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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, 2002
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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
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SIGMA-ALDRICH CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 43-1050617
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3050 Spruce Street, St. Louis, Missouri 63103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 314-771-5765
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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; Common Share Purchase Right
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes X No ___
---
Aggregate market value of the voting stock held by non-affiliates of the
registrant:
$3,625,954,076 June 28, 2002
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Value Date of Valuation
Number of shares of the Registrant's common stock, $1.00 par value,
outstanding as of March 7, 2003 was 71,122,634.
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 17-40 of the Annual Report to
Shareholders for the year ended
December 31, 2002 Parts I, II and IV
Proxy Statement for the 2003 Annual
Meeting of Shareholders Part III
The Index to Exhibits is located on page F-2 of this report.
1
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 that are preceded by, followed by, or that
include the words "believes," "expects," "anticipates," "should" 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, including without limitation,
statements regarding the Company's expectations, goals, beliefs, intentions and
the like regarding future sales, earnings, return on equity, the discontinuance
of its Diagnostics business, including the effect on earnings from running the
discontinued business as assets are held for sale and other matters. These
statements involve assumptions regarding the Company's operations, investments,
acquisitions and conditions in the markets the Company serves and the sale of
assets and actions related to the discontinuance of its Diagnostics business.
Although the Company believes its expectations are based on reasonable
assumptions, such statements are subject to risks and uncertainties, including,
among others, certain economic, political and technological factors. Actual
results could differ materially from those stated or implied in the Report, due
to, but not limited to, such factors as (1) changes in pricing and the
competitive environment, (2) other changes in the business environment in which
the Company operates, (3) changes in research funding, (4) uncertainties
surrounding government healthcare reform, (5) government regulations applicable
to the business, (6) the impact of fluctuations in interest rates and foreign
currency exchange rates, (7) the effectiveness of the Company's further
implementation of its global software systems, (8) expectations for the
discontinuance of the Diagnostics business, (9) the ability to retain customers,
suppliers and employees and (10) the outcome of the matters described in Note 11
- - Contingent Liabilities and Commitments to the Company's consolidated financial
statements on page 33 of the 2002 Annual Report, which is incorporated herein by
reference. 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 April 23, 2002, the Company announced its decision to sell substantially all
the assets of its Diagnostics business and continue to supply customers under
contract while seeking to transfer these commitments to other vendors as it
seeks to discontinue this business. Efforts to sell the assets of and
discontinue the Diagnostics business resulted in the sale of the EIA product
line to IVAX Diagnostics, Inc. in May 2002 and the sale of the coagulation
product line to Trinity Biotech plc in August 2002. These two product lines,
along with other product lines sold during 2002, represented approximately 70%
of Diagnostics sales in 2001 (after reclassifying products that contributed
$11.0 and $10.0 million in Diagnostics sales for 2001 and 2000, respectively, to
the Company's Scientific Research unit). Efforts to sell other product lines and
reduce inventories through sales to customers continue, with the expectation
that all such activities will be substantially concluded by the end of the first
quarter of 2003. The Company recorded a one-time charge of $52.3 million, net of
taxes, in 2002 as a result of discontinuing the Diagnostics business.
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 $37.2 million.
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On May 26, 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 March 27, 2000, the Company reached an agreement to sell its B-Line Systems
metal business to Cooper Industries, Inc. On May 1, 2000, the Company completed
the sale to Cooper Industries, Inc. for $430.4 million (including purchase price
adjustments). The funds received from the sale were used to repurchase shares
and reduce outstanding borrowings and for other general corporate purposes.
The Diagnostics and metal operations are accounted for as discontinued
operations, and accordingly, operating results, including cash flows and related
assets and liabilities, are segregated in the consolidated financial statements.
(b) Financial information about segments.
Information concerning the Company's business units is provided in Note 13 to
the Company's consolidated financial statements on page 36 of the 2002 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 and chromatography products available in
the world. These chemical products and kits are used in scientific and genomic
research, biotechnology, pharmaceutical development, the diagnosis of disease
and chemical manufacturing. The Company operates in 34 countries, offers more
than 85,000 chemical products and distributes these products in over 150
countries.
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. In 2002 and 2001,
approximately 70% and in 2000 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. In 2002 and 2001, the remaining 30% and in 2000 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 proteomics research and
chromotography products used in life science research and high technology
applications. Biochemical products and kits supplied in Biotechnology relate to
the areas of immunochemistry, cell culture, molecular biology, cell signaling
and neuroscience. The Fine Chemicals unit is a top 25 supplier of large-scale
organic chemicals and biochemicals used in development and production by
pharmaceutical, biotechnology, industrial and diagnostic companies.
Status of products:
Due to continuing developments in life science, high technology 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 techniques. This information, along
with its own research technology, determines the Company's development of
improved and/or additional products.
Sales and Distribution:
During 2002, products were sold to over 60,000 accounts representing over
1,000,000 individual customers, including hospitals, universities,
pharmaceutical, industrial, diagnostics and biotechnology companies and
commercial laboratories as well as private and governmental research
laboratories. Small orders in laboratory quantities averaging approximately $300
accounted for 81% of the Company's sales in both 2002 and 2001 and 82% in 2000.
The Company also makes its chemical products available in
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larger-than-normal laboratory quantities for use in manufacturing. Sales of
these products accounted for 19% of sales in both 2002 and 2001 and 18% in 2000.
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 (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
believed appropriate 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;
Australia; Canada; Germany; Israel; Japan; Switzerland and the United Kingdom. A
minor amount of production is done by some of the Company's other subsidiaries.
Biochemicals 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
products, or roughly 55% of sales in 2002. Products not manufactured by the
Company are purchased from many sources either under contract or in the open
market.
No one of the Company's 10,000 suppliers accounted for more than 10% of the
Company's chemical purchases in 2002. 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 issued or pending patents and has roughly
550 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" and "Sigma-Aldrich Fine Chemicals."
Their related registered logos, which have various expiration dates, are
expected to be renewed indefinitely.
Dependence on a single customer or product:
During the year ended December 31, 2002, 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 backlog. 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 at December 31, 2002 and 2001, the backlog of firm orders
and orders for future delivery was not significant. The Company anticipates that
substantially all of the December 31, 2002 backlog will be shipped during 2003.
4
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 of
chromatography products for analyzing and separating complex chemical mixtures.
While the Company generally offers thousands of chemicals in stock and analyzes
many of its products, some of the Company's products are unusual and have
relatively little demand. There are many competitors who offer a limited
quantity of chemicals. In addition, 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 three business units: Scientific Research, Biotechnology and Fine
Chemicals. The Company had over 3,500,000 catalogs in the marketplace in 2002
for the Sigma, Aldrich, Fluka, Riedel-de Haen and Supelco brands with customers
and potential customers throughout the world. These catalogs are supplemented
with advertisements in chemical and other scientific journals, through the use
of mailing of special product brochures, by personal visits by sales and
technical representatives with customers and through our website
(sigma-aldrich.com).
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"). However, a limited
number of the Company's products 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 promulgated under the Act.
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
regulate the emission of harmful pollutants to the air outside of the work
environment. Federal or state regulatory agencies may require companies to
acquire permits, perform monitoring and install control equipment for certain
pollutants.
The Clean Water Act (CWA), as amended, and the regulations promulgated
thereunder regulate 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 require the labeling of hazardous substance containers, the supplying
of Material Safety Data Sheets ("MSDS") on hazardous products to customers and
hazardous substances to which an employee may be exposed in the workplace, the
training of 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 require certain procedures regarding the
treatment, storage and disposal of hazardous waste.
The Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA), 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.
5
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 5,940 employees as of December 31, 2002. The total number
employed in the United States was 3,205 with the remaining 2,735 employed by the
Company's foreign subsidiaries. The Company employs over 2,000 people who have
degrees in chemistry, biochemistry, engineering or other scientific disciplines,
including approximately 200 with Ph.D. degrees.
(d) Financial information about geographic areas.
Information concerning geographic areas and business units for the years ended
December 31, 2002, 2001 and 2000, is located in Note 13 to the Company's
consolidated financial statements on page 36 of the 2002 Annual Report, which is
incorporated herein by reference.
In the years ended December 31, 2002, 2001 and 2000, approximately 55%, 53% and
54%, respectively, 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 located in more than 30 other countries.
For sales with final destinations in an international market, the Company uses
the Extraterritorial Income Exclusion (EIE), which provides certain Federal
income tax advantages. The effect of the tax rules governing the EIE is to lower
the effective Federal income tax rate on export income. The EIE resulting from
the Company's U.S. export sales replaced the benefit previously realized by the
Company's Foreign Sales Corporation (FSC).
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 2002, approximately 16% of the Company's United States
operations' chemical purchases were from international suppliers.
(e) Available information.
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and amendments to reports filed pursuant to Sections 13(a) and 15(d)
of the Securities Exchange Act of 1934, as amended, are available on our website
at www.sigma-aldrich.com as soon as reasonably practicable after filed
electronically with or furnished to the SEC. Our web site does not constitute
part of this Report.
6
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 1,621 4,029 admin.,production,warehousing,distrib.
Germany 43 522 admin.,production,warehousing,distrib.
Switzerland 13 413 admin.,production,warehousing,distrib.
United Kingdom 240 351 admin.,production,warehousing,distrib.
Israel 5 131 admin.,production,warehousing,distrib.
All Other 34 531 admin.,warehousing,distrib.
----- ------
Total 1,956 5,977
Percent Owned 84%
Percent Leased 16%
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. The
Company now uses about 50% of its manufacturing capacity and expects to increase
the utilization of its plants in the future.
Item 3. Legal Proceedings.
The information contained in Note 11 - Contingent Liabilities and Commitments on
page 33 of the 2002 Annual Report is incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted by the Company to the stockholders for a vote during
the fourth quarter of 2002.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Information concerning the market price of the Company's Common Stock and
related shareholder information for the years ended December 31, 2002 and 2001
is located on page 40 of the 2002 Annual Report, which is incorporated herein by
reference.
As of March 7, 2003, there were 1,107 record holders of the Company's Common
Stock.
Items 6 through 8. Selected Financial Data, Management's Discussion and Analysis
of Financial Condition and Results of Operations, Quantitative and Qualitative
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 17-40 of the 2002 Annual Report. See Index to Financial
Statements on page F-1 of this report. Those pages of the Company's 2002 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.
The information contained in the Company's Form 8-K dated June 28, 2002 is
incorporated herein by reference and includes, among other things, the dismissal
of Arthur Andersen and hiring of KPMG.
7
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information under the captions "Nominees for Board of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" of the 2003 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 55 Vice President, Information Systems
Terry R. Colvin 47 Vice President, Human Resources
David R. Harvey 63 Chairman, President and Chief
Executive Officer
Michael R. Hogan 49 Chief Financial Officer, Chief
Administrative Officer and Secretary
David W. Julien 48 President, Biotechnology
Rodney L. Kelley 49 Vice President, Quality and Safety
James W. Meteer 52 Vice President, Process Improvement
Karen J. Miller 45 Controller
Jai P. Nagarkatti 56 President, Scientific Research
Kirk A. Richter 56 Treasurer
Frank D. Wicks 49 President, Fine Chemicals
There is no family relationship between any of the officers or directors.
Mr. Blazevich has been Vice President, Information Systems of the Company for
more than five years.
Mr. Colvin has been Vice President, Human Resources of the Company for more than
five years.
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 has been President of the Company for more than five years.
Mr. Hogan joined the Company 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 Process Improvement 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 1996 through March 1999.
Mr. Julien was named President of the Biotechnology unit of the Company in
November 1999. Previously he served as President of Sigma from August 1998 to
November 1999 and as Vice President of Sigma from November 1995 to August 1998.
Mr. Kelley was elected Vice President, Quality and Safety of the Company in
August of 1998. He served as Director of Safety for over four years prior to
August 1998.
Mr. Meteer has been Vice President, Process Improvement of the Company for more
than five years.
Ms. Miller has been Controller of the Company for more than five years.
Dr. Nagarkatti was named President of the Scientific Research unit of the
Company in December 2002. He had served as President of the Fine Chemicals unit
from November 1999 to December 2002. Previously, he had served as President of
Aldrich for more than five years.
Mr. Richter has been Treasurer of the Company for more than five years.
Dr. Wicks was named President of the Fine Chemicals unit of the Company in
December 2002. He had served as President of the Scientific Research unit from
November 1999 to
8
December 2002 and 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 2003 Proxy Statement is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Information under the captions "Security Ownership of Directors, Executive
Officers and Principal Beneficial Owners" and "Equity Compensation Plan
Information" of the 2003 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information under the caption "Director Compensation and Transactions" of
the 2003 Proxy Statement is incorporated herein by reference.
Item 14. Controls and Procedures.
(a) Evaluation of disclosure controls and procedures. The Company's Chief
Executive Officer and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures (as defined in Exchange Act
Rule 13a-14(c) or 15d-14(c)) are sufficiently effective to ensure that the
information required to be disclosed by the Company in the reports it
files under the Exchange Act is gathered, analyzed and disclosed with
adequate timeliness, accuracy and completeness, based on an evaluation of
such controls and procedures conducted within 90 days prior to the filing
date of this report.
b) Changes in internal controls. There have been no significant changes in
the Company's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the
evaluation referred to above.
PART IV
Item 15. 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 on page F-1 of this report. Those
pages of the Company's 2002 Annual Report listed in such Index are
hereby incorporated by reference.
2. 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.
3. Exhibits.
See Index to Exhibits on page F-2 of this report.
9
(b) Reports on Form 8-K:
A Form 8-K was filed on October 1, 2002 under items 5 and 7 that included,
among other things, an agreement in principle to settle U.S. Commerce
Department export allegations.
A Form 8-K was filed on December 16, 2002 under items 5 and 7 that
included, among other things, a change in organizational responsibilities
among the Company's existing executive staff to coincide with the latest
revisions in the Company's ongoing implementation of its strategic plan.
A Form 8-K was filed on December 19, 2002 under items 5 and 7 that
included, among other things, the sale of the Company's Milwaukee
production facility to the Wisconsin Department of Transportation
(WISDOT).
10
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 21, 2003
-------------------------------------- --------------
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 re-substitution, 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 21, 2003
------------------------------------------ --------------
David R. Harvey, Director, Chairman, Date
President and Chief Executive Officer
By /s/ Karen J. Miller March 21, 2003
------------------------------------------ --------------
Karen J. Miller, Controller Date
By /s/ Michael R. Hogan March 21, 2003
------------------------------------------ --------------
Michael R. Hogan, Chief Financial Officer, Date
Chief Administrative Officer and Secretary
By /s/ D. Dean Spatz March 21, 2003
------------------------------------------ --------------
D. Dean Spatz, Director Date
By /s/ Nina V. Fedoroff March 21, 2003
------------------------------------------ --------------
Nina V. Fedoroff, Director Date
By /s/ W. Lee McCollum March 21, 2003
------------------------------------------ --------------
W. Lee McCollum, Director Date
By /s/ Jerome W. Sandweiss March 21, 2003
------------------------------------------ --------------
Jerome W. Sandweiss, Director Date
11
CEO FORM 10-K CERTIFICATION
I, David R. Harvey, certify that:
1. I have reviewed this annual report on Form 10-K of Sigma-Aldrich
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 21, 2003
/s/ David R. Harvey
-----------------------------
David R. Harvey
Chairman, President and Chief
Executive Officer
12
CFO FORM 10-K CERTIFICATION
I, Michael R. Hogan, certify that:
1. I have reviewed this annual report on Form 10-K of Sigma-Aldrich
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 21, 2003
/s/ Michael R. Hogan
---------------------------
Michael R. Hogan
Chief Administrative Officer and
Chief Financial Officer
13
SIGMA-ALDRICH CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page Number
Reference
Annual Report
to Shareholders
---------------
Management's discussion and analysis 17-23
Market risk disclosure 22
FINANCIAL STATEMENTS:
Consolidated Balance Sheets
December 31, 2002 and 2001 25
Consolidated statements for the years
ended December 31, 2002, 2001 and 2000
Income 24
Stockholders' Equity 26
Cash Flows 27
Notes to consolidated financial statements 28-39
Report of independent public accountants 39
Selected financial data, including Common
Stock Data and related stockholder information,
Annual Financial Data for the five years ended
December 31, 2002 and Quarterly Financial Data
for the quarterly periods in 2002 and 2001 40
F-1
INDEX TO EXHIBITS
These Exhibits are numbered in accordance with the Exhibit Table of Item 601 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 quarter 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 quarter 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 - Incorporated by reference to Exhibit 3(b) of Form
10-K for the year ended December 31, 2001, Commission File number 0-8135.
4 Instruments Defining the Rights of Shareholders, Including Indentures:
(a) Certificate of Incorporation and Amendments See Exhibit 3(a) above.
(b) By-Laws as amended 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. - 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.
10 Material Contracts:
(a) Third Amendment and Restatement of the Incentive Stock Bonus Plan* -
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.
F-2
(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* - Incorporated by reference
to Exhibit 10(e) of Form 10-K filed for the year ended December 31, 2000,
Commission File Number 0-8135.
(f) Fourth 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, 2000, Commission File Number 0-8135.
(g) Employment Agreement with Chairman and Chief Executive Officer David H.
Harvey* See exhibit 10(g).
(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* - Incorporated by reference
to Exhibit 10(i) of Form 10-K filed for the year ended December 31, 2000,
Commission File Number 0-8135.
(j) Second Amendment to Share Option Plan of 1995* - Incorporated by
reference to Exhibit 10(j) of Form 10-K filed for the year ended December
31, 2000, Commission File Number 0-8135.
(k) Third Amendment to Share Option Plan of 1995* - Incorporated by reference
to Exhibit 10(k) of Form 10-K filed for the year ended December 31, 2000,
Commission File Number 0-8135.
(l) Fourth Amendment to Share Option Plan of 1995* - Incorporated by
reference to Exhibit 10(l) of Form 10-K filed for the year ended December
31, 2000, Commission File Number 0-8135.
(m) Fifth Amendment to Share Option Plan of 1995* - Incorporated by reference
to Exhibit 10(m) of Form 10-K filed for the year ended December 31, 2000,
Commission File Number 0-8135.
(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* -
Incorporated by reference to Exhibit 10(o) of Form 10-K filed for the
year ended December 31, 2000, Commission File Number 0-8135.
(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.
(q) Form of Employee Agreement (Similar Employment Agreements also exist with
Larry S. Blazevich, Terry R. Colvin, Michael R. Hogan, David W. Julien,
Rodney L. Kelley, James W. Meteer, Karen J. Miller, Jai P. Nagarkatti,
Kirk A. Richter and Frank D. Wicks) See exhibit 10(q).
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 2002 consolidated financial statements filed as
Exhibit 13 below.
13 Pages 17-40 of the Annual Report to Shareholders for the year ended
December 31, 2002.
16 Letter Regarding Change in Certifying Accountants- Letter from Arthur
Andersen LLP to the Securities and Exchange Commission dated June 27,
2002. Incorporated by reference to Item 4 of Form 8-K filed June 28,
2002, Commission File Number 0-8135.
21 Subsidiaries of Registrant
F-3
22 Matters Submitted to Vote of Security Holders- Incorporated by reference
to Pages 20-34 of the Company's Definitive Proxy Statement filed March
26, 2003, Commission File Number 0-8135.
23 Consent of Independent Public Accountants
99.1 CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. See exhibit 99.1.
99.2 CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002. See exhibit 99.2.
*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