-----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, KG1vFERAFo7ceNlVJRE/rDATSkhMyWlGmKKH98m6RtRxfCeq5SBrVvOCUcMXKZGZ zMSJpl6SwPAlPqp5c5p74A== 0001021408-01-001907.txt : 20010329 0001021408-01-001907.hdr.sgml : 20010329 ACCESSION NUMBER: 0001021408-01-001907 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010328 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: 1582516 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 0001.txt FORM 10-K (MARCH 2001) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark one) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 ------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _________________ Commission file number 0-8135 --------- SIGMA-ALDRICH CORPORATION ================================================================================ (Exact name of Registrant as specified in its charter) Delaware 43-1050617 - ------------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 3050 Spruce Street, St. Louis, Missouri 63103 - ----------------------------------------- ------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 314-771-5765 ------------------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1.00 par value - -------------------------------------------------------------------------------- (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] Aggregate market value of the voting stock held by non-affiliates of the Registrant: $3,283,554,488 March 2, 2001 - ------------------------------- ------------------------------ Value Date of Valuation Number of shares of the registrant's common stock, $1.00 par value, outstanding as of March 2, 2001 was 75,399,947. ================================================================================ 1 The following documents are incorporated by reference in the Parts of Form 10-K indicated below: Documents Incorporated by Reference Parts of Form 10-K into which Incorporated - ----------------------------------- ------------------------------------------ Pages 16-36 of the Annual Report to Shareholders for the year ended December 31, 2000 Parts I, II and IV Proxy Statement for the 2001 Annual Meeting of Shareholders Part III The Index to Exhibits is located on page F-3 of this report. 2 This Annual Report on Form 10-K (the Report) may be deemed to include or incorporate forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as statements preceded by, followed by, or that include the words "believes," "expects," "anticipates" or similar expressions, and other statements contained herein regarding matters that are not historical facts. Additionally, the Report contains forward-looking statements relating to future performance, goals, strategic actions and initiatives and similar intentions and beliefs which involve assumptions regarding the Company operations, investments, acquisitions and conditions in the markets the Company serves. Although the Company believes its expectations are based on reasonable assumptions, such statements are subject to risk and uncertainty, including, among others, certain economic, political and technological factors. Actual results could differ materially from those stated or implied in the forward-looking statements herein, due to, but not limited to, such factors as changes in prices and the competitive business environment, other changes in the business environment in which the Company operates, changes in research funding, uncertainties surrounding government healthcare reform, government regulations applicable to the business, the impact of fluctuations in interest rates and foreign currency exchange rates and the effectiveness of the Company's further implementation of its global software systems. The Company does not undertake any obligation to update these forward-looking statements. PART I - -------------------------------------------------------------------------------- Item 1. Business. - -------------------------------------------------------------------------------- (a) General development of business. - -------------------------------------------------------------------------------- Sigma-Aldrich Corporation ("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. The Company's principal executive offices are located at 3050 Spruce Street, St. Louis, Missouri, 63103. On February 16, 2001, the Company acquired the stock of Isotec, Inc., a leading producer and supplier of stable isotopes and isotopically labeled compounds used in life science research, medical diagnostics and PET imaging applications. The purchase price was $35.6 million. In August 2000, the Company acquired the assets of Amelung GmbH for $28 million, which included an initial payment of $25 million and assumed debt of $3 million. A payment of up to an additional $6 million may be made in mid-2003 if there have been no adverse impacts against the seller's representations at that time. Amelung GmbH uses leading edge technology to develop and manufacture coagulation analyzer instruments. In July 2000, the Company acquired the stock of First Medical, Inc. First Medical has developed a rapid immunoassay system that provides results to diagnose acute myocardial infarction. The initial investment is $15 million, with additional payments required if certain contingent sales and income growth targets are met through 2005. In May 2000, the Company acquired the stock of ARK Scientific GmbH for $2 million. ARK is among the leading manufacturers and suppliers of custom synthetic DNA (oligonucleotides or "oligos") to life science researchers in Europe. On November 22, 1999, the Company announced its strategic decision to seek a buyer for its B-Line Systems metal business. On March 27, 2000, the Company reached an agreement to sell B-Line Systems to Cooper Industries, Inc. On May 1, 2000, the Company completed the sale to Cooper Industries, Inc. for $425.2 million. Final purchase price adjustments increased the sale amount to $430.4 million. The funds received from the 3 sale were used to finance share repurchases, reduce outstanding borrowings and for other general corporate purposes. The metal operations are accounted for as discontinued operations, and accordingly, operating results and net assets are segregated in the Consolidated Statements of Income and Consolidated Balance Sheets. (b) Financial information about segments. - -------------------------------------------------------------------------------- Information concerning the Company's business units is provided in note 12 on page 30 of the 2000 Annual Report which is incorporated herein by reference. (c) Narrative description of business. - -------------------------------------------------------------------------------- The Company develops, manufactures and distributes the broadest range of high quality biochemicals, organic chemicals, chromatography products and diagnostic reagents available in the world. These chemical products and kits are used in scientific and genomic research, biotechnology, pharmaceutical development, the chemical industry and for the diagnosis of disease. The Company operates in 33 countries, lists more than 85,000 chemical products and distributes these products in over 160 countries. The Company renamed the two research-based sales units to more accurately reflect their capabilities and focused markets. The sales unit formerly known as Laboratory Products has become Scientific Research and the former Life Science unit is now named Biotechnology. These units represent over three-fourths of the Company's sales and drive the Company's overall business mix, roughly 75% of which is to customers in the life sciences and 25% of which is to customers using our products in a broad variety of high technology applications. The Fine Chemical and Diagnostic sales units did not change names. Products: The Company's life science products are used in many applications and disciplines including molecular biology, cell biology, cell culture, protein analysis and chromatography, DNA sequencing and gene studies. Approximately 75% of the products supplied through the Scientific Research unit consist of biochemicals, organic chemicals, reagents and other products used by customers at universities, government institutions, non-profit organizations, pharmaceutical, diagnostic and biotechnology companies. The remaining 25% of the Scientific Research products are complex and very pure organic and inorganic chemicals and analytical reagents used in high technology research. The products marketed through the Biotechnology unit are biochemicals and kits used in biotechnology, genomic and proteomic research and chromotography applications. Additional products supplied in Biotechnology relate to the areas of immunology, cell culture, molecular biology and cell signaling. The Fine Chemicals unit is a medium-sized supplier of large scale organic chemicals and biochemicals used in development and production by pharmaceutical, biotechnology and diagnostic companies. The Diagnostics unit is a niche supplier of diagnostic reagents and instruments used in the diagnosis of disease. The main focus for diagnostics is in clinical chemistry, coagulation and immunochemistry, including coagulation analyzers and point-of-care cardiac testing. Customers for the Company's diagnostic reagents and equipment include hospitals, doctor and commercial laboratories and universities. Status of products: Due to continuing developments in life science and other scientific research, there can be no assurance of a continuing market for each of the Company's products. However, through ongoing reviews of technical literature, along with regular communications with customers, the Company's goal is to keep abreast of the trends in research and diagnostic techniques. This information, along with its own research technology, determines the Company's development of improved and/or additional products. 4 Sales and Distribution: During the year ended December 31, 2000, products were sold to approximately 60,000 customers, including hospitals, universities, pharmaceutical companies and clinical laboratories as well as private and governmental research laboratories. Small orders in laboratory quantities averaging approximately $300 accounted for 76% of the Company's sales. The Company also makes its chemical products available in larger-than-normal laboratory quantities for use in manufacturing. Sales of these products accounted for 17% of sales. The Company also packages certain individual products in diagnostic kit form. A diagnostic kit contains products which, when used in a series of manual and/or automated testing procedures, aid in detecting particular conditions or diseases. Diagnostic products account for 7% of the Company's sales. Customers and potential customers, wherever located, are encouraged to contact the Company by telephone ("collect" or on "toll-free" WATS lines) or via its homepage on the World Wide Web (www.sigma-aldrich.com) for technical staff consultation or for placing orders. Shipments are made six days a week from St. Louis, Milwaukee, the United Kingdom, Germany, Israel and Japan and five days a week from all other locations. The Company strives to ship its products to customers on the same day an order is received and carries inventory levels required to maintain this policy. Production and Purchasing: The Company has chemical production facilities in Milwaukee and Sheboygan, Wisconsin; St. Louis, Missouri; Houston, Texas; Bellefonte, Pennsylvania; Germany, Israel, Switzerland and the United Kingdom. A minor amount of production is done by some of the Company's other subsidiaries. Biochemicals and diagnostic reagents are primarily produced by extraction and purification from yeasts, bacteria and other naturally occurring animal and plant sources. Organic and inorganic chemicals and radiolabeled chemicals are primarily produced by synthesis. Chromatography media and columns are produced using proprietary chemical synthesis and proprietary preparation processes. Similar processes are used for filtration and sample collection processes. There are over 85,000 products listed in the Sigma, Aldrich, Fluka/Riedel-de Haen and Supelco catalogs, of which the Company produces approximately 40,000, or roughly 50% of the products sold. Products not manufactured by the Company are purchased from many sources either under contract or in the open market. No one supplier accounts for more than 10% of the Company's chemical purchases. The Company has generally been able to obtain adequate supplies of products and materials to meet its needs, although no assurance can be given that shortages will not occur in the future. Whether a product is produced by the Company or purchased from outside suppliers, it is subjected to quality control procedures, including the verification of purity, prior to final packaging. Quality control is performed by a staff of chemists and lab technicians utilizing highly calibrated equipment. Patents and Trademarks: The Company holds approximately 150 patents and has roughly 400 licensing agreements worldwide. The Company's significant trademarks are the brand names, "Sigma", "Aldrich", "Fluka", "Riedel-de Haen" and "Supelco". The brands are marketed through business units called "Sigma-Aldrich Scientific Research", Sigma-Aldrich Biotechnology", "Sigma-Aldrich Fine Chemicals" and "Sigma Diagnostics". Their related registered logos, which have various expiration dates, are expected to be renewed indefinitely. 5 Dependence on a single customer or product: During the year ended December 31, 2000, no single customer or product accounted for more than 2% of the Company's net sales. Backlog: The majority of customer orders are shipped from inventory on the day ordered, resulting in limited back-log. Individual items may occasionally be out of stock. These items are shipped as soon as they become available. Some orders for larger-than-normal quantities specify a future delivery date which can create a small backlog, however on December 31, 2000 and 1999, the back-log of firm orders and orders for future delivery was not significant. The Company anticipates that substantially all of the December 31, 2000 back-log will be shipped during 2001. 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 many of their products. While the Company generally offers a larger number of products, some of the Company's products are unusual and have relatively little demand. In addition, there are many competitors who offer a limited quantity of chemicals, and several companies compete with the Company by offering thousands of chemicals, although few of them stock or analyze substantially all of the chemicals they offer for sale. In all product areas the Company competes primarily on the basis of customer service, product quality and price. The Company markets its chemical products through its four business units: Scientific Research, Biotechnology, Fine Chemicals and Diagnostics. The Company has over 3,500,000 catalogs in the market place for the year 2000 for the Sigma, Aldrich, Fluka, Riedel-de Haen and Supelco brands to customers and potential customers throughout the world. This is supplemented with advertisements in chemical and other scientific journals, through the use of direct mailing of special product brochures and by personal visits by sales and technical representatives with customers. Compliance with 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. 6 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's 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. Number of persons employed: The Company had 6,218 employees as of December 31, 2000. The total number employed in the United States was 3,445 with the remaining 2,773 employed by the Company's foreign subisidaries. The Company employs over 2,000 people who have degrees in chemistry, biochemistry, engineering or other scientific disciplines, including approximately 300 with Ph.D. degrees. 7 (d) Financial information about geographic areas. - -------------------------------------------------------------------------------- Information concerning geographic segments for the years ended December 31, 2000, 1999 and 1998, is located in Note 12 to the consolidated financial statements on page 30 of the 2000 Annual Report which is incorporated herein by reference. In the year ended December 31, 2000, approximately 55% of the Company's sales were to customers located outside the United States. These sales were made directly by the Company, through distributors and by subsidiaries (noted in Exhibit 21) organized in Argentina, Australia, Austria, Belgium, Brazil, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, India, Ireland, Israel, Italy, Japan, Malaysia, Mexico, The Netherlands, Norway, Poland, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland and the United Kingdom. For sales with final destinations in an international market, the Company has a Foreign Sales Corporation ("FSC") subsidiary, which provides certain Federal income tax advantages. The effect of the tax rules governing the FSC is to lower the effective federal income tax rate on export income. The Company intends to continue to comply with the provisions of the Internal Revenue Code relating to FSCs. The Company's international operations and United States export sales are subject to certain risks such as changes in the legal and regulatory policies of foreign jurisdictions, local political and economic developments, currency fluctuations, exchange controls, changes in tariff restrictions, royalty and tax increases, export and import restrictions and restrictive regulations of foreign governments, among other factors inherent in these operations. The Company is unable to predict the extent to which its business may be affected in the future by these matters. During the year ended December 31, 2000, approximately 12% of the Company's United States operations' chemical purchases were from international suppliers. (e) 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 following table shows the location, land area, building area and function of the properties the Company owns or leases.
Building Area Land Area (Sq. Ft.) Country (Acres) (In thousands) Function ------- ------- ------------ -------- United States 1,532 4,076 admin., production, warehousing, distrib. Germany 45 587 admin., production, warehousing, distrib. Switzerland 13 383 admin., production, warehousing, distrib. United Kingdom 242 317 admin., production, warehousing, distrib. Israel 5 132 admin., production, warehousing, distrib. All Other 33 413 admin., warehousing, distrib. ----- ----- Total 1,870 5,908
Percent Owned 88% Percent Leased 12% 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 selected markets. 8 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 2000. 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 information for the years ended December 31, 2000 and 1999 is located on page 36 of the 2000 Annual Report which is incorporated herein by reference. As of March 2, 2001, there were 1,369 record holders of the Registrant's Common Stock. Items 6 through 8. Selected Financial Data, Management's Discussion and Analysis - -------------------------------------------------------------------------------- of Financial Condition and Results of Operations, Qualitative and Quantitative - ------------------------------------------------------------------------------ Disclosures about Market Risk and Financial Statements and Supplementary Data. - ------------------------------------------------------------------------------ The information required by Items 6 through 8 is incorporated herein by reference to pages 16-36 of the 2000 Annual Report. See Index to Financial Statements and Schedules on page F-1 of this report. Those pages of the Company's 2000 Annual Report listed in the Index or referred to in Items 1 through 4 are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. - -------------------------------------------------------------------------------- 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" and section 16(a) "Beneficial Ownership Reporting Compliance" of the 2001 Proxy Statement is incorporated herein by reference. - -------------------------------------------------------------------------------- The executive officers of the Registrant are: Name of Executive Officer Age Positions and Offices Held ------------------------- --- -------------------------- Larry S. Blazevich 53 Vice President, Chief Information Officer Terry R. Colvin 45 Vice President, Human Resources David R. Harvey 61 Chairman, President and Chief Executive Officer Michael R. Hogan 48 Chief Financial Officer, Chief Administrative Officer and Secretary David W. Julien 46 President, Biotechnology Rodney Kelley 46 Vice President, Safety and Compliance James W. Meteer 50 Vice President, Quality Systems 9 Karen J. Miller 43 Controller Robert Monaghan 54 President, Diagnostics Jai Nagarkatti 53 President, Fine Chemicals Kirk A. Richter 54 Treasurer Frank D. Wicks 47 President, Scientific Research There is no family relationship between any of the officers or directors. Mr. Blazevich joined Sigma-Aldrich in April 1996 as Director of Information Services and was elected Vice President, Information Services and Chief Information Officer in June 1996. Previously, Mr. Blazevich was employed with Thomas and Betts, an electrical manufacturing company, for sixteen years where he served as Vice President of Information Services from 1988-1996. Mr. Colvin was elected Vice President, Human Resources of the Company in March 1998. He served as Vice President, Human Resources at Sigma from January 1995 to February 1998. Dr. Harvey has been Chairman of the Board since January 2001 and became Chief Executive Officer of the Company in November 1999. He served as the Chief Operating Officer of the Company for more than five years until November 1999. He was elected President of the Company in March 1995 after serving as Executive Vice President for more than five years. Mr. Hogan joined Sigma-Aldrich in April 1999 as Vice President and Chief Financial Officer. Since then, his duties have been expanded to include leadership of the Human Resources, Information Systems and Quality functions when he was named Chief Administrative Officer in November 1999. Before joining the Company, Mr. Hogan served as Corporate Vice President and Controller of Monsanto Company from January of 1996 through March of 1999. Prior to joining Monsanto, he held a number of senior management positions for ten years at General American Life Insurance Company, including serving as Chairman and Chief Executive Officer of Cova Corporation from January through December 1995 and as President of GenCare Health Systems, Inc. from March 1990 through January 1995. Mr. Julien was named President of the Biotechnology division in November 1999. Previously he served as President of Sigma from August 1998 to November 1999 and as Vice-President-Sigma from November 1995 to August 1998. Mr. Kelley was elected Vice President of Safety and Compliance in August of 1998. He served as Director of Safety for over four years prior to August 1998. Mr. Meteer was elected Vice President, Quality of the Company in September 1996 after serving as Director of Quality since 1995. Ms. Miller joined Sigma-Aldrich as Controller in May 1997. Previously, Ms. Miller was employed as Controller of several divisions at Allergan, Inc. for more than five years until February 1997. Mr. Monaghan joined Sigma-Aldrich in July 1998 as President of Sigma Diagnostics. Previously, Mr. Monaghan was employed as Vice-President of Dade Behring and Vice-President of Behring Diagnostics from October 1997 to July 1998 and from April 1991 to October 1997, respectively. Dr. Nagarkatti was named President of the Fine Chemicals division in November 1999. Previously, he had served as President of Aldrich for more than five years. Mr. Richter was elected Treasurer in May 1997 after serving as Controller for more than five years. 10 Dr. Wicks was named President of the Scientific Research division in November 1999. He served as Vice President of Operations from August 1998 until November 1999. Previously, he served as President of Sigma for five years. The present terms of office of the officers will expire when the next annual meeting of the Directors is held and their successors are elected. Item 11. Executive Compensation. - -------------------------------------------------------------------------------- Information under the captions "Director Compensation and Transactions" and "Information Concerning Executive Compensation" of the 2001 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 2001 Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. - -------------------------------------------------------------------------------- Information under the caption "Director Compensation and Transactions" of the 2001 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 2000 Annual Report listed in such Index or referred to in Items 1 through 5 are incorporated herein by reference. 2. Financial Statement Schedules. See Index to Financial Statements and Schedules on page F-1 of this report. 3. Exhibits. See Index to Exhibits on page F-3 of this report. (b) Reports on Form 8-K: None filed in the fourth quarter. 11 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 28, 2001 -------------------------------------- -------------- Karen J. Miller, Controller Date KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David R. Harvey, Karen J. Miller, Kirk A. Richter and Michael R. Hogan and each of them (with full power to each of them to act alone), his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this report, and to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she 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/ David R. Harvey March 28, 2001 ------------------------------------------ -------------- David R. Harvey, Director, Chairman of the Date Board, President and Chief Executive Officer By /s/ Karen J. Miller March 28, 2001 ------------------------------------------ -------------- Karen J. Miller, Controller Date By /s/ Michael R. Hogan March 28, 2001 ------------------------------------------ -------------- Michael R. Hogan, Chief Financial Officer, Date Chief Administrative Officer and Secretary By /s/ D. Dean Spatz March 28, 2001 ------------------------------------------ -------------- D. Dean Spatz, Director Date By /s/ Nina Fedoroff March 28, 2001 ------------------------------------------ -------------- Nina Fedoroff, Director Date By /s/ Andrew E. Newman March 28, 2001 ------------------------------------------ -------------- Andrew E. Newman, Director Date By /s/ Jerome W. Sandweiss March 28, 2001 ------------------------------------------ -------------- Jerome W. Sandweiss, Director Date 12 SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES - --------------------------------------------------------------------------------
Page Number Reference --------------- Annual Report to Shareholders --------------- Selected financial data for the years 2000, 1999, 1998, 1997 and 1996 36 Management's discussion and analysis 16 Market risk disclosure 19 FINANCIAL STATEMENTS: Consolidated Balance Sheets December 31, 2000 and 1999 22 Consolidated statements for the years ended December 31, 2000, 1999 and 1998 Income 21 Stockholders' Equity 23 Cash Flows 24 Notes to consolidated financial statements 25 Report of independent public accountants 35
FINANCIAL STATEMENT SCHEDULES: All schedules are omitted as they are not applicable, not required or the information is included in the consolidated financial statements or related notes to the consolidated financial statements. F-1 INDEX TO EXHIBITS - ----------------- These Exhibits are numbered in accordance with the Exhibit Table of Item 6.01 of Regulation S-K: Exhibits - -------- 2 (a) Sale and Purchase Agreement dated March 27, 2000 by and among Sigma- --------------------------- Aldrich Corporation, a Delaware corporation ("SIAL"), Sigma-Aldrich Co., an Illinois corporation ("SAC"), Sigma-Aldrich Canada Ltd., a corporation organized under the laws of Canada ("Sigma Canada"), Sigma-Aldrich Company Ltd., a corporation organized under the laws of the United Kingdom ("Sigma UK"), Sigma-Aldrich Chemie GmbH, a corporation organized under the laws of Germany("Sigma Germany"), Cooper Industries, Inc., an Ohio corporation ("Cooper"), CBL Acquisition Corp., a Delaware corporation ("CBL") and Cooper Technologies Company, a Delaware Corporation ("CTC", and with SIAL, SAC, Sigma Canada, Sigma UK, Sigma Germany, Cooper and CBL, the "Parties") Sigma-Aldrich Corporation, Sigma-Aldrich Co., Sigma-Aldrich Canada Ltd., Sigma-Aldrich Company Ltd., Sigma-Aldrich Chemie GmbH, as sellers and Cooper Industries, Inc., CBL Acquisition Corp., Cooper Technologies Company, as buyers (schedules omitted). - Incorporated by reference to Exhibit 2(a) of Form 10-Q filed for the period ended March 31, 2000, Commission File number 0-8135. (b) First Amendment to the Sale and Purchase Agreement - Incorporated by -------------------------------------------------- reference to Exhibit 2(b) of Form 10-Q for the period ended March 31, 2000, Commission File number 0-8135. 3 (a) Certificate of Incorporation and Amendments - Incorporated by ------------------------------------------- reference to Exhibit 3(a) of Form 10-Q Filed for the quarter ended September 30, 1996, Commission File Number 0-8135. (b) By-Laws as amended - Attached as 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 February 20, 2001 See Exhibit 3(b) above. (c) Rights Agreement, dated as of August 8, 2000 between Sigma-Aldrich ------ --------- Corporation and Computershare Investor Services, LLC, as Rights Agent, which includes the form of Right Certificate as Exhibit A and the Summary of Common Stock Purchase Rights as Exhibit B. Pursuant to the Rights Agreement, printed Right Certificates will not be mailed until as soon as practicable after the earlier of the tenth day after public announcement that a person or group (except for certain exempted persons or groups) has acquired beneficial ownership of 15% or more of the outstanding shares of Common Stock or the tenth business day (or such later date as may be determined by action of the Board of Directors) after a person commences, or announces its intention to commence, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding shares of Common Stock.-Incorporated by reference to Exhibit 1 of Form 8 - A12(g) filed on August 10, 2000, Commission File number 0-8135. (d) 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 any instruments defining the rights of holders of long- term debt of the Company and its consolidated subsidiaries. F-2 10 Material Contracts: (a) Third Amendment and Restatement of the Incentive Stock Bonus Plan* - ----------------------------------------------------------------- 10(d) of Form 10-K filed for the Incorporated by reference to Exhibit 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 Plan of 1987* - Incorporated by -------------------------------------------- reference to Exhibit 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 Plan of 1987* - Incorporated by ---------------------------------------------- reference to Exhibit 10(f) of Form 10-K filed for the Year ended December 31, 1994, Commission File Number 0-8135. (e) Third Amendment to Share Option Plan of 1987* - See exhibit 10 (e) -------------------------------------------- (f) Fourth Amendment to Share Option Plan of 1987* - See exhibit 10 (f) --------------------------------------------- (g) Employment Agreement with former Chairman Carl T. Cori*(Similar -------------------- Employment Agreements also exist with David R. Harvey, Larry S. Blazevich, Terry R. Colvin, Michael R. Hogan, David W. Julien, Rodney L. Kelley, James W. Meteer, Karen J. Miller, Robert Monaghan, Jai P. Nagarkatti, Kirk A. Richter and Frank D. Wicks)Incorporated by reference to Exhibit 10 (f) of Form 10-K filed for the year ended December 31, 1992, Commission File Number 0-8135. (h) Share Option Plan of 1995* - Incorporated by reference to Appendix A ------------------------- of the Company's Definitive Proxy statement filed March 30, 1995, Commission File Number 0-8135. (i) First Amendment to Share Option Plan of 1995* - See exhibit 10 (i) -------------------------------------------- (j) Second Amendment to Share Option Plan of 1995* - See exhibit 10 (j) --------------------------------------------- (k) Third Amendment to Share Option Plan of 1995* - See exhibit 10 (k) --------------------------------------------- (l) Fourth Amendment to Share Option Plan of 1995* - See exhibit 10 (l) --------------------------------------------- (m) Fifth Amendment to Share Option Plan of 1995* - See exhibit 10 (m) -------------------------------------------- (n) Directors' Nonqualified Share Option Plan of 1998* - Incorporated by ------------------------------------------------- reference to Exhibit A of the Company's Definitive Proxy statement filed March 27, 1998, Commission File Number 0-8135 (o) First Amendment to Directors' Nonqualified Share Option Plan of 1998* -------------------------------------------------------------------- - See exhibit 10 (o) (p) Share Option Plan of 2000* - Incorporated by reference to Appendix A ------------------------- of the Company's Definitive Proxy Statement filed March 30, 2000, Commission File Number 0-8135. F-3 (11) Statement Regarding Computation of Net Earnings Per Share- Incorporated by --------------------------------------------------------- reference to the information on net earnings per share included in Note 15 to the Company's 2000 financial statements filed as Exhibit 13 below. (13) Pages 16-36 of the Annual Report to Shareholders for the year ended ------------------------------------------------ December 31, 2000 - See Exhibit 13. (21) Subsidiaries of Registrant - See Exhibit 21. -------------------------- (23) Consent of Independent Public Accountants - See Exhibit 23. ----------------------------------------- *Represents management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K. F-4 EX-3.(B) 2 0002.txt BY-LAWS AS AMENDED Exhibit 3(b) ------------ On February 20, 2001, the Company amended its By-Laws, among other things, as follows: 3.01 General Powers, Number and Election. The business and affairs of the ----------------------------------- corporation shall be managed by its Board of Directors. The number of directors of the corporation shall be eight who shall be elected by the shareholders at the annual meeting of shareholders. SIGMA-ALDRICH CORPORATION (A Delaware Corporation) BY-LAWS ------- ARTICLE I. OFFICES 1.01. Registered Office. The registered office shall be in the City of ----------------- Wilmington, County of New Castle, State of Delaware. 1.02. Other Offices. The Corporation may also have offices at such ------------- other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II. SHAREHOLDERS 2.01. Annual Meeting. The annual meeting of the shareholders shall be -------------- held on the first Tuesday of May of each year commencing in 1976 or on such other date as may be fixed by or under the authority of the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may properly come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Delaware, such meeting shall be held on the next succeeding business day. If the election of directors shall not be held on the day designated herein, or fixed as herein provided, for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as is convenient. 2.01A. Notice of Shareholder Business. ------------------------------ (a) At an annual meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before the meeting (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any shareholder of the Corporation who is a shareholder of record both at the time of giving of the notice provided for in this By-Law and at the time of the meeting, who shall be entitled to vote at such meeting and who complies with the notice and other requirements set forth in this By-Law. (b) For a proposal to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation as hereinafter provided and such proposal must otherwise be a proper subject for action by the Corporation's shareholders. To be timely, a shareholder's notice must be delivered to the Secretary at the principal executive offices of the Corporation and received not less than 90 nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so received not earlier than the opening of business on the 120/th/ day prior to such annual meeting and not later than the close of business on the later of the 90/th/ day prior to such annual meeting or the tenth day following the day on which public announcement of the date of the meeting is first made. Such shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting: (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation's stock transfer records, of the shareholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of stock of the Corporation which are owned beneficially and of record by such shareholder of record and by the beneficial owner, if any, on whose behalf the proposal is made, (iv) any material interest in such business of such shareholder of record and the beneficial owner, if any, on whose behalf the proposal is made, and (v) a representation that the shareholder intends to appear in person or by proxy at the meeting to propose such other business. The provisions of this paragraph (b) shall also govern what constitutes timely notice for purposes of Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended, or any successor provision. (c) Only such business shall be conducted, and only such proposals shall be acted upon, at a special meeting of shareholders called pursuant to Section 2.02 as shall have been brought before such meeting pursuant to a notice of meeting delivered pursuant to Section 2.04. Proposals of business may be made by or on behalf of a shareholder or shareholders at a special meeting called by the person designated by the requisite holders of a majority of shares entitled to vote in accordance with Section 2.02 only if (i) the proposal is made by a shareholder who is a shareholder of record both at the time of giving of the notice provided for in this paragraph (c) and at the time of the meeting, who shall be entitled to vote at such meeting and who complies with the notice and other requirements set forth in this By-Law, (ii) the proposal or proposals are proper subjects for shareholder action in accordance with provisions of applicable law and (iii) the person so designated by the requisite holders of a majority of shares entitled to vote in accordance with Section 2.02 gives a notice to the Secretary at the principal executive offices of the Corporation containing the same information as would be required under paragraph (b) of this By-Law for an annual meeting, which notice must be delivered to and received by the Secretary at least 30 days prior to the earlier of the time the person so designated calls the meeting pursuant to Section 2.02 or the day on which public announcement of the date of the meeting is first made. (d) The Board of Directors may reject any shareholder proposal submitted for consideration at the meeting which is not made in accordance with the terms of this By-Law or which is not a proper subject for shareholder action in accordance with provisions of applicable law. Alternatively, if the Board of Directors fails to consider the validity of any shareholder proposal, the presiding officer of the meeting shall, if the facts warrant, determine and declare at the meeting that the shareholder proposal was not properly brought before the meeting in accordance with the procedures prescribed by these By-Laws or is not a proper subject for shareholder action in accordance with provisions of applicable law, and if he should make that determination, he shall so declare at the meeting and any such business or proposal shall not be acted upon. (e) For purpose of this By-Law, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, Reuters or comparable news service or in a document publicly filed by the Corporation or other person with the Securities and Exchange Commission pursuant to Sections 13, 14, or 15(d) of the Securities Exchange Act of 1934, as amended. In no event shall the public announcement of a postponement or adjournment of a meeting commence a new time period for the giving of a shareholder's notice pursuant to this By-Law. (f) Notwithstanding the foregoing provisions of this By-Law, a shareholder shall also comply with all applicable requirements of state law and the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this By-Law. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at the meeting unless stated, filed and recorded as herein provided. Nothing in the By-Law shall be deemed to affect any rights of shareholders to request inclusion of proposals in, or the Corporation's right to omit proposals from, the Corporation's proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or any successor provision. 2.02. Special Meeting. Special meetings of the shareholders, for --------------- any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Chairman of the Board of Directors, the President or the Board of Directors, or by the person designated in the written request of the holders of not less than a majority in amount of all shares of the Corporation entitled to vote at the meeting. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of shareholders shall be limited to the purpose or purposes stated in the notice. 2.03. Place of Meeting. The Board of Directors may designate any place, ---------------- either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Delaware, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the registered office of the Corporation, or such other suitable place in the county of such registered office as may be designated by the person calling such meeting, but any meeting may be adjourned to reconvene at any place designated by vote of a majority of the shares represented thereat. 2.04. Notice of Meeting. Written notice stating the place, day and hour of the ----------------- meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (unless a longer period is required by law) nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the President, or the Secretary, or other officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the Corporation, with postage thereon prepaid. 2.05. Closing of Transfer Books or Fixing of Record Date. For the purpose of -------------------------------------------------- determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the close of business on the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired. 2.06. Voting Records. The officer who has charge of the stock ledger of the -------------- Corporation shall prepare and make, at least ten days before every meeting of shareholders, a complete list of the shareholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. Upon the willful neglect or refusal of the directors to produce such a list at any meeting for the election of directors they shall be ineligible for election to any office at such meetings. In all other instances, failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. 2.07. Quorum. Except as otherwise provided in the Certificate of Incorporation, ------ a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless the vote of a greater number or voting by classes is required by law or the Certificate of Incorporation. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. 2.08. Conduct of Meeting. The Chairman of the Board, and in his absence, the ------------------ President, and in his absence, a Vice-President in the order provided under Section 4.07, and in their absence, any person chosen by the shareholders present shall call the meeting of the shareholders to order and shall act as chairman of the meeting, and the Secretary of the Corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. 2.09 Proxies. At all meetings of shareholders, a shareholder entitled to vote ------- may vote in person or by proxy appointed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his proxy shall not of itself constitute a revocation. No proxy shall be valid after three years from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. 2.10. Voting of Shares. Each outstanding share shall be entitled to one vote ---------------- upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the Certificate of Incorporation. 2.11. Voting of Shares by Certain Holders. ----------------------------------- (a) Other Corporations. Shares standing in the name of another ------------------ corporation may be voted either in person or by proxy, by the president of such corporation or any other officer appointed by such president. A proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, of the designation of some other person by the board of directors or by the by-laws of such other corporation. (b) Legal Representatives and Fiduciaries. Shares held by any ------------------------------------- administrator, executor, guardian, conservator, trustee in bankruptcy, receiver, or assignee for creditors may be voted by him, either in person or by proxy, without a transfer of such shares into his name provided that there is filed with the Secretary before or at the time of meeting proper evidence of his incumbency and the number of shares held. Shares standing in the name of a fiduciary may be voted by him, either in person or by proxy. A proxy executed by a fiduciary, shall be conclusive evidence of the signer's authority to act, in the absence of express notice to this Corporation, given in writing to the Secretary of this Corporation, that such manner of voting is expressly prohibited or otherwise directed by the document creating the fiduciary relationship. (c) Pledgees. A shareholder whose shares are pledged shall be entitled -------- to vote such shares, unless in the transfer by the pledgor on the books of the Corporation he has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. (d) Treasury Stock and Subsidiaries. Neither treasury shares, nor shares ------------------------------- held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this Corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, may be voted and shall be counted in determining the total number of outstanding shares entitled to vote. (e) Minors. Shares held by a minor may be voted by such minor in person ------ or by proxy and no such vote shall be subject to disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has received written notice or has actual knowledge that shareholder is a minor. (f) Incompetents and Spendthrifts. Shares held by an incompetent or ----------------------------- spendthrift may be voted by such incompetent or spendthrift in person or by proxy and no such vote shall be subject to a disaffirmance or avoidance, unless prior to such vote the Secretary of the Corporation has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or actual knowledge of filing of judicial proceedings for appointment of a guardian. (g) Joint Tenants. Shares registered in the names of two or more ------------- individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (i) no other such individual or his legal representative is present and claims the right to participate in the voting of such shares or prior to the vote files with the Secretary of the Corporation a contrary written voting authorization or direction or written denial of authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary of the Corporation has no actual knowledge that the survivor has been adjudicated not to be the successor to the interests of those deceased. 2.12. Waiver of Notice by Shareholders. Whenever any notice whatever is required -------------------------------- to be given to any shareholder of the Corporation under the Certificate of Incorporation or By-Laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Delaware Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. 2.13. Unanimous Consent Without Meeting. Any action required or permitted by the --------------------------------- Certificate of Incorporation or By-Laws or any provision of law to be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. ARTICLE III. BOARD OF DIRECTORS 3.01. General Powers, Number and Election. The business and affairs of the ----------------------------------- Corporation shall be managed by its Board of Directors. The number of directors of the Corporation shall be eight who shall be elected by the shareholders at the annual meeting of shareholders. 3.02. Tenure and Qualifications. Each director shall hold office until the next ------------------------- annual meeting of shareholders and until his successor shall have been elected, or until his prior death, resignation or removal. A director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose. A director may resign at any time by filing his written resignation with the Secretary of the Corporation. Directors need not be residents of the State of Delaware or shareholders of the Corporation. 3.03. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-Law immediately after the annual meeting of shareholders, and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholders. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Delaware for the holding of additional regular meetings without other notice than such resolution. 3.04. Special Meetings. Special meetings of the Board of Directors may be ---------------- called by or at the request of the Chairman of the Board of Directors, President, Secretary or any two directors. The Chairman of the Board of Directors, President or Secretary calling any special meeting of the Board of Directors called by them, and if no other place is fixed the place of meeting shall be the registered office of the Corporation in the State of Delaware. 3.05. Notice; Waiver. Notice of each meeting of the Board of Directors (unless -------------- otherwise provided in or pursuant to Section 3.03) shall be given by written notice delivered personally or mailed or given by telegram to each director at his business address (or at such other address as such director shall have designated in writing filed with the Secretary), in each case not less than five days prior to the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any director of the Corporation under the Certificate of Incorporation or By-Laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. 3.06. Quorum. Except as otherwise provided by law or by the Certificate of ------ Incorporation or these By-Laws, a majority of the number of directors as provided in Section 3.01 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice. 3.07. Manner of Acting. The act of the majority of the directors present at a ---------------- meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the Certificate of Incorporation or these By-Laws. 3.08. Conduct of Meetings. The Chairman of the Board of Directors, and in his ------------------- absence, the President, or in his absence, a Vice President, in the order provided under Section 4.07, and in their absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as chairman of the meeting. The Secretary of the Corporation shall act as secretary of all meetings of the Board of Directors, but in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting. 3.09. Vacancies. Any vacancy occurring in the Board of Directors, including a --------- vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof. 3.10. Compensation. The Board of Directors, by affirmative vote of a majority ------------ of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. 3.11. Presumption of Assent. A director of the Corporation who is present at a --------------------- meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 3.12. Committees. The Board of Directors by resolution adopted by the ---------- affirmative vote of a majority of the whole Board may designate one or more committees, each committee to consist of three or more directors elected by the Board of Directors, which to the extent provided in said resolution as initially adopted, and as thereafter supplemented or amended by further resolution adopted by a like vote, shall have and may exercise, when the Board of Directors is not in session, the management of the business and affairs of the Corporation, except that no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the shareholders a dissolution of the Corporation or a revocation of a dissolution, amending the By-Laws of the Corporation, declaring dividends to shareholders, authorizing the issuance of stock, or electing the principal officers or the filling of vacancies in the Board of Directors or committees created pursuant to this section. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the President or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. 3.13. Unanimous Consent Without Meeting. Any action required or permitted by --------------------------------- the Certificate of Incorporation or By-Laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors then in office. 3.14. Nomination By-Law. ----------------- (a) Only persons who are nominated in accordance with the procedures set forth in these By-Laws shall be eligible to serve as Directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders (i) by or at the direction of the Board of Directors or (ii) in the case of an annual meeting or any special meeting for which the notice of special meeting states that the purpose or one of the purposes of the special meeting is to elect directors at such meeting, by any shareholder of the Corporation who is a shareholder of record both at the time of giving of notice provided for in this By-Law and at the time of the meeting, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice and other requirements set forth in this By-Law. (b) Nominations by shareholders must be made pursuant to timely notice in writing to the Secretary of the Corporation as hereinafter provided. To be timely, a shareholder's notice must be delivered to the Secretary at the principal executive offices of the Corporation and received (i) in the case of an annual meeting, not less than 90 nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so received not earlier than the opening of business on the 120th day prior to such annual meeting and later than the close of business on the later of the later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of the meeting is first made, and (ii) in the case of a special meeting at which directors are to be elected, not earlier than the opening of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. Such shareholder's notice to the Secretary shall set forth (i) as to each person whom the shareholder proposes to nominate for election or reelection as a director, (1) the name, age, business and residential addresses, and principal occupation or employment of such proposed nominee, (2) the class and number of shares of stock of the Corporation that are beneficially owned by such nominee as of the date of such notice, (3) a description of all arrangements or understandings between the shareholder and such nominee and the name of any other person or persons pursuant to which the nomination or nominations are to be made by the shareholder, (4) all other information relating to such nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor provision, and (5) the written consent of each proposed nominee to being named in the proxy statement as a nominee and to serving as a director of the Corporation if elected;(ii) as to the shareholder giving the notice (x) the name and address, as they appear on the Corporation's stock transfer records, of such shareholder, (y) the class and number of shares of stock of the Corporation which are beneficially owned by such shareholder and also which are owned of record by such shareholder, and (z) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; and (iii) as to the beneficial owner, if any, on whose behalf the nomination is made, (x) the name and address of such person and (y) the class and number of shares of stock of the Corporation which are beneficially owned by such person. The Corporation may require any proposed nominee to furnish any other information it may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the Corporation. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. The provisions of this paragraph (b) shall also govern what constitutes timely notice for purposes of Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended, or any successor provision, if applicable. (c) Notwithstanding anything in the second sentence of paragraph (b) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increase Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation. (d) Subject to the rights, if any, of holders of any class of capital stock of the Corporation (other than the common stock) then outstanding, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this By-Law. The Board of Directors may reject any nomination submitted for consideration at the annual or special meeting which is not made in accordance with the terms of this By-Law or which is not valid under applicable law. Alternatively, if the Board of Directors fails to consider the validity of any nomination, the presiding officer of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these By-Laws or is not valid under applicable law, and if he should make that determination, he shall so declare at the meeting and the defective nomination shall be disregarded. (e) For purposes of the By-Law, "public announcement" shall mean disclosure in a press release reported by the Dow Jones New Service, Associated Press, Reuters or comparable news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. In no event shall the public announcement of a postponement or adjournment of a special meeting commence a new time period for the giving of a shareholder's notice pursuant to this By-Law. (f) Notwithstanding the foregoing provisions of this By-Law, a shareholder shall also comply with all applicable requirements of state law and the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in the By-Law. ARTICLE IV. OFFICERS 4.01. Number. The principal officers of the Corporation shall be a Chairman of ------ the Board of Directors, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary, a Treasurer and a Controller, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person, except the offices of President and Secretary and the offices of President and Vice President. If required by the Board of Directors, any one or more of the officers shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. 4.02. Election and Term of Office. The officers of the Corporation to be --------------------------- elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election shall not be held at such meeting, such election shall be held as soon thereafter as is convenient. Each officer shall hold office until his successor shall have been duly elected or until his prior death, resignation or removal 4.03. Removal. Any officer or agent may be removed by affirmative vote of ------- majority of the whole Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. 4.04. Vacancies. A vacancy in any principal office because of death, --------- resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. 4.05. Chairman of the Board of Directors. The Chairman of the Board of ---------------------------------- Directors shall preside at all meetings of the Board of Directors and shareholders at which he is present and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the Board of Directors. 4.06. The President. The President shall be the Chief Executive Officer of ------------- the Corporation and, subject to the control of the Board of Directors, shall supervise and control the business, property, and affairs of the Corporation and perform such duties as may be assigned to him by the Board of Directors. In the absence of the Chairman of Board, or in the event of his death, inability or refusal to act, the President shall preside at the meetings of the Board of Directors and shareholders at which he is present. He may sign and execute all instruments in the name of the Corporation which the Board of Directors has authorized to be executed, except where the execution thereof shall be expressly delegated by the Board of Directors or the By-Laws to another officer or agent of the Corporation, or shall be required by law to be otherwise executed. The President shall perform all duties incident to the office of Chief Executive Officer and shall be an ex-officio member of all standing committees. 4.07. Chief Financial Officer. The Chief Financial Officer shall, subject ----------------------- to the control of the Board of Directors, (a) have primary charge and custody of and be responsible for all funds and securities of the Corporation; (b) be responsible for the accounting and financial services of the Corporation; and (c) in general perform all of the duties and exercise such other authority as from time to time may be delegated or assigned to the Chief Financial Officer by the Chairman of the Board, the President or by the Board of Directors. 4.08. The Vice Presidents. Subject to the provisions of Section 4.06, in ------------------- the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impractical for him to act personally, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the Corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him by the President or the Board of Directors. The execution of any instrument of the Corporation by any Vice President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President. 4.09. The Secretary. The Secretary shall: (a) keep the minutes of the ------------- meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the Chairman of the Board or the President, or a Vice President, certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the Corporation; and (g) in general perform all duties and exercise such authority as from time to time may be delegated or assigned to him by the Chairman of the Board, or the President or by the Board of Directors. 4.10. The Treasurer. The Treasurer shall, under the general supervision of ------------- the Chief Financial Officer, (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties and exercise such other authority as from time to time may be delegated or assigned to the Treasurer by the Chief Financial Officer or by the Board of Directors. 4.11. The Controller. The Controller shall, under the general supervision -------------- of the Chief Financial Officer, (a) be in charge of the financial records of the Corporation; (b) be responsible for the accounting and financial services of the Corporation; and (c) in general perform all of the duties and exercise such other authority as from time to time may be delegated or assigned to the Controller by the Chief Financial Officer or by the Board of Directors. The Controller shall at all reasonable times within business hours exhibit the Controller's books and accounts to any director. 4.12. Assistant Secretaries and Assistant Treasurers. There shall be such ---------------------------------------------- number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Secretaries may sign with the Chairman of the Board, or the President or a Vice President certificates for shares of the Corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the Chairman of the Board or the President or the Board of Directors. 4.13. Other Assistants and Acting Officers. The Board of Directors shall have ------------------------------------ the power to appoint any person to act as assistant to any officer, or agent for the Corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors shall have the power to perform all the duties of the office to which he is so appointed to be assistant, or as to which he is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors. 4.14. Salaries. The salaries of the principal officers shall be fixed from time -------- to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS: SPECIAL CORPORATE ACTS 5.01 Contracts. The Board of Directors may authorize any officer or officers, --------- agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. 5.02 Loans. No indebtedness for borrowed money shall be contracted on behalf ----- of the Corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances. 5.03. Checks, Drafts, etc. All checks, drafts, or other orders for the payment ------------------- of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 5.04. Deposits. All funds of the Corporation not otherwise employed shall be -------- deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as may be selected by or under the authority of a resolution of the Board of Directors. 5.05. Voting of Securities Owned by This Corporation. Subject always to the ---------------------------------------------- specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the President of this Corporation if he be present, or in his absence by any Vice President of this Corporation who may be present, and (b) whenever in the judgment of the President, or in his absence, of any Vice President, it is desirable for this Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the President or one of the Vice Presidents of this Corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal or counter signature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this Corporation and the same as such shares or other securities might be voted by this Corporation. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER 6.01. Certificates for Shares. Certificates representing shares of the by the ----------------------- Board of Directors. Such certificates shall be signed by the Chairman of the Board, or the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6.06. 6.02. Facsimile Signatures and Seal. The seal of the Corporation on any ----------------------------- certificate for shares may be a facsimile. The signature of the Chairman of the Board or the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the Corporation itself or an employee of the Corporation. 6.03. Signature by Former Officers. In case any officer, who has signed or ---------------------------- whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. 6.04. Transfer of Shares. Prior to due presentment of a certificate for shares ------------------ for registration of transfer the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the Corporation had no duty to inquire into adverse claims or had discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. 6.05. Restrictions on Transfer. The face or reverse side of each certificate ------------------------ representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. 6.06. Lost, Destroyed or Stolen Certificates. Where the owner claims that his -------------------------------------- certificate for shares has been lost, destroyed or wrongfully taken, a new certificate may be issued in place thereof if the owner so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser. When authorizing such issuance of a new certificate the President, Vice President or Secretary of the Corporation shall require the owner of such lost, destroyed or wrongfully taken certificate to file with the Corporation sufficient indemnity bond, and satisfy such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors. 6.07. Consideration for Shares. The shares of the Corporation may be issued for ------------------------ such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation. No certificate shall be issued for any share until such share is fully paid. 6.08 Stock Regulations. The Board of Directors shall have the power and ----------------- authority to make all such further rules and regulations not inconsistent with the statutes of the State of Delaware as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VII. INDEMNIFICATION 7.01. Mandatory Indemnification. The Corporation shall, to the full extent ------------------------- permitted by the Delaware Corporation Law, indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of any other corporation or enterprise. Such right of indemnification shall inure to the benefit of the heirs, executors, administrators and personal representatives of such a person. 7.02. Permissive Supplementary Benefits. The Corporation may, but shall not be --------------------------------- required to, supplement the right of indemnification under Section 7.01 by (a) the purchase of insurance on behalf of any one or more of such persons, whether or not the Corporation would be obligated to indemnify such person Section 7.01, (b) individual or group indemnification agreements with any one or more of such persons and (c) advances for related expenses of such a person. 7.03. Amendment. This Article VII may be amended or repealed only by a vote of --------- the shareholders and not by a vote of the Board of Directors. ARTICLE IX. AMENDMENTS 9.01. By Shareholders. These By-Laws may be altered, amended or appealed and --------------- new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the shares present or represented at any annual or special meeting of the shareholders at which a quorum is in attendance. 9.02. By Directors. These By-Laws may also be altered, amended or repealed and ------------ new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no by-laws adopted by the shareholders shall be amended or repealed by the Board of Directors if the by-law so adopted so provides. 9.03. Implied Amendments. Any action taken or authorized by the shareholders or ------------------ by the Board of Directors, which would be inconsistent with the By-Laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the By-Laws so that the By-Laws would be consistent with such action, shall be given the same effect as though the By-Laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. EX-10.(E) 3 0003.txt THIRD AMENDMENT TO SHARE OPTION PLAN OF 1987 Exhibit 10 (e) -------------- THIRD AMENDMENT TO THE ---------------------- SIGMA-ALDRICH CORPORATION SHARE OPTION PLAN OF 1987 --------------------------------------------------- This Third Amendment to the Share Option Plan of 1987 is hereby approved and adopted by Sigma-Aldrich Corporation (the "Company") effective as of November 1, 1999. WHEREAS, the Company established its Share Option Plan of 1987 (the "Plan") to provide for the granting of options to purchase common stock of the Company to certain key employees of the Company and its subsidiaries; and WHEREAS, the Company desires to clarify that the employees of a subsidiary which is sold will be treated in the same manner as employees whose employment is terminated pursuant to the sale of assets; and WHEREAS, the Company desires to amend the Plan to provide twelve months rather than three months after (i) termination of employment by retirement or (ii) termination of employment by the Company without cause for an optionee to exercise the unexercised portion of an option provided that in no event shall the original ten year termination date of such option be extended; and WHEREAS, the Plan provides that each option shall be exercisable in such manner, at such time or times and subject to such conditions or limitations as shall be fixed by the Compensation Committee of the Board (the "Committee"), in its sole discretion at the time such option is granted; and WHEREAS, the Company desires to clarify that the Committee, in certain circumstances, may amend the terms and conditions with respect to which an option is exercisable after the time an option is granted; and WHEREAS, the Plan established by the Company and approved by the shareholders of the Company contemplated that with certain exceptions no option would be exercisable within twelve months of grant; and WHEREAS, the Company desires to create exceptions to such twelve month rule. NOW, THEREFORE, the following amendments and modifications are hereby made a part of the Plan: 1. The first two sentences of paragraph 6 of the Plan are hereby deleted and the following three sentences are inserted in their place: Except as provided in paragraphs 8(b)(ii) and 8(b)(v), no option granted under this Plan may be exercised prior to the expiration of twelve (12) months from the date it is granted. The Committee may specify a longer period of time during which an option may not be exercised at the time each option is granted. Any period of non- exercise (whether shortened as provided in paragraphs 8(b)(ii) and 8(b)(v) or lengthened as provided in the preceding sentence) is hereinafter referred to as the "Non-exercise Period." 2. Paragraph 8(b)(i) of the Plan is hereby amended and restated as follows: (b) Termination of Employment After the Non-exercise Period ------------------------------------------------------- (1) By Retirement or Termination of Employment by the Company --------------------------------------------------------- Without Cause ------------- If the Non-exercise Period shall have elapsed and the optionee's employment with the Company and every subsidiary of the Company shall have been terminated by the Company thereafter without cause (as hereinafter defined) or shall terminate because of the retirement of an optionee on a permitted Retirement Date from the Company and all subsidiaries, the optionee shall have the right to exercise the unexercised portion of the option at any time during a period of twelve (12) months after the date of termination or retirement, in whole or in part, to the extent the optionee could have exercised such option had he remained in the employ of the Company during the twelve (12) month period. If a subsidiary of the Company ceases to be a subsidiary of the Company, an optionee who is employed by such former subsidiary and is no longer employed by either the Company or any current subsidiary of the Company shall be deemed to have terminated employment with the Company and every subsidiary of the Company and such termination shall be deemed to have been made by the Company without cause. The unexercised portion of the option shall terminate no later than twelve (12) months after an optionee ceases to be an employee for any of the foregoing reasons, and any unexercised portion shall terminate immediately if and when the optionee becomes an employee, agent or principal of a competitor of the Company, or of any subsidiary of the Company, without the consent of the Company. If an optionee dies within such twelve (12) month period at a time when the optionee is not an employee, agent or principal of a competitor of the Company or of any subsidiary (or when the Company has consented to such relationship with a competitor), the option may be exercised at any time during the period of twelve (12) months after the date of the death of the optionee by a designee, for the number of Shares which the deceased optionee could have acquired by the exercise of such option had the deceased optionee survived for the twelve (12) month period, without regard to the requirement of exercise within twelve (12) months after termination of employment. The Committee may, in its sole and absolute discretion, amend existing options, which provide only three (3) months for exercise after termination by retirement or termination by the Company without cause, to conform the provisions of this Paragraph 8(b)(i) as amended. For purposes of this Plan, the term "designee" means the deceased optionee's personal representative or any person who acquired the right to exercise such option by bequest or inheritance or by reason of the laws of descent and distribution. The term "Retirement Date" shall have the meaning set forth in the Employees' Retirement Plan, as in effect from time to time, of the optionee's employer, and shall include, where applicable, the Normal Retirement Date, the Early Retirement Date, and Retirement By Reason of Disability as defined in such Plan, or, if the optionee's employer has no such plan, the term shall have the meaning set forth in the Federal Social Security Act, as in effect from time to time. 3. A new paragraph 8(b)(v) is added immediately following paragraph 8(b)(iv) as follows: (v) Certain Corporate Transactions. If an optionee's employment is ------------------------------ terminated or deemed terminated with the Company and every subsidiary of the Company solely as a result of: (1) the sale of a subsidiary of the Company, (2) the sale of the assets of a portion of the business of the Company or a subsidiary of the Company, or (3) a corporation reorganization or restructuring, the Committee may, in its sole and absolute discretion, allow the optionee to exercise options (i) which are not yet otherwise exercisable and (ii) which have not been granted at least twelve (12) months prior to the date of such transaction. IN WITNESS WHEREOF, the Company has executed this Third Amendment to the Share Option Plan of 1987 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By /s/ David R. Harvey -------------------------- President EX-10.(F) 4 0004.txt FOURTH AMENDMENT TO SHARE OPTION PLAN 1987 Exhibit 10 (f) FOURTH AMENDMENT TO THE SIGMA-ALDRICH CORPORATION SHARE OPTION PLAN OF 1987 This Fourth Amendment to the Sigma-Aldrich Corporation Share Option Plan of 1987 is hereby adopted by Sigma-Aldrich Corporation (the "Company") effective as of February 20, 2001. WHEREAS, the Company established its Share Option Plan of 1987 (the "Plan") to provide for the granting of options to purchase common stock of the Company to certain key employees of the Company and its subsidiaries; WHEREAS, Paragraph 15 of the Plan provides that the Board of Directors may make such amendments and modifications as it deems advisable, in its sole discretion, subject to certain exceptions; WHEREAS, the Board of Directors desires to amend the Plan to provide that options shall become vested and exercisable upon (i) termination of employment by retirement or (ii) termination of employment by reason of death or disability, subject to the terms and conditions of the Plan; and WHEREAS, the Plan provides that each option shall be exercisable in such manner, at such time or times and subject to such conditions or limitations as shall be fixed by the Compensation Committee of the Board (the "Committee"), in its sole discretion at the time such option is granted or after the time an option is granted; NOW, THEREFORE, the following amendments and modifications are hereby made a part of the Plan: 1. The first three sentences of Paragraph 6 are hereby deleted and replaced with the following: "Except as provided in Paragraph 8, no option granted under this Plan may be exercised prior to the expiration of twelve (12) months from the date it is granted. The Committee may specify a longer period of time during which an option may not be exercised at the time each option is granted. Any period of non-exercise (whether shortened as provided in Paragraph 8 or lengthened as provided in the preceding sentence) is hereinafter referred to as the 'Non-exercise Period.'" 2. Paragraph 8(a) is hereby deleted and replaced with the following: "(a) Termination of Employment During the Non-exercise Period -------------------------------------------------------- "Except as provided in Paragraph 8(b) hereof, if, during the Non- exercise Period, the optionee's employment with the Company and every subsidiary of the Company shall terminate for any reason, the optionee's right to exercise the option shall terminate and all rights thereunder shall cease." 3. The first three paragraphs of Paragraph 8(b)(i) are hereby deleted and replaced with the following: "If the Non-exercise Period shall have elapsed and the optionee's employment with the Company and every subsidiary of the Company shall have been terminated by the Company thereafter without cause (as hereinafter defined) or shall terminate because of the retirement of an optionee on a permitted Retirement Date from the Company and all subsidiaries, the optionee shall have the right to exercise the unexercised portion of the option at any time during a period of twelve (12) months after the date of termination or retirement, in whole or in part, (x) in the case of termination of the optionee's employment by the Company without cause, to the extent the optionee could have exercised such option had he remained in the employ of the Company during the twelve (12) month period or (y) in the case of termination because of retirement of an optionee on a permitted Retirement Date, to the extent of any or all the options held by the optionee, whether or not the Non-exercise Period shall have elapsed with respect to such options. If a subsidiary of the Company ceases to be a subsidiary of the Company, an optionee who is employed by such former subsidiary and is no longer employed by either the Company or any current subsidiary of the Company shall be deemed to have terminated employment with the Company and every subsidiary of the Company and such termination shall be deemed to have been made by the Company without cause. The unexercised portion of the option shall terminate no later than twelve (12) months after an optionee ceases to be an employee for any of the foregoing reasons, and any unexercised portion shall terminate immediately if and when the optionee becomes an employee, agent or principal of a competitor of the Company or of any subsidiary of the Company without the consent of the Company. "If an optionee dies within such twelve (12) month period at a time when the optionee is not an employee, agent or principal of a competitor of the Company or of any subsidiary (or when the Company has consented to such relationship with a competitor), the option may be exercised at any time during the period of twelve (12) months after the date of the death of the optionee by his designee, (x) in the case of termination of the optionee's employment by the Company without cause, for the number of Shares which the deceased optionee could have acquired by the exercise of such option had the deceased optionee survived for the twelve (12) month period, without regard to the requirement of exercise within twelve (12) months after termination of employment or (y) in the case of termination because of retirement of an optionee on a permitted Retirement Date, for the number of Shares subject to any or all the options held by the deceased optionee, whether or not the Non-exercise Period shall have elapsed with respect to such options, without regard to the requirement of exercise within twelve (12) months after termination of employment. "The Committee may, in its sole and absolute discretion, amend existing options to conform to the provisions of this Paragraph 8(b)(i) as amended." 4. Paragraph 8(b)(ii) is hereby deleted and replaced with the following: "(ii) By Death or Permanent and Total Disability ------------------------------------------ "If an optionee dies or is totally and permanently disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code) while in the employ of the Company or any subsidiary, the option may be exercised by the optionee or by his personal representative at any time during the twelve (12) month period after the date of such death or disability for the total number of Shares subject to such person's options, whether or not the Non-exercise Period shall have elapsed with respect to such options." 5. In all other respects, the Plan, as amended, is hereby ratified and confirmed. IN WITNESS WHEREOF, the Company has executed this Fourth Amendment to the Share Option Plan of 1987 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By /s/ David R. Harvey ------------------- President EX-10.(I) 5 0005.txt FIRST AMENDMENT TO SHARE OPTION PLAN 1995 Exhibit 10 (i) -------------- FIRST AMENDMENT TO THE SHARE OPTION PLAN OF 1995 ------------------------------------------------ THIS FIRST AMENDMENT TO THE SHARE OPTION PLAN OF 1995 is hereby approved and adopted by Sigma-Aldrich Corporation (the "Company") effective as of the 1/st/ day of January, 1999. WHEREAS, the Company established its Share Option Plan of 1995 (the "Plan") to provide for the granting of options to purchase Common Stock of the Company to certain key employees of the Company and its subsidiaries; and WHEREAS, the Plan established by the Company and approved by the Shareholders of the Company contemplated that, as specified in Paragraph 6 of the Plan, no option could be exercised after a date ten (10) years from the date the option was granted; and WHEREAS, with respect to "non-qualified" options to be granted by the Company to employees of the Company and its subsidiaries located outside the United States, the Company desires to modify the ten (10) year limitation period described above by extending this exercise period as provided in this First Amendment. NOW, THEREFORE, the following amendments and modifications are hereby made a part of the Plan: 1. The last sentence of the first paragraph of Paragraph 6 of the Plan is hereby deleted, and the following sentence is inserted as the last sentence of the first paragraph of Paragraph 8; No option shall be exercisable for less than ten (10) share lots nor in any amount after a date ten (10) years from the date it was granted; provided, however, notwithstanding the foregoing ten year limitation, the Committee shall be authorized and empowered hereunder to grant, in its discretion, non-qualified options to employees of the Company, or its present and future subsidiaries, whose location is outside of the United States with option terms specifying a period longer than ten (10) years during which the non-qualified options may be exercised but in no event shall such extended period exceed seventeen (17) years from the date said options are granted. 2. The penultimate paragraph contained in Paragraph 8 of the Plan is hereby deleted, and the following paragraph is inserted as the penultimate paragraph of Paragraph 8: Except as may be otherwise specified by the Committee with respect to non-qualified options granted under Paragraph 6 of this Plan, nothing in this Paragraph 8 shall be construed to permit the exercise of an option more than ten (10) years after the date it was granted. IN WITNESS WHEREOF, the Company has executed this First Amendment to the Share Option Plan of 1995 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By: /s/ David R. Harvey ------------------- Title: President EX-10.(J) 6 0006.txt SECOND AMENDMENT TO SHARE OPTION PLAN 1995 Exhibit 10 (j) -------------- SECOND AMENDMENT TO THE ----------------------- SIGMA-ALDRICH CORPORATION SHARE OPTION PLAN OF 1995 --------------------------------------------------- This Second Amendment to the Share Option Plan of 1995 is hereby approved and adopted by Sigma-Aldrich Corporation (the "Company") effective as of the November 1, 1999. WHEREAS, the Company established its Share Option Plan of 1995 (the "Plan") to provide for the granting of options to purchase Common Stock of the Company to certain key employees of the Company and its subsidiaries; and WHEREAS, the Company desires to clarify that the employees of a subsidiary which is sold will be treated in the same manner as employees whose employment is terminated pursuant to the sale of assets; and WHEREAS, the Plan provides that each option shall be exercisable in such manner, at such time or times and subject to such conditions or limitations as shall be fixed by the Compensation Committee of the Board (the "Committee"), in its sole discretion at the time such option is granted; and WHEREAS, the Company desires to clarify that the Committee, in certain circumstances, may amend the terms and conditions with respect to which an option is exercisable after the time an option is granted; and WHEREAS, the Plan established by the Company and approved by the shareholders of the Company contemplated that with certain exceptions no option would be exercisable within twelve months of grant; and WHEREAS, the Company desires to create exceptions to such twelve month rule. NOW, THEREFORE, the following amendments and modifications are hereby made a part of the Plan: 1. The first two sentences of paragraph 6 of the Plan are hereby deleted and the following three sentences are inserted in their place: Except as provided in paragraphs 8(b)(ii) and 8(b)(v), no option granted under this Plan may be exercised prior to the expiration of twelve (12) months from the date it is granted. The Committee may specify a longer period of time during which an option may not be exercised at the time each option is granted. Any period of non-exercise (whether shortened as provided in paragraphs 8(b)(ii) and 8(b)(v) or lengthened as provided in the preceding sentence) is hereinafter referred to as the "Non-exercise Period." 2. A new sentence is added after the first sentence in paragraph 8(b)(i) of the Plan as follows: If a subsidiary of the Company ceases to be a subsidiary of the Company, an optionee who is employed by such former subsidiary and is no longer employed by either the Company or any current subsidiary of the Company shall be deemed to have terminated employment with the Company and every subsidiary of the Company and such termination shall be deemed to have been made by the Company without cause. 3. A new paragraph 8(b)(v) is added immediately following paragraph 8(b)(iv) as follows: (V) Certain Corporate Transactions. If an optionee's employment is ------------------------------ terminated or deemed terminated with the Company and every subsidiary of the Company solely as a results of: (1) the sale of a subsidiary of the Company, (2) the sale of the assets of a portion of the business of the Company or a subsidiary of the Company, or (3) a corporate reorganization or restructuring, the Committee may, in its sole and absolute discretion, allow the optionee to exercise options (i) which are not yet otherwise exercisable and (ii) which have not been granted at least twelve (12) months prior to the date of such transaction. IN WITNESS WHEREOF, the Company has executed this Second Amendment to the Share Option Plan of 1995 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By: /s/ Michael R. Hogan -------------------- Vice President EX-10.(K) 7 0007.txt THIRD AMENDMENT TO SHARE OPTION PLAN 1995 Exhibit 10 (k) -------------- THIRD AMENDMENT TO THE SHARE OPTION PLAN OF 1995 ------------------------------------------------ 1. Sigma-Aldrich Corporation (the "Company") has at the date set out below adopted the following sub-plan (the "UK Sub-Plan") pursuant to Paragraph 2 of the Sigma-Aldrich Corporation Share Option Plan of 1995 (the "Plan") so that the Plan may be administered and operated for the benefit of key employees of the Company and its subsidiaries who are resident or may be potentially resident in the United Kingdom. The UK Sub-Plan consists of two parts, the Approved Sub-Plan and the Non-Approved Sub-Plan. The Approved Sub-Plan --------------------- 2. The following paragraphs 3 to 22 inclusive set out the terms of the Approved Sub-Plan which will constitute the part of the Plan approved by the Commissioners of the UK Inland Revenue (the "Commissioners") under Schedule 9 of the Income and Corporation Taxes Act 1988 ("Schedule 9"). 3. The provisions of the Approved Sub-Plan shall be the provisions set out in the Plan with and subject to the following modifications in paragraphs 4 to 22 inclusive. 4. Unless the context requires all expressions shall have the same meaning as in the Plan, provided that all words and terms not otherwise defined shall have the meaning attributed by Schedule 9 which for the purposes hereof (but for no other purpose) shall take precedence. In addition any references to any statutory enactments shall be construed as a reference to that enactment as for the time being amended or reenacted. Where the context so admits or requires words importing the singular shall include the plural and vice versa and words importing the masculine shall include the feminine. 5. The Shares over which options may be granted shall form part of the ordinary share capital (as defined in Section 832 (1) Income and Corporation Taxes Act 1988 ("ICTA 1988")) of the Company and shall comply with the requirements of Paragraphs 10 to 14 inclusive of Schedule 9. 6. The companies participating in the approved Sub-Plan shall be the Company and all companies controlled by the Company within the meaning of Section 840 ICTA 1988 and which have been nominated by the Company to participate for the time being in the Approved Sub-Plan (the "Participating Companies"). 7. The Shares to be acquired on the exercise of an option shall: 7.1 be fully paid up; 7.2 not be redeemable; and 7.3 not be subject to any restrictions other than restrictions which attach to all shares or stocks of the same class. For the purpose of this paragraph the term "restrictions" shall include restrictions which are deemed to attach to the shares or stocks under any contract, agreement, arrangement or condition as referred to in Paragraph 13 of Schedule 9. 8. In addition to the provisions set out in Paragraph 4 of the Plan, an option shall only be granted under the approved Sub-Plan to employees (other than directors) or directors (other than those who normally work less than 25 hours per week exclusive of meal breaks) of Participating Companies. 9. A person shall not participate in the approved Sub-Plan, that is to say, obtain or exercise rights under it, if at that time he is precluded from participation by Paragraph 8 of Schedule 9. 10. No option shall be granted where the option price is less than Market Value on the date of the grant. For this purpose "Market Value" shall be the market value of a share as determined in accordance with the provisions of Part (VIII) of the Taxation of Chargeable Gains Act 1992 and agreed for the purposes of the approved Sub-Plan in advance with the Shares Valuation Division of the Inland Revenue. 11. In all cases the option price shall be determined and stated at the date of grant and any other terms, conditions or limitations imposed on an option in accordance with Paragraph 6 of the Plan shall be objective. 12. Options shall be personal to the optionee and shall not be transferable otherwise than on the death of the optionee. 13. An optionee shall where the context permits include his legal personal representative. 14. Options shall not be transferable by the laws of dissent or distribution, but the personal representative(s) of the optionee may exercise options held by him at the date of death, in accordance with and subject to the provisions of Paragraph 8 of the Plan, provided in all cases that the option is exercised within 12 months of the optionee's death and the said optionee would not have been precluded at the date of his death from exercising the options pursuant Paragraph 8 of Schedule 9. 15. For the avoidance of doubt it is stated that the Company shall be the grantor as defined in Paragraph 1(1) of Schedule 9. 16. No option shall be granted to an employee or director of a Participating Company if the grant of that option would cause the aggregate market value of shares (determined at the time prescribed by Paragraph 28 of Schedule 9 and calculated in accordance with the provisions of Schedule 9) which he can acquire under the Approved Sub-Plan and any other scheme approved under Schedule 9 (excluding any Savings-Related Share Option Scheme) and established by the grantor or by any associated company (as defined in Section 187(2) ICTA 1988) of the grantor to exceed the limit prescribed by Paragraph 28 of Schedule 9. 17. To the extent that any grant of an option exceeds the limit prescribed in paragraph 16 it shall be deemed to comprise such whole number of Shares, as nearly as possible equals, but does not exceed, such limit. 18. The payment of the option price shall only be paid for in cash, cheque, banker's draft or such similar method and Paragraph 9 of the Plan shall for the purposes of the Approved Sub-Plan be construed accordingly. 19. Subject to any legal impediment beyond the reasonable control of the Company, Shares shall either be transferred or issued to the optionee to satisfy an option within 30 days of its exercise. 20. If at a time when the UK Approved Sub-Plan is approved by the Commissioners under Schedule 9, no adjustment to an outstanding option shall have effect unless it is made pursuant to a transaction that constitutes a variation for the purposes of Paragraph 29 of Schedule 9 and until it is approved by the Commissioners and Paragraph 11 of the Plan shall be amended accordingly. 21.1 If any company "the Acquiring Company" claims control of the Company as a result of making a general offer 21.1.1 to acquire the whole of the issued ordinary share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have control of the Company; or 21.1.2 to acquire all the shares in the Company which are the same class as the shares subject to the option; then the optionee may at any time within the appropriate period, by agreement with the Company and the Acquiring Company, release his options under the Approved Sub-Plan (the "Old Option") in consideration of the grant to him of options which are equivalent to the Old Options but relate to shares in the Acquiring Company ("the New Options"). 21.2 For the purposes of this paragraph 21 "the appropriate period" shall mean the period of 6 months beginning with the time when the Acquiring Company making the offer has obtained control of the Company and any condition subject to which the offer is made is satisfied. 21.3 The New Option shall only be regarded as equivalent to the Old Option if the conditions specified in Paragraph 15(3) of Schedule 9 are satisfied. 21.4 For the purposes of any application of the provisions of this Approved Sub- Plan any New Options granted pursuant to this paragraph 21 shall be regarded as having been granted at a time when the corresponding Old Option was granted. 21.5 The New Option shall be exercisable in the same manner as the corresponding Old Option released and subject to the Rules of the Approved Sub-Plan as they have effect immediately before the release except that, with effect from a release, reference to the "Company" and to "Shares" throughout these Rules (except for Rules 6 and 15) shall, in relation to the New Option, be construed respectively as references to the Acquiring Company (or as the case may be, any other company in respect of whose shares the New Option is granted) and to the shares comprised in the New Option. 22. No amendment or modification, made pursuant to Paragraph 15 of the Plan, to the Approved Sub-Plan, (at a time when the Approved Sub-Plan is approved by the Commissioners under Schedule 9), shall take effect until approved by the Commissioners. The Non-Approved Sub-Plan - ------------------------- 23. The following paragraphs 24, 25, 26 and 27 set out the terms of the Non- Approved Sub-Plan which will constitute part of the Plan but will not be approved by the Commissioners. 24. The provisions of the Non-Approved Sub-Plan shall be the provisions set out in the Plan and paragraphs 6, 10, and 11 of the Approved Sub-Plan. 25. In addition for the purpose of the Non-Approved Sub-Plan the words "and agreed for the purposes of the Approved Sub-Plan in advance with the Shares Valuation Division of the Inland Revenue" referred to in paragraph 10 of the Approved Sub-Plan shall be deleted. 26. In the event that a Tax Liability arises in respect of the grant or exercise of an option, the option will not be deemed to be granted or may it be exercised unless: 26.1 the Relevant Payer is able to deduct an amount equal to the whole of the Tax Liability from the optionee's or potential optionee's net pay for the relevant period; or 26.2 the optionee or potential optionee has paid to the Relevant Payer an amount equal to the Tax Liability; or 26.3 the sum of the amount that the optionee or potential optionee has paid to the Relevant Payer in respect of the Relevant Payer's obligation to satisfy the Tax Liability and the total amount that the Relevant Payer is able to deduct from the optionee's or potential optionee's net pay for the relevant period is equal to or more than the Tax Liability; or 26.4 the optionee or potential optionee has given irrevocable instructions to the Company's brokers (or other person acceptable to the Committee) for the sale of sufficient Shares acquired on the exercise of the option to realize an amount equal to the Tax Liability and the payment of the Tax Liability to the Relevant payer; or 26.5 the Committee determines otherwise. 27. For the purposes of paragraph 26 and this paragraph 27: 27.1. "Tax Liability" shall mean the amount of all taxes and/or employees' social security contributions and all other social taxes which a Participating Company, any company controlled by the Company with the meaning of Section 840 ICTA 1988 or any other person (other than an optionee or potential optionee) would be required to account for or pay to the UK Inland Revenue or other tax authority in respect of an option; and 27.2. "Relevant Payer" shall mean the person or persons who are liable to account for or pay any Tax Liability. Adopted by the Board of Directors on November 9, 1999. SIGMA-ALDRICH CORPORATION By: /s/ Michael R. Hogan -------------------- Vice President EX-10.(L) 8 0008.txt FOURTH AMENDMENT TO SHARE OPTION PLAN 1995 Exhibit 10 (l) -------------- FOURTH AMENDMENT TO THE ----------------------- SIGMA-ALDRICH CORPORATION SHARE OPTION PLAN OF 1995 --------------------------------------------------- This Fourth Amendment to the Share Option Plan of 1995 is hereby approved and adopted by Sigma-Aldrich Corporation (the "Company") effective as of the November 22, 1999. WHEREAS, the Company established its Share Option Plan of 1995 (the "Plan") to provide for the granting of options to purchase Common Stock of the Company to certain key employees of the Company and its subsidiaries; and WHEREAS, the Company desires to amend the Plan to provide twelve months rather than three months after (I) termination of employment by retirement or (ii) termination of employment by the Company without cause for an optionee to exercise the unexercised portion of an option provided that in no event shall the original ten year termination date of such option be extended; and WHEREAS, the Plan provides that each option shall be exercisable in such manner, at such time or times and subject to such conditions or limitations as shall be fixed by the Compensation Committee of the Board (the "Committee"), in its sole discretion at the time such option is granted; and WHEREAS, the Company desires to clarify that the Committee, in certain circumstances, may amend the terms and conditions with respect to which an option is exercisable after the time an option is granted. NOW, THEREFORE, the following amendments and modifications are hereby made a part of the Plan: 1. Paragraph 8(b)(i) of the Plan is hereby amended and restated as follows: (b) Termination of Employment After the Non-exercise Period ------------------------------------------------------- (i) By Retirement or Termination of Employment by the Company Without ----------------------------------------------------------------- Cause ----- If the Non-exercise Period shall have elapsed and the optionee's employment with the Company and every subsidiary of the Company shall have been terminated by the Company thereafter without cause (as hereinafter defined) or shall terminate because of the retirement of an optionee on a permitted Retirement Date from the Company and all subsidiaries, the optionee shall have the right to exercise the unexercised portion of the option at any time during a period of twelve (12) months after the date of termination or retirement, in whole or in part, to the extent the optionee could have exercised such option had he remained in the employ of the Company during the twelve (12) month period. If a subsidiary of the Company ceases to be a subsidiary of the Company, an optionee who is employed by such former subsidiary and is no longer employed by either the Company or any current subsidiary of the Company shall be deemed to have terminated employment with the Company and every subsidiary of the Company and such termination shall be deemed to have been made by the Company without cause. The unexercised portion of the option shall terminate no later than twelve (12) months after an optionee ceases to be an employee for any of the foregoing reasons, and any unexercised portion shall terminate immediately if and when the optionee becomes an employee, agent or principal of a competitor of the Company, or of any subsidiary of the Company, without the consent of the Company. If an optionee dies within such twelve (12) month period at a time when the optionee is not an employee, agent or principal of a competitor of the Company or of any subsidiary (or when the Company has consented to such relationship with a competitor), the option may be exercised at any time during the period of twelve (12) months after the date of the death of the optionee by a designee, for a number of Shares which the deceased optionee could have acquired by the exercise of such option had the deceased optionee survived for the twelve (12) month, without regard to the requirement of exercise within twelve (12) months after termination of employment. The Committee may, in its sole and absolute discretion, amend existing options, which provide only three (3) months for exercise after termination by retirement or termination by the Company without cause, to conform the provisions of this Paragraph 8(b)(i) as amended. For purposes of this Plan, the term "designee" means the deceased optionee's personal representative or any person who acquired the right to exercise such option by bequest or inheritance or by reason of the laws of descent and distribution. The term "Retirement Date" shall have the meaning set forth in the Employees' Retirement Plan, as in effect from time to time, of the optionee's employer, and shall include, where applicable, the Normal Retirement Date, the Early Retirement Date, and Retirement By Reason of Disability as defined in such Plan, or, if the optionee's employer has no such plan, the term shall have the meaning set forth in the Federal Social Security Act, as in effect from time to time. IN WITNESS WHEREOF, the Company has executed this Fourth Amendment to the Share Option Plan of 1995 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By: /s/ Michael R. Hogan -------------------- Vice President EX-10.(M) 9 0009.txt FIFTH AMENDMENT TO SHARE OPTION PLAN OF 1995 Exhibit 10 (m) -------------- FIFTH AMENDMENT TO THE SIGMA-ALDRICH CORPORATION SHARE OPTION PLAN OF 1995 This Fifth Amendment to the Sigma-Aldrich Corporation Share Option Plan of 1995 is hereby adopted by Sigma-Aldrich Corporation (the "Company") effective as of February 20, 2001. WHEREAS, the Company established its Share Option Plan of 1995 (the "Plan") to provide for the granting of options to purchase common stock of the Company to certain key employees of the Company and its subsidiaries; WHEREAS, Paragraph 15 of the Plan provides that the Board of Directors may make such amendments and modifications as it deems advisable, in its sole discretion, subject to certain exceptions; WHEREAS, the Board of Directors desires to amend the Plan to provide that options shall become vested and exercisable upon (i) termination of employment by retirement or (ii) termination of employment by reason of death or disability, subject to the terms and conditions of the Plan; and WHEREAS, the Plan provides that each option shall be exercisable in such manner, at such time or times and subject to such conditions or limitations as shall be fixed by the Compensation Committee of the Board (the "Committee"), in its sole discretion at the time such option is granted or after the time an option is granted; 1. The first three sentences of Paragraph 6 are hereby deleted and replaced with the following: "Except as provided in Paragraph 8, no option granted under this Plan may be exercised prior to the expiration of twelve (12) months from the date it is granted. The Committee may specify a longer period of time during which an option may not be exercised at the time each option is granted. Any period of non-exercise (whether shortened as provided in Paragraph 8 or lengthened as provided in the preceding sentence) is hereinafter referred to as the 'Non-exercise Period.'" 2. Paragraph 8(a) is hereby deleted and replaced with the following: "(a) Termination of Employment During the Non-exercise Period -------------------------------------------------------- "Except as provided in Paragraph 8(b) hereof, if, during the Non- exercise Period, the optionee's employment with the Company and every subsidiary of the Company shall terminate for any reason, the optionee's right to exercise the option shall terminate and all rights thereunder shall cease." 3. The first three paragraphs of Paragraph 8(b)(i) are hereby deleted and replaced with the following: "If the Non-exercise Period shall have elapsed and the optionee's employment with the Company and every subsidiary of the Company shall have been terminated by the Company thereafter without cause (as hereinafter defined) or shall terminate because of the retirement of an optionee on a permitted Retirement Date from the Company and all subsidiaries, the optionee shall have the right to exercise the unexercised portion of the option at any time during a period of twelve (12) months after the date of termination or retirement, in whole or in part, (x) in the case of termination of the optionee's employment by the Company without cause, to the extent the optionee could have exercised such option had the optionee remained in the employ of the Company during the twelve (12) month period or (y) in the case of termination because of retirement of an optionee on a permitted Retirement Date, to the extent of any or all the options held by the optionee, whether or not the Non-exercise Period shall have elapsed with respect to such options. If a subsidiary of the Company ceases to be a subsidiary of the Company, an optionee who is employed by such former subsidiary and is no longer employed by either the Company or any current subsidiary of the Company shall be deemed to have terminated employment with the Company and every subsidiary of the Company and such termination shall be deemed to have been made by the Company without cause. The unexercised portion of the option shall terminate no later than twelve (12) months after an optionee ceases to be an employee for any of the foregoing reasons, and any unexercised portion shall terminate immediately if and when the optionee becomes an employee, agent or principal of a competitor of the Company, or of any subsidiary of the Company, without the consent of the Company. "If an optionee dies within such twelve (12) month period at a time when the optionee is not an employee, agent or principal of a competitor of the Company or of any subsidiary (or when the Company has consented to such relationship with a competitor), the option may be exercised at any time during the period of twelve (12) months after the date of the death of the optionee by a designee, (x) in the case of termination of the optionee's employment by the Company without cause, for the number of shares which the deceased optionee could have acquired by the exercise of such option had the deceased optionee survived for the twelve (12) month period, without regard to the requirement of exercise within twelve (12) months after termination of employment or (y) in the case of termination because of retirement of an optionee on a permitted Retirement Date, for the number of shares subject to any or all the options held by the deceased optionee, whether or not the Non-exercise Period shall have elapsed with respect to such options, without regard to the requirement of exercise within twelve (12) months after termination of employment. "The Committee may, in its sole and absolute discretion, amend existing options to conform to the provisions of this Paragraph 8(b)(i) as amended." 4. Paragraph 8(b)(ii) is hereby deleted and replaced with the following: "(ii) By Death or Permanent and Total Disability ------------------------------------------ "If an optionee dies or is totally and permanently disabled (within the meaning of Section 22(e)(3) of the Internal Revenue Code) while in the employ of the Company or any subsidiary, the option may be exercised by the optionee or by the optionee's personal representative at any time during the twelve (12) month period after the date of such death or disability for the total number of shares subject to such person's options, whether or not the Non-exercise Period shall have elapsed with respect to such options." 5. In all other respects, the Plan, as amended, is hereby ratified and confirmed. IN WITNESS WHEREOF, the Company has executed this Fifth Amendment to the Share Option Plan of 1995 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By /s/ David R. Harvey ------------------- President EX-10.(O) 10 0010.txt FIRST AMENDMENT TO DIRECTORS NONQUALIFIED SHARE. Exhibit 10 (o) -------------- FIRST AMENDMENT TO THE SIGMA-ALDRICH CORPORATION DIRECTORS' NONQUALIFIED SHARE OPTION PLAN OF 1998 This First Amendment to the Sigma-Aldrich Corporation Directors' Nonqualified Share Option Plan of 1998 is hereby adopted by Sigma-Aldrich Corporation (the "Company") effective as of February20, 2001. WHEREAS, the Company established its Directors' Nonqualified Share Option Plan of 1998 (the "Plan") to provide for the granting of options to purchase common stock of the Company to certain nonemployee directors of the Company; WHEREAS, Paragraph 11 of the Plan provides that the Board of Directors may make such amendments and modifications as it deems advisable, in its sole discretion, subject to certain exceptions; WHEREAS, the Board of Directors desires to amend the Plan to provide that options shall become vested and exercisable upon (i) termination of employment by reason of death or disability, or (ii) termination of employment due to retirement, subject to the terms and conditions of the Plan, and to permit exercise within twelve (12) months thereafter, subject to the terms and conditions of the Plan; 1. The first sentence of Paragraph 5(e) is hereby deleted and replaced with the following: "Except as provided in subparagraph (g) below, no Option will vest or may be exercised to any extent until the Holder will have served as a director of the Company continuously for at least three (3) months from the date of grant." 2. Paragraph 5(g) is hereby deleted and replaced with the following: "(g) Termination of Service as Director or Death. In the event that a ------------------------------------------- Holder ceases to serve as a director of the Company for any reason other than his or her death, disability or termination for Cause, such Holder will have the right to exercise an unexpired Option at any time within six months after his or her termination of service to the extent his or her right to exercise the Option has vested and has not previously been exercised at the date of termination; provided, that in the case of cessation of service as a director due to retirement, such Holder will have the right to exercise an unexpired Option at any time within six months after his or her termination of service. In the event of termination of service of the Holder by reason of disability, the Holder may exercise his or her Option at any time within twelve (12) months after the date of such termination. If the Holder of an unexpired Option dies while he or she is serving as a director of the Company, his or her unexpired Option may be exercised (to the extent that the Holder would have been entitled to do so at the date of his or her death) by a legatee or legatees of the Holder under his or her last will, or by his or her personal representatives or distributee, at any time within twelve (12) months following his or her death. In the event of termination of service of the Holder for Cause, any and all Options of the Holder shall automatically expire upon such termination. In all of the cases cited above, the exercise period of one or more Options may be extended by a vote of a majority of the Directors whose Options are not being extended; provided, however, that notwithstanding anything in this subparagraph (g), no Option may be exercised more than ten (10) years after the date on which such Option was granted. For purposes of this subparagraph (g), service as a director will not be deemed terminated so long as the Holder is a director of the Company or another entity which has assumed this Option in a transaction to which Section 424(a) of the Code is applicable. In the event of termination of service of the Holder by reason of retirement, disability or death, the Holder or his or her legatee or legatees, personal representatives or distributee, as the case may be, may exercise all of his or her Options as provided above, whether or not the three-month period vesting period pursuant to Paragraph 5(e) shall have elapsed. 3. In all other respects, the Plan is hereby ratified and confirmed. IN WITNESS WHEREOF, the Company has executed this First Amendment to the Sigma-Aldrich Corporation Directors' Nonqualified Share Option Plan of 1998 as of the day and year first above written. SIGMA-ALDRICH CORPORATION By /s/ David R. Harvey ------------------- President EX-13 11 0011.txt PAGES 16-36 OF THE ANNUAL REPORT SHAREHOLDERS Exhibit 13 ---------- Management's Discussion and Analysis ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. INTRODUCTION The net income summaries below present the results of our operations before and after unusual items affecting our business. These summaries show the impact unusual items had on our net income and basic and diluted net income per share. Additional information relating to these unusual items is contained in the detailed financial section. Due to the sale of the metal business in 2000, we present results separately for our continuing chemical and discontinued metals operations.
Net Income (in millions) Years Ended December 31 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Net income from continuing operations before unusual items $144.7 $146.0 $140.7 --------------------------------------------------- Additional provision for bad debts -- (4.0) -- Provision for restructuring -- (2.6) -- One-time charges -- (0.6) -- Research & development and other tax credits -- 9.8 7.0 Purchased in-process research & development (5.6) -- (2.9) --------------------------------------------------- Total unusual items (5.6) 2.6 4.1 --------------------------------------------------- Net income from continuing operations after unusual items 139.1 148.6 144.8 Net income from discontinued operations 10.0 23.7 21.5 Gain on sale of discontinued operations, net of taxes 171.1 -- -- --------------------------------------------------- Net income $320.2 $172.3 $166.3 =================================================== Net Income Per Share--Basic 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Net income from continuing operations before unusual items $ 1.74 $ 1.45 $ 1.40 --------------------------------------------------- Additional provision for bad debts -- (.04) -- Provision for restructuring -- (.03) -- One-time charges -- (.01) -- Research & development and other tax credits -- .10 .07 Purchased in-process research & development (.07) -- (.03) --------------------------------------------------- Total unusual items (.07) .02 .04 --------------------------------------------------- Net income from continuing operations after unusual items 1.67 1.47 1.44 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- --------------------------------------------------- Net income $ 3.84 $ 1.71 $ 1.65 =================================================== Net Income Per Share-- Diluted 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Net income from continuing operations before unusual items $ 1.73 $ 1.45 $ 1.39 --------------------------------------------------- Additional provision for bad debts -- (.04) -- Provision for restructuring -- (.03) -- One-time charges -- (.01) -- Research & development and other tax credits -- .10 .07 Purchased in-process research & development (.07) -- (.03) --------------------------------------------------- Total unusual items (.07) .02 .04 --------------------------------------------------- Net income from continuing operations after unusual items 1.66 1.47 1.43 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- --------------------------------------------------- Net income $ 3.83 $ 1.71 $ 1.64 ===================================================
HIGHLIGHTS Net income in 2000 increased 85.8% to $320.2 from $172.3 in 1999. Included in 2000 is a one-time gain of $171.1 from the sale of our B-Line Systems metal business. Earnings per share for 2000 is $3.84 and $3.83 on a basic and diluted basis, respectively, compared to $1.71 on a basic and diluted basis for 1999. Earnings per share in 2000 includes the gain on the sale of the B-Line Systems of $2.05 on a basic and diluted basis. Net income from continuing operations before unusual items was $144.7 compared to $146.0 in 1999. The decrease in net income resulted from the dilutive effect of acquisitions in 2000 and higher interest expense related to borrowings for acquisitions and stock repurchases. Unusual items decreased net income from continuing operations by $5.6 or $.07 per basic and diluted share in 2000 and increased net income by $2.6 or $.02 per basic and diluted share in 1999. For the year, diluted earnings per share from continuing operations before unusual items increased 19.3% to $1.73 compared to $1.45 in 1999. A one-time, non-cash charge for purchased in-process research and development from the acquisition of businesses in 2000 reduced diluted earnings per share for the year by an additional $.07 in 2000. Additionally, the operations of First Medical, Inc. and Amelung GmbH acquired in 2000 further reduced diluted earnings per share by $.06 for 2000. Discontinued operations, including the gain on the sale of the B-Line Systems metal business, added $2.17 to year-to-date diluted earnings per share. ITEMS AFFECTING COMPARABILITY OF RESULTS The following items affect the comparability of our results: . On August 31, 2000, the Company purchased Amelung GmbH. . On July 22, 2000, the Company purchased First Medical, Inc. . On May 26, 2000, the Company purchased ARK Scientific GmbH. . On May 1, 2000, the sale of B-Line Systems was completed. The metal operations are accounted for as discontinued operations, and accordingly, operating results and net assets are segregated in the accompanying Consolidated Statements of Income and Consolidated Balance Sheets. . On March 31, 1999, the Company purchased the remaining 25% interest in Riedel-de Haen. . On December 23, 1998, the Company purchased Genosys Biotechnologies, Inc. . At December 31, 2000 and 1999, the Company had repurchased 25.6 million and 2.6 million of its outstanding shares, respectively. OPERATING RESULTS FROM CONTINUING OPERATIONS Sales Sales increased 3.3%, 7.6% and 7.3% in 2000, 1999 and 1998, respectively. The sales growth is attributed to price increases, the annual addition of new products, acquisitions and volume gains provided by increased sales and marketing activities. Price increases for products listed in the sales catalogs averaged 4.0% in 2000 and 3.0% in 1999 and 1998. New product sales, while not material in the year introduced, do contribute to sales growth in subsequent years. Recent acquisitions did not contribute to growth in 2000 but are certainly expected to do so in 2001 and beyond. Acquisitions did contribute 2.9% and 2.4% of the 1999 and 1998 growth, respectively. The effect of translating foreign currency sales into U.S. dollars reduced the 2000, 1999 and 1998 sales growth by 4.4%, 0.8% and 1.8%, respectively. We renamed our two research-based business units to more accurately reflect their capabilities and focused markets. The unit formerly known as Laboratory Products has become Scientific Research and the former Life Science unit is now named Biotechnology. These units represent over three-fourths of the Company's sales and drive the Company's overall business mix, roughly 75% of which is to customers in the life sciences and 25% of which is to customers using our products in a broad variety of high technology applications. Scientific Research sales, excluding currency impacts, continued to grow at the market rate of approximately five percent. Biotechnology sales gains, excluding currency impacts, improved each quarter, reflecting proactive customer contact, ongoing introduction of new products and new Cell Signaling and Life Science catalogs distributed during 2000. Biotechnology sales gains exceeded targeted rates, with an increase of 14.6% in 2000, excluding currency impacts. Strong demand for both custom synthesized products and our semi-bulk chemicals from pharmaceutical customers and promotion of our sourcing capabilities provided currency adjusted sales gains in Fine Chemicals of 15.7% for the year. Competitive pricing and fewer instrument placements led to an 8% reduction in Diagnostics sales (currency adjusted) for the year. The Company's e-commerce capabilities increased electronic orders to 10% of U.S. research sales and approximately 5% of worldwide research sales in the fourth quarter of 2000. Excluding currency impacts, international direct sales increased 9.6%, 13.7% and 19.3% in 2000, 1999 and 1998, respectively. These increases are partially offset by declines in U.S. export sales of 9.8%, 39.7% and 28.6% in 2000, 1999 and 1998, respectively, reflecting the continued transfer of those sales to our international offices. Cost of Products Sold Cost of Products Sold was 51.5%, 52.7% and 50.8% of net sales in 2000, 1999 and 1998, respectively. The increase in the gross profit rate in 2000 reflects price increases and process improvement savings. Overall, the cost of products sold increased 1.0% compared to a sales increase of 3.3% in 2000. Selling, General and Administrative Expenses Excluding unusual items, selling, general and administrative expenses were 28.8%, 28.1% and 28.1% of sales in 2000, 1999 and 1998, respectively. In 2000, selling, general and administrative expenses, excluding unusual items, as a percent of sales increased 0.7% primarily due to acquisitions, new catalogs, increased sales efforts, upgrades of our web site and internal operating systems and product acquisition and development. In 1999, selling, general and administrative expenses, excluding unusual items, as a percent of sales was consistent with 1998. Net interest expense reduced pretax earnings by $6.6 in 2000, while net interest income contributed $3.7 and $3.0 to pretax earnings in 1999 and 1998, respectively. The increase in interest expense in 2000 resulted from borrowings for acquisitions and share repurchases. Accounting Changes To comply with a new accounting requirement, sales results now include shipping and handling fees billed to customers that were previously offset against selling, general and administrative expenses. Shipping and handling costs previously included in selling, general and administrative expenses are now included in cost of products sold. The reclassifications had no effect on pre-tax or net income. Income Taxes Excluding unusual items, income taxes, which include federal, state and international taxes, were 31.0%, 31.9% and 33.4% of pretax income from continuing operations in 2000, 1999 and 1998, respectively. The reduction in the income tax rate in 2000 is a result of increases in foreign tax credits, offset by a slight increase in state income taxes. The reduction in the income tax rate from 1998 to 1999 is a result of an increase in the Foreign Sales Corporation ("FSC") benefit derived on export sales and a decrease in state income taxes. LIQUIDITY AND CAPITAL RESOURCES Operating Activities Cash provided by operating activities was $115.0 in 2000 compared to $230.9 in 1999. The decrease primarily resulted from higher growth in inventories due to intentional inventory build-up to support new product launches and stronger growth in Biotechnology and international sales and taxes paid on the gain on the sale of the B-Line Systems metal business. Investing Activities Cash provided by investing activities was $319.6 in 2000 compared to cash used of $98.7 and $175.2 in 1999 and 1998, respectively. In 2000, the Company received cash proceeds of $430.4 from the sale of the B-Line Systems metal business. The cash used for investing activities in 2000 was primarily for capital expenditures of $69.2 and $41.2 for the acquisitions of ARK Scientific GmbH, First Medical, Inc. and Amelung GmbH. In 1999, the cash used is primarily for capital expenditures of $91.8. During 2001, we anticipate capital spending of approximately $100 to continue construction on a new facility for Life Science research and development, to further enhance distribution and production facilities and to continue to improve our operating systems. Financing Activities In 2000, the Company used cash in financing activities for stock repurchases and payment of dividends. The Board of Directors authorized the purchase of up to 30 million shares of Company stock, of which 25.6 million shares were purchased by December 31, 2000. These outflows totaled $26.1 and $700.5 for dividend payments and stock repurchases in 2000, respectively, compared to dividends paid of $29.7 and $28.4 for 1999 and 1998, respectively, and stock repurchases of $77.8 for 1999. At December 31, 2000, the Company had credit facilities totaling $360, of which $193.7 was unused. At December 31, 2000, the Company also had $100 of long-term debt payable on September 12, 2010. The proceeds from borrowings were used for stock repurchases, acquisitions and for general corporate purposes. Total debt as a percentage of total capitalization was 24.6% and 1.7% at December 31, 2000 and 1999, respectively. EURO On January 1, 1999, eleven member countries of the European Community established fixed conversion rates between their existing currencies and the European Economic and Monetary Union's new common currency, the Euro. The transition period for the introduction of the Euro is January 1, 1999 through January 1, 2002. During the transition period, payment and billing may be conducted in the Euro or the relevant legacy currency. The Company is currently developing and implementing plans to address the conversion to the Euro, including updating certain information technology systems and evaluating currency risk, impacts on financial transactions and competitive activity. The cost associated with addressing the Euro conversion is not expected to be material. The Company believes the conversion to the Euro will not have a material impact on its financial condition or results of its operations. ENVIRONMENTAL MATTERS The operations of the Company, like those of other companies engaged in similar lines of business, are subject to various federal, state, foreign and local laws and regulations intended to protect the public health and the environment. These regulations primarily relate to worker safety, air and water quality, and waste handling. The Company believes it is in compliance with these regulations. INFLATION Management recognizes that inflationary pressures may have an adverse effect on the Company through higher asset replacement costs and higher material costs. The Company tries to minimize these effects through cost reductions and productivity improvements as well as price increases to maintain reasonable profit margins. It is management's view, however, that inflation has not had a significant impact on operations in the three years ended December 31, 2000. MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS The market risk inherent in the Company's financial instruments and positions represents the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. Interest Rates At December 31, 2000, the Company's outstanding debt represents approximately 25% of total capitalization. Approximately 36% of the Company's outstanding debt at December 31, 2000 is at a fixed rate. Cash flows from operations and available credit facilities are sufficient to meet the working capital requirements of the Company. It is management's view that market risk or variable interest rate risk would not significantly impact the Company's results of operations. Foreign Currency Exchange Rates The Company uses forward currency contracts to manage some of the risks associated with certain receivables and payables denominated in foreign currencies in order to stabilize the value of receivables and payables. Most of the contracts are single currency. Gains and losses on these contracts, based on the difference in the contract rate and the spot rate at the end of each month for all contracts still in force, are typically offset either partially or completely by transaction gains and losses, with any net gains and losses included in selling, general and administrative expenses. The market risk of foreign currency rate changes represents the potential loss in fair value of net currency positions at year end due to an adverse change in foreign currency exchange rates. The Company does not enter into foreign currency contracts for speculative trading purposes. The market risk of the Company's foreign currency positions at December 31, 2000, assuming a hypothetical 10% change in foreign currency exchange rates, would be $9.5. RESTRUCTURING ACTIVITIES In 1999, the Company recorded charges for restructuring in the amount of $3.9 ($2.6 after taxes or $.03 per basic and diluted share). These charges relate primarily to termination costs associated with the reorganization of the Company. DISCONTINUED OPERATIONS Results from discontinued operations represent the activity of the B-Line Systems metal business (B-Line). The sale of B-Line for $430.4, which was completed on May 1, 2000, resulted in a $171.1 gain. Operating results of B-Line through April 30, 2000 and the gain on the sale of B-Line are included as discontinued operations in the Consolidated Statements of Income. FORWARD-LOOKING STATEMENTS Management's discussion and analysis and other sections of the Annual Report to shareholders should be read in conjunction with the consolidated financial statements and notes thereto. Except for historical information, the statements in this discussion may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1993 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as statements that are preceded by, followed by, or that include words "believes," "expects," "anticipates," "should," or similar expressions, and other statements contained herein regarding matters that are not historical facts. Additionally, the Annual Report to shareholders contains forward-looking statements relating to future performance, goals, strategic actions and initiatives and similar intentions and beliefs, including without limitation statements regarding the Company's expectations, goals, beliefs, intentions and the like, which involve assumptions regarding Company operations, investments and acquisitions and conditions in the markets the Company serves. Although the Company believes its expectations are based on reasonable assumptions, such statements are subject to risk and uncertainty, including, among others, certain economic, political and technological factors. Actual results could differ materially from those stated or implied in this Annual Report to shareholders, due to, but not limited to, such factors as changes in pricing and the competitive environment, other changes in the business environment in which the Company operates, changes in research funding, uncertainties surrounding government health care reform, government regulations applicable to the business, the impact of fluctuations in interest rates and foreign currency exchange rates and the effectiveness of the Company's further implementation of its global software systems. The Company does not undertake any obligation to update these forward-looking statements. Consolidated Statements of Income (In Thousands, Except Per Share Data)
Years Ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------------- Net sales $1,096,270 $1,061,179 $986,183 Cost of products sold 564,360 558,829 500,728 - -------------------------------------------------------------------------------------------------------------------------- Gross profit 531,910 502,350 485,455 Selling, general and administrative expenses 315,730 298,457 277,033 Provision for restructuring -- 3,900 -- Purchased in-process research and development 6,700 -- 2,870 Interest, net 6,571 (3,724) (2,990) - -------------------------------------------------------------------------------------------------------------------------- Income from continuing operations before provision for income taxes 202,909 203,717 208,542 Provision for income taxes 63,859 55,112 63,646 - -------------------------------------------------------------------------------------------------------------------------- Net income from: Continuing operations 139,050 148,605 144,896 Discontinued operations 10,081 23,665 21,451 Gain on sale of discontinued operations, net of taxes 171,067 -- -- - -------------------------------------------------------------------------------------------------------------------------- Net income $ 320,198 $ 172,270 $166,347 - -------------------------------------------------------------------------------------------------------------------------- Weighted average number of shares outstanding - Basic 83,345 100,672 100,540 Weighted average number of shares outstanding - Diluted 83,585 100,984 101,188 Net income per share - Basic: Net income from continuing operations $1.67 $1.47 $1.44 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- - -------------------------------------------------------------------------------------------------------------------------- Net income $3.84 $1.71 $1.65 - -------------------------------------------------------------------------------------------------------------------------- Net income per share - Diluted: Net income from continuing operations $1.66 $1.47 $1.43 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- - -------------------------------------------------------------------------------------------------------------------------- Net income $3.83 $1.71 $1.64 - --------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. Consolidated Balance Sheets (In Thousands, Except Per Share Data)
December 31, 2000 1999 - --------------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $31,058 $43,847 Accounts receivable, less allowance for doubtful accounts 185,938 193,471 of $5,550 and $9,695, respectively Inventories 444,277 408,518 Other current assets 52,352 59,774 Net current assets of discontinued operations -- 68,961 - --------------------------------------------------------------------------------------------------------------------------------- Total current assets 713,625 774,571 - --------------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment: Land 34,883 34,534 Buildings and improvements 347,465 328,275 Machinery and equipment 483,600 427,820 Construction in progress 37,487 53,636 Less - accumulated depreciation (410,430) (362,529) - --------------------------------------------------------------------------------------------------------------------------------- Net property, plant and equipment 493,005 481,736 - --------------------------------------------------------------------------------------------------------------------------------- Goodwill, net 118,158 90,938 Other assets 22,919 18,569 Net noncurrent assets of discontinued operations -- 66,187 - --------------------------------------------------------------------------------------------------------------------------------- Total assets 1,347,707 1,432,001 - --------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity Current liabilities: Notes payable $180,011 $20,665 Current maturities of long-term debt 98 143 Accounts payable 58,050 41,995 Accrued payroll and payroll taxes 22,422 20,890 Accrued income taxes 47,819 -- Other accrued expenses 26,880 21,919 - --------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 335,280 105,612 - --------------------------------------------------------------------------------------------------------------------------------- Long-term debt 100,846 205 Deferred postretirement benefits 42,827 42,931 Deferred compensation 6,808 6,128 Other liabilities 2,671 17,774 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities 488,432 172,650 - --------------------------------------------------------------------------------------------------------------------------------- Stockholders' equity: Common stock, $1.00 par value; 200,000 shares authorized; 101,056 and 100,905 shares issued 101,056 100,905 at December 31, 2000 and 1999, respectively; 76,216 and 98,292 shares outstanding at December 31, 2000 and 1999, respectively. Capital in excess of par value 41,129 35,783 Common stock in treasury, at cost, 24,840 and 2,613 shares at December 31, 2000 and 1999, (756,968) (77,785) respectively Retained earnings 1,532,044 1,240,184 Accumulated other comprehensive loss (57,986) (39,736) - --------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 859,275 1,259,351 - --------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $1,347,707 $1,432,001 - --------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. Consolidated Statement of Stockholders' Equity (In Thousands, Except Per Share Data)
- ------------------------------------------------------------------------------------------------------------------------------------ Common Capital in Common Retained Accumulated Total Compre- Stock Excess of Stock in Earnings Other Stockholders' hensive Par Value Treasury Comprehensive Equity Income Income/(Loss) - ------------------------------------------------------------------------------------------------------------------------------------ Balance, December 31, 1997 $100,377 $24,168 $ -- $ 959,717 $ (23,928) $1,060,334 Net income -- -- -- 166,347 -- 166,347 $ 166,347 Other comprehensive income-foreign currency translation -- -- -- -- 12,794 12,794 12,794 --------- Comprehensive income -- -- -- -- -- -- $ 179,141 --------- Dividends ($.2825 per share) -- -- -- (28,411) -- (28,411) Awards under deferred compensation plan 38 1,480 -- -- -- 1,518 Shares exchanged for options (79) -- -- -- -- (79) Exercise of stock options 287 3,590 -- -- -- 3,877 - ---------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1998 100,623 29,238 -- 1,097,653 (11,134) 1,216,380 -- Net income -- -- -- 172,270 -- 172,270 $ 172,270 Other comprehensive loss-foreign currency translation -- -- -- -- (28,602) (28,602) (28,602) --------- Comprehensive income -- -- -- -- -- -- $ 143,668 --------- Dividends ($.2950 per share) -- -- -- (29,739) -- (29,739) Awards under deferred compensation plan 29 848 -- -- -- 877 Exercise of stock options 253 5,697 -- -- -- 5,950 Stock repurchases -- -- (77,785) -- -- (77,785) - ---------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1999 100,905 35,783 (77,785) 1,240,184 (39,736) 1,259,351 Net income -- -- -- 320,198 -- 320,198 $ 320,198 Other comprehensive loss-foreign currency translation -- -- -- -- (18,250) (18,250) (18,250) --------- Comprehensive income -- -- -- -- -- -- $ 301,948 --------- Dividends ($.3150 per share) -- -- -- (26,077) -- (26,077) Awards under deferred compensation plan -- -- 381 -- -- 381 Exercise of stock options 151 5,346 20,928 (2,261) -- 24,164 Stock repurchases -- -- (700,492) -- -- (700,492) - ---------------------------------------------------------------------------------------------------------------------- Balance, December 31, 2000 $101,056 $41,129 $(756,968) $1,532,044 $ (57,986) $ 859,275 - ----------------------------------------------------------------------------------------------------------------------
Common stock shares issued and common stock shares in treasury are summarized below:
Common Common Stock Stock Issued in Treasury - ------------------------------------------------------------------------------------------------------------------------ Balance, December 31, 1997 100,377 -- Awards under deferred compensation plan 38 -- Shares exchanged for options (79) -- Exercise of stock options 287 -- - --------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1998 100,623 -- Awards under deferred compensation plan 29 -- Exercise of stock options 253 -- Stock repurchases -- 2,613 - --------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1999 100,905 2,613 Awards under deferred compensation plan -- (8) Exercise of stock options 151 (704) Stock repurchases -- 22,989 - --------------------------------------------------------------------------------------------------------------------- Balance, December 31, 2000 101,056 24,840 - ---------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement. Consolidated Statements of Cash Flows (In Thousands)
Years Ended December 31, 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 320,198 $ 172,270 $ 166,347 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 67,563 66,919 61,827 Gain on sale of discontinued operations (171,067) -- -- Purchased in-process research and development 6,700 -- 2,870 Deferred income taxes (28,254) 7,086 11,111 Postretirement benefits expense 3,988 4,695 4,072 Deferred compensation, net (846) (1,766) (3,349) Changes in assets and liabilities: Increase in accounts receivable (138) (12,342) (37,917) Increase in inventories (39,118) (7,016) (36,401) Other (44,050) 1,083 (6,490) - ----------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 114,976 230,929 162,070 - ----------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Property, plant and equipment additions (69,184) (91,810) (130,378) Sale of equipment 841 990 2,383 Proceeds from sale of discontinued operations 430,389 -- -- Acquisition of businesses (41,206) -- (39,500) Other, net (1,278) (7,913) (7,700) - ----------------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 319,562 (98,733) (175,195) - ----------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Issuance (repayment) of notes payable 159,409 (10,093) 23,211 Issuance (repayment) of long-term debt 100,607 (160) 57 Payment of dividends (26,077) (29,739) (28,411) Stock repurchases (700,492) (77,785) -- Exercise of stock options 24,164 5,950 3,798 - ----------------------------------------------------------------------------------------------------------------------------- Net cash used in financing activities (442,389) (111,827) (1,345) - ----------------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (4,938) (867) (7,413) - ----------------------------------------------------------------------------------------------------------------------------- Net change in cash and cash equivalents (12,789) 19,502 (21,883) Cash and cash equivalents at beginning of year 43,847 24,345 46,228 - ----------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 31,058 $ 43,847 $ 24,345 - ----------------------------------------------------------------------------------------------------------------------------- Supplemental disclosures of cash flow information: Income taxes paid $ 153,425 $ 65,818 $ 81,497 Interest paid, net of capitalized interest 8,288 1,765 926
The accompanying notes are an integral part of these statements. Notes to Consolidated Financial Statements ($ In Thousands, Except Per Share Data) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations: Sigma-Aldrich Corporation ("the Company") develops, manufactures and distributes the broadest range of high quality biochemicals, organic chemicals, chromatography products and diagnostic reagents available in the world. These products are used in scientific and genomic research, biotechnology, pharmaceutical development, chemical manufacturing and in the diagnosis of disease. Principles of Consolidation: The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Financial Instruments: The Company has no financial instruments that have a materially different fair value than the respective instrument's carrying value. 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 periods of five to forty years. Accumulated goodwill amortization at December 31, 2000 and 1999 was $18,005 and $12,060, respectively. Foreign Currency Translation: Assets and liabilities denominated in foreign currency are translated at current exchange rates and profit and loss accounts are translated at weighted average exchange rates. Resulting translation gains and losses are included as a separate component of stockholders' equity, as accumulated other comprehensive income or loss. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Reclassifications: The accompanying consolidated financial statements for prior years contain certain reclassifications to conform with the presentation used in 2000. The consolidated operating results and net assets include the Company's B-Line Systems metal business as a discontinued operation. Effect of New Accounting Standards: In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. The Company reviewed the effects of adopting SFAS No. 133 on its consolidated financial statements during the third quarter of 2000 and determined that its current method of accounting for derivative financial instruments is consistent with the requirements of SFAS 133. Accordingly, the adoption of SFAS No. 133 did not have a material impact on the Company's consolidated financial statements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB 101), "Revenue Recognition in Financial Statements." SAB 101 provides guidance on recognition, presentation and disclosure of revenue in financial statements. In addition, the Emerging Issues Task Force (EITF) issued EITF 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 provides guidance on the classification of amounts billed to customers and costs incurred for shipping and handling. The Company adopted SAB 101 and EITF 00-10 in the fourth quarter of 2000. The adoption of these standards did not effect pre-tax or net income; however, sales results now include shipping and handling fees billed to customers that were previously offset against selling, general and administrative expenses. Shipping and handling costs previously included in selling, general and administrative expenses are now included in cost of products sold. NOTE 2: ALLOWANCE FOR DOUBTFUL ACCOUNTS Changes in the allowance for doubtful accounts for the years ended December 31, 2000, 1999 and 1998 are as follows: 2000 1999 1998 - ------------------------------------------------------------------------------ Balance, beginning of year $9,695 $6,473 $6,325 Additions to reserves 3,285 10,968 1,829 Deductions from reserves 7,430 7,746 1,681 - ------------------------------------------------------------------------------ Balance, end of year $5,550 $9,695 $6,473 - ------------------------------------------------------------------------------ NOTE 3: INVENTORIES The principal categories of inventories are: December 31, 2000 1999 - -------------------------------------------------------------------- Finished goods $367,283 $342,351 Work in process 21,871 18,556 Raw materials 55,123 47,611 - -------------------------------------------------------------------- Total $444,277 $408,518 - -------------------------------------------------------------------- Inventories are valued at the lower of cost or market. Costs for certain domestic inventories (22% of total inventories) are determined using the last- in, first-out method. Costs for other inventories are based on actual costs using purchase price and costs to manufacture, which includes material, labor and overhead. If the cost of all chemical inventories had been determined using the above method, inventories would have been $1,178, $1,627, $3,161, and $3,252 higher than reported at December 31, 2000, 1999, 1998, and 1997, respectively. NOTE 4: DISCONTINUED OPERATIONS On November 22, 1999, the Company announced its strategic decision to seek a buyer for its B-Line Systems metal business. On March 27, 2000, the Company reached an agreement to sell B-Line Systems to Cooper Industries, Inc. On May 1, 2000, the Company completed the sale to Cooper Industries, Inc. for $425,200. Final purchase price adjustments increased the sale amount to $430,389, resulting in a net gain of $171,067 after deducting taxes of $102,301. The net current assets of this discontinued operation are primarily accounts receivable, inventory, accounts payable and accrued expenses. Net noncurrent assets are primarily property, plant and equipment and goodwill. Operating results for the metal business are included in the Consolidated Statements of Income as net income from discontinued operations for all periods presented. Results for discontinued operations are as follows: Years ended December 31, 2000 1999 1998 - -------------------------------------------------------------------------- Net sales $101,093 $252,587 $228,363 - -------------------------------------------------------------------------- Income before income taxes $ 16,002 $ 37,563 $ 34,048 Provision for income taxes 5,921 13,898 12,597 - -------------------------------------------------------------------------- Net income $ 10,081 $ 23,665 $ 21,451 - -------------------------------------------------------------------------- NOTE 5: NOTES PAYABLE The Company has short term credit facilities totaling $360,000, of which $50,000 is a committed facility, at December 31, 2000. Borrowings under these facilities of $166,300 at a weighted average interest rate of 7.0% and $13,500 at a weighted average interest rate of 5.9% were outstanding at December 31, 2000 and 1999, respectively. The committed facility contains financial covenants related to working capital, interest coverage and net worth. The Company is in full compliance with these covenants. These credit facilities expire at different times through December 14, 2001. The Company intends to renew these facilities as they expire or substitute similar facilities for any that are not renewed. All of these facilities, except the committed facility which may be terminated by the lending bank only in the event of default by the Company, may be terminated before their expiration dates upon notice by either party. Interest rates for all facilities are based on federal funds, LIBOR, prime, eurocurrency or other rates offered by the lending banks. Notes payable by international subsidiaries were $13,711 and $7,165 at December 31, 2000 and 1999, respectively. The notes are payable in local currencies with weighted average interest rates of 1.9% and 2.2% at December 31, 2000 and 1999, respectively. NOTE 6: LONG-TERM DEBT Long-term debt consists of the following: December 31, 2000 1999 - -------------------------------------------------------------------------- 7.687% Senior Notes, due September 12, 2010 $100,000 $-- Other 944 348 - -------------------------------------------------------------------------- Total 100,944 348 Less-Current maturities (98) (143) - -------------------------------------------------------------------------- $100,846 $205 - -------------------------------------------------------------------------- On September 12, 2000, the Company issued $100,000 of 7.687% Senior Notes to an insurance company. The Company, at its option, may redeem all or any portion of the Senior Notes by notice to the holder. The Senior Notes contain certain covenants that require the maintenance of net worth and restrict indebtedness. The Company is in full compliance with these covenants. Total interest expense incurred by the Company, net of immaterial amounts capitalized, was $10,189, $918 and $920 in 2000, 1999 and 1998, respectively. NOTE 7: FINANCIAL DERIVATIVES AND RISK MANAGEMENT The Company transacts business in many parts of the world and is subject to risks associated with changing foreign currency exchange rates. The Company's objective is to minimize the impact of foreign currency exchange rate changes during the period of time between the original transaction date and its cash settlement. Accordingly, the Company enters into forward currency exchange contracts in order to stabilize the value of certain 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 manage the risks associated with existing receivables, payables and commitments. The principal forward currency exchange contracts are for the British pound, the Euro, German mark, Swiss franc, Japanese yen and Canadian dollar. These contracts are recorded at fair value and are included in other current assets. Resulting gains and losses are recorded in selling, general and administrative expenses and partially or completely offset changes in the value of related exposures. The duration of the 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 notional amount of open forward exchange contracts at December 31, 2000 and 1999 was $284,218 and $335,235, respectively. NOTE 8: LEASE COMMITMENTS The Company and its subsidiaries lease manufacturing, office and warehouse facilities and computer equipment under non-cancelable operating leases expiring at various dates. Rent charged to operations was $15,602, $13,764 and $11,253 in 2000, 1999 and 1998, respectively. Minimum rental commitments for non-cancelable leases in effect at December 31, 2000, are as follows: 2001.......................... $10,561 2002.......................... 8,414 2003.......................... 5,335 2004.......................... 3,690 2005.......................... 2,812 2006 and thereafter........... 7,271 NOTE 9: INCOME TAXES The provision for income taxes from continuing operations consists of the following:
2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- Current: Federal $50,310 $34,110 $39,017 State 6,272 2,410 3,163 International 37,420 12,519 11,613 - ----------------------------------------------------------------------------------------------------------------------------------- Total current 94,002 49,039 53,793 - ----------------------------------------------------------------------------------------------------------------------------------- Deferred: Federal (5,652) 6,320 7,290 State (691) 479 588 International (23,800) (726) 1,975 - ----------------------------------------------------------------------------------------------------------------------------------- Total deferred (30,143) 6,073 9,853 - ----------------------------------------------------------------------------------------------------------------------------------- Provision for income taxes $63,859 $55,112 $63,646 - ----------------------------------------------------------------------------------------------------------------------------------- A reconciliation of statutory and effective tax rates is as follows: 2000 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- Statutory tax rate 35.0% 35.0% 35.0% FSC benefits (2.7) (2.7) (2.1) State income taxes, net of federal benefits 1.6 1.1 1.3 Research and development credits (1.1) (2.9) (4.1) International taxes (3.4) (3.1) .2 Purchased in-process research and development .7 - .5 Other, net 1.4 (.3) (.3) - ----------------------------------------------------------------------------------------------------------------------------------- Total effective tax rate on continuing operations 31.5% 27.1% 30.5% - -----------------------------------------------------------------------------------------------------------------------------------
The Company's Foreign Sales Corporation ("FSC") subsidiary is taxed at a lower effective tax rate on its income from U.S. export sales. The research and development credit is a benefit of the Company's commitment of resources to new and enhanced products. The international tax rate reduction of 3.4% in 2000 and 3.1% in 1999 is a benefit from international restructurings. 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 asset (liability) at December 31 results from the following temporary differences:
2000 1999 - ----------------------------------------------------------------------------------------------------------------------------------- Gross deferred assets: Inventories $25,564 $ 20,600 Pension and postretirement benefit plans 10,201 12,806 - ----------------------------------------------------------------------------------------------------------------------------------- Total 35,765 33,406 Gross deferred liabilities: Depreciation and amortization (15,890) (35,501) Other (11,354) (19,314) - ----------------------------------------------------------------------------------------------------------------------------------- Total (27,244) (54,815) - ----------------------------------------------------------------------------------------------------------------------------------- Net deferred tax asset (liability) $ 8,521 $ (21,409) - -----------------------------------------------------------------------------------------------------------------------------------
United States taxes are not provided on unremitted earnings and related cumulative translation adjustments of international subsidiaries because the Company intends to reinvest the earnings indefinitely. The estimated amount of income taxes that would be incurred should such earnings be distributed is not significant due to the availability of foreign tax credits. NOTE 10: CONTINGENT LIABILITIES AND COMMITMENTS At December 31, 2000, there were no known contingent liabilities (including guarantees, pending litigation, taxes and other claims) that management believes will have a material effect on the Company's results of operations or financial position, nor were there any material commitments outside the normal course of business. NOTE 11: COMMON STOCK The Company's deferred compensation plan provides for cash and common stock payments to certain key employees. Under this plan, a bonus pool is calculated by a formula based on the amount of increase in profitability. Bonus units are then awarded. Bonus units are distributed five years after being awarded in the form of one share of common stock for each bonus unit. In addition, the Company makes cash payments equal to the amount of Federal income taxes the employee would be required to pay for the receipt of such stock and cash at the highest marginal Federal income tax rate. Expenses for this plan are recorded during the period for which the calculation is made. During 2000, 1999 and 1998, 7,800, 28,700 and 38,200 shares of common stock, respectively, were issued under this plan. At December 31, 2000, 80,950 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 1,521,000 shares remain to be awarded. The Company has a Directors' Non-Qualified Share Option Plan. This plan permits the award of non-qualified stock options to purchase up to 400,000 shares of the Company's common stock to those members of the Board of Directors who are not employees of the Company. Under this plan, the seven non-employee Directors received an initial option to purchase 10,000 shares of common stock. Additional awards of options to purchase 2,000 shares are made to each eligible Director on the day after each annual shareholders' meeting. Options were granted in the amount of 14,000, 14,000 and 84,000 shares for 2000, 1999 and 1998, respectively, at prices ranging from $28.625 to $40.13. Options for 288,000 shares remain to be granted at December 31, 2000. The Company's Share Option Plan of 2000, which replaced the Share Option Plan of 1995, permits the granting of incentive stock options or non-qualified options to purchase up to 4,500,000 shares of the Company's common stock. 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 2000 of 602,000 shares become exercisable over a one to five year period. Options to purchase 3,203,750 shares of the Company's common stock under this plan remain to be granted at December 31, 2000. Options granted under the 1995 plan to purchase 31,000, 312,000, and 235,000 shares in 2000, 1999 and 1998, respectively, become exercisable over one to five years. Options granted in 1998 for 25,000 shares become exercisable over a ten year period. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards in 2000, 1999 and 1998 consistent with the provisions of this Statement, the Company's net income and net income per share would have been as follows: 2000 1999 1998 - ------------------------------------------------------------------------------- Pro-forma net income $302,930 $164,326 $164,368 Net income per share - Basic $ 3.63 $ 1.63 $ 1.63 Net income per share - Diluted $ 3.62 $ 1.63 $ 1.62 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 2000: dividend yield of .91%, expected volatility of 47.1%, risk-free interest rate of 5.14% and expected life based on historical exercise periods of 6.3 years. The weighted-average assumptions for 1999 and 1998 are as follows: dividend yield of .86% and .80%, expected volatility of 24.2% and 23.7%, risk-free interest rate of 6.69% and 4.68% and expected life based on historical exercise for both periods of 6.0 years. The following table summarizes information about stock options outstanding at December 31, 2000:
Options Outstanding Options Exercisable --------------------------------------------------------------------------------------------------- Range of Exercise Number Wtd. Avg. Wtd. Avg. Number Wtd.Avg. Prices Outstanding Remaining Exercise Exercisable Exercise at 12/31/00 Contractual Life Price at 12/31/00 Price - ------------------------------------------------------------------------------------------------------------------------------- $18.125 to $24.00 323,150 40.4 months $19.50 317,150 $19.44 $ 25.50 to $31.25 1,718,921 79.8 months 27.00 1,683,421 26.95 $ 31.75 to $36.00 749,300 82.6 months 35.50 743,300 35.54 $ 36.50 to $40.75 1,571,750 112.8 months 36.80 278,000 38.43 - ------------------------------------------------------------------------------------------------------------------------------- 4,363,121 89.3 months $31.44 3,021,871 $29.33 - -------------------------------------------------------------------------------------------------------------------------------
A summary of the combined activity and balances for the Company's stock options for the plans as of December 31, 2000, 1999 and 1998 and changes during the years ended on those dates is as follows:
2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Shares Wtd. Avg. Shares Wtd. Avg. Shares Wtd. Avg. Exercise Exercise Exercise Price Price Price ----------------------------------------------------------------------------------- Options outstanding, beginning of year 3,898,011 $28.67 3,242,257 $29.05 3,228,698 $27.91 Options granted 1,341,250 36.20 1,240,000 27.16 362,000 34.95 Options exercised (855,140) 26.10 (253,114) 23.47 (286,709) 21.02 Options cancelled (21,000) 38.62 (331,132) 32.70 (61,732) 28.95 - ---------------------------------------------------------------------------------------------------------------------------------- Options outstanding, end of year 4,363,121 $31.44 3,898,011 $28.67 3,242,257 $29.05 - ---------------------------------------------------------------------------------------------------------------------------------- Options exercisable at year-end 3,021,871 $29.33 2,691,511 $29.35 2,880,257 $28.48 Weighted average fair value of options granted during the year $17.66 $ 9.69 $10.77
Note 12: Company operations by Segment The Company is organized into four business units based on their product offerings and markets they serve. The Company's chief operating decision maker and Board of Directors review net sales for the Company's four business units to assess performance and make overall operating decisions and resource allocations. Because the business units share production and distribution facilities, specific cost and income information is not provided for each business unit. Profit and loss information is reported on a consolidated basis to the chief operating decision maker and the Company's Board of Directors. Based on these factors, the Company concludes it has one reportable segment. Net sales by business unit are as follows: 2000 1999 1998 - ---------------------------------------------------------------------------- Scientific Research $ 613,420 $ 608,688 $587,393 Biotechnology 220,969 198,934 155,901 Fine Chemicals 189,497 171,443 160,773 Diagnostics 72,384 82,114 82,116 - ---------------------------------------------------------------------------- Total $1,096,270 $1,061,179 $986,183 - ---------------------------------------------------------------------------- The United States sales to unaffiliated customers presented in the summary below include sales to international markets as follows:
Year Amount Year Amount Year Amount ---- ------ ---- ------ ---- ------ 2000 $32,420 1999 $35,959 1998 $59,662 - ---------------------------------------------------------------------------------------------------------------------------- 2000 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------- Net sales to unaffiliated customers: United States $ 547,288 $ 518,468 $ 502,601 International 548,982 542,711 483,582 Net intercompany sales between geographic areas: United States 230,421 219,432 203,858 International 49,596 41,796 52,337 Eliminations (280,017) (261,228) (256,195) - ---------------------------------------------------------------------------------------------------------------------------- Total $1,096,270 $1,061,179 $ 986,183 - ---------------------------------------------------------------------------------------------------------------------------- Income before provision for income taxes: United States $ 168,062 $ 164,603 $ 166,726 International 33,441 40,261 40,412 Eliminations 1,406 (1,147) 1,404 - ---------------------------------------------------------------------------------------------------------------------------- Total $ 202,909 $ 203,717 $ 208,542 - ---------------------------------------------------------------------------------------------------------------------------- Total assets at December 31: United States $ 831,674 $ 815,133 $ 823,292 International 581,516 534,684 552,930 Eliminations (65,483) (52,964) (99,135) Net assets of discontinued operations -- 135,148 139,585 - ---------------------------------------------------------------------------------------------------------------------------- Total $1,347,707 $1,432,001 $1,416,672 - ----------------------------------------------------------------------------------------------------------------------------
Note 13: restructuring activities On November 22, 1999, the Company announced plans to reorganize the chemical business based upon an evaluation of competitive conditions in the market. Accordingly, the Company recorded a one-time restructuring charge of $3,900 in 1999. The major component of the restructuring charge related to severance packages for positions eliminated in the reorganization. Note 14: Pension and Other Postretirement Benefit Plans The Company maintains several retirement plans covering substantially all U.S. employees and employees of certain international subsidiaries. Pension benefits are generally based on years of service and compensation. The Company also maintains postretirement medical benefit plans covering most of its U.S. employees. 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 obligations, assets, funded status and rate assumptions associated with the pension and postretirement medical benefit plans.
Pension Plans Postretirement Medical Benefit Plans --------------------------------------------- United States International ----------------------------------------------------------------------- 2000 1999 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Reconciliation of funded status of the plans and the amounts included in the Company's Consolidated Balance Sheets: Change in benefit obligations Beginning obligations $58,780 $ 60,090 $ 52,152 $ 50,564 $ 36,903 $ 38,078 Service cost 2,728 3,634 2,623 2,532 1,373 1,908 Interest cost 4,850 4,188 2,851 2,561 2,808 2,788 Plan participant contributions -- -- 1,208 1,158 -- -- Amendments -- -- -- 598 -- -- Foreign currency exchange rate changes -- -- (1,641) (4,572) -- -- Actuarial (gains)/losses 5,370 (2,718) 1,300 259 707 (4,392) Effect of curtailment - B-Line participants (1,235) -- -- -- (2,386) -- Effect of settlement - B-Line participants (7,230) -- -- -- -- -- Benefits paid (6,177) (6,414) (1,502) (948) (1,497) (1,479) - ------------------------------------------------------------------------------------------------------------------------------------ Ending obligations $57,086 $ 58,780 $ 56,991 $ 52,152 $ 37,908 $ 36,903 - ------------------------------------------------------------------------------------------------------------------------------------ Changes in plans' assets Beginning fair value $84,551 $ 72,818 $ 60,959 $ 58,693 $ -- $ -- Actual return on plans' assets (1,011) 14,497 2,863 5,334 -- -- Foreign currency exchange rate changes -- -- (2,033) (5,150) -- -- Employer contributions 1,000 3,650 2,005 1,872 1,497 1,479 Plan participant contributions -- -- 1,208 1,158 -- -- Effect of settlement (7,230) -- -- -- -- -- Benefits paid (6,177) (6,414) (1,502) (948) (1,497) (1,479) - ------------------------------------------------------------------------------------------------------------------------------------ Ending fair value $71,133 $ 84,551 $ 63,500 $ 60,959 $ -- $ -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance sheet amount Funded status $14,047 25,771 $ 6,509 $ 8,807 $(37,908) $(36,903) Unrecognized net actuarial (gains) losses 111 (14,204) (3,022) (6,221) (4,836) (5,736) Unrecognized prior service cost 6,014 8,634 1,540 1,763 -- -- Unrecognized net transition asset (322) (454) (78) (127) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net balance sheet asset/(liability) $19,850 $ 19,747 $ 4,949 $ 4,222 $(42,744) $(42,639) - ------------------------------------------------------------------------------------------------------------------------------------ Weighted average assumptions as of December 31 Discount rate 7.50% 8.00% 5.40% 5.50% 7.50% 8.00% Expected return on plan assets 9.50% 9.50% 6.90% 7.00% n/a n/a Compensation rate increase 5.00% 5.50% 4.40% 4.40% n/a n/a
The components of the net periodic benefit costs are as follows:
Pension Plans Postretirement Medical Benefit Plans -------------------------------------------------------------- United States International --------------------------------------------------------------------------------------------- 2000 1999 1998 2000 1999 1998 2000 1999 1998 - --------------------------------------------------------------------------------------------------------------------------------- Service cost $ 2,728 $ 3,634 $ 3,350 $ 2,623 $ 2,532 $ 2,614 $ 1,373 $ 1,908 $ 1,628 Interest cost 4,850 4,188 3,939 2,851 2,561 2,484 2,808 2,787 2,444 Expected return on plan assets (7,410) (6,680) (5,630) (4,281) (3,823) (3,641) -- -- -- Plan settlement and curtailment 250 -- -- -- -- -- -- -- -- Amortization 479 699 699 (57) (12) (17) (193) -- -- - --------------------------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 897 $ 1,841 $ 2,358 $ 1,136 $ 1,258 $ 1,440 $ 3,988 $ 4,695 $ 4,072 - ---------------------------------------------------------------------------------------------------------------------------------
Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement medical benefit plans. Medical costs were assumed to increase at an annual rate of 9.0% in 2000, decreasing ratably to a growth rate of 5.0% in 2004 and remaining at 5.0% 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 and $1,520, 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 $220 and $1,640, 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 pension plan. The plan permits participants to voluntarily defer up to 15% of their compensation, subject to Internal Revenue Code limitations. The Company also contributes a fixed amount per year to the account of each eligible employee plus a percentage of the employee's salary deferral. The Company's policy is to fully fund this plan. The cost for this plan was $5,393, $5,831 and $6,008 for the years ended December 31, 2000, 1999 and 1998, respectively. Note 15: Earnings Per Share A reconciliation of basic and diluted earnings per share, together with the related shares outstanding is as follows:
2000 1999 1998 - -------------------------------------------------------------------------------------------------------------------- Net income available to common shareholders Net income from continuing operations $139,050 $148,605 $144,896 Net income from discontinued operations 10,081 23,665 21,451 Gain on sale of discontinued operations, net of taxes 171,067 -- -- - -------------------------------------------------------------------------------------------------------------------- Net income $320,198 $172,270 $166,347 - -------------------------------------------------------------------------------------------------------------------- Weighted average shares Basic shares 83,345 100,672 100,540 Effect of dilutive securities - options outstanding 240 312 648 - -------------------------------------------------------------------------------------------------------------------- Diluted shares 83,585 100,984 101,188 - -------------------------------------------------------------------------------------------------------------------- Net income per share - Basic Net income from continuing operations $ 1.67 $ 1.47 $ 1.44 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- - -------------------------------------------------------------------------------------------------------------------- Net income $ 3.84 $ 1.71 $ 1.65 - -------------------------------------------------------------------------------------------------------------------- Net income per share - Diluted Net income from continuing operations $ 1.66 $ 1.47 $ 1.43 Net income from discontinued operations .12 .24 .21 Gain on sale of discontinued operations, net of taxes 2.05 -- -- - -------------------------------------------------------------------------------------------------------------------- Net income $ 3.83 $ 1.71 $ 1.64 - --------------------------------------------------------------------------------------------------------------------
Note 16: Stockholder Rights Plan On August 8, 2000, the Board of Directors declared a dividend of one common share purchase right (a "Right") for each outstanding share of common stock of the Company. The dividend distribution was made on August 22, 2000 (the "Record Date") to stockholders of record as of the close of business on that date. Each Right entitles the registered holder to purchase from the Company one share of common stock at a price of $150.00 per share (the "Purchase Price"), subject to adjustment. The Rights generally will be exercisable only after the close of business on the tenth business day following the date of public announcement or the date on which the Company first has notice or determines that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, 15% or more of the outstanding shares of voting stock of the Company without the prior express written consent of the Company, or the close of business on the tenth business day following the commencement of a tender offer or exchange offer, without the prior written consent of the Company, by a person which, upon consummation, would result in such party's control of 15% or more of the Company's voting stock. The Rights Agreement requires the Board of Directors to review the Rights after they have been outstanding for four years, provided they have not then become exercisable, to determine whether they should be terminated or left in effect. The Rights will expire, if not previously exercised, exchanged or redeemed, or if the Rights Agreement has not been terminated following such review, on August 8, 2010. Generally, if any person or group acquires 15% or more of the Company's outstanding voting stock without the prior written consent of the Board of Directors, each Right, except those held by such persons, would entitle each holder of a Right to acquire such number of shares of the Company's common stock as shall equal the result obtained by multiplying the then current Purchase Price by the number of shares of common stock for which a Right is then exercisable and dividing that product by 50% of the then current per-share market price of Company common stock. Generally, if any person or group acquires more than 15% but less than 50% of the outstanding Company common stock without prior written consent of the Board of Directors, each Right, except those held by such persons, may be exchanged by the Board of Directors for one share of Company common stock. If the Company were acquired in a merger or other business combination transaction where the Company is not the surviving corporation or where Company common stock is exchanged or changed or 50% or more of the Company's assets or earnings power is sold in one or several transactions without the prior written consent of the Board of Directors, each Right would entitle the holders thereof (except for the Acquiring Person) to receive such number of shares of the acquiring company's common stock as shall be equal to the result obtained by multiplying the then current Purchase Price by the number of shares of Company common stock for which a Right is then exercisable and dividing that product by 50% of the then current market price per-share of the common stock of the acquiring company on the date of such merger or other business combination transaction. At any time prior to the tenth business day following the time an Acquiring Person becomes such, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption Price"). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board of Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Note 17: Acquisitions On February 16, 2001, the Company acquired the stock of Isotec, Inc., a leading producer and supplier of stable isotopes and isotopically labeled compounds used in life science research, medical diagnostics and PET imaging applications. The purchase price was approximately $35,600. In August 2000, the Company acquired the assets of Amelung GmbH for approximately $28,000, which includes an initial payment of $25,000 and assumed debt of $3,000. A payment of up to an additional $6,000 may be made in mid-2003 if there have been no adverse impacts against the sellers representations at that time. Amelung GmbH uses leading edge technology to develop and manufacture coagulation instruments. In July 2000, the Company acquired the stock of First Medical, Inc. First Medical has developed a rapid immunoassay system that provides results to diagnose acute myocardial infarction. The initial investment is approximately $15,000, with additional payments required if certain contingent sales and income growth targets are met through 2005. In May 2000, the Company acquired the stock of ARK Scientific GmbH for approximately $2,000. In March 1999, the Company acquired the remaining 25% interest in Riedel-de Haen. In December 1998, the Company acquired the stock of Genosys Biotechnologies, Inc. for approximately $39,500. The above transactions have been accounted for using the purchase method of accounting. The acquisitions were immaterial for proforma presentation requirements. Note 18: Purchased In-Process research and Development One-time pre-tax charges for purchased in-process research and development (IPR&D) from the acquisitions of Amelung GmbH and First Medical, Inc. totaled $6,700 in 2000. In 1998, a pre-tax charge for IPR&D totaled $2,870 related to the acquisition of Genosys Biotechnologies, Inc. IPR&D represents the value assigned to research and development projects of the acquired businesses that had commenced but had not yet been completed at the date of acquisition. It is the Company's belief that the projects in process were currently not technologically feasible and the projects had no alternative future use for the Company and accordingly the amount of purchase price assigned to these projects was immediately written off to the income statement. The method used to determine the value of IPR&D was a net present value cash flow method. Note 19: Share Repurchases At December 31, 2000, the Company had repurchased approximately 25.6 million shares of an authorized 30 million shares. The shares were acquired at an average purchase price of $30.46. Additional purchases through February 20, 2001 brought the total shares repurchased to approximately 26.8 million. As of February 20, 2001, approximately 3.2 million shares remained available under the repurchase program. The Company expects to continue share repurchases to acquire the remaining 3.2 million shares, but the timing and number of shares repurchased will depend upon market conditions and other factors. Report of Management The management of Sigma-Aldrich Corporation (the Company) prepared and is responsible for the consolidated financial statements and other information in this Annual Report. The statements have been prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on estimates and judgments that management believes are reasonable under the circumstances. The Company established and maintains a system of internal controls designed to provide reasonable assurance as to the integrity and reliability of the consolidated financial statements, the protection of assets from unauthorized use and the execution and recording of transactions in accordance with management's authorization. These systems and controls are reviewed by our internal auditors in order to ensure compliance and by our independent accountants to support their audit work. The Audit Committee of the Board of Directors meets regularly with management, internal auditors and our independent accountants to review accounting, auditing and financial matters. Our Audit Committee is composed of only outside, non-employee Directors. To ensure complete independence, the Audit Committee, internal auditors and the independent accountants have free access to each other with or without management being present, to discuss the results of their examinations and their opinions on the adequacy of internal controls and the quality of financial reporting. /s/ David R. Harvey /s/ Michael R. Hogan Chairman, President and Chief Administrative Officer, Chief Executive Officer Chief Financial Officer and Secretary REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Sigma-Aldrich Corporation: We have audited the accompanying consolidated balance sheets of Sigma-Aldrich Corporation (a Delaware Corporation) and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000. 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 auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN, LLP St. Louis, Missouri February 20, 2001 Selected Financial Data (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------- Common Stock Data: (per share) - ---------------------------------------------------------------------------------------------------------------------------- 2000 Price Range 1999 Price Range Dividends ---------------------------------------------------------------------------------------------- High Low High Low 2000 1999 ---------------------------------------------------------------------------------------------- First Quarter $35-1/4 $20-3/16 $30-3/4 $24-1/2 $.0775 $.0725 Second Quarter 36-1/4 25-1/2 35-1/4 28-5/8 .0775 .0725 Third Quarter 34-1/8 25-3/8 35-1/4 30-3/8 .0775 .0725 Fourth Quarter 40-7/8 31-13/16 33-3/16 26-9/16 .0825 .0775
The common stock is traded on the National Market System ("NMS") of the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). The trading symbol is SIAL. Options in the Company's common stock are traded on the Chicago Board Options Exchange.
Annual Financial Data: (in millions, except per share data) - ------------------------------------------------------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------------------------- Net sales $1,096.3 $1,061.2 $986.2 $919.4 $851.9 Net income from continuing operations 139.1 148.6 144.8 142.7 128.3 Per share: Net income from continuing operations - Basic 1.67 1.47 1.44 1.43 1.28 Net income from continuing operations - Diluted 1.66 1.47 1.43 1.39 1.26 Dividends .3150 .2950 .2825 .2575 .2275 Total assets 1,347.7 1,432.0 1,416.7 1,226.2 1,080.2 Long-term debt 100.8 .2 .4 .6 3.8
Quarterly Financial Data: (in millions, except per share data) - ---------------------------------------------------------------------------------------------------------------------------- 2000 Quarter Ended March 31 June 30 Sept. 30 Dec. 31 ------------------------------------------------------ Net sales $290.1 $273.8 $269.8 $262.6 Gross profit 143.0 134.9 130.6 123.4 Net income from continuing operations 41.7 37.8 27.9 31.7 Net income per share from continuing operations - Basic .45 .45 .35 .41 Net income per share from continuing operations - Diluted .45 .45 .35 .41
- ----------------------------------------------------------------------------------------------------------------------------- 1999 Quarter Ended March 31 June 30 Sept. 30 Dec.31 ------------------------------------------------------- Net sales $278.1 $262.3 $263.1 $257.7 Gross profit 135.8 127.6 125.9 113.0 Net income from continuing operations 39.1 38.8 38.0 32.7 Net income per share from continuing operations - Basic .39 .38 .38 .33 Net income per share from continuing operations - Diluted .39 .38 .38 .33
EX-21.1 12 0012.txt SUBSIDIARIES OF THE REGISTRANT SIGMA-ALDRICH CORPORATION SUBSIDIARIES ------------ Sigma-Aldrich Corporation (Delaware), the Registrant: 1) Sigma-Aldrich Co. (Illinois) (A) Sigma Chemical Company (Missouri) (B) Sigma Israel Chemicals, Ltd. (Israel) (C) Aldrich Chemical Company, Inc. (Delaware) (D) Sigma-Aldrich N.V./S.A. (Belgium) (1) Sigma Chemie B.V. (Netherlands) (E) Sigma-Aldrich B.V. (Netherlands) (1) Sigma-Aldrich Holding B.V. (Netherlands) (a) Sigma-Aldrich Chemie Holding GmbH (Germany) (a) Sigma-Aldrich Chemie GmbH (Germany) (b) Sigma-Aldrich Laborchemikalien GmbH (Germany) (c) Sigma-Aldrich Productions GmbH (Germany) (d) Sigma Ark GmbH (Germany) (e) Sigma-Aldrich Verwaltungs GmbH (Germany) (F) Sigma Aldrich-Chemie Verwaltungs GmbH (Germany) (G) Sigma-Aldrich S.r.l. (Italy) (H) Sigma-Aldrich Chimie S.N.C. (France) (1) Sigma-Aldrich Chemie S.a.r.l. (France) (I) Supelco, Inc. (Delaware) (J) Sigma Genosys, Inc. (Texas) (K) Sigma-Aldrich Business Holdings, Inc. (Delaware) (1) Sigma-Aldrich Research Biochemicals, Inc. (Massachusetts) (L) Sigma-Aldrich Lancaster, Inc. (Missouri) (1) Carbolabs, Inc. (Connecticut) (2) Techcare Systems, Inc. (California) (3) Chemical Trade, Ltd (Russia) (4) Medchem, Ltd. (Russia) (a) TechMed Biochem, Ltd. (Russia) (b) SAF-LAB (Russia) (N)Sigma Diagnostics, Inc.(Missouri) (1) FMI Holdings, Inc (Delaware) 2) Sigma-Aldrich, Inc. (Wisconsin) 3) Sigma-Aldrich Finance Co. (Missouri) 4) Sigma-Aldrich & Subs Foreign Sales Corporation (Barbados) 5) Fluka Holding AG (Switzerland) (A) Fluka Chemie GmbH (B) Fluka Production GmbH (C) Fluka GmbH 6) Sigma-Aldrich Company, Ltd. (United Kingdom) (A) Sigma-Genosys Limited 7) Sigma-Aldrich Foreign Holding Co. (Missouri) (A) Sigma-Aldrich Handels GmbH (Austria) (B) Sigma-Aldrich Spol. s.r.o. (Czech Republic) (C) Sigma-Aldrich A/S (Denmark) (D) Ya-Kemia Oy (Finland) (E) Sigma-Aldrich (OM) Ltd. (Greece) (F) Sigma-Aldrich Kft (Hungary) (G) Sigma-Aldrich Financial Services Limited (Ireland) (H) Sigma-Aldrich Ireland Ltd. (Ireland) (I) Sigma-Aldrich Norway AS (Norway) (J) Sigma-Aldrich Sp. z.o.o. (Poland) (K) Sigma-Aldrich Quimica S.A. (Spain) (L) Sigma-Aldrich Sweden AB (Sweden) (M) Sigma-Aldrich de Argentina, S.A. (Argentina) (N) Sigma-Aldrich Pty., Limited (Australia) (O) Sigma-Aldrich Quimica Brasil Ltda. (Brazil) (P) Sigma-Aldrich Canada Ltd. (Canada) (Q) Sigma-Aldrich Japan KK (Japan) (R) Sigma-Aldrich Korea Ltd. (Korea) (S) Sigma-Aldrich Quimica, S.A. de C.V. (Mexico) (T) Sigma-Aldrich Pte. Ltd. (Singapore) (U) Sigma-Aldrich Sdn. Bhd. (Malaysia) (V) Sigma-Aldrich (Pty.) Ltd. (South Africa) EX-23.1 13 0013.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 23 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 333-49912, 33-24415, 33-62541, 33-64661 and 333-30528. ARTHUR ANDERSEN LLP St. Louis, Missouri March 28, 2001 -----END PRIVACY-ENHANCED MESSAGE-----