Statement Of Income
Statement Of Income (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Net sales | 2147.6 | 2200.7 | 2038.7 |
Cost of products sold | 1057.7 | 1070.8 | 1002.7 |
Gross profit | 1089.9 | 1129.9 | 1,036 |
Selling, general and administrative expenses | 518.1 | 561.6 | 517.1 |
Research and development expenses | 63 | 64.5 | 59.3 |
Restructuring costs | 9.2 | 0 | 0 |
Operating income | 499.6 | 503.8 | 459.6 |
Interest, net | 10 | 14.3 | 22 |
Income before income taxes | 489.6 | 489.5 | 437.6 |
Provision for income taxes | 142.9 | 148 | 126.5 |
Net income | 346.7 | 341.5 | 311.1 |
Weighted average number of shares outstanding - Basic (in millions) | 121.9 | 126.3 | 130.6 |
Weighted average number of shares outstanding - Diluted (in millions) | 123.7 | 128.8 | 133.1 |
Net income per share - Basic | 2.84 | 2.7 | 2.38 |
Net income per share - Diluted | 2.8 | 2.65 | 2.34 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | Dec. 31, 2009
| Dec. 31, 2008
|
Current assets: | ||
Cash and cash equivalents | 372.5 | 251.8 |
Accounts receivable | 285.2 | 269.8 |
Inventories | 609 | 661.8 |
Deferred taxes | 53.3 | 45.9 |
Other current assets | 63.5 | 79.9 |
Total current assets | 1383.5 | 1309.2 |
Property, plant and equipment: | ||
Land | 49 | 49 |
Buildings and improvements | 694.7 | 674.6 |
Machinery and equipment | 800.2 | 757.5 |
Construction in progress | 107.9 | 41.4 |
Less - accumulated depreciation | -942.9 | -862.1 |
Property, plant and equipment, net | 708.9 | 660.4 |
Goodwill, net | 400.7 | 388.3 |
Intangibles, net | 129.3 | 120.6 |
Other assets | 91.4 | 78 |
Total assets | 2713.8 | 2556.5 |
Current liabilities: | ||
Notes payable and current maturities of long-term debt | 476.5 | 528.8 |
Accounts payable | 112.4 | 114.6 |
Payroll | 51 | 58.6 |
Income taxes | 42.2 | 41.1 |
Other | 59.8 | 50.8 |
Total current liabilities | 741.9 | 793.9 |
Long-term debt | 100 | 200.1 |
Pension and post-retirement benefits | 93.9 | 92.6 |
Deferred taxes | 22.5 | 18.6 |
Other liabilities | 69.5 | 72.1 |
Total liabilities | 1027.8 | 1177.3 |
Stockholders' equity: | ||
Common stock, $1.00 par value; 300.0 million shares authorized; 201.8 million shares issued at December 31, 2009 and 2008; 121.7 million and 122.1 million shares outstanding at December 31, 2009 and 2008, respectively | 201.8 | 201.8 |
Capital in excess of par value | 152.8 | 133 |
Common stock in treasury, at cost, 80.0 million and 79.7 million shares at December 31, 2009 and 2008, respectively | (1,983) | -1935.3 |
Retained earnings | 3230.4 | 2954.4 |
Accumulated other comprehensive income | 84 | 25.3 |
Total stockholders' equity | 1,686 | 1379.2 |
Total liabilities and stockholders' equity | 2713.8 | 2556.5 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Share data in Millions, except Per Share data | Dec. 31, 2009
| Dec. 31, 2008
|
Common stock, par value | $1 | $1 |
Common stock, shares authorized | 300 | 300 |
Common stock, shares issued | 201.8 | 201.8 |
Common stock, shares outstanding | 121.7 | 122.1 |
Common stock in treasury, shares | 80 | 79.7 |
Statement Of Stockholders' Equi
Statement Of Stockholders' Equity (USD $) | ||||||
In Millions | Common Stock
| Capital in Excess of Par Value
| Common Stock in Treasury
| Retained Earnings
| Accumulated Other Comprehensive Income/(Loss)
| Total
|
Beginning Balance at Dec. 31, 2006 | 201.8 | 69.8 | ||||
Beginning Balance at Dec. 31, 2006 | 201.8 | 79.1 | -1375.4 | 2424.7 | 80.7 | 1410.9 |
Net income | 311.1 | 311.1 | ||||
Other comprehensive income - Foreign currency translation | 71.5 | 71.5 | ||||
Pension and Post Retirement | 8.4 | 8.4 | ||||
Unrealized gain (loss) on securities, net | -0.7 | -0.7 | ||||
Dividends ($.58 in 2009, $.52 in 2008 and $.46 in 2007 per share) | (60) | (60) | ||||
Shares exchanged for stock options | -0.9 | -0.9 | ||||
Exercise of stock options | 17.3 | 24 | 41.3 | |||
Restricted stock grant | 0.7 | 1.6 | 2.3 | |||
Stock-based compensation expense | 13.5 | 13.5 | ||||
Stock repurchases | -184.3 | -184.3 | ||||
Adjustment to initially apply FIN 48 | 3.5 | 3.5 | ||||
Exercise of stock options | -1.4 | |||||
Stock repurchases | 4 | |||||
Ending Balance at Dec. 31, 2007 | 201.8 | 109.7 | -1534.1 | 2679.3 | 159.9 | 1616.6 |
Ending Balance at Dec. 31, 2007 | 201.8 | 72.4 | ||||
Net income | 341.5 | 341.5 | ||||
Other comprehensive income - Foreign currency translation | -86.4 | -86.4 | ||||
Pension and Post Retirement | -42.2 | -42.2 | ||||
Unrealized gain (loss) on securities, net | (6) | (6) | ||||
Adjustment to initially apply the measurement date features of Statement of Financial Accounting Standards No. 158, net of tax | (1) | (1) | ||||
Dividends ($.58 in 2009, $.52 in 2008 and $.46 in 2007 per share) | -65.4 | -65.4 | ||||
Shares exchanged for stock options | -0.6 | -0.6 | ||||
Exercise of stock options | 15 | 18.1 | 33.1 | |||
Restricted stock grant | 1.6 | 1.9 | 3.5 | |||
Stock-based compensation expense | 7.3 | 7.3 | ||||
Stock repurchases | -421.2 | -421.2 | ||||
Exercise of stock options | (1) | |||||
Stock repurchases | 8.3 | |||||
Ending Balance at Dec. 31, 2008 | 201.8 | 133 | -1935.3 | 2954.4 | 25.3 | 1379.2 |
Ending Balance at Dec. 31, 2008 | 201.8 | 79.7 | ||||
Net income | 346.7 | 346.7 | ||||
Other comprehensive income - Foreign currency translation | 55.4 | 55.4 | ||||
Pension and Post Retirement | 2.8 | 2.8 | ||||
Unrealized gain (loss) on securities, net | 0.5 | 0.5 | ||||
Dividends ($.58 in 2009, $.52 in 2008 and $.46 in 2007 per share) | -70.7 | -70.7 | ||||
Shares exchanged for stock options | -0.9 | -0.9 | ||||
Exercise of stock options | 14.5 | 16.5 | 31 | |||
Restricted stock grant | 2.1 | 3 | 5.1 | |||
Stock-based compensation expense | 6.4 | 6.4 | ||||
Stock repurchases | -67.2 | -67.2 | ||||
Minority interest purchase | -2.3 | -2.3 | ||||
Exercise of stock options | -1.1 | |||||
Stock repurchases | 1.4 | |||||
Ending Balance at Dec. 31, 2009 | 201.8 | 152.8 | ($1,983) | 3230.4 | $84 | $1,686 |
Ending Balance at Dec. 31, 2009 | 201.8 | 80 |
2_Statement Of Stockholders' Eq
Statement Of Stockholders' Equity (Parenthetical) (USD $) | |||
1/1/2009 - 12/31/2009
| 1/1/2008 - 12/31/2008
| 1/1/2007 - 12/31/2007
| |
Dividends, per share | 0.58 | 0.52 | 0.46 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||
In Millions | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash flows from operating activities: | |||
Net income | 346.7 | 341.5 | 311.1 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 92.4 | 98.6 | 97.8 |
Deferred taxes | -6.8 | 18.1 | -21.7 |
Stock-based compensation expense | 17 | 12.2 | 19 |
Restructuring costs | 9.1 | 0 | 0 |
Loss on investments, net | 0 | 5.3 | 0.2 |
Other | 3.1 | 1.7 | -2.6 |
Changes in operating assets and liabilities: | |||
Accounts receivable | -8.7 | (4) | -7.3 |
Inventories | 71.2 | -37.5 | -25.2 |
Accounts payable | -5.2 | -12.2 | 26.8 |
Income taxes | -5.3 | -0.1 | 25 |
Pension obligation | -0.3 | -20.6 | 2.6 |
Other | 2.5 | 1 | -8.7 |
Net cash provided by operating activities | 515.7 | 404 | 417 |
Cash flows from investing activities: | |||
Property, plant and equipment additions | -119.9 | -89.9 | -77.6 |
Purchases of investments | -25.1 | -1.1 | -8.6 |
Proceeds from sale of investments | 8.1 | 11.6 | 8.8 |
Acquisitions of businesses, net of cash acquired | (6) | -6.1 | -67.6 |
Purchases of technology | -19.2 | -1.3 | -5.4 |
Other, net | 2.6 | 0.1 | 1.4 |
Net cash used in investing activities | -159.5 | -86.7 | (149) |
Cash flows from financing activities: | |||
Net issuance/(repayment) of short-term debt | -134.7 | 270.5 | 61.8 |
Repayment of long-term debt | -6.9 | (90) | -69.7 |
Payment of dividends | -70.7 | -65.4 | (60) |
Treasury stock purchases | -67.2 | -421.2 | -184.3 |
Exercise of stock options | 23.3 | 23.8 | 32.4 |
Excess tax benefits from stock-based compensation | 5.9 | 8.4 | 7.8 |
Net cash used in financing activities | -250.3 | -273.9 | (212) |
Effect of exchange rate changes on cash | 14.8 | -29.2 | 7.8 |
Net change in cash and cash equivalents | 120.7 | 14.2 | 63.8 |
Cash and cash equivalents at beginning of year | 251.8 | 237.6 | 173.8 |
Cash and cash equivalents at end of year | 372.5 | 251.8 | 237.6 |
Supplemental disclosures of cash flow information: | |||
Income taxes paid | 145.4 | 120.2 | 113.9 |
Interest paid, net of capitalized interest | 13.3 | 23.1 | 29.6 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Sigma-Aldrich Corporation (the Company) develops, manufactures, purchases and distributes a broad range of high quality biochemicals and organic chemicals throughout the world. These chemical products and kits are used in scientific research, including genomic and proteomic research, biotechnology, pharmaceutical development and as key components in pharmaceutical, diagnostic and other high technology manufacturing. 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 instruments carrying value, except as described in Note 6. Revenue Revenue, which includes shipping and handling fees billed to customers, is recognized upon transfer of title of the product to the customer, which generally occurs upon shipment to the customer, and is not dependent upon any post-shipment obligations. Research and Development Expenditures relating to the development of new products and processes, including significant improvements to existing products or processes, are expensed as incurred as research and development. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and investments with original maturities of less than three months. 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. Depreciation expense was $81.1, $87.1, and $86.1 for the years ended December31, 2009, 2008 and 2007, respectively. The Company capitalizes interest as part of the cost of constructing major facilities and equipment. Goodwill Accounting Standards Codification (ASC) Subtopic 350-20 Goodwill requires the Company to assess goodwill for impairment rather than to systematically amortize goodwill against earnings. The goodwill impairment test compares the fair value of a reporting unit to its carrying amount, including goodwill. The Company operates as one reporting unit and its fair value exceeds its carrying value, including goodwill. Therefore, the Company has determined that no impairment of goodwill existed at December31, 2009 or 2008. Long-Lived Assets Long-lived assets are reviewed for impairment whenever conditions indicate that the carrying value of assets may not be fully recoverable. Such impairment tests are based on a comparison of the undiscounted cash flows prior to income taxes to the recorded value of the asset. If impairment is indicated, the asset value is written down to its fair market value if readily determinable or its estimated fair value based on discounted cash flows. Any significant unanticipated changes in business or market conditions that vary from current expectations could have an impact on the fair value of these asse |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
ALLOWANCE FOR DOUBTFUL ACCOUNTS | NOTE 2: ALLOWANCE FOR DOUBTFUL ACCOUNTS Changes in the allowance for doubtful accounts for the years ended December31, 2009 and 2008 are as follows: 2009 2008 Balance, beginning of year $ 4.1 $ 4.4 Additions to reserves 3.4 1.4 Deductions from reserves 1.0 1.7 Balance, end of year $ 6.5 $ 4.1 |
INVENTORIES
INVENTORIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
INVENTORIES | NOTE 3: INVENTORIES The principal categories of inventories at December31, 2009 and 2008 are as follows: 2009 2008 Finished goods $ 519.6 $ 566.9 Work in process 25.8 27.2 Raw materials 63.6 67.7 Total $ 609.0 $ 661.8 Inventories are valued at the lower of cost or market. Costs for 74% of inventories are determined using a weighted average actual cost method. Costs for 26% of inventories are determined using the last-in, first-out method. If the value of all last-in, first-out inventories had been determined using the weighted average actual cost method, inventories would have been $2.1, $1.3, and $0.7 higher than reported at December31, 2009, 2008 and 2007, respectively. The Company regularly reviews inventories on hand and records a provision for slow-moving and obsolete inventory, inventory not meeting quality standards and inventory subject to expiration. The provision for slow-moving and obsolete inventory is based on current estimates of future product demand, market conditions and related management judgment. Any significant unanticipated changes in future product demand or market conditions that vary from current expectations could have an impact on the value of inventories. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
INTANGIBLE ASSETS | NOTE 4: INTANGIBLE ASSETS The Companys amortizable and unamortizable intangible assets at December31, 2009 and 2008 are as follows: Cost Accumulated Amortization 2009 2008 2009 2008 Amortizable intangible assets: Patents $ 13.1 $ 16.7 $ 6.3 $ 6.6 Licenses 38.1 20.1 6.4 5.8 Customer relationships 97.3 95.1 29.9 23.1 Technical knowledge 22.0 21.1 7.5 5.6 Other 12.9 12.5 11.8 11.4 Total amortizable intangible assets $ 183.4 $ 165.5 $ 61.9 $ 52.5 Unamortizable intangible assets: Goodwill $ 427.0 $ 414.2 $ 26.3 $ 25.9 Trademarks and trade names 15.6 15.4 7.8 7.8 Total unamortizable intangible assets $ 442.6 $ 429.6 $ 34.1 $ 33.7 The Company added $20.5 of acquired amortizable intangible assets during 2009, including adjustments for the finalization of the purchase accounting allocation of various insignificant acquisitions. The Company recorded amortization expense of $11.4, $11.5, and $11.7, for the years ended December31, 2009, 2008 and 2007, respectively, related to amortizable intangible assets with estimated useful lives ranging from one to twenty years using a straight-line method. The Company expects to record annual amortization expense for all existing intangible assets in a range from approximately $10.0 to $12.5 from 2010 through 2014. Changes in net goodwill for the years ended December31, 2009 and 2008 are as follows: 2009 2008 Balance, beginning of year $ 388.3 $ 420.3 Adjustments associated with acquisitions (0.3 ) (0.7 ) Impact of foreign exchange rates 12.7 (31.3 ) Balance, end of year $ 400.7 $ 388.3 |
NOTES PAYABLE
NOTES PAYABLE | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
NOTES PAYABLE | NOTE 5: NOTES PAYABLE Notes payable consists of the following at December31, 2009 and 2008: December31, 2009 December31, 2008 Out- standing Weighted Average Rate Out- standing Weighted Average Rate Commercial paper(1) $ 376.5 0.2 % $ 378.7 0.5 % $200.0 European revolving credit facility, due March13, 2014(2) 135.9 0.6 % Sigma-Aldrich Korea limited credit facility, due June11, 2009(3) 5.1 6.2 % Other short-term credit facilities(4) 2.2 1.5 % Total notes payable 376.5 0.2 % 521.9 0.6 % Plus current maturities of long-term debt 100.0 7.7 % 6.9 5.3 % Total notes payable and current maturities of long-term debt $ 476.5 1.8 % $ 528.8 0.6 % (1) The Company has a $450.0 five-year revolving credit facility with a syndicate of banks in the U.S. that supports the Companys commercial paper program. In October 2009, the Company received a one-year extension for a $30.0 portion of the facility which extends the maturity of the entire $450.0 to December11, 2012. At December31, 2009 and December31, 2008, the Company did not have any borrowings outstanding under this facility. The syndicated facility contains financial covenants that require the maintenance of consolidated net worth of at least $750.0 and a ratio of consolidated debt to total capitalization of no more than 55%. The Companys consolidated net worth and total consolidated debt as a percentage of total capitalization, as defined in the credit facility, were $1,538.2 and 27.3%, respectively, at December31, 2009. (2) Facility contains financial covenants that require the maintenance of consolidated net worth of at least $750.0 and a ratio of consolidated debt to total capitalization of no more than 55.0%. The Companys consolidated net worth and consolidated debt as a percentage of total capitalization, as defined in the respective agreement, were $1,538.2 and 27.3%, respectively, at December31, 2009. (3) Although the reported borrowings of the facility were due and repaid on June11, 2009, a total commitment of 20 billion Korean Won ($17.2) remains at December31, 2009. There were no outstanding borrowings under this facility at December31, 2009. (4) Although there were no borrowings under the facilities supporting this debt at December31, 2009, the facilities are available to the Company with total commitments converted into U.S. Dollars of $25.1 at December31, 2009. The Company has provided guarantees to financial institutions that are lending to certain subsidiaries for any outstanding borrowings from the European revolving credit facility and the short-term credit facility of the wholly-owned Korean subsidiary. There are no existing events of default that would require the Company to honor these guarantees. |
LONG-TERM DEBT
LONG-TERM DEBT | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
LONG-TERM DEBT | NOTE 6: LONG-TERM DEBT Long-term debt consists of the following at December31, 2009 and 2008: December31, 2009 December31, 2008 Out- standing Weighted Average Rate Out- standing Weighted Average Rate Senior notes, due September12, 2010 (1) $ 100.0 7.7 % $ 100.0 7.7 % Senior notes, due December5, 2011(2) 100.0 5.1 % 100.0 5.1 % Other 7.0 5.3 % Total 200.0 6.4 % 207.0 6.4 % Less current maturities (100.0 ) 7.7 % (6.9 ) 5.3 % Total long-term debt $ 100.0 5.1 % $ 200.1 6.4 % (1) The Company, at its option, may redeem all or any portion of the $100.0 of 7.687% Senior Notes by notice to the holder and by paying a make whole amount to the holder as compensation for loss of future interest income. The note agreement contains financial covenants that require the maintenance of consolidated net worth of at least $750.0, a ratio of consolidated debt to total capitalization of no more than 55.0% and an aggregate amount of all consolidated priority debt of no more than 30.0% of consolidated net worth. Consolidated priority debt includes all unsecured debt of any subsidiary in which the Company owns a majority of the voting shares. The Companys consolidated net worth, consolidated debt as a percentage of total capitalization and consolidated priority debt as a percentage of total consolidated net worth, as defined in the respective agreement, were $1,538.2, 27.3% and 0.0%, respectively, at December31, 2009. (2) The Company, at its option, may redeem all or any portion of the $100.0 of 5.11% Senior Notes by notice to the holder and by paying a make whole amount to the holder as compensation for loss of future interest income. The note agreement contains financial covenants that require a ratio of consolidated debt to total capitalization of no more than 60.0% and an aggregate amount of all consolidated priority debt of no more than 30.0% of consolidated net worth. The Companys consolidated debt as a percentage of total capitalization and consolidated priority debt as a percentage of total consolidated net worth, as defined in the respective agreement, were 25.5% and 0.0%, respectively, at December31, 2009. Total interest expense incurred on short-term and long-term debt, net of amounts capitalized, was $12.3, $21.0, and $28.9 in 2009, 2008, and 2007, respectively. The fair value of long-term debt, as calculated using the aggregate cash flows from principal and interest payments over the life of the debt, was approximately $205.8 and $221.4 at December31, 2009 and 2008, respectively, based upon a discounted cash flow analysis using current market interest rates. |
FINANCIAL DERIVATIVES AND RISK
FINANCIAL DERIVATIVES AND RISK MANAGEMENT | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
FINANCIAL DERIVATIVES AND RISK MANAGEMENT | 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 Companys 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. None of the contracts have been designated as hedges for accounting purposes. The Company does not enter into foreign currency transactions for speculative trading purposes. The principal forward currency exchange contracts are for the Euro, Swiss franc, Israeli shekel, British pound, and Chinese yuan. These contracts are recorded at fair value and are included in other current assets and liabilities. Resulting gains and losses are recorded in selling, general and administrative expenses and are partially or completely offset by changes in the value of related exposures. The duration of the contracts typically does not exceed six months. The Company continues to assess the potential impact of recent trends in the global economic environment on the availability of and its access to these forward currency exchange contracts in the open market, as well as the ability of the counterparties to meet their obligations. Given that a majority of the forward exchange contracts are in currencies such as the U.S. dollar, Euro and British pound, management does not believe that a significant risk exists of these forward contracts becoming unavailable in the global marketplace within the next 12 months. The notional amount of open forward exchange contracts at December31, 2009 and 2008 was $128.1 and $210.1, respectively. The fair value of these contracts was immaterial at December31, 2009 and 2008. |
LEASE COMMITMENTS
LEASE COMMITMENTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
LEASE COMMITMENTS | 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 expense was $39.3, $41.4, and $36.6 in 2009, 2008 and 2007, respectively. Minimum rental commitments for non-cancelable leases in effect at December31, 2009, are as follows: 2010 $ 37.0 2011 29.0 2012 21.8 2013 13.6 2014 10.4 2015 and thereafter 16.0 |
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
RESTRUCTURING ACTIVITIES | NOTE 9: RESTRUCTURING ACTIVITIES In 2009 the Company committed to a restructuring plan that includes exit activities at five manufacturing sites in the U.S. and Europe. The Company expects to complete these activities over the next 1218 months. These exit activities impact approximately 200 employees and are intended to reduce the Companys fixed cost structure and better align its global manufacturing and distribution footprint. Additionally, in 2009 the Company initiated a voluntary retirement program that was accepted by approximately 90 eligible U.S. employees as part of its cost reduction and long-term profit enhancement initiatives. The Company expects to further reduce its workforce by approximately 100 people, some of these actions have already occurred in 2010. The remaining reductions will take place over the next twelve months. Once fully implemented, the Company expects annual savings associated with these activities in a range from $15.0 to $20.0. The Company will continue to pursue actions as needed to reduce its fixed cost structure. The Company expects that the execution of these activities will result in additional pre-tax restructure costs of approximately $21.8 to be recorded in the next 12-18 months. The following provides a summary of total costs incurred during 2009 and total expected costs associated with these activities by major type of cost: Incurredduring the year ended December31,2009 Totalestimated amountexpected to be incurred Employee termination benefits $ 5.5 $ 21.0 Other restructuring costs 3.7 10.0 Total restructuring costs $ 9.2 $ 31.0 Employee termination benefits primarily include pension and post-retirement benefit plan charges related to the voluntary retirement program, as well as payments to employees impacted by facility exit and other cost reduction activities. Other restructuring costs relate mainly to changes in the expected useful life of the assets impacted by these restructuring activities. The following is a rollforward of the liabilities associated with the restructuring activities, since the inception of the plan. The liabilities are reported as a component of either other accrued payroll and payroll taxes or other liabilities in the accompanying consolidated balance sheets. Employee Termination Benefits Other Restructuring Costs Total Charges $ 5.5 $ 3.7 $ 9.2 Transferred to pension and other post-retirement benefit plans (3.7 ) (3.7 ) Payments and other adjustments (0.1 ) (2.9 ) (3.0 ) Balance as of December31, 2009 $ 1.7 $ 0.8 $ 2.5 For a further description of the impacts to the pension and other post-retirement benefit plans, see Note 14 Pension and Other Post-Retirement Benefit Plans - to the consolidated financial statements |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
INCOME TAXES | NOTE 10: INCOME TAXES The components of income before income taxes consisted of the following for the years ended December31: 2009 2008 2007 United States operations $ 319.8 $ 321.4 $ 286.6 International operations 169.8 168.1 151.0 Total income before taxes $ 489.6 $ 489.5 $ 437.6 The provision for income taxes consists of the following for years ended December31: 2009 2008 2007 Current: Federal $ 95.5 $ 91.6 $ 86.4 State and local 7.9 7.2 7.4 International 41.5 28.4 65.0 Total current 144.9 127.2 158.8 Deferred: Federal (6.1 ) 9.4 (18.1 ) State and local (0.6 ) 0.7 (0.5 ) International 4.7 10.7 (13.7 ) Total deferred (2.0 ) 20.8 (32.3 ) Provision for income taxes $ 142.9 $ 148.0 $ 126.5 The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and the Companys effective tax rate are as follows for years ended December31: 2009 2008 2007 Statutory tax rate 35.0 % 35.0 % 35.0 % U.S. manufacturing deduction (1.5 ) (1.3 ) (2.1 ) State and local income taxes, net of federal benefit 1.0 1.0 1.0 Research and development credits (0.7 ) (0.7 ) (0.8 ) International taxes (4.3 ) (4.8 ) (4.9 ) Tax audits and unrecognized tax positions (0.7 ) 0.2 Other, net 0.4 0.8 0.7 Total effective tax rate 29.2 % 30.2 % 28.9 % The international taxes benefit is primarily the result of lower statutory tax rates for our international operations and international restructurings. The tax audits and unrecognized tax positions provided a net benefit from statute of limitation expirations and audit activity in 2009. Undistributed earnings of the Companys international subsidiaries amounted to approximately $552.0 at December31, 2009. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries. The Company may periodically make distributions from its international subsidiaries to its U.S. parent. These distributions will only be made at such time that they are deemed to be tax efficient. As such, the Company does not anticipate that distribution will result in any significant increase to its U.S. tax liability above that which has been previously recorded. Deferred income tax provisions reflect the effect of temporary differences between consolidated financial statement and tax reporting of income and expense items. The net deferred tax assets/liabilities at December31, 2009 and 2008, respectively, result from the following tempora |
CONTINGENT LIABILITIES AND COMM
CONTINGENT LIABILITIES AND COMMITMENTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
CONTINGENT LIABILITIES AND COMMITMENTS | NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTS The Company is involved in legal proceedings generally incidental to its business, as described below: Insurance and Other Contingent Liabilities and Commitments The Company is a defendant in several lawsuits and claims related to the normal conduct of its business, including lawsuits and claims related to product liability and personal injury matters. The Company accrues for such liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. The Company has self-insured retention limits and has obtained insurance to provide coverage above the self-insured limits for product liability and personal injury claims, subject to certain limitations and exclusions. Reserves have been provided to cover expected payments for these self-insured amounts at December31, 2009. In one group of lawsuits and claims, the Company, as well as others engaged in manufacturing and distributing similar products, was a defendant in multiple claims alleging injuries from exposure to various chemicals by a limited number of employees of one electronics manufacturer. These claims were filed in three states. A global settlement has been reached for all cases, which has been approved by the court. The settlement is not significant to the Companys consolidated financial statements. In another group of lawsuits and claims, the Company provided a product for use in research activities in developing various vaccines at pharmaceutical companies. The Company, together with other manufacturers and distributors offering the same product and several pharmaceutical companies, has been named as a defendant and served in 294 lawsuits, of which 126 lawsuits have been dismissed to date. Several of the outstanding suits have been stayed by various state and federal courts pending a decision on coverage available under a U.S. federal government relief program. No definite date has been set for this decision. In all cases, the Company believes its products in question were restricted to research use and that proper information for safe use of the products was provided to the customer. In another group of lawsuits and claims, the Company, as well as others engaged in manufacturing and distributing flavoring products, is a defendant in multiple claims alleging personal injuries from exposure to the products. The Company has been named as a defendant and served in 19 lawsuits, 15 of which have been dismissed or settled. These claims have been filed in six states. The Company is vigorously defending its rights to the claims. The Company believes it is covered by insurance for the above matters, subject to its self-insurance retention limits. A class action complaint was filed against a subsidiary of the Company in the Montgomery County, Ohio Court of Common Pleas related to a 2003 explosion in a column at the Companys Isotec facility in Miamisburg, Ohio. The case was separated into the following four phases: phase one existence of liability, phase two quantification of any compensatory damages, phase three existence of any punitive damages and ph |
COMMON STOCK
COMMON STOCK | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
COMMON STOCK | NOTE 12: COMMON STOCK The Companys 2003 Long-Term Incentive Plan (2003 LTIP), permits the granting of incentive or nonqualified stock options as well as stock appreciation rights, performance shares, restricted stock and other stock-based awards. The 2003 LTIP permits the distribution of up to 11,000,000 shares of the Companys common stock, subject to increase for any shares forfeited under the other plans after the effective date of the 2003 LTIP. Shares issued under the 2003 LTIP may be authorized and unissued shares or treasury shares. This plan permits the award of non-qualified stock options to those members of the Board of Directors who are not employees of the Company. Under this plan, a non-employee Director will receive an initial option to purchase 20,000 shares of common stock on the date of his or her initial election as a Director. Additional awards of options to purchase 10,000 shares are made to each eligible Director on the day after each annual shareholders meeting if the non-employee Director has served on the Board of Directors for at least six months. Under this plan, incentive stock options may only be granted to employees of the Company or its subsidiaries, and a participant may not hold incentive stock options with a fair market value, determined as of the grant date, in excess of $0.1 in the year in which they are first exercisable if this limitation is necessary to qualify the option as an incentive stock option. Incentive and nonqualified 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 from three months to three years following the grant date and expire ten years after the grant date. Including shares forfeited or swapped, 3,552,945 shares of the Companys common stock remain to be awarded at December31, 2009 under this plan. As of December31, 2009, the Company expects $19.9 of unrecognized expense related to nonvested stock-based compensation arrangements granted to be incurred in future periods. This expense is expected to be recognized over a weighted average period of 1.4 years. Stock-based compensation expense charged against income is included in selling, general and administrative expenses. The stock-based compensation expense for the years ended December31, 2009, 2008 and 2007 was $17.0, $12.2 and $19.0, respectively. The tax benefit related to this expense was $5.2, $3.1 and $4.1 for the years ended December31, 2009, 2008 and 2007, respectively. Stock Options The Company measures the total fair value of options on the grant date using the Black-Scholes option-pricing model. The Company then recognizes each grants total cost over the period that the options vest based on its calculated fair value. During the year ended December31, 2009, the Company granted a total of 457,470 stock options under the 2003 LTIP. The weighted-average assumptions under the Black-Scholes option-pricing model for stock option grants are as follows: 2009 2008 2007 Expected term (years) 4.6 4.7 5.9 Expected volatility 28.89 % 19.19 % 25.12 % Risk-free intere |
COMPANY OPERATIONS BY BUSINESS
COMPANY OPERATIONS BY BUSINESS UNIT | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
COMPANY OPERATIONS BY BUSINESS UNIT | NOTE 13: COMPANY OPERATIONS BY BUSINESS UNIT The Company is organized into four business units featuring the Research units of Essentials, Specialties and Biotech and the Fine Chemicals unit, SAFC, to align the Company with the customers it serves. The business unit structure is the Companys approach to serving customers and reporting sales rather than any internal division used to allocate resources. Net sales for the Companys business units are as follows: 2009 2008 2007 Research Essentials $ 417.5 $ 420.9 $ 390.7 Research Specialties 793.4 824.1 753.5 Research Biotech 332.3 332.2 302.0 Research Chemicals 1,543.2 1,577.2 1,446.2 SAFC 604.4 623.5 592.5 Total $ 2,147.6 $ 2,200.7 $ 2,038.7 The Companys Chief Operating Decision Maker and Board of Directors review profit and loss information on a consolidated basis to assess performance, make overall operating decisions and make resource allocations. The Companys business units are closely interrelated in their activities and share services such as order entry, billing, technical services, Internet, purchasing and inventory control and share production and distribution facilities. Additionally, these units are supported by centralized functional areas such as finance, human resources, quality, safety and compliance and information technology. Further, the Companys Chief Operating Decision Maker, Chief Financial Officer and Business Unit Presidents participate in compensation programs which reward performance based upon consolidated Company results for sales growth, operating income growth, return on equity and return on assets. Certain Business Unit Presidents also have a modest component of their compensation program based on their respective business unit sales growth in addition to consolidated sales growth. Based on these factors, the Company concludes that it operates in one segment. Sales are attributed to countries based upon the location of product shipped. 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 2009 $ 34.8 2008 $ 31.5 2007 $ 30.5 Geographic financial information is as follows: 2009 2008 2007 Net sales to unaffiliated customers: United States $ 784.8 $ 794.6 $ 756.3 United Kingdom 148.2 176.6 212.7 Germany 236.3 232.9 195.5 Other International 978.3 996.6 874.2 Total $ 2,147.6 $ 2,200.7 $ 2,038.7 Long-lived assets at December 31: United States $ 472.0 $ 440.2 $ 466.3 International 284.2 254.6 268.7 Total $ 756.2 $ 694.8 $ 735.0 |
PENSION AND OTHER POST-RETIREME
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS | NOTE 14: PENSION AND OTHER POST-RETIREMENT 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 post-retirement medical benefit plans covering some of its U.S. employees. Benefits are subject to deductibles, co-payment provisions and coordination with benefits available under Medicare. The Company has made a determination regarding the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) that the prescription drug benefits it provides are actuarially equivalent to the benefits provided under the Act. The following chart summarizes the Consolidated Balance Sheet impact, as well as the benefit obligations, assets and funded status of the pension and post-retirement medical benefit plans: Pension Plans Post-Retirement MedicalBenefitPlans United States International 2009 2008 2009 2008 2009 2008 Reconciliation of funded status of the plans and the amounts included in the Companys Consolidated Balance Sheets at December31: Change in benefit obligations Beginning obligations $ 108.6 $ 99.2 $ 180.8 $ 186.7 $ 41.8 $ 38.9 Adjustments due to adoption of FAS 158 0.3 1.2 0.2 Service cost 6.2 5.8 6.6 8.0 1.0 1.0 Interest cost 6.5 6.0 7.6 7.9 2.6 2.4 Plan participant contributions 2.4 2.6 0.9 0.7 Special termination benefits 3.0 0.7 Benefits and expenses paid (5.8 ) (4.6 ) (5.9 ) (3.1 ) (2.5 ) (2.7 ) Actuarial loss (gain) 30.0 (1) 1.9 4.3 (11.5 ) 1.5 1.3 Exchange rate changes 9.5 (11.0 ) Ending obligations $ 148.5 $ 108.6 $ 205.3 $ 180.8 $ 46.0 $ 41.8 Changes in plans assets Beginning fair value $ 92.3 $ 98.9 $ 143.6 $ 168.3 $ $ Adjustments due to adoption of FAS 158 (0.7 ) 0.1 (0.1 ) Actual return on plan assets 23.0 (31.0 ) 19.5 (22.2 ) Employer contributions 15.8 29.7 9.1 9.2 1.6 2.1 Plan participant contributions 2.4 2.6 0.9 0.7 Benefits and expenses paid (5.8 ) (4.6 ) (5.9 ) (3.1 ) (2.5 ) (2.7 ) Exchange rate changes 9.0 (11.3 ) Ending fair value $ 125.3 $ 92.3 $ 177.7 $ 143.6 $ $ Reconciliation of funded s |
EARNINGS PER SHARE
EARNINGS PER SHARE | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
EARNINGS PER SHARE | NOTE 15: EARNINGS PER SHARE A reconciliation of basic and diluted earnings per share, together with the related shares outstanding for the years ended December31 are as follows: 2009 2008 2007 Net income available to common shareholders $ 346.7 $ 341.5 $ 311.1 Weighted average shares ($ In Millions) Basic shares 121.9 126.3 130.6 Effect of dilutive securities options outstanding 1.8 2.5 2.5 Diluted shares 123.7 128.8 133.1 Net income per share Basic $ 2.84 $ 2.70 $ 2.38 Net income per share Diluted $ 2.80 $ 2.65 $ 2.34 Potential common shares of 0.6 and 0.3million stock options were excluded from the calculation of weighted average shares for the year ended December31, 2009 and December31, 2008, respectively, because their effect was considered to be antidilutive. |
SHARE REPURCHASES
SHARE REPURCHASES | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
SHARE REPURCHASES | NOTE 16: SHARE REPURCHASES At December31, 2009 and December31, 2008, the Company had repurchased a total of 93.7million shares and 92.3million shares, respectively. On October20, 2008, the Board of Directors authorized the repurchase of up to an additional 10.0million shares under the existing repurchase program, to be available for purchase within three years, bringing the total authorization to 100.0million shares. There were 121.7million shares outstanding as of December31, 2009. The Company expects to continue to offset the dilutive impact of issuing incentive compensation by future repurchases. Further, the Company may repurchase additional shares, but the timing and amount will depend on market conditions and other factors. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
ACCUMULATED OTHER COMPREHENSIVE INCOME | NOTE 17: ACCUMULATED OTHER COMPREHENSIVE INCOME Components of accumulated other comprehensive income, net of tax are as follows: ForeignCurrency TranslationAdjustment UnrealizedGain(Loss) on Securities Pensionand Post-Retirement Benefit Plans AccumulatedOther ComprehensiveIncome Balance, December31, 2006 $ 107.3 $ 4.1 $ (30.7 ) $ 80.7 Current period change 71.5 (0.7 ) 8.4 79.2 Balance, December31, 2007 178.8 3.4 (22.3 ) 159.9 Current period change (86.4 ) (6.0 ) (42.2 ) (134.6 ) Balance, December31, 2008 92.4 (2.6 ) (64.5 ) 25.3 Current period change 55.4 0.5 2.8 58.7 Balance, December31, 2009 $ 147.8 $ (2.1 ) $ (61.7 ) $ 84.0 The 2009 activity for unrealized loss on securities is net of tax of $0.3. The 2009 pension and post-retirement benefit plans activity is net of tax of $3.1. Deferred taxes are not provided on foreign currency translation adjustment. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
SUBSEQUENT EVENTS | NOTE 18: SUBSEQUENT EVENTS The Company has evaluated events and transactions subsequent to December31, 2009 through February10, 2010, the date the financial statements were filed with the SEC as part of this Form 10-K. No events required recognition in the consolidated financial statements or disclosures by the Company. |
Document Information
Document Information | |
12 Months Ended
Dec. 31, 2009 USD / shares | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Jan. 31, 2010
| Jun. 30, 2009
| |
Trading Symbol | SIAL | ||
Entity Registrant Name | SIGMA ALDRICH CORP | ||
Entity Central Index Key | 0000090185 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 121,772,581 | ||
Entity Public Float | $5,927,659,830 |