultation Services with Incorporated by reference Dr. David M. Kipnis* to Exhibit 10 (g) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (g) Share Option Plan of 1995* Incorporated by reference to Appendix A of the Company's Definitive Proxy Statement filed March 30, 1995, Commission File Number 0-8135. (h) Separation Agreement and See Exhibit 10(h). Release with Peter Gleich (i) Consulting Agreement and Release See Exhibit 10(i). with Floyd Worley (11) Statement Regarding Computation of Per Incorporated by reference Share Earnings to the information on net income per share included in Note 1 to the Company's 1998 financial statements filed as Exhibit 13. (13) Pages 12-28 of the Annual Report to Shareholders See Exhibit 13. for the year ended December 31, 1998 (21) Subsidiaries of Registrant See Exhibit 21. (23) Consent of Independent Public Accountants Page F-4 of this report. (27) Financial Data Schedule See Exhibit 27. *Represents management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
EX-10.(H) 2 Exhibit 10(h) SEPARATION AGREEMENT AND RELEASE -------------------------------- This Agreement is made between Sigma-Aldrich Corporation, including its divisions, subsidiaries, affiliated companies, successors and assigns ("SIAL"), and Peter Gleich ("Gleich"). WHEREAS, Gleich desires to retire from his employment and settle all legal rights and obligations resulting from Gleich's employment with SIAL. NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations and undertakings of the parties set forth herein, the adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Gleich has elected to retire from his employment with SIAL with an effective date as set forth in Paragraph 3. 2. In consideration for Gleich's execution of this Separation Agreement and Release (hereinafter "Agreement"), SIAL agrees: (a) To pay Gleich a severance payment in the amount of $750,000.00 less deductions required by law. This amount shall be payable as follows: one-third payable January 5, 1998, one-third payable March 31, 1998 and one-third payable June 30, 1998. (b) To continue to cover Gleich under SIAL's group medical insurance plan through March 26, 2000. The parties acknowledge and agree that the effective date of Gleich's retirement shall constitute the qualifying event for purposes of COBRA. Should Gleich exercise his right to elect COBRA continuation coverage, SIAL agrees to pay for such coverage, provided such coverage does not extend beyond March 26, 2000. Effective March 26, 2000, Gleich shall be eligible to participate, should he so apply/elect, in SIAL's retiree health benefit program. (c) To pay Gleich on January 5, 1998, the amount of $268,228.00 less deductions required by law. This amount represents payment for 4,500 Sigma Aldrich incentive stock bonus units within the deferred stock program, which value was calculated as of the close of business on November 25, 1997 and increased as appropriate for tax considerations. (d) To allow Gleich ninety (90)days from the effective date of his retirement to exercise all stock options, with all stock options to be considered fully vested, in accordance with the terms of SIAL's Stock Option Plan. (e) If, in accordance with the Sigma-Aldrich Incentive Stock Plan, Gleich will be eligible for an award in 1997, in lieu of such stock award, Gleich will be provided a cash payout in an amount equal to the value of the award and increased as appropriate for tax considerations. Such payment to Gleich will be made one week after the awards have been made. (f) To allow Gleich to retain his Company car, car phone and computer, thereby releasing all claims of title/ownership thereto or thereof. (g) To reimburse Gleich for reasonable legal fees, accounting fees or consulting fees concerning this Agreement. 3. Gleich's retirement shall become effective upon SIAL's selection and hire of a Chief Financial Officer or June 30, 1998, whichever occurs first. 4. Gleich has elected to delay the effective date of retirement (as noted in Paragraph 3) and continue to provide his services to SIAL in a professional and responsible manner. Based upon this additional promise of Gleich, SIAL agrees, in addition to the foregoing, to compensate Gleich at an annualized salary rate of $295,000.00, less deductions required by law, until June 30, 1998. Such payments will be made in accordance with the Company's normal payroll dates following execution of this Agreement. 5. The parties agree that the compensation and benefits described above provided Gleich by SIAL represents additional compensation and benefits to which Gleich would not be entitled absent this Agreement. The parties further agree that the compensation and benefits described above constitute the total understanding of all compensation and benefits payable by SIAL to Gleich with regard to his employment by SIAL and the termination thereof, and that no other compensation, bonuses, stock options, vacation, benefits or payments of any kind will be paid other than the amounts set forth above. 6. SIAL hereby waives and releases Gleich from any claims of breach of fiduciary duty and/or claims arising out of the performance of Gleich's duties. 7. Gleich hereby waives and releases SIAL, its officers, directors, representatives, and employees from any and all claims made, or which could have been made, of whatever nature, as a consequence of his employment or the termination of his employment relationship with SIAL pursuant to this Agreement, or arising out of any known or unknown fact, condition, or incident occurring prior to the date of this Agreement, including, but not limited to, all claims of discrimination under local, state or federal law, regulation or executive order, including, but not limited to, all claims under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement Income Security Act, the Americans with Disabilities Act, the Missouri Human Rights Act, City of St. Louis Ordinance No. 62710, all claims in contract or tort, all claims for lost wages, bonuses, stock options, benefits, expenses, severance, re-employment, service letters, compensatory or punitive damages, attorney's fees and all claims for any other type of damage relief. Gleich further waives all rights to future employment with SIAL. Nothing contained in this Agreement shall be construed as a waiver or release of any claim(s) of breach of contract arising out of performance of this Agreement. Notwithstanding the foregoing release, nothing contained in this Agreement shall limit Gleich's rights to indemnification from SIAL or his rights to coverage under SIAL's D&O coverage (or other insurance coverage) for acts or omissions as an officer of SIAL that he would be covered for under the terms of existing indemnification policies and insurance policies. 8. Gleich covenants not to sue SIAL or any other party released herein with respect to any claim released pursuant to this Agreement. 9. Gleich agrees not to disclose the terms or details of this Agreement to any person other than his attorney, accountant, income tax preparer, spouse and children or pursuant to court order or as otherwise required by law. Gleich agrees to ensure said individuals maintain such confidentiality. 10. SIAL agrees to insure that those employees of SIAL or members of the Board of Directors having knowledge of this Agreement will not disclose the terms or details of this Agreement except on a need to know basis, as required to comply with applicable securities requirements, pursuant to court order or as otherwise required by law. SIAL further agrees to insure that those employees of SIAL or members of the Board of Directors having knowledge of this Agreement will not defame Gleich or make defamatory comments concerning his job performance. 11. By execution of this document, Gleich expressly waives any and all rights to claims under the Age Discrimination in Employment Act of 1967, 29 U.S.C. 621, et seq.: (a) Gleich acknowledges that his waiver of rights or claims refers to rights or claims arising under the Age Discrimination in Employment Act of 1967, is in writing and is understood by Gleich; (b) Gleich expressly understands that by execution of this document, Gleich does not waive any rights or claims that may arise after the date the waiver is executed; (c) Gleich acknowledges that the waiver of his rights or claims arising under the Age Discrimination in Employment Act is in exchange for the consideration outlined in this Agreement which is above and beyond that to which Gleich is entitled and that this waiver is not requested in connection with an existing incentive or other employment termination program; (d) Gleich acknowledges that SIAL expressly advised him on November 26, 1997, to consult an attorney of his choosing prior to executing this document and that he has been given a period of not less that twenty-one (21) days within which to consider this document; (e) Gleich acknowledges he has been advised by SIAL that he is entitled to revoke (in the event he executes this document) his waiver of rights or claims arising under the Age Discrimination in Employment Act within seven (7) days after executing this document or on or before January 2, 1998, whichever is later, and that said waiver will not and does not become effective or enforceable until this revocation period has expired. Gleich agrees that payment of monies due under this executed and unrevoked waiver shall not be payable until this revocation period has expired. The parties further agree as follows: 12.1 That the covenants of this Agreement are severable and that if a clause(s) shall be found unenforceable, the entire document shall not fail but shall be construed and enforced without any severed clause(s) in accordance with the terms of this document; 12.2 That this Agreement shall supersede all other oral or written agreements or understandings between the parties with the exception that Gleich shall continue to be bound by the Agreement between SIAL and Gleich executed by him during employment by SIAL and attached hereto as Appendix A; 12.3 That this Agreement contains the entire understanding of the parties and that this Agreement shall not be modified, altered or changed except upon the express written consent of the parties hereto; 12.4 That SIAL's failure to exercise any of its rights in the event Gleich breaches any of the separate and distinct promises in this Agreement shall not be construed as a waiver of such breach or prevent SIAL from later enforcing strict compliance with any and all promises in this Agreement; 12.5 SIAL and the other parties released herein specifically deny that they have violated any statute, regulation, or any other legal duty governing their relationship with Gleich. It is understood that the payments and other consideration provided by this Agreement are not and shall not be construed to be an admission of guilt or liability on the part of any party hereby released. 13. Gleich acknowledges he has read this Agreement, that he has had a reasonable amount of time to consider its terms, that the only consideration for him signing this Agreement are the terms stated above, that no other promise, agreement, statement or representation of any kind has been made to him by any person or entity to cause him to sign this Agreement, that he is competent to execute this Agreement, that he has had an adequate opportunity to discuss this Agreement with an attorney and he has done so or he has voluntarily elected not to do so, that he fully understands the meaning and intent of this Agreement and that he is voluntarily executing it of his own free will after good faith negotiations with SIAL concerning its terms. AGREED TO AND ACCEPTED: /s/ Peter Gleich _____________________________ Peter Gleich STATE OF MISSOURI ) ) ss. CITY OF ST. LOUIS ) COMES NOW Peter Gleich, who states to me that he has read and understands the foregoing Agreement and agrees to and accepts its terms and conditions as a free act of his own volition. Subscribed and sworn to before me this 15th day of December, 1997. /s/ Sandi J. Lucido ------------------------------ Notary Public My Commission Expires: 8/6/2001 SIGMA-ALDRICH CORPORATION By: /s/ Tom Cori -------------------------- Date: 12/11/97 ------------------------ Appendix "A" [Company Logo] AGREEMENT between SIGMA CHEMICAL COMPANY and - -------------------------------------------- Peter A. Gleich ----------------------------------------------- In consideration of the compensation and other benefits of my employment or continued employment by Sigma Chemical Company (the Company) and of other valuable consideration, I agree as follows: CONFIDENTIAL INFORMATION I recognize that the Company is engaged in the business of research, development, manufacture and sale of chemicals, chemical products and allied activities, which business requires for its successful operation the fullest security of its Confidential Information of which I will acquire knowledge during the course of my employment. As used in this agreement, "Confidential Information" means all technical and business information of the Company, or which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, similar information is revealed to the Company, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by me (alone or with others) or to which I shall have had access during my employment. Confidential Information shall include all data, designs, plans, notes, memoranda, work sheets, formulas, processes, patents, customer and supplier lists. I shall use my best efforts and diligence both during and after my employment with the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. I shall not, directly or indirectly, use (for myself or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of my duties for the Company. I shall promptly deliver to the Company, at the termination of my employment or at any other time at the Company's request, without retaining any copies, all documents and other material in my possession relating, directly or indirectly, to any Confidential Information. Each of my obligations in this section shall also apply to the confidential, trade secret and proprietary information learned or acquired by me during my employment from others with whom the Company has a business relationship. COMPETITIVE ACTIVITY I shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the period of my employment by the Company and for a period of two years following termination for any reason of my employment with the Company engage in or contribute my knowledge to any work or activity that involves a product, process, service or development which is then competitive with and the same as or similar to a product, process, service or development on which I worked or with respect to which I had access to Confidential Information while with the Company. However, I shall be permitted to engage in such proposed work or activity, and the Company shall furnish me a written consent to that effect signed by an officer, if I shall have furnished to the Company clear and convincing written evidence, including assurances from me and my new employer, that the fulfillment of my duties in such proposed work or activity would not cause me to disclose, base judgements upon, or use any Confidential Information, including information relating to the identity of or products supplied to or purchased from the customers or suppliers of the Company. Following expiration of said two-year period, I shall continue to be obligated under the "Confidential Information" section of this Agreement not to use or to disclose Confidential Information so long as it shall remain proprietary or protectible as confidential or trade secret information. Following termination of my employment for any reason, I agree to advise the Company of my new employer within ten days after accepting new employment. I further agree to keep the Company so advised of any change in my employment for two years following termination of my employment with the Company. I understand that it is not the intention of this Agreement to prevent me from earning a livelihood utilizing my general purchasing, sales, professional or technical skills in any of the hospitals, businesses, research or manufacturing facilities of companies which are not directly or indirectly in competition with the Company. IDEAS, INVENTIONS, DISCOVERIES I shall promptly disclose to the Company all ideas, inventions or discoveries, whether or not patentable, which I may conceive or make (alone or with others) during my employment , whether or not during working hours, and which, directly or indirectly, (a) relate to matters within the scope of my duties or field of responsibility during my employment with the Company; or (b) are based on my knowledge of the actual or anticipated business or interest of the Company; or (c) are aided by the use of time, materials, facilities or information of the Company. I hereby assign to the Company or its designee, without further compensation, all of my right, title and interest in all such ideas, inventions or discoveries in all countries of the world. Without further compenstation but at the Company's expense, I shall give all testimony and execute all patent applications, rights of priority, assignments and other documents and in general do all lawful things requested of me by the Company to enable the Company to obtain, maintain and enforce protection of such ideas, inventions and dicoveries for and in the name of the Company or its designee (as the case may be) in all countries of the world. However, should I render any of these services during a two-year period following termination of my employment, I shall be compensated at a rate per hour equal to the basic salary I revceived from the Company at the time of termination and shall be reimbursed for reasonable out-of-pocket expenses incurred in rendering the services. GENERAL If I am employed by an affiliate of the Company and have not entered into a superseding agreement with my new employer covering the subject matter of this Agreement, then this Agreement shall continue in effect and my new employer shall be termed "the Company" for all pruposes hereunder and shall have the right to enforce this Agreement as my employer. In the event of any subsequent employment by the Company or any other affiliate, my new employer shall succeed to all rights under this Agreement so long as such employer shall be an affiliate of the Company and so long as this Agreement has not been superseded. As used in this Agreement, an "affiliate" of the Company shall mean any parent of subsidiary of the Company, any company owned or controlled by any parent of the Company as well as any subsidiary of such companies and any company or corporation with which the Company has a contractual or ongoing business relationship which requires the Company and such other company or corporation to agree to noncompetition or non-disclosure covenants similar to or the same as those contained herein. The Company and I shall have the right to terminate my employment at any time by giving at least 30 days written notice to the other party; provided, however, the Company may terminate my employment without notice at any time for any cause deemed by it to be a breach of my employment duties or of any of my obligations under this Agreement. The Company, at its option, may elect to pay my salary for the notice period instead of continuing my active employment during that period. I hereby acknowledge that damages for the violation of the provisions contained in this Agreement will not give fill and sufficient relief to the Company, and I agree that in the event of any violation of any of said provisions the Company shall be entitled to injunctive relief against violation thereof, in addition to any other rights it may have by reason of said violation. This Agreement shall be interpreted under the laws of the State of Missouri. If any provision of this Agreement is held invalid in any respect, it shall not affect the validity of any other provision of this Agreement. If any provision of this Agreement is held to be unreasonable as to time, scope or otherwise, it shall be construed by limiting and reducing it so as to be enforceable under then applicable law. This agreement shall supercede any and all previous employment agreements between the company and me. This Agreement is signed in duplicate, as of the 30th day of August, 1982. SIGMA CHEMICAL COMPANY By /s/ Carl T. Cori /s/ Peter A. Gleich ------------------------------------ -------------------------------------- Signature of Employee Carl T. Cori Peter A. Gleich - -------------------------------------- -------------------------------------- Typed Name and Title Typed Name of Employee EX-10.(I) 3 Exhibit 10(i) CONSULTING AGREEMENT AND RELEASE -------------------------------- This Agreement is made between B-Line Systems, Inc., including any subsidiaries, parent, affiliated or related companies, their successors and assigns (hereinafter collectively referred as "B-Line"), and Floyd Worley ("Worley"). WHEREAS, Worley desires to retire from his employment and settle all legal rights and obligations resulting from Worley's employment with B-Line; and WHEREAS, Worley has been employed by B-Line and is intimately familiar with its business; and WHEREAS, B-Line desires to retain Worley as an independent contractor to render consulting and advisory services to B-Line, and to assist in the conduct of its business; and WHEREAS, Worley desires to be so retained and render such consulting and advisor services to B-Line, all on the terms and subject to the conditions herein provided; NOW, THEREFORE, in consideration of the foregoing and the mutual promises, representations and undertakings of the parties set forth herein, the adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Worley agrees to voluntarily retire from his employment with B-Line effective December 31, 1998 and agrees to be available to perform services as a consultant for B-Line for the compensation set forth below for the eighteen (18) month period from January 1, 1999 through June 30, 2000, when Worley will cease to be a consultant or associated with B-Line in any capacity. Worley further agrees to resign as an officer of Sigma/Aldrich Corporation ("Sigma/Aldrich") effective December 31, 1998. 2. In consideration for Worley's execution of this Separation Agreement and Release (hereinafter "Agreement"), B-Line agrees: (a) To continue to pay Worley his regular salary up to and including December 31, 1998. (b) To pay Worley the sum of Eleven Thousand Dollars ($11,000) per month, as compensation for the eighteen (18) month period, January 1, 1999 through June 30, 2000, that Worley agrees to serve as a consultant to B-Line pursuant to this Agreement. Worley understands and agrees that said payments are made for services as an independent contractor and he agrees to pay all taxes due on said payments. (c) To continue to cover Worley under B-Line's group medical insurance plan through June 30, 2000. The parties acknowledge and agree that the effective date of Worley's retirement shall constitute the qualifying event for purposes of COBRA. Should Worley exercise his right to elect COBRA continuation coverage, B- Line agrees to pay for such coverage, provided such coverage does not extend beyond June 30, 2000. Effective June 30, 2000, Worley shall be eligible to participate, should he so apply/elect, in B- Line's retiree health benefit program. (d) To pay Worley on January 4, 1999, less deductions required by law for 10,200 Sigma/Aldrich incentive stock bonus units within the Sigma/Aldrich Incentive Stock Bonus Plan, which value will be calculated using the highest closing price of Sigma/Aldrich stock on the NASDAQ Exchange on any trading day between November 24, 1998 and December 31, 1998 and increased as appropriate for tax considerations. A schedule of said incentive stock bonus units is attached hereto as Schedule 1. (e) To allow Worley ninety (90) days from the effective date of his resignation to exercise all stock options, with all stock options to be considered fully vested in accordance with the terms of the Sigma/Aldrich Stock Option Plan. A schedule of said stock options is attached hereto and incorporated herein as Schedule 2. (f) To transfer title of Worley's company car to Worley effective December 31, 1998. 3. The parties agree that the compensation and benefits described above provided Worley by B-Line represents additional compensation and benefits to which Worley would not be entitled absent this Agreement. The parties further agree that the compensation and benefits described above constitute the total understanding of all compensation and benefits payable by B-Line to Worley with regard to his employment by B-Line, the resignation thereof, and his services as a consultant, and that no other compensation, bonuses, incentive stock bonus units, stock options, vacation, benefits or payments of any kind will be paid other than the amounts set forth above. 4. (a) B-Line agrees to retain Worley as a consultant, and Worley agrees to serve as a consultant to B-Line, during the period January 1, 1999 through June 30, 2000. Worley agrees to provide reasonable advisory and consulting services to B-Line on such matters relating to the business of B-Line as B-Line from time to time may request. These consulting services will be within the experience and vocational capabilities of Worley and reasonable notice and deadlines for accomplishment of services by Worley will be provided by B-Line. All requests for the consulting services of Worley will be issued by Carl T. (Tom) Cori, Chief Executive Officer, Sigma/Aldrich Corporation, who will specify the question to be answered and/or the matter to be addressed, leaving the means, methods and details of performance to Worley's independent judgment and discretion consistent with the law and common business ethics and standards of conduct. (b) For and during the term of Worley's consulting services, Worley will be deemed to be, and will be acting as, an independent contractor with respect to any consulting services requested pursuant to this Agreement. Nothing contained in this Agreement shall be construed to create the relation of employer/employee between Worley and B-Line. Worley will be free to exercise his own judgment as to the means and details by which he will accomplish the performance of any consulting services performed under this Agreement. Worley's authority is limited to providing consulting services, and he shall have no authority whatsoever to incur any obligation or liability, or make any contract, agreement, or any other commitment on behalf of B-Line or any subsidiaries or affiliates thereof, without the express prior written consent of Carl T. (Tom) Cori, Chief Executive Officer, Sigma/Aldrich Corporation. 5. Worley hereby waives and releases B-Line, its officers, directors, representatives, and employees from any and all claims made, or which could have been made, of whatever nature, as a consequence of his employment or the termination of his employment relationship with B-Line pursuant to this Agreement, or arising out of any known or unknown fact, condition, or incident occurring prior to the date of this Agreement, including, but not limited to, all claims of discrimination under local, state or federal law, regulation or executive order, including, but not limited to, all claims under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Employee Retirement Income Security Act, the Americans With Disabilities Act, any other federal, state or local law, ordinance or regulation regarding discrimination in employment or termination of employment, any claims for breach of contract, wrongful termination, promissory estoppel, detrimental reliance, negligent or intentional infliction of emotional distress, or any other common law claims in contract or tort, all claims for lost wages, bonuses, commissions, benefits, stock options, incentive stock options, expenses, severance, re-employment, compensatory or punitive damages, attorneys' fees and all claims for any other type of damage relief. Worley further waives all rights to future employment with B-Line and agrees not to apply for employment with B-Line subsequent to the effective date of his retirement. Notwithstanding the foregoing Release, nothing contained in this Agreement shall limit Worley's rights to indemnification from Sigma/Aldrich or his rights to coverage under Sigma/Aldrich's D&O coverage (or other insurance coverage) for acts or omissions as an officer of Sigma/Aldrich that he would be covered for under the terms of existing indemnification policies and insurance policies. 6. Worley agrees to return all B-Line property in his possession including, without limitation, computer, telephone and facsimile machine, on or immediately following the effective date of his retirement. 7. Worley covenants not to sue B-Line or any other party released herein with respect to any claim released pursuant to this Agreement. 8. Worley agrees not to disclose the terms or details of this Agreement to any person other than his attorney, accountant, income tax preparer, spouse and children. Worley agrees to ensure said individuals maintain such confidentiality. 9. By execution of this document, Worley expressly waives any and all rights to claims under the Age Discrimination in Employment Act of 1967, 29 U.S.C. 621, et seq.: (a) Worley acknowledges that his waiver of rights or claims refers to rights or claims arising under the Age Discrimination in Employment Act of 1967, is in writing and is understood by Worley; (b) Worley expressly understands that by execution of this document, Worley does not waive any rights or claims that may arise under the Age Discrimination in Employment Act of 1967, after the date the waiver is executed; (c) Worley acknowledges that the waiver of his rights or claims arising under the Age Discrimination in Employment Act is in exchange for the consideration outlined in this Agreement which is above and beyond that to which Worley is entitled and that this waiver is not requested in connection with an existing incentive or other employment termination program; (d) Worley acknowledges that B-Line expressly advised him on November 24, 1998 to consult an attorney of his choosing prior to executing this document and that he has been given a period of not less than twenty-one (21) days within which to consider this document; (e) Worley acknowledges he has been advised by B-Line that he is entitled to revoke (in the event he executes this document) his waiver of rights or claims arising under the Age Discrimination in Employment Act within seven (7) days after executing this document and that said waiver will not and does not become effective or enforceable until the seven (7) day revocation period has expired. Worley agrees that payment of monies due under this executed and unrevoked waiver shall not be payable until the seven (7) day revocation period has expired. 10. The parties further agree as follows: 10.1 That the covenants of this Agreement are severable and that if a clause(s) shall be found unenforceable, the entire document shall not fail but shall be construed and enforced without any severed clause(s) in accordance with the terms of this document; 10.2 That this Agreement shall supersede all other oral or written agreements including, without limitation, Worley's employment agreement dated April 9, 1990 or understandings between the parties with the exception that Worley shall continue to be bound by the Agreement between B-Line and Worley executed by him during employment by B-Line and attached hereto as Exhibit A. 10.3 That this Agreement contains the entire understanding of the parties and that this Agreement shall not be modified, altered or changed except upon the express written consent of the parties hereto; 10.4 That B-Line's failure to exercise any of its rights in the event Worley breaches any of the separate and distinct promises in this Agreement shall not be construed as a waiver of such breach or prevent B-Line from later enforcing strict compliance with any and all promises in this Agreement; 10.5 B-Line and the other parties released herein specifically deny that they have violated any statute, regulation, or any other legal duty governing their relationship with Worley. It is understood that the payments and other consideration provided by this Agreement are not and shall not be construed to be an admission of guilt or liability on the part of any party hereby released. 11. Worley acknowledges he has read this Agreement, that he has had a reasonable amount of time to consider its terms, that the only consideration for him signing this Agreement are the terms stated above, that no other promise, agreement, statement or representation of any kind has been made to him by any person or entity to cause him to sign this Agreement, that he is competent to execute this Agreement, that he has had an adequate opportunity to discuss this Agreement with an attorney and he has done so or he has voluntarily elected not to do so, that he fully understands the meaning and intent of this Agreement and that he is voluntarily executing it of his own free will after good faith negotiations with B-Line concerning its terms. AGREED TO AND ACCEPTED: /s/ Floyd Worley - ------------------------------------ FLOYD WORLEY STATE OF Missouri ) )ss. CITY OF St. Louis ) COMES NOW Floyd Worley, who states to me that he has read and understands the foregoing Agreement and agrees to and accepts its terms and conditions as a free act of his own volition. Subscribed and sworn to before me this 10th day of December, 1998. /s/ Janet L. Bohnstadt --------------------------------- Notary Public My Commission Expires: 8/26/2001 B-LINE SYSTEMS, INC. By: /s/ David R. Harvey ---------------------------------------- Date: 12/10/98 -------------------------------------- SCHEDULE 1 ---------- SIGMA/ALDRICH CORPORATION INCENTIVE STOCK BONUS PLAN YEAR STOCK BONUS UNITS OUTSTANDING ---- ----------------------------- 1993 2,400 1994 -0- 1995 4,000 1996 2,300 1997 1,500 SCHEDULE 2 ---------- SIGMA/ALDRICH CORPORATION STOCK OPTION GRANTS Number of Year Price Shares ---- --------- ------------ 1990 $14.5625 7,000 1992 $23.375 6,000 1993 $27.625 40,000 1994 $18.125 40,000 1995 0 1996 0 1997 $36.00 20,000 All share prices and grant amounts prior to 1997 have been adjusted for January, 1997 stock dividends. EXHIBIT "A" AGREEMENT between SIGMA CHEMICAL COMPANY and - -------------------------------------------- ----------------------------------------------- In consideration of the compensation and other benefits of my employment or continued employment by Sigma Chemical Company (the Company) and of other valuable consideration, I agree as follows: CONFIDENTIAL INFORMATION I recognize that the Company is engaged in the business of research, development, manufacture and sale of chemicals, chemical products and allied activities, which business requires for its successful operation the fullest security of its Confidential Information of which I will acquire knowledge during the course of my employment. As used in this agreement, "Confidential Information" means all technical and business information of the Company, or which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, similar information is revealed to the Company, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by me (alone or with others) or to which I shall have had access during my employment. Confidential Information shall include all data, designs, plans, notes, memoranda, work sheets, formulas, processes, patents, customer and supplier lists. I shall use my best efforts and diligence both during and after my employment with the Company to protect the confidential, trade secret and/or proprietary character of all Confidential Information. I shall not, directly or indirectly, use (for myself or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of my duties for the Company. I shall promptly deliver to the Company, at the termination of my employment or at any time at the Company's request, without retaining any copies, all documents and other material in my possession relating, directly or indirectly, to any Confidential Information. Each of my obligations in this section shall also apply to the confidential, trade secret and proprietary information learned or acquired by me during my employment from others with whom the Company has a business relationship. COMPETITIVE ACTIVITY I shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the period of my employment by the Company and for a period of two years following termination for any reason of my employment with the Company engage in or contribute my knowledge to any work or activity that involves a product, process, service or development which is then competitive with and the same or similar to a product, process, service or development on which I worked or with respect to which I had access to Confidential Information while with the Company. However, I shall be permitted to engage in such proposed work or activity, and the Company shall furnish me a written consent to that effect signed by an officer, if I shall have furnished to the Company clear and convincing written evidence, including assurances from me and my new employer, that the fulfillment of my duties in such proposed work or activity would not cause me to disclose, base judgements upon, or use any Confidential Information, including information relating to the identity of or product supplied to or pruchased from the customers or suppliers of the Company. Following expiration of said two-year period, I shall continue to be obligated under the "Confidential Information" section of this Agreement not to use or to disclose Confidential Information so long as it shall remain proprietary or protectible as confidential or trade secret information. Following termination of my employment for any reason, I agree to advise the Company of my new employer within ten days after accepting new employment. I further agree to keep the Company so advised of any change in my employment for two years following termination of my employment with the Company. I understand that it is not the intention of the Agreement to prevent me from earning a livelihood utilizing my general purchasing, sales, professional or technical skills in any of the hospitals, businesses, research or manufacturing facilities of companies which are not directly or indirectly in competition with the Company. IDEAS, INVENTIONS, DISCOVERIES I shall promptly disclose to the Company all ideas, inventions or discoveries, whether or not patentable, which I may conceive or make (alone or with others) during my employment, whether or not during working hours, and which, directly or indirectly, (a) relate to matters within the scope of my duties or field of responsibility during my employment with the Company; or (b) are based on my knowledge of the actual or anticipated business or interest of the Company; or (c) are aided by the use of time, materials, facilities or information of the Company. I herby assign to the Company or its designee, without further compensation, all of my right, title and interst in all such ideas, inventions or discoveries in all countries of the world. Without further compensation but at the Company's expense, I shall give all testimony and execute all patent applications, rights of priority, assignments and other documents and in general do all lawful things requested of me by the Company to enable the Company to obtain, maintain and enforce protection of such ideas, inventions and discoveries for and in the name of the Company or its designee (as the case may be) in all countries of the world. However, should I render any of these services during a two-year period following termination of my employment, I shall be compensated at a rate per hour equal to the basic salary I received from the Company at the time of termination and shall be reimbursed for reasonable out-of-pocket expenses incurred in rendering the services. GENERAL If I am employed by an affiliate of the Company and have not entered into a superseding agreement with my new employer covering the subject matter of this Agreement, then this Agreement shall continue in effect and my new employer shall be termed "the Company" for all purposes hereunder and shall have the right to enforce this Agreement as my employer. In the event of any subsequent employment by the Company or any other affiliate, may new employer shall succeed to all rights under this Agreement so long as such employer shall be an affiliate of the Company and so long as this Agreement has not been superseded. As used in this Agreement, an "affiliate" of the Company shall mean any parent or subsidiary of the Company, any company owned or controlled by any parent of the Company as well as any subsidiary of such companies and any company or corporation with which the Company has a contractual or ongoing business relationship which requires the Company and such other company or coporation to agree to noncompetition or non-disclosure covenants similar to or the same as those contained herein. The Company and I shall have the right to terminate my employment at any time by giving at least days written notice to the other party; provided, however, the Company may terminate my employment without notice at any time for any cause deemed by it to be a breach of my employment duties or of any of my obligations under this Agreement. The Company, at its option, any elect to pay my salary for the notice period instead of continuing my active employment during that period. I hereby acknowledge that damages for the violation of the provisions contained in this Agreement will not give full and sufficient relief to the Company, and I agree that in the event of any violation of any of said provisions the Company shall be entitled to injunctive relief against violation thereof, in addition to any other rights it may have by reason of said violation. This Agreement shall be interpreted under the laws of the State of Missouri. If any provison of this Agreement is held invalid in any respect, it shall not affect the validity of any other provision of this Agreement. If any provision of the Agreement is held to be unreasonable as to time, scope or otherwise, it shall be construed by limiting and reducing it so as to be enforceable under then applicable law. This Agreement is signed in duplicate, as of the 29th day of March, 1990. SIGMA CHEMICAL COMPANY By /s/ Carl T. Cori /s/ Floyd L. Worley ---------------------------------- ---------------------------------------- Signature of Employee Carl T. Cori Floyd L. Worley - ------------------------------------ ---------------------------------------- Typed Name and Title Typed Name of Employee EX-13 4 (Pages 12-14 of the 1998 Annual Report to Shareholders) ------------------------------------ Management's Discussion of Financial Condition and Results of Operations --------------------- Results of Operations During the three years ended December 31, 1998, the Company's sales and net income continued to grow. Chemical sales increased 7.1%, 8.3%, and 7.4% for 1998, 1997 and 1996, respectively. This sales growth is attributed to selective price increases, the annual addition of new products, acquisitions, including Genosys in December of 1998 and Riedel-de Haen in June of 1997, and the opening of new international sales offices. Price increases for products listed in the general chemical catalogs averaged 3.0%, 3.5% and 4.5% in 1998, 1997 and 1996, respectively. New product sales, while not material in the year introduced, contribute to sales growth in subsequent years. Acquisitions contributed 2.5% and 3.0% to the 1998 and 1997 sales increases, respectively. The effect of translating foreign currency chemical sales into the U.S. dollar reduced the 1998, 1997 and 1996 sales growth by 1.8%, 4.4% and 1.3%, respectively. Both Research and Fine Chemicals sales continued to grow in 1998 while Diagnostic sales declined slightly due to competitive pressures. Chemical sales, in particular Research, were affected by disruptions to service during the installation of new customer service and warehouse systems. System conversions in the future are expected to proceed more smoothly. Emphasis on international markets and new sales offices, together with the addition of Riedel-de Haen products, helped achieve growth in international direct sales of 19.3% in 1998, 30.6% in 1997 and 14.0% in 1996, after eliminating the effect of changes in currency exchange rates. The increase in direct international sales is partially offset by a slowing in export sales from the United States. Export sales declined 32.2%, 22.0% and 1.0% in 1998, 1997 and 1996, respectively, reflecting the continued transfer of sales to both our existing and new international offices. Metal sales increased 1.3%, 11.8% and 9.6% for 1998, 1997 and 1996, respectively. Average selling prices decreased 1.5%, 2.2% and 2.0% in 1998, 1997 and 1996, respectively, due to competitive markets and lower costs for raw materials. The slower growth in 1998 reflects the weakness in the industrial construction market which was only partially offset by the fast-growing demand for telecommunications and enclosures products. The growth in 1997 and 1996 also came mainly from the telecommunications and enclosures market. Cost of products sold was 46.7% in 1998 and 46.0% in 1997 and 1996. The decline in the gross profit rate in 1998 is due to a higher proportion of lower margin business, costs of new production facilities, increased investment in R & D in the Molecular Biology area and competitive pricing pressures. The cost of chemical products sold increased by 8.9% and the cost of metal products sold increased by 3.5% in 1998, compared to sales increases of 7.1% and 1.3%, respectively. Selling, general and administrative expenses were 33.0%, 31.6% and 31.8% of sales in 1998, 1997 and 1996, respectively. The increase in 1998 is due to incremental expenses associated with new systems, sales offices and additional warehouse facilities, offset by ongoing efforts to effectively manage staffing levels and control other significant operating expenses. Also included in 1998 is a $2.9 million charge for acquired research and development related to the acquisition of Genosys. In 1998, 1997 and 1996, net interest income contributed $2.9 million, $4.8 million and $5.2 million, respectively, to pretax earnings, reflecting lower average cash balances in 1998. Net income benefited from a tax credit of $7.0 million from our enhanced research and development activities over the last several years. The effect of changes in currency exchange rates reduced net income by $ .06, $ .05 and $ .01 per share in 1998, 1997 and 1996, respectively. Management expects future sales growth from the continuing introduction of new products, promotion and marketing programs, new sales offices and businesses added during 1998. The Company will benefit from investments in new systems, products and facilities designed to enhance customer service. Liquidity and Capital Resources In 1998, cash and temporary cash investments decreased $21.9 million while short-term borrowings increased by $23.2 million to $30.0 million. In 1997, cash and temporary cash investments decreased by $57.5 million while short-term borrowings were increased by $4.1 million. Cash provided by operating activities was $162.1 million in 1998, an increase of $30.0 million from 1997. The change resulted primarily from slower growth in inventories of $36.4 million in 1998 compared to $63.4 million in 1997 and higher depreciation and amortization of $13.8 million in 1998 compared to 1997. The higher growth of inventories in 1997 resulted from acquisitions and further deployment of inventory to new locations. Cash generated by operations and available from credit facilities continues to provide sufficient liquidity for present and future operating and capital needs. Cash currently available and expected to be generated in 1999 will be invested on a temporary basis. Longer term, excess funds are expected to be reinvested in the business. Also, depending on opportunities and market conditions, funds may be used to acquire new businesses. These investments should enable the Company to continue to grow sales and profits. During 1998, a total of $130.4 million was invested in property, plant and equipment. Significant expenditures were made in support of new customer service and warehouse systems and distribution and production facility expansions, both domestically and internationally. Also in 1998, the Company acquired Genosys, a leading supplier of synthetic DNA products, for $39.5 million to strengthen our position in Life Science research. During 1999, we expect capital spending of approximately $75 million to continue to enhance distribution, production and information systems. The Company has not made any other significant commitments for, or acquisitions of, capital facilities early in 1999. Year 2000 In 1997, the Company began a comprehensive worldwide program to evaluate and mitigate the risks associated with the Year 2000 problem. The program consists of evaluating traditional computer systems such as order taking, inventory control and finance and systems supporting the business such as plant machinery controls and the phone systems. A number of the Company's computer systems, primarily in Europe, are Year 2000 capable. Year 2000 system changes to other systems began in 1997. In an effort to upgrade the Company's major computer systems, the implementation of SAP, a global enterprise resource planning software system, began in 1997.The SAP system is Year 2000 capable and has eliminated the need to update approximately 50% of the Company's existing computer systems. The Company expects that all systems requiring updates will either be converted to SAP or made Year 2000 capable by the end of 1999. Approximately 70% of the Company's systems have been converted to SAP or are currently Year 2000 capable. The Company is not presently aware of any Year 2000 issues encountered by its business partners that would materially impact the Company's operations. There can be no assurance that the Company will not experience operational difficulties as a result of Year 2000 issues either arising out of internal systems or caused by its business partners which may have a material adverse effect on its business operations. The implementation of SAP software systems has reduced the need to update many of the Company's systems to be Year 2000 capable. Excluding costs related to SAP, approximately $1.5 million has been incurred in the Company's effort to achieve Year 2000 capable systems through December 31, 1998. Total costs to achieve Year 2000 capable systems are estimated at $3.0 million. In planning for the most reasonably likely worst case scenario, all major elements in the Company's comprehensive program have been addressed. The Company's systems are expected to be Year 2000 capable. No known event, trend or uncertainty is likely to have a material adverse impact on the Company's results of operations, liquidity or financial condition. Contingency plans have been developed to ensure critical systems will function in the event of any occurrences of unremediated or unresolved Year 2000 issues. Year 2000 (continued) The Company is preparing for the risk that certain business partners may experience Year 2000 issues. While the Company values the established relationships with its business partners, alternate sources for some products and services are available. The Company also recognizes the risk of other key partners such as utilities, communications companies and delivery services in evaluating Year 2000 issues and is developing plans to mitigate the potential adverse impacts of these risks. If certain key partners experience Year 2000 failures, the Company could experience material adverse effects on the results of its operations and financial condition. Euro On January 1, 1999, eleven member countries of the European Community established fixed conversion rates between their existing currencies and the European Economic and Monetary Union's new common currency, the Euro. The transition period for the introduction of the Euro is January 1, 1999 through January 1, 2002. During this transition period, payment and billing may be conducted in the Euro or the relevant legacy currency. The Company is currently developing and implementing plans to address the conversion to the Euro such as updating certain information technology systems and evaluating currency risk, impacts on financial transactions and competitive activity. The costs associated with addressing the Euro conversion are not expected to be material. The Company believes the conversion to the Euro will not have a material impact on the Company's financial condition or results of its operations. Forward-Looking Statements The preceding discussion should be read in conjunction with the consolidated financial statements and notes thereto. Except for historical information, the statements in this discussion may constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as any statements preceded by, followed by, or that include the words "believes," "expects," "anticipates" or similar expressions, and other statements contained herein regarding matters that are not historical facts. Although the Company believes its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. The important factors that could cause actual results to differ materially from those in the forward looking statements herein include, without limitation, reduced growth in research funding, uncertainties surrounding possible government health care reform, government regulation applicable to the Company's business, the effectiveness of the Company's further implementation of its global software system, SAP, the status and effectiveness of the Company's Year 2000 efforts, the highly competitive environment in which the Company operates and the impact of fluctuations in foreign currency exchange rates. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on it's behalf are expressly qualified in their entirety by such cautionary statements. The Company does not undertake any obligation to release publicly any revisions to such forward-looking statement to reflect events or uncertainties after the date hereof or to reflect the occurrence of unanticipated events. (Five bar graphs appear on pages 12-14 depicting the following data)
1998 1997 1996 ---- ---- ---- Chemical Sales (millions of dollars) 965.9 901.7 832.9 Metal Sales (millions of dollars) 228.4 225.4 201.7 Cost of Products Sold (percent of sales) 46.7 46.0 46.0 Selling, General and Administrative Expenses (percent of sales) 33.0 31.6 31.8 Capital Expenditures (millions of dollars) 130.4 108.7 93.9
(Page 15 of the 1998 Annual Report to Shareholders) Exchange Rate Sensitivity The Company uses forward exchange contracts to hedge certain receivables and payables denominated in foreign currencies. Most of the contracts are single currency. Gains and losses on these hedges, based on the difference in the contract rate and the spot rate at the end of each month for all contracts still in force are typically offset by transaction gains and losses, with net gains and losses included in selling, general and administrative expenses. While contract terminations are infrequent, gains and losses on terminations are recognized in the month of execution in the same manner. The table below provides information about the Company's derivative financial instruments and related balance sheet items by currency and presents such information in U.S. dollar equivalents. The table summarizes information on the derivative instruments and related underlying transactions that are sensitive to foreign currency exchange rates, including foreign currency forward exchange contracts and receivables and payables in other than a unit's local currency. The net amount that is exposed to changes in foreign currency rates is then subjected to a 10% appreciation and depreciation in the value of the foreign currency versus the U.S. dollar. The effect of changes in foreign currency rates on the Company's net exposed derivative financial instrument position would not be material.
December 31, 1998 (unaudited, in millions) Foreign Foreign U.S. Dollar Net Underlying Net Exposed Exchange Impact Exchange Impact Value of Net Foreign Currency Long/(Short) From 10% From 10% Foreign Exchange Transaction Currency Appreciation of Depreciation of Contracts Exposure Position U.S. Dollar U.S. Dollar - ----------------------------------------------------------------------------------------------------- German Mark $ 69.0 $ 68.5 $ (0.5) $ (.05) $ .05 British Pound 33.6 30.8 (2.8) (.28) .28 Swiss Franc (39.5) (29.3) 10.2 1.02 (1.02) French Franc 33.3 20.5 (12.8) (1.28) 1.28 Japanese Yen 19.8 20.3 0.5 .05 (.05) Canadian Dollar 12.9 12.8 (0.1) (.01) .01 Italian Lira 9.9 9.1 (0.8) (.08) .08 Others 24.5 18.3 (6.2) (.62) .62 - ----------------------------------------------------------------------------------------------------- Total $163.5 $151.0 $(12.5) $(1.25) $1.25 - -----------------------------------------------------------------------------------------------------
(Page 16 of the 1998 Annual Report to Shareholders) CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Data) Years Ended December 31, 1998 1997 1996 - ---------------------------------------------------------------------------------------------- Net sales $1,194,290 $1,127,084 $1,034,565 Cost of products sold 557,864 518,711 476,120 - ---------------------------------------------------------------------------------------------- Gross profit 636,426 608,373 558,445 Selling, general and administrative expenses 393,836 355,619 328,761 - ---------------------------------------------------------------------------------------------- Income before provision for income taxes 242,590 252,754 229,684 Provision for income taxes 76,243 86,695 81,828 - ---------------------------------------------------------------------------------------------- Net income $ 166,347 $ 166,059 $ 147,856 - ---------------------------------------------------------------------------------------------- Weighted average number of shares outstanding - Basic 100,540 100,210 99,930 Weighted average number of shares outstanding - Diluted 101,188 102,804 101,715 Net income per share - Basic $1.65 $1.66 $1.48 Net income per share - Diluted $1.64 $1.62 $1.45 The accompanying notes are an integral part of these statements.
Report of Independent Public Accountants To Sigma-Aldrich Corporation: We have audited the accompanying consolidated balance sheets of Sigma- Aldrich Corporation (a Delaware Corporation) and subsidiaries (the "Company") as of December 31, 1998 and 1997, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sigma- Aldrich Corporation and subsidiaries as of December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP St. Louis, Missouri February 16, 1999 (Page 17 of the 1998 Annual Report to Shareholders)
CONSOLIDATED BALANCE SHEETS (In Thousands) December 31, 1998 1997 - ---------------------------------------------------------------------------- Assets Current assets: Cash and temporary cash investments $ 24,345 $ 46,228 Accounts receivable, less allowance for doubtful accounts of $6,749 and $6,531, respectively 229,486 186,847 Inventories 464,035 420,809 Other current assets 54,815 52,790 - ---------------------------------------------------------------------------- Total current assets 772,681 706,674 - ---------------------------------------------------------------------------- Property, plant and equipment: Land 32,623 31,594 Buildings and improvements 318,073 252,388 Machinery and equipment 456,506 381,771 Construction in progress 84,463 90,831 Less - accumulated depreciation (372,926) (317,706) - ---------------------------------------------------------------------------- Net property, plant and equipment 518,739 438,878 - ---------------------------------------------------------------------------- Goodwill, net 113,737 83,261 Other assets 27,678 15,009 - ---------------------------------------------------------------------------- Total assets $1,432,835 $1,243,822 - ---------------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable $ 30,019 $ 6,751 Current maturities of long-term debt 624 649 Accounts payable 63,520 53,257 Accrued payroll and payroll taxes 17,025 13,453 Other accrued expenses 30,312 28,816 Accrued income taxes 872 16,553 - -------------------------------------------------------------------------- Total current liabilities 142,372 119,479 - -------------------------------------------------------------------------- Long-term debt 415 552 Deferred postretirement benefits 40,663 35,475 Deferred compensation 7,894 12,766 Other liabilities 25,111 15,216 - -------------------------------------------------------------------------- Total liabilities 216,455 183,488 - -------------------------------------------------------------------------- Stockholders' equity: Common stock 100,623 100,377 Capital in excess of par value 29,238 24,168 Retained earnings 1,097,653 959,717 Accumulated other comprehensive loss (11,134) (23,928) - --------------------------------------------------------------------------- Total stockholders' equity 1,216,380 1,060,334 - --------------------------------------------------------------------------- Total liabilities and stockholders' equity $1,432,835 $1,243,822 - --------------------------------------------------------------------------- The accompanying notes are an integral part of these balance sheets.
(Page 18 of the 1998 Annual Report to Shareholders)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In Thousands, Except Per Share Data) Common Stock Accumulated 200,000 Shares Authorized Capital in Other ($1.00 Par) Excess of Retained Comprehensive Comprehensive Shares Amount Par Value Earnings Income/(Loss) Income - ---------------------------------------------------------------------------------------------------------------- Balance, December 31, 1995 49,877 $ 49,877 $11,455 $ 744,370 $ 19,032 Net income - - - 147,856 - $147,856 Other comprehensive income- foreign currency translation - - - - (13,271) (13,271) --------- Comprehensive income - - - - - $134,585 Dividends ($.2275 per share) - - - (22,738) - --------- Awards under deferred compensation plan 8 8 384 - - Exercise of stock options 138 138 5,163 - - Stock split (2 for 1) 50,021 50,021 - (50,021) - - ------------------------------------------------------------------------------------------------ Balance, December 31, 1996 100,044 100,044 17,002 819,467 5,761 Net income - - - 166,059 - $166,059 Other comprehensive income- foreign currency translation - - - - (29,689) (29,689) --------- Comprehensive income - - - - - $136,370 --------- Dividends ($.2575 per share) - - - (25,809) - Awards under deferred compensation plan 23 23 682 - - Exercise of stock options 310 310 6,484 - - - ------------------------------------------------------------------------------------------------ Balance, December 31, 1997 100,377 100,377 24,168 959,717 (23,928) Net income - - - 166,347 - $166,347 Other comprehensive income- foreign currency translation - - - - 12,794 12,794 --------- Comprehensive income - - - - - $179,141 --------- Dividends ($.2825 per share) - - - (28,411) - Awards under deferred compensation plan 38 38 1,480 - - Shares exchanged for options (79) (79) - - - Exercise of stock options 287 287 3,590 - - - ------------------------------------------------------------------------------------------------ Balance, December 31, 1998 100,623 $100,623 $29,238 $1,097,653 $(11,134) - ------------------------------------------------------------------------------------------------ Share and per share information prior to the December 1996 stock split have not been restated. The accompanying notes are an integral part of this statement.
(Page 19 of the 1998 Annual Report of the Shareholders)
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Years Ended December 31, 1998 1997 1996 - -------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $166,347 $166,059 $147,856 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,827 48,053 45,213 Deferred income taxes 11,111 4,994 1,918 Postretirement benefits expense 4,072 3,792 3,739 Deferred compensation expense (income) (2,244) 3,437 2,762 Deferred compensation payments (1,105) (628) (407) Increase in accounts receivable (37,917) (30,077) (22,726) Increase in inventories (36,401) (63,390) (19,361) Increase in other current assets (1,044) (18,513) (1,297) Increase (decrease) in accounts payable 9,373 (7,534) 2,847 Increase in accrued payroll and payroll taxes 3,363 2,155 2,435 Increase (decrease) in other accrued expenses 1,053 16,547 (8,904) Increase (decrease) in accrued income taxes (16,365) 7,182 (655) - ---------------------------------------------------------------------------------------- Net cash provided by operating activities 162,070 132,077 153,420 - ---------------------------------------------------------------------------------------- Cash flows from investing activities: Property, plant and equipment additions (130,378) (108,740) (93,888) Sale of equipment 2,383 1,963 1,228 Acquisition of businesses, net of cash acquired (39,500) (51,083) (13,629) Other, net (7,700) - (1,500) - ---------------------------------------------------------------------------------------- Net cash used in investing activities (175,195) (157,860) (107,789) - ---------------------------------------------------------------------------------------- Cash flows from financing activities: Issuance (repayment) of notes payable 23,211 4,155 (4,419) Issuance (repayment) of long-term debt 57 (11,895) (1,036) Payment of dividends (28,411) (25,809) (22,738) Exercise of employee stock options 3,798 6,794 5,301 - ---------------------------------------------------------------------------------------- Net cash used in financing activities (1,345) (26,755) (22,892) - ---------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (7,413) (4,919) (3,023) - ---------------------------------------------------------------------------------------- Net change in cash and cash equivalents (21,883) (57,457) 19,716 Cash and cash equivalents at beginning of year 46,228 103,685 83,969 - ---------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 24,345 $ 46,228 $103,685 - ---------------------------------------------------------------------------------------- Supplemental disclosures of cash flow information: Income taxes paid $ 81,497 $ 74,518 $ 81,802 Interest paid, net of capitalized interest 926 783 1,390 The accompanying notes are an integral part of these statements.
(Page 20-27 of the 1998 Annual Report to Shareholders) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary Of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Financial Instruments: The Company considers its temporary cash investments, which have original maturities of three months or less, to be cash equivalents. The Company has no financial instruments that have a materially different fair value than the respective instrument's carrying value. Gains and losses on hedges of existing assets or liabilities are recognized monthly and are included in selling, general and administrative expenses. See Note 5 - Financial Derivatives and Risk Management for further information regarding the Company's hedging activities. Property, Plant and Equipment: The cost of property, plant and equipment is depreciated over the estimated useful lives of the assets using the straight-line method with lives ranging from three to twelve years for machinery and equipment and fifteen to forty years for buildings and improvements. The Company capitalizes interest as part of the cost of constructing major facilities and equipment. Goodwill: Goodwill arising from acquisitions made by the Company is capitalized and amortized over a period of five to forty years. Net Income Per Share: Net income per share is based on the weighted average number of shares outstanding during each period. Foreign Currency Translation: Foreign currency assets and liabilities are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders' equity, as accumulated other comprehensive income or loss. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Effect of New Accounting Standards: In June 1998, the Financial Accounting Standards Board adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. The Company has not yet quantified the effects of adopting SFAS No. 133 on its consolidated financial statements nor has it determined the timing or method of its adoption of SFAS No. 133. However, SFAS No. 133 could increase volatility in earnings and other comprehensive income. Note 2 - Inventories
The principal categories of inventories are (in thousands): December 31, 1998 1997 - --------------------------------------------------------------- Finished goods $374,578 $336,295 Work in process 25,627 24,269 Raw materials 63,830 60,245 - --------------------------------------------------------------- Total $464,035 $420,809 - ---------------------------------------------------------------
Chemical products are valued at the lower of cost or market. Costs for certain domestic chemical inventories (23% of total chemical inventories) are determined using the last-in, first-out method. Costs for other chemical inventories are determined by specific lot using purchase price and cost to manufacture, which includes material, labor and overhead. If the cost of all chemical inventories had been determined using the specific cost method, inventories would have been $3,161,000, $3,252,000, $6,538,000 and $8,062,000 higher than reported at December 31, 1998, 1997, 1996 and 1995, respectively. Note 2 - Inventories (continued) Metal inventories are valued at the lower of cost or market, cost being determined using the first-in, first-out method, which includes material, labor and overhead. Note 3 - Notes Payable The Company has revolving credit facilities with domestic banks totaling $81,000,000. A facility for $40,000,000 expires in May 1999, two other facilities totaling $40,000,000 expire in June 1999 and one facility for $1,000,000 expires in December 1999. All facilities may be terminated earlier upon notice by either party. The Company also has an unsecured multi-currency bank commitment in the amount of $15,000,000 expiring in November 1999. Interest rates for all facilities are based on federal funds, LIBOR, prime or other rates offered by the lending banks. At December 31, 1998 borrowings of $25,250,000 were outstanding under these facilities, with an average interest rate of 5.5%. No borrowings were outstanding at December 31, 1997. The company intends to renew these facilities as they expire or substitute similar facilities for any which are not renewed. Notes payable by international subsidiaries were $4,769,000 and $6,751,000 at December 31, 1998 and 1997, respectively, and are payable in local currencies with weighted average interest rates of 5.3% at both December 31, 1998 and 1997. Note 4 - Long-Term Debt
Long-term debt consists of the following (in thousands): December 31, 1998 1997 - ----------------------------------------------------------- Total $1,039 $1,201 Less-Current maturities (624) (649) - ----------------------------------------------------------- $ 415 $ 552 - -----------------------------------------------------------
Total interest expense incurred by the Company, net of immaterial amounts capitalized, was $920,000, $734,000 and $1,824,000 in 1998, 1997 and 1996, respectively. Note 5 - Financial Derivatives And Risk Management The Company transacts business in virtually every part of the world and is subject to risks associated with changing foreign exchange rates. The Company's objective is to minimize the impact of foreign exchange rate changes during the period of time between the original transaction date and its cash settlement. Accordingly, the Company enters into forward currency contracts in order to stabilize the value of receivables and payables denominated in foreign currencies. The Company does not enter into foreign currency transactions for speculative trading purposes. The Company's policy is to maintain hedge coverage only on existing receivables, payables and commitments. The gains and losses on these contracts offset changes in the value of the related exposures. The principal currencies hedged are the British pound, Italian lira, German mark, French franc, Swiss franc, Japanese yen and Canadian dollar. The duration of the hedge contracts typically does not exceed six months. The counterparties to the contracts are large, reputable commercial banks and, accordingly, the Company expects all counterparties to meet their obligations. The amount of open forward exchange contracts at December 31, 1998 and 1997 was $294.5 million and $243.4 million, respectively. Note 6 - Lease Commitments The Company and its subsidiaries lease manufacturing and warehouse facilities and computer equipment under non-cancelable leases expiring at various dates through 2022. Rent charged to operations was $13,281,000, $10,054,000, and $8,676,000 in 1998, 1997 and 1996, respectively. Minimum rental commitments for non-cancelable leases in effect at December 31, 1998, are as follows (in thousands): 1999 $15,125 2000 9,801 2001 3,924 2002 2,263 2003 1,436 2004-2022 15,029 Note 7 - Income Taxes
The provision for income taxes consists of the following (in thousands): 1998 1997 1996 - ------------------------------------------------------------- Current: Federal $49,818 $65,630 $58,376 State 3,664 6,141 6,609 International 11,650 9,930 14,925 - -------------------------------------------------------------- Total current 65,132 81,701 79,910 - -------------------------------------------------------------- Deferred: Federal 8,514 4,554 1,833 State 622 615 482 International 1,975 (175) (397) - --------------------------------------------------------------- Total deferred 11,111 4,994 1,918 - --------------------------------------------------------------- Total provision for income taxes $76,243 $86,695 $81,828 - ---------------------------------------------------------------
A reconciliation of statutory and effective tax rates is as follows: 1998 1997 1996 - --------------------------------------------------------------- Statutory tax rate 35.0% 35.0% 35.0% FSC benefits (1.9) (2.0) (1.4) State income taxes, net of federal benefits 1.3 1.7 1.9 Research and development credits (3.7) - - International taxes 0.2 (0.6) 0.2 Other, net 0.5 0.2 (0.1) - ------------------------------------------------------------- 31.4% 34.3% 35.6% - -------------------------------------------------------------
The 3.7% tax rate reduction in 1998 is a result of the Company's enhanced research and development activities over the last several years. Deferred income tax provisions reflect the effect of temporary differences between financial statement and tax reporting of income and expense items. The net deferred tax liability at December 31, which is included in other assets or other liabilities in the consolidated balance sheets, results from the following temporary differences (in thousands):
1998 1997 - ----------------------------------------------------------------- Gross deferred assets: Inventories $17,377 $18,856 Pension and postretirement benefit plans 12,645 14,624 - ---------------------------------------------------------------- Total 30,022 33,480 - ---------------------------------------------------------------- Gross deferred liabilities: Depreciation (31,335) (24,700) Other (13,010) (11,992) - ---------------------------------------------------------------- Total (44,345) (36,692) - ---------------------------------------------------------------- Net deferred tax liability $(14,323) $ (3,212) - ----------------------------------------------------------------
At December 31, 1998 and 1997, no valuation allowance for the deferred tax assets was required. United States taxes are not provided on unremitted earnings and related cumulative translation adjustments of international subsidiaries (approximately $159 million at December 31, 1998) because the Company intends to reinvest the earnings indefinitely. The estimated amount of income taxes that would be incurred should such earnings be distributed is not significant due to the availability of foreign tax credits. The Company has a Foreign Sales Corporation (FSC) subsidiary which is taxed at a lower effective tax rate on its income from U.S. export sales. Note 8 - Insurance The Company's general and products liability insurance coverage, which provides for risks up to $200 million, was renewed during 1998. The current policies provide limited coverage for environmental damage and are written on a claims-made basis. Note 9 - Common Stock In November 1996, the Company declared a two-for-one common stock split effected in the form of a 100% stock dividend to stockholders of record on December 16, 1996. Since the par value of the common stock remains unchanged, the increased shares effected by the stock split resulted in a transfer from retained earnings to common stock during 1996. Unless otherwise noted, all share and per share information has been restated to reflect this stock split. The Company's deferred compensation plan provides for cash and common stock payments to certain key employees. Under this plan, a bonus pool is calculated by a formula based on the amount of increase in profitability. Bonus units are then awarded. Bonus units are distributed five years after being awarded in the form of one share of common stock for each bonus unit. In addition, the Company makes cash payments equal to the amount of Federal income taxes the employee would be required to pay for the receipt of such stock and cash at the highest marginal Federal income tax rate. Expenses for this plan are recorded during the period for which the calculation is made. During 1998, 1997 and 1996, 38,200, 23,000 and 15,534 shares of common stock, respectively, were issued under this plan. At December 31, 1998, 135,400 bonus units were awarded but not distributed. This plan permits issuance of a maximum of 2,400,000 shares of the Company's common stock, of which 1,521,010 shares remain to be awarded. Note 9 - Common Stock (continued) On February 17, 1998, the Company adopted the Directors' Non-Qualified Share Option Plan of 1998. This plan permits the award of non-qualified stock options to purchase up to 400,000 shares of the Company's common stock to those members of the Board of Directors who are not employees of the Company. Under this plan, the seven non-employee directors received an initial option to purchase 10,000 shares of common stock. Additional awards of options to purchase 2,000 shares are made to each eligible director on the day after each annual shareholder's meeting, beginning in 1998. As of December 31, 1998, 84,000 shares were awarded at prices ranging from $39.88 to $40.13, with 316,000 shares remaining. The Company's Share Option Plan of 1995, which replaced the Share Option Plan of 1987, permits the granting of incentive stock options or non-qualified options to purchase up to 4,000,000 shares of the Company's common stock through 2005. Incentive stock options may not have an option price of less than the fair market value of the shares at the date of the grant. Options generally become exercisable one year following the grant date and expire ten years after the grant date. Options granted in 1998, 1997 and 1996 to purchase 235,000, 160,000 and 249,000 shares, respectively, become exercisable over a one to five year period. Options granted in 1998 for 25,000 shares become exercisable over a ten year period. Options to purchase 1,597,732 shares of the Company's common stock under this plan remain to be granted at December 31, 1998. The Company's Share Option Plan of 1987 permitted the granting of incentive stock options or non-qualified options to purchase up to 2,000,000 shares of the Company's common stock through 1997. Options granted had an option price equal to the market value of the shares at the date of the grant. Options are generally exercisable one year following the grant date. Options granted in 1994 and 1993 to purchase 320,000 and 260,000 shares, respectively, become exercisable ratably over a five year period. The balance of the shares that had been reserved for issuance under this plan were released. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Company's two stock option plans been determined based on the fair value at the grant date for awards in 1998, 1997 and 1996 consistent with the provisions of this statement, the Company's net income and net income per share would have been as follows (in thousands, except net income per share): 1998 1997 1996 - --------------------------------------------------------------------- Net income $164,368 $157,478 $141,562 Net income per share - Basic $1.63 $1.57 $1.42 Net income per share - Diluted $1.62 $1.53 $1.39 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for 1998: dividend yield of .80%, expected volatility of 23.7%, risk-free interest rate of 4.68% and expected life based on historical exercise periods of 6.0 years. The weighted-average assumptions for 1997 and 1996 were as follows: dividend yield of .70% and .74%, expected volatility of 17.9% and 17.6%, risk-free interest rate of 5.75% and 6.5% and expected life based on historical exercise periods of 6.5 years and 5.75 years, respectively. A summary of the combined activity and balances for the Company's stock options for the two plans as of December 31, 1998, 1997 and 1996 and changes during the years ended on those dates is as follows:
1998 1997 1996 - --------------------------------------------------------------------------------------------------------------- Wtd. Avg. Wtd. Avg. Wtd. Avg. Exercise Exercise Exercise Shares Price Shares Price Shares Price - --------------------------------------------------------------------------------------------------------------- Options outstanding, beginning of year 3,228,698 $27.91 2,396,636 $23.43 1,736,376 $21.31 Options granted 278,000 34.95 1,170,000 35.42 984,000 25.69 Options exercised (286,709) 21.02 (310,388) 22.17 (279,740) 19.41 Options cancelled (61,732) 28.95 (27,550) 24.17 (44,000) 21.83 - --------------------------------------------------------------------------------------------------------------- Options outstanding, end of year 3,158,257 29.05 3,228,698 27.91 2,396,636 23.43 - --------------------------------------------------------------------------------------------------------------- Options exercisable at year-end 2,880,257 28.48 2,066,702 23.64 1,419,436 21.70 Weighted average fair value of options granted during the year $10.77 $11.16 $8.02
Note 9 - Common Stock (continued)
The following table summarizes information about stock options outstanding at December 31, 1998: Options Outstanding Options Exercisable - ------------------------------------------------------------------------------------------------------- Number Wtd. Avg. Wtd. Avg. Number Wtd. Avg. Outstanding Remaining Exercise Exercisable Exercise Range of Exercise Prices at 12/31/98 Contractual Life Price at 12/31/98 Price - ------------------------------------------------------------------------------------------------------ $10.1875 to $14.5625 7,000 16.0 months $14.56 7,000 $14.56 $16.25 to $24.00 601,800 63.6 months 19.39 601,800 19.39 $24.875 to $31.25 1,268,457 75.7 months 26.66 1,183,457 26.53 $31.75 to $36.00 1,088,000 105.6 months 35.68 1,088,000 35.68 $36.875 to 40.75 193,000 109.0 months 37.81 - - - ------------------------------------------------------------------------------------------------------ 3,158,257 80.7 months $29.05 2,880,257 $28.48 - ------------------------------------------------------------------------------------------------------
NOTE 10 - Company Operations By Segment The Chemical Products segment distributes biochemicals, organic chemicals, chromatography products, diagnostic reagents and related products for use in research and development, in the diagnosis of disease and in manufacturing. These products are both manufactured by the Company and purchased for resale. The Metal Products segment manufactures and distributes components for metal frameworks used in industry to support pipes, lighting fixtures and conduit, continuous networks of trays used in routing power and telecommunications cabling, and electrical and electronic enclosures. Sales between these two industry segments are not significant. Cash and temporary cash investments are considered available for general corporate purposes and, accordingly, are not allocated to the identifiable assets of either segment. The United States sales to unaffiliated customers presented in the summary of operations by geographic segment below include sales to international markets as follows (in thousands): Year Amount ------------------ 1998 $ 60,160 1997 82,824 1996 106,154
The Company's operations by geographic segment are as follows (in thousands): 1998 1997 1996 - ------------------------------------------------------------------------------------------- Net sales to unaffiliated customers: United States $ 709,282 $ 705,978 $ 683,810 International 485,008 421,106 350,755 Net intercompany sales between geographic areas: United States 203,432 195,115 146,202 International 52,337 42,252 39,268 Eliminations (255,769) (237,367) (185,470) - ------------------------------------------------------------------------------------------- Total $1,194,290 $ 1,127,084 $1,034,565 - ------------------------------------------------------------------------------------------- Income before provision for income taxes: United States $ 232,019 $ 245,586 $ 192,415 International 41,290 31,553 41,664 Eliminations (30,719) (24,385) (4,395) - ------------------------------------------------------------------------------------------- Total $ 242,590 $ 252,754 $ 229,684 - ------------------------------------------------------------------------------------------- Identifiable assets at December 31: United States $ 976,867 $ 836,524 $ 783,699 International 555,103 450,082 348,732 Eliminations (99,135) (42,784) (32,473) - ------------------------------------------------------------------------------------------- Total $1,432,835 $1,243,822 $1,099,958 - -------------------------------------------------------------------------------------------
NOTE 10 - Company Operations By Segment (continued)
The Company's operations by industry segment are as follows (in thousands): 1998 1997 1996 - ---------------------------------------------------------------------------------- Net sales to unaffiliated customers: Chemical Products $ 965,927 $ 901,701 $ 832,924 Metal Products 228,363 225,383 201,641 - ---------------------------------------------------------------------------------- Total $1,194,290 $1,127,084 $1,034,565 - ---------------------------------------------------------------------------------- Income before provision for income taxes: Chemical Products $ 205,609 $ 214,282 $ 193,075 Metal Products 34,087 33,717 31,395 Interest income, net 2,894 4,755 5,214 - ---------------------------------------------------------------------------------- Total $ 242,590 $ 252,754 $ 229,684 - ---------------------------------------------------------------------------------- Depreciation: Chemical Products $ 48,574 $ 37,441 $ 36,221 Metal Products 7,987 6,056 5,007 - ---------------------------------------------------------------------------------- Total $ 56,561 $ 43,497 $ 41,228 - ---------------------------------------------------------------------------------- Capital expenditures: Chemical Products $ 119,158 $ 96,228 $ 77,541 Metal Products 11,220 12,512 16,347 - ---------------------------------------------------------------------------------- Total $ 130,378 $ 108,740 $ 93,888 - ---------------------------------------------------------------------------------- Identifiable assets at December 31: Chemical Products $1,255,500 $1,044,806 $ 860,676 Metal Products 152,990 152,788 135,597 Cash and temporary cash investments 24,345 46,228 103,685 - ---------------------------------------------------------------------------------- Total $1,432,835 $1,243,822 $1,099,958 - ---------------------------------------------------------------------------------- Income Tax Expense: Chemical Products $ 63,639 $ 72,859 $ 68,981 Metal Products 12,604 13,836 12,847 - ---------------------------------------------------------------------------------- Total $ 76,243 $ 86,695 $ 81,828 - ---------------------------------------------------------------------------------- Net intercompany sales: Chemical Products $ 251,775 $ 233,204 $ 182,204 Metal Products 3,994 4,163 3,266 - ---------------------------------------------------------------------------------- Total $ 255,769 $ 237,367 $ 185,470 - ----------------------------------------------------------------------------------
Note 11 - Pension And Other Postretirement Benefit Plans The Company maintains several retirement plans. Retirement benefits are generally based on years of service and compensation. The Company also maintains postretirement health and welfare benefit plans. Benefits are subject to deductibles, co-payment provisions and coordination with benefits available under Medicare. The Company may amend the plans periodically. The following chart summarizes the balance sheet impact, as well as the benefit obligation, assets, funded status and rate assumptions associated with the pension and postretirement medical benefit plans.
Pension Plans -------------------------------------------------- Postretirement Medical United States International Benefit Plans -------------------------------------------------- -------------------------- 1998 1997 1998 1997 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------- Reconciliation of funded status of the plans and the amounts included in the Company's consolidated balance sheets (in thousands): Change in benefit obligations: Beginning obligations $52,372 $47,387 $45,655 $44,320 $ 35,898 $ 30,724 Service cost 3,350 3,159 2,614 2,149 1,628 1,436 Interest cost 3,939 3,765 2,484 2,269 2,444 2,362 Plan participant contributions - - 1,201 1,080 - - Foreign currency exchange rate changes - - 1,211 (3,183) - - Actuarial (gains)/losses 4,448 2,784 (1,725) (265) (767) 2,459 Benefits paid (4,019) (4,723) (876) (715) (1,125) (1,083) - ------------------------------------------------------------------------------------------------------------------------ Ending obligations 60,090 52,372 50,564 45,655 38,078 35,898 - ------------------------------------------------------------------------------------------------------------------------ Changes in plans' assets: Beginning fair value 59,188 52,372 50,629 47,353 - - Actual return on plans' assets 8,693 11,539 4,499 3,816 - - Foreign currency exchange rate changes - - 1,317 (2,736) - - Employer contributions 8,956 - 1,923 1,831 1,125 1,083 Plan participant contributions - - 1,201 1,080 - - Benefits paid (4,019) (4,723) (876) (715) (1,125) (1,083) - ----------------------------------------------------------------------------------------------------------------------- Ending fair value 72,818 59,188 58,693 50,629 0 0 - ----------------------------------------------------------------------------------------------------------------------- Balance sheet amount: Funded status 12,728 6,816 8,129 4,974 (38,078) (35,898) Unrecognized net actuarial gain (3,670) (5,054) (5,375) (2,822) (1,344) (577) Unrecognized prior service cost 9,424 10,213 1,366 1,443 - - Unrecognized net transition asset (545) (636) (173) (215) - - - ----------------------------------------------------------------------------------------------------------------------- Net balance sheet asset/(liability) $17,937 $11,339 $ 3,947 $ 3,380 $(39,422) $(36,475) - ----------------------------------------------------------------------------------------------------------------------- Weighted average assumptions as of December 31: Discount rate 6.75% 7.00% 5.30% 5.40% 6.75% 7.00% Expected return on plan assets 9.50% 9.00% 6.90% 6.80% n/a n/a Compensation rate increase 4.25% 5.00% 4.30% 4.30% n/a n/a Components of net periodic benefit cost: Service cost $ 3,350 $ 3,159 $ 2,614 $ 2,149 $ 1,628 $ 1,436 Interest cost 3,939 3,765 2,484 2,269 2,444 2,362 Expected return on plan assets (5,630) (4,557) (3,641) (3,169) - - Amortization 699 699 (17) 62 - (6) - ----------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 2,358 $ 3,066 $ 1,440 $ 1,311 $ 4,072 $ 3,792 - -----------------------------------------------------------------------------------------------------------------------
Note 11 - Pension And Other Postretirement Benefit Plans (continued) Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement health and welfare benefit plans. Medical costs were assumed to increase at an annual rate of 7% in 1998, decreasing ratably to a growth rate of 5% in 2002 and remaining at 5% per year thereafter. The effects of a one percentage point decrease in the assumed health care cost trend rates on the aggregate service and interest cost components and on the postretirement benefit obligations are decreases of $200,000 and $1,800,000, respectively. The effects of a one percentage point increase on the aggregate service and interest cost components and on the postretirement benefit obligations are increases of $200,000 and $1,840,000, respectively. Benefits are funded as claims are paid. The Company's 401(k) retirement savings plan provides retirement benefits to eligible U.S. employees in addition to those provided by the defined benefit plan. The plan permits participants to voluntarily defer up to 15% of their compensation, subject to Internal Revenue Code limitations. The Company also contributes a fixed amount per year to the account of each eligible employee plus a percentage of the employee's salary deferral. The Company's policy is to fully fund this plan. The cost for this plan was $6,008,000, $5,798,000 and $5,504,000 for the years ended December 31, 1998, 1997 and 1996, respectively. Note 12 - Earnings Per Share The Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share," effective December 15, 1997. As a result, the Company's earnings per share for 1996 was restated. A reconciliation of basic and diluted earnings per share, together with the related shares outstanding, and the effect of this change on previously reported earnings per share (EPS) is as follows (in thousands, except per share amounts):
Reconciliation of Earnings and Shares Per-Share Income Shares Amount - ---------------------------------------------------------------------- For the Year Ended 1996 Basic Earnings per Share Net income available to common shareholders $147,856 99,930 $1.48 Options outstanding - 1,785 - ---------------------------------------------------------------------- Diluted Earnings per Share Net income available to common shareholders $147,856 101,715 $1.45 - ---------------------------------------------------------------------- For the Year Ended 1997 Basic Earnings per Share Net income available to common shareholders $166,059 100,210 $1.66 Options outstanding - 2,594 - -------------------------------------------------------- Diluted Earnings per Share Net income available to common shareholders $166,059 102,804 $1.62 - --------------------------------------------------------------------- For the Year Ended 1998 Basic Earnings per Share Net income available to common shareholders $166,347 100,540 $1.65 Options outstanding - 648 - ------------------------------------------------------- Diluted Earnings per Share Net income available to common shareholders $166,347 101,188 $1.64 - --------------------------------------------------------------------
Effect on Previously Reported EPS 1996 - -------------------------------------------------------------------- Per share amounts Primary EPS as reported $1.48 Effect of SFAS No. 128 - - -------------------------------------------------------------------- Basic EPS as restated $1.48 - -------------------------------------------------------------------- Fully diluted EPS as reported $1.48 Effect of SFAS No. 128 (0.03) - -------------------------------------------------------------------- Diluted EPS as restated $1.45 - --------------------------------------------------------------------
SELECTED FINANCIAL DATA (unaudited) Common Stock Data: (per share) - --------------------------------------------------------------------------------------- 1998 Price Range 1997 Price Range Dividends High Low High Low 1998 1997 - --------------------------------------------------------------------------------------- First Quarter $42-3/4 $35-3/4 $33 $28-7/8 $ .0700 $.0625 Second Quarter 41-5/8 32-9/16 36 26-7/8 .0700 .0625 Third Quarter 36 25-3/4 35-3/4 31-3/8 .0700 .0625 Fourth Quarter 33-3/4 27-11/16 41-1/8 31-3/4 .0725 .0700 The common stock is traded on the National Market System ("NMS") of the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). The trading symbol is SIAL. Options in the Company's common stock are traded on the Chicago Board Options Exchange.
(Page 28 of the 1998 Annual Report to Shareholders)
Annual Financial Data: (in millions, except per share data) - ---------------------------------------------------------------------------- 1998 1997 1996 1995 1994 - ---------------------------------------------------------------------------- Net sales $1,194.3 $1,127.1 $1,034.6 $959.8 $851.2 Net income 166.3 166.1 147.9 131.7 110.3 Per share: Net income - Basic 1.65 1.66 1.48 1.32 1.11 Net income - Diluted 1.64 1.62 1.45 1.30 1.09 Dividends .2825 .2575 .2275 .1900 .1688 Total assets 1,432.8 1,243.8 1,100.0 985.2 852.0 Long-term debt .4 .6 3.8 13.8 14.5
Quarterly Financial Data: (in millions, except per share data) - ----------------------------------------------------------------------------- 1998 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 - ----------------------------------------------------------------------------- Net sales $306.2 $294.6 $300.4 $293.1 Gross profit 163.1 158.2 157.6 157.5 Net income 44.2 41.1 41.4 39.6 Net income per share - Basic .44 .41 .41 .39 Net income per share - Diluted .43 .41 .41 .39 1997 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 - ----------------------------------------------------------------------------- Net sales $279.1 $278.6 $286.0 $283.4 Gross profit 150.5 151.7 151.4 154.8 Net income 41.4 40.7 41.8 42.2 Net income per share - Basic .41 .41 .42 .42 Net income per share - Diluted .40 .40 .41 .41
EX-21 5 Exhibit 21 SIGMA-ALDRICH CORPORATION PRINCIPAL SUBSIDIARIES ------------------------- Sigma-Aldrich Corporation (Delaware), the Registrant: 1. Sigma-Aldrich Co. (Illinois) (A) Sigma Chemical Company (Missouri) (B) Sigma Israel Chemicals, Ltd. (Israel) (C) Sigma-Aldrich Chemie Holding GmbH (Germany) (1) Sigma-Aldrich Chemie GmbH (Germany) (a) RdH Laborchemikalien GmbH & Co. (Germany) (2) Sigma-Aldrich Produktions GmbH (Germany) (D) Aldrich Chemical Company, Inc. (Delaware) (E) Sigma-Aldrich N.V./S.A. (Belgium) (1) Sigma Chemie B.V. (The Netherlands) (F) Aldrich-Chemie GmbH & Co. K.G. (Germany) (G) Aldrich-Chemie Verwaltungs GmbH (Germany) (H) Sigma-Aldrich S.r.l. (Italy) (I) Sigma-Aldrich Chimie S.N.C. (France) (1) Sigma-Aldrich Chemie S.a.r.l. (France) (J) Supelco, Inc. (Delaware) (K) Genosys Biotechnologies, Inc. (Texas) (L) Research Biochemicals, Inc. (Delaware) (M) Carbolabs, Inc. (Connecticut) (N) Techcare Systems, Inc. (California) 2. B-Line Systems, Inc. (Illinois) 3. Sigma-Aldrich, Inc. (Wisconsin) 4. Sigma-Aldrich & Subs Foreign Sales Corporation (Barbados) 5. Fluka Chemie AG (Switzerland) 6. Sigma-Aldrich Company, Ltd. (United Kingdom) 7. Sigma-Aldrich Foreign Holding Co. (Missouri) (A) Sigma-Aldrich Quimica S.A. (Spain) (B) Sigma-Aldrich Pty., Limited (Australia) (C) Sigma-Aldrich Canada Ltd. (Canada) (D) Sigma-Aldrich s.r.o. (Czech Republic) (E) Sigma-Aldrich Quimica Brasil Ltda. (Brazil) (F) Sigma-Aldrich Quimica, S.A. de C.V. (Mexico) (G) Sigma-Aldrich Handels GmbH (Austria) (H) Sigma-Aldrich Kft (Hungary) (I) Sigma-Aldrich Sp. zo.o (Poland) (J) Sigma-Aldrich Japan KK (Japan) (K) Sigma-Aldrich India (India) (L) Sigma-Aldrich Ireland Ltd. (Ireland) (M) Sigma-Aldrich E.P.E. (Greece) (N) Sigma-Aldrich de Argentina, S.A. (Argentina) (O) Sigma-Aldrich (Pty.) Ltd. (South Africa) (P) Sigma-Aldrich Pte. Ltd. (Singapore) (Q) Sigma-Aldrich Korea Ltd. (Korea) (R) LabKemi AB (Sweden) (S) Ing F. Heidenreich AS (Norway) (T) Sigma-Aldrich A/S (Denmark) (U) Sigma-Aldrich (M) Sdn. Bhd (Malaysia) (V) Ya-Kemia Oy (Finland) (W) Sigma-Aldrich Finance, Ltd. (UK) 8. Sigma-Aldrich Finance Co. (Missouri) EX-27 6
5 1,000 YEAR DEC-31-1998 DEC-31-1998 24,345 0 236,235 6,749 464,035 772,681 891,665 372,926 1,432,835 142,372 415 0 0 100,623 1,115,757 1,432,835 1,194,290 1,194,290 557,864 557,864 393,836 0 920 242,590 76,243 166,347 0 0 0 166,347 1.65 1.64
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