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3050 Spruce Street, St. Louis, Missouri 63103 sigma-aldrich.com

2009 Annual R epor t

Enabling Science to Improve Quality of Life

Service

Innovation

Trust

The CompanyEnabling Science to Improve Quality of Life: Sigma-Aldrich has the unrivalled scientific knowledge, backed by unsurpassed service and market-leading innovation, to be the trusted global partner of choice for our customers.

About Sigma-Aldrich Sigma-Aldrich is a leading Life Science and High Technology Materials company. Its biochemical and organic 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. The Company has customers in life science companies, university and government institutions, hospitals and in industry. Over one million scientists and technologists use its products. Sigma-Aldrich operates in 38 countries and has 7,700 employees providing excellent service worldwide. Sigma-Aldrich is committed to Accelerating Customer Success through Innovation and Leadership in Life Science, High Technology Materials and Service.

• Pharmaceutical, Diagnostics, Biotechnology Companies• Chemical and Allied Industrial Companies• Universities, Government Institutions, Not-for-Pro�t Organizations• Hospitals and Commercial Laboratories

CustomersApproximately one million individual customers worldwide in over 92,000 accounts.(% of 2009 total sales)

35%27%

31%

7%

• Chemicals (48,000 manufactured)• Laboratory equipment Items

ProductsLeading the way in the life science and high technology materials markets. (# of products)

130,000

40,000

• Research Essentials• Research Specialties• Research Biotech• SAFC

PortfolioFour customer-centric business units delivering quality products and service. (% of 2009 total sales)

37%

19%28%

16%

• United States• CAPLA (Canada, Asia Paci�c and Latin America)• Europe

Geographies Enhancing our global reach through service excellence. (% of 2009 total sales)36%

43%

21%

1,66

7

05

Sales$ Millions

06 07 08 09

1,79

8 2,03

92,

201

2,14

8

258

05

Net Income$ Millions

06 07 08 09

277 31

1 342

347

1.88

05

Net Income Per Share – Diluted$

06 07 08 09

2.05 2.

34 2.65 2.

80

21.1

05

Return on Equity%

06 07 08 09

20.9

20.6 22

.822

.8

3428

05

Stock Price Range$

06 07 08 09

4031

5638

6335

5631

188

05

Free Cash Flow*$ Millions

*Net cash provided by operations less capital expenditures

06 07 08 09

256

339

314

396



35%27%

31%

7%



130,000

40,000



37%

19%28%

16%



43%

21%

1,66

7

05

Sales$ Millions

06 07 08 09

1,79

8 2,03

92,

201

2,14

8

258

05


06 07 08 09

277 31

1 342

347

1.88

05


06 07 08 09

2.05 2.

34 2.65 2.

80

21.1

05

Return on Equity%

06 07 08 09

20.9

20.6 22

.822

.8

3428

05

Stock Price Range$

06 07 08 09

4031

5638

6335

5631

188

05



06 07 08 09

256

339

314

396



35%27%

31%

7%



130,000

40,000



37%

19%28%

16%



43%

21%

1,66

7

05

Sales$ Millions

06 07 08 09

1,79

8 2,03

92,

201

2,14

8

258

05


06 07 08 09

277 31

1 342

347

1.88

05


06 07 08 09

2.05 2.

34 2.65 2.

80

21.1

05

Return on Equity%

06 07 08 09

20.9

20.6 22

.822

.8

3428

05

Stock Price Range$

06 07 08 09

4031

5638

6335

5631

188

05



06 07 08 09

256

339

314

396

Research Biotech2009 Sales: $332 million

Key Competitors: Thermo-Fisher, Life Technologies, Millipore, Qiagen, Techne

Research Essentials2009 Sales: $418 million

Key Competitors: EMerck, Life Technologies, Thermo-Fisher, VWR, Wako

Research Specialties2009 Sales: $793 million

Key Competitors: EMerck, GE Healthcare, Roche Biomolecular, Thermo-Fisher, Wako

SAFC2009 Sales: $605 million

Key Competitors: BASF, Covidien, DSM, Evonik Degussa, Lonza

The CompanyEnabling Science to Improve Quality of Life

Gilles A. CottierPresident, SAFC

Eric M. GreenVice President & Managing Director, International

Michael C.J. Harris Managing Director, Europe, Middle East, Africa

David W. JulienPresident, Global Supply Chain

Michael F. KananVice President & Corporate Controller

George L. MillerSr. Vice President, General Counsel & Secretary

Karen J. MillerSr. Vice President, Corporate Strategy & Development

Jai P. Nagarkatti Chairman, President & Chief Executive Officer

Douglas W. Rau Vice President, Human Resources

Kirk A. Richter Vice President & Treasurer

Rakesh Sachdev Sr. Vice President, Chief Financial Officer & Chief Administrative Officer

David A. Smoller President, Research Biotech

Gerrit J.C. van den DoolVice President, Sales

Steven G. WaltonVice President, Environmental, Health & Safety

Franklin D. Wicks President, Research Specialties and Research Essentials & Managing Director, North America

Rebecca M. Bergman Vice President, New Therapies and Diagnostics, Cardiac Rhythm Management, Medtronic Inc.

George M. Church Professor of Genetics, Harvard Medical School

David R. Harvey Former Chairman of the Board

W. Lee McCollum Former Executive Vice President and Chief Financial Officer, S.C. Johnson and Son, Inc.


Avi M. Nash Managing Director, Avi Nash LLC; Former Partner, Goldman Sachs

Steven M. Paul, M.D. Former Executive Vice President for Science and Technology and Former President of the Lilly Research Laboratories of Eli Lilly and Company

J. Pedro Reinhard President, Reinhard & Associates; Former Chief Financial Officer, Dow Chemical Company

Timothy R.G. Sear Former Chairman & Chief Executive Officer, Alcon, Inc.

D. Dean Spatz Chief Executive Officer, Watasso Ventures; Former Chairman & Chief Executive Officer, Osmonics, Inc.

Barrett A. Toan Former Chairman & Chief Executive Officer, Express Scripts, Inc.

Annual Meeting Date: May 4, 2010 Time: 11:00 a.m. CDT Place: Sigma-Aldrich Life Science and High Technology Center, 2909 Laclede Ave., St. Louis, MO 63103

General Information Shares traded on NASDAQ Global Select Market, Trading symbol: SIAL

Transfer Agent American Stock Transfer and Trust Company, New York, NY 800-937-5449

10-K A copy of the Company’s Form 10-K annual report, as filed with the Securities and Exchange Commission, may be obtained without charge by writing to the Secretary, Sigma-Aldrich Corporation, P.O. Box 14508, St. Louis, Missouri 63178.

Corporate Offices Sigma-Aldrich Corporation 3050 Spruce Street St. Louis, Missouri 63103 800-521-8956 Fax: 314-286-7874 Email: [email protected] Website: sigma-aldrich.com

Office of the Chief Executive Board of Directors

Corporate Information

For the most up-to-date information about our Company visit our Investor Relations website at sigma-aldrich.com

Sigma-Aldrich®, Sigma®, SAGE™, CompoZr™, Ascentis®, Fluka®, Supelco®, Hydranal®, MISSION®, Prestige Antibodies®, ChemNavigator®, Material Matters™ and Aldrich® are trademarks of Sigma-Aldrich Biotechnology LP and Sigma-Aldrich Co. Sartorius Stedim Biotech® is a trademark of Sartorius Stedim Biotech GmbH. Ingenuity® is a registered trademark of Ingenuity Systems, Inc. The Scientist® is a trademark of Scientist, Inc. Facebook® is a registered trademark of Facebook Inc. Habitat for Humanity® is a registered trademark of Habitat for Humanity International.

This annual report is printed on FSC-certified paper. The pages are printed on 10% recycled stock.

Table of ConTenTs

2 To Our Shareholders 6 Build Upon Our Strengths10 Continue Our Improvement Initiatives and

Refine Our Go-to-Market Accelerators 14 Achieve Leadership in Our Markets:

Sigma-Aldrich Enterprise Strategy 18 Financials

Sigma-Aldrich products can be found on the shelves of

almost every scientific laboratory in the world. Our products

are used in scientific research and as key components in

pharmaceutical, diagnostic and other high technology

manufacturing, all of which help improve quality of life

for millions of people around the world.

Generations of scientists have come to know and

trust our quality products, unsurpassed service, innovation

and commitment to sustainability. This trust has been a key

foundation for the growth of our Company and leveraging that

trust has always been a key part of our long-term strategy.

Our Mission: Enabling science to improve quality of life.Our Vision: Be the trusted global partner of choice for our customers by building on our proven foundation of trust, service and innovation to accelerate customers’ success and deliver shareholder value.

6 10 14


2 SIGMA-ALDRICH 2009AnnuALRepoRt

Scientists founded Sigma-Aldrich with a passion for enabling new discoveries in life science and high technology materials. The core values that drive us are based on our understanding of how scientists work and their expectations. Our continued commitment to enable customers’ success has earned us the trust of researchers and production managers around the world. Sigma-Aldrich has a singular mission – Enabling Science to Improve Quality of Life, which we strive to achieve by being a supplier of innovative products used in research and manufacturing applications.

financial ResultsOur strong performance continued in 2009 with reported sales of $2.1 billion and record net income of $347 million. Each of our four customer-centric business units contributed

Sigma-Aldrich delivered another strong performance in 2009 even as we faced the most challenging economic climate in recent history. Organic sales growth and cost management more than offset a strong currency headwind and enabled us to extend our growth record in earnings per share to 35 consecutive years. We also achieved a record level of free cash flow and maintained our strong financial position. These achievements were the result of an outstanding level of commitment by our employees worldwide who made necessary adjustments to deliver short-term results while still investing to position our Company for sustainable long-term growth. We are an innovative company, strategically positioned to support evolving global research and manufacturing requirements, with strong financial resources to make the investments needed to drive future growth.

Jai nagaRkaTTiChairman, President and Chief Executive Officer

To Our Shareholders


SIGMA-ALDRICH 2009AnnuALRepoRt 3

investing for long-Term growth While many businesses reduced investments, we continued to invest for our future growth. We invested $120 million in capital expenditures and an additional $25 million to expand our tech-nology portfolio while maintaining our normal spending levels on research and development. Some of our investments in 2009 included:• A fermentation plant in Israel to make bio-

logical products conforming with regulatory requirements,

• A new state-of-the-art plant in Wisconsin to make high-potency active pharmaceutical ingredients,

• An expansion of capacity to produce compo-nents for viral vaccines in California, and

• A new distribution and warehousing center in Shanghai to support our growing business in China.

We introduced more than 40,000 new products in 2009, including over 15,000 new antibodies that are used to study and understand diseases. To build a strong position in our gene editing and manipulation products, we expanded our licens-ing agreement for the award-winning CompoZr™ Zinc Finger Nuclease (ZFN) technology to include broad commercial rights. Applying this ZFN technology in collaboration with researchers at the University of Wisconsin, we created the first targeted transgenic (genetically modified) rat model. This breakthrough in transgenic animal production has enabled us to develop and offer new human disease models for research. Under a research grant from The Michael J. Fox Founda-tion, our scientists are using this novel technology in an effort to create research models critically needed for the development of transformative treatments for Parkinson’s disease.

to our organic sales growth. In a year where the broader markets did not grow, our three research business units delivered organic sales growth of 2%. Despite facing challenging market conditions early in the year, our specialty Fine Chemical business (SAFC) finished strong with fourth-quarter organic sales growth in double digits to deliver a modest full-year growth of about 1%. Our SAFC unit benefited from our ability to rapidly manufacture and supply crucial ingredients used to produce the H1N1 flu vaccine and other biopharmaceuticals. Geographically, our sales in international markets (Canada, Asia Pacific and Latin America) continued to grow at an accelerated pace. In our focus markets of China, India and Brazil, we grew at an impressive rate of 18% on an ex-currency basis.

We were successful in expanding operating profit margins to 23.3% of sales, up from 22.9% in 2008 despite an adverse currency impact. The global supply chain initiatives, which we launched in 2007, achieved $22 million in savings and were an important contributor to margin expansion. We achieved a new high of $2.80 in diluted earnings per share, a growth rate of 21% excluding the impact of currency changes. Our return on equity of 23% exceeded our long-term goal of 20% for the seventh consecutive year and free cash flow of $396 million set a new record. The Company’s financial position has never been stronger, and gives us the flexibility to make sig-nificant investments to fund future growth.

As a result of strong earnings, we once again increased our dividend for the 35th consecutive year as we returned $71 million to shareholders. We also spent $67 million to repurchase our shares. Every year, we strive to continue earning your confidence and trust through our performance.



January

Launch of Your Favorite Gene powered by Ingenuity provides scientists access to dynamic library of life science research; Company honored with CIO 100 award.

March

New web portal provides the stem cell biology community with easy access to stem cell product portfolio.

Expanded presence in the Republic of Chile provides local service to research and manufacturing customers.

april

Sigma-Aldrich and Roche NimbleGen combine technol-ogy platforms to advance the development of drugs for epigenetic research.

2009 year in review

segments of environmental, food safety and bioanalytical testing;

• Targeting high-growth Biology segments with new products and technology where we have proven capabilities or a unique technology platform. We recently unveiled our new Sigma® Life Science brand and website, designed to elevate the current focus on biology and provide a single destination where researchers can access deep biological knowledge and market-leading products and technologies. Our biology product offering is broad and includes the world’s largest custom oligonucleotide service, a growing portfolio of more than 26,000 monoclonal and polyclonal antibodies, the largest number of bioactive small molecules in the market, peptides and proteins for cell biology and neuroscience research, cutting-edge gene silencing prod-ucts and novel rodent models of human disease developed using the CompoZr™ ZFN technology; and,

• Accelerating our focus and growth in the Mate-rials Science segment of the chemistry market with new applications for alternative energy, organic and micro-electronics, specialized polymers, high purity metals, nanomaterials and biocompatible products.

We continued to invest in e-commerce capabilities to maintain our superiority by increasing the func-tionality, speed and content of our website. Global research sales through e-commerce channels rose to 45% of total research sales, up from 42% one year ago. With the mid-year acquisition of ChemNavigator®, a leading provider of discovery research informatics software tools, we now have a comprehensive suite of virtual screening and selection tools and an industry-leading searchable database of over 60 million compounds.

strategy for growthOur strategies for continued top- and bottom- line growth are built on leveraging our core competencies of unrivalled scientific knowledge, broad product offering in life science and high technology materials, unique manufacturing capabilities, global sourcing, packaging and distri-bution capabilities and our process improvement culture. Having conducted an exhaustive externally- focused review of our markets and customer buying preferences, we plan to add new product-focused initiatives to leverage our core strengths in Analytical Chemistry, Biology and Chemistry-Materials Science. Elements of this strategy include: • Expanding our presence and building a

leadership position in Analytical Chemistry markets by focusing on faster-growing



July

CompoZr Zinc Finger Nucle-ase Technology used to create first targeted knockout rats.

SAFC® and Sartorius Stedim Biotech partner to provide world-class fluid management and liquid/powder systems for biopharmaceutical manufacturing.

august

New Sigma Advanced Genetic Engineer-ing (SAGE™) Labs opens to offer unique rodent models to researchers.

ChemNavigator, Inc. acquired to provide researchers industry-leading chemical compound selection and procurement services.

october

Michael J. Fox Foundation awards Sigma-Aldrich a grant to develop Parkinson’s Disease research models.

December

Targeted knockout rat ranks among The Scientist magazine’s top five innovations of 2009.

JAI NAGARkATTI

Chairman, President and Chief Executive Officer

during 2009. I welcome two senior managers who joined the team this past year. George Miller joined us as Senior Vice President, Secretary and General Counsel and Mike kanan was appointed Vice President and Controller. I also thank Tim Sear who will be retiring after the annual meeting this year for his valuable contribution as a direc-tor of our Company. We welcome Dr. George Church, Professor of Genetics at Harvard Medical School, as a new member of our board.

In closing, I thank each of our shareholders for their continued support during 2009 and look forward to a successful 2010. We have a strong company with dedicated employees who are poised to execute our strategy to propel our growth in 2010 and beyond. We can look to the future with confidence.

our futureAs we continue to expand and grow, we intend to maintain our culture of operating at the high-est level of safety and compliance. We are proud of the safety record we again achieved in 2009, with the fewest number of injuries in our history and reaching a world-class safety record in our industry. As a company, we also remain committed to advance global sustainability through the introduction of new, greener chemistry products and packaging initiatives. We have initiated Global Citizenship Awards to recognize employees who are working to reduce the environmental impact of our business opera-tions. Our employees around the world continue to be engaged in their respective communities, supporting many worthy causes. Through our Company and the Sigma-Aldrich Foundation, we contributed more than one million dollars in cash and products to support several community and educational projects, even in a challenging economic climate.

Employees have always been an integral part of our success. We strive to create an environment that offers our team the opportunity to grow and advance their careers with our Company. Nearly 400 of our employees took on additional respon-sibilities with promotions in our organization



BuilduponourStrengthsBy offering a wide range of quality products and backing that with unsurpassed service,

we have earned the trust of over a million customers around the world.

Managementteam (Top) Standing left to right: Rakesh Sachdev, Steven G. Walton, George L. Miller, Michael F. kanan, Douglas W. Rau and kirk A. Richter Seated left to right: karen J. Miller and Jai P. Nagarkatti

(Left) Standing left to right: Michael C.J. Harris, David A. Smoller, Gerrit J.C. van den Dool, Franklin D. Wicks and David W. Julien Seated left to right: Eric M. Green and Gilles A. Cottier



sources, developing alternate supply chains to ensure a seamless supply for customers.

Customer & sales support and Technical serviceOur Customer & Sales Support teams are focused on enabling research and manufacturing one customer interaction at a time. These highly trained teams play a critical role in our success by effectively and consis-tently meeting the needs of more than one million customers worldwide. Our aim is to be the most competent, proactive and collaborative Customer & Sales Support team in the scientific industry. This customer-centric strategy creates positive customer experiences that build buyer loyalty and result in a competitive advantage.

Our Technical Service teams responded to more than a half-million telephone calls, e-mails and website live chat interactions in 2009, serving as the voice of the Company and providing unrivalled scientific support that sets us apart in the industry. Customers rely on our support – scientists helping scientists – to combine expert knowledge of biology and chemistry with a passion to build personal relationships and share knowledge.

The Sigma-Aldrich Service teams respond to customers in ways that do not fall within the clas-sic definitions of service roles, including responses to natural disasters. In 2009, our SAFC Hitech team members in Taiwan worked around the clock to ensure order fulfillment despite a major typhoon there, and in Italy our office staff delivered service

Trust The most visible sign of our contribution to science is the trust placed in us by our one million custom-ers. We have gained this trust by delivering on our promise of unrivalled scientific knowledge and unsurpassed service. Sigma-Aldrich is a name that our customers, employees and the communities where we operate have come to know and trust not through our words, but through our deeds. We have a loyal customer base of researchers who value qual-ity and service and our ability to manufacture, source and distribute a broad portfolio of high quality, innovative products in a fast, efficient, compliant and sustainable manner. This trust is the foundation of our value creation model.

servicePurchasing, Production and DistributionProduct availability is one of the most important factors in our commitment to provide unsurpassed service. Our customers work diligently to make prog-ress in their critical research projects and they need our products delivered quickly no matter where they are located. As a result, we strive to maintain an inven-tory of over 170,000 products for same day shipment around the globe. We have distribution centers in 17 countries and offices in 38 countries worldwide servicing customers in more than 160 countries. The 48,000 products we manufacture provide approxi-mately 65% of our sales, with the remainder sourced through our network of over 10,000 suppliers. Each of our high-quality products, whether manufactured or procured, is analyzed and quality tested to rigid specifications before being packaged in one of our 31 plants located in 11 countries.

Our global reach is a competitive advantage in sourcing and distribution. With world-class logistics capabilities, we support customers quickly and efficiently, supplying materials they need for their research and manufacturing. As an example, in 2009, the key material Acetonitrile used in pharmaceuti-cal research, processing and quality control testing was in short global supply threatening our custom-ers’ projects. We anticipated this global shortage and took the initiative to find new non-traditional

BuilduponourStrengths



that went beyond expectations to customers after an earthquake.

On the technical side, one of our scientists co-authored an article entitled “Guidelines for qPCR Consistency,” which established an industry standard to improve the reliability of this essential research procedure. Sigma-Aldrich R&D scientists authored a technical bulletin that has become a widely accepted and trusted resource for safely han-dling air-sensitive reagents. Customers around the world depend on Sigma-Aldrich service for their critical research programs designed to improve quality of life. Our focus is to satisfy their needs.

innovation Sigma-Aldrich has a long history of successfully serv-ing the research and development community, life science and high technology manufacturers with market-leading and innovative products, service and technical support. In 2009, we added over 40,000 new products. Over 60 years ago, the Company was one of the first suppliers of adenosine triphosphate (ATP), a critical component in research at that time. Today, we are a premier supplier of cutting-edge targeted genome editing technology that holds incredible promise to help fight disease. Our unrivalled scientific knowledge enables us to be a true partner with our customers to help solve their research and manufac-turing needs. Sigma-Aldrich has unique capabilities that differentiate it in its markets and, ultimately, enable scientists to improve quality of life.

Custom ManufacturingThrough SAFC, our fine chemicals business serving manufacturing customers, we continued to expand our innovative offerings. In 2009, we expanded facili-ties in Carlsbad, California; Madison, Wisconsin; and Jerusalem, Israel to enhance commercial-scale capa-bilities. We intend to continue this trend and achieve strong growth in key niche technologies, including high potency active pharmaceutical ingredients, conjugation and components for manufacturing vac-cines. Additionally, we combined technology and our manufacturing capability in a comprehensive package for the vaccine industry, resulting in the Company

being a key supplier of raw materials for the manufac-ture of the H1N1 vaccine.

SAFC also has broad capabilities to facilitate innova-tion for its customers. From the development and production of chemically-defined hydrolysates (enabling more stable processes for biopharmaceuti-cal production) to the utilization of unique chemistry capabilities used for light-emitting diode (LED) tech-nology, the Company continues to lead innovation in the industries we serve.

Quality and consistency are critical for our commercial customers, and we continue to work closely with them to devise new ways to minimize risk to supply, ensure supply chain transparency, and reduce complexity through vendor audit services, raw material character-ization and offering our Enhanced Quality Profile program designed to elevate and standardize the quality assurance aspects for our products, ensuring consistent product performance from batch to batch.

life scienceIn 2009, we expanded our innovative portfolio of life science tools and technologies. We launched Sigma® Advanced Genetic Engineering (SAGE™) Labs to define, develop and offer a new generation of genetically-engineered rodent research models to study disease states in humans and play a key role in the drug discovery process, leveraging our CompoZr™ Zinc Finger Nuclease gene editing technology. In addition, we launched Your Favorite Gene powered by Ingenuity, to serve as an information hub for researchers and students exploring diseases,




a five-year sustainable development roadmap that creates specific targets for our global citizenship ini-tiatives. We plan to increase efficiencies in water use, waste creation and disposal and energy use with the use of worldwide tracking systems and by continuing to implement improvement strategies while simulta-neously reducing our green house gas emissions. In addition, we intend to increase efforts to deliver better environmental testing, “greener” chemistry and alter-native energy products to our customers.

We believe we are well positioned to meet our global customers’ science needs. But we will not rest on our laurels. We recognize that we must continue to enhance our unrivalled scientific knowledge and unsurpassed service with continued innovation to meet our long-term growth objectives.

Commitment to good Corporate CitizenshipAt the heart of Sigma-Aldrich’s core values is a com-mitment to our communities. Our dedication to a better quality of life can be found in the substantial contributions that the Company and its Sigma-Aldrich Foundation provide to support the advancement of science, education, innovation, thought leadership and environmental sustainability.

In 2009, Sigma-Aldrich and its employees continued to give generously to our communities. Through our Team Sigma-Aldrich program, approxi-mately 1,300 employees participated in 23 events, donating both time and money to worthwhile causes. Team Sigma-Aldrich celebrated its fifth anniversary in 2009 and introduced two new sites to the program, Castle Hill, Australia, and Oakville, Canada. The Team Sigma-Aldrich concept has proven successful because it pairs the motivations of our employees with the principles of the Sigma-Aldrich Foundation. With worthwhile causes such as Habitat for Humanity® in Lenexa, kansas and Arklow, Ireland’s commu-nity outreach program, Sigma-Aldrich employees gave back over 4,200 hours of service and support through the Team Sigma-Aldrich program in 2009. In addition, the Company and the Sigma-Aldrich Foun-dation donated approximately $1 million in products and cash in 2009.

functions and gene pathways, and to match our com-prehensive collection of products, kits and reagents to relevant biological information. As part of our strat-egy to become a leader in the antibodies market, we added over 15,000 antibodies, including 2,300 new, highly validated Prestige Antibodies®, bringing our total portfolio to more than 26,000 antibodies.

RecognitionsWe have diverse capabilities and broad scientific knowledge spanning the research workflow as well as the commercial development pipeline. Our inno-vations were recognized in 2009 by several leading scientific publications and organizations:

• Targeted knockout Rat ranked among The Scientist magazine’s top 5 innovations of 2009

• 2009 North America Healthcare Innovation Award in Drug Discovery Technologies for Emerging Markets

• Aldrichimica Acta, our premier international publication for chemical research, ranked first in Organic Chemistry by Impact Factor

• 2009 Sailing to New Heights with Logility Award for supply chain excellence

• Amgen Risk Mitigation Award

• Abbott Supplier Excellence Award

• Most useful and easiest to use online catalog – BioInformatics, LLC

Contributions to scienceSigma-Aldrich enables customers to meet their research and manufacturing needs. For more than 30 years, the Company has also recognized outstand-ing scientific contributions by making annual awards to acknowledge outstanding contributions to the fields of chromatography, original research in fats, oils, lipid chemistry, or biochemistry, creative work in syn-thetic organic chemistry, fundamental research in the field of inorganic chemistry and many others.

sustainable businessWe continued to strengthen our commitment to the communities where we live and work. We have




ContinueourImprovementInitiativesandRefineourGo-to-MarketAccelerators

Market trends are shifting and we are continually changing to strengthen our market leadership. In 2009, we added new product-based initiatives that will serve as our strategic roadmap to direct our path to profitable growth and shareholder value creation. These initiatives, which renew and refine our focus on innovation, are

intended to build upon the trust we have developed with our customers and our reputation for unsurpassed service.



fast growing Markets In 2009, our sales in markets outside the U.S. and Europe continued to expand at a rapid pace. Our strong foundation in emerging markets like India, Brazil and China rewarded us with market-leading positions in each of those countries, and a collective 18% currency adjusted sales growth over the prior year.

Our Bangalore, India research campus continues to be a testament to the success of our approach to serving global customers using a localized approach – providing the research community with the products needed, no matter where they are located in the world. In 2009, we continued expan-sion in the People’s Republic of China, adding a new distribution center to our Shanghai, Pudong location to better serve that market. In the Republic of Chile, our acquisition of a local dealer is allowing us to directly serve our research and manufacturing customers in that region.

Process improvementWe believe that process improvement helps Sigma-Aldrich accelerate our customers’ success as we reinvest our savings in new growth initiatives. We have improvement projects at all levels and in all functions of our business. As a result, 2009 marked the eighth consecutive year our efforts yielded an-nual savings exceeding $15 million in pre-tax ben-efits. In addition, we expanded our grass roots, floor level, continuous improvement program from seven to 13 sites in 2009. We will continue to build addi-tional process improvement capabilities, especially through our flagship Advanced Improver Program which trains new employees every year on the improvement culture of our Company.

global supply Chain The Global Supply Chain initiative, launched in 2007, is our single largest Company-wide process improve-ment program. Focusing on the entire supply chain, our mission is to ensure that customers have a fast and seamless supply of quality products delivered globally in the most efficient way. This initiative helps Sigma-Aldrich to not only maintain its market-leading global service levels and provide rapid introduction of innovative products, but also to grow operating profits faster than sales.

In 2009, we increased service levels to an all-time high. We added $70 million to our free cash flow by reducing inventory, resulting in a new record for free cash flow. We also generated $22 million in pre-tax savings, exceeding our targets for the second consecutive year. These efforts were accomplished through enhanced global systems, complexity reduction and implementation of leading-edge supply chain practices.

Moving forward, we plan to continue to invest in our Global Supply Chain initiative, with a focus on rapid global service, especially in emerging mar-kets, new product introduction, risk mitigation, eBusiness, and effective integration of mergers and acquisitions. Our aim is to continue to ensure that our high quality innovative products are delivered rapidly and reliably anywhere in the world.




ebusiness The use of the Internet and other digital technologies for commerce, communication and collaboration in scientific research has been the single most dynamic industry trend in the last decade. With our world-class website, Sigma-Aldrich offers outstanding scientific content, attracting over three million visi-tors each month. Sales transacted through electronic channels achieved a new high in 2009, with 45% of global research sales coming through the website and other electronic channels.

We continued to enhance the functionality of our website to better serve our customers. As an example, we added Japanese translated pages and search capabilities, developing a personalized, user-friendly experience for our customers in Japan. In addition, we introduced new web 2.0 features such as product rating and review postings for selected products to provide more information and to continue to foster trust with the scientific community. We also launched a unique life science-focused application for the social media site, Facebook. The “What’s Your Favorite Gene?” application provides a platform that can enable scientists and researchers to network with each other and facilitate discussion based on their favorite genes, identifiable via gene functionality

With facilities in 38 countries, our global footprint continues to expand, enabling science in almost every region of the world and aligning Sigma-Aldrich and its customers in the markets we serve.

In 2010 and beyond, we plan to continue to build and implement additional localized strategies, including increased sales force specialization for specific areas, and special focus on the life sciences, analytical and manufacturing markets. We plan to deploy local sourcing, analytical and packaging capabilities as we concentrate on supporting specific needs in emerging markets and build on our solid global foundation to exploit opportunities in these fast growing areas.

sales forceThe markets we serve are constantly changing. As the research and manufacturing practices of our customers evolve, we are adapting our products and the ways we reach out to these customers to meet new requirements and expectations. Our sales organization focuses on communicating to customers the new, cutting-edge technologies we offer and supplying essential basics to meet their evolving needs.

In 2010, our plan is to expand our sales coverage, concentrating on the faster-growing analytical and biology customer segments. Our sales team is con-tinually familiarizing customers with the technologies, tools and support that Sigma-Aldrich offers to help them answer their research questions. To be success-ful in the changing and diverse markets we serve, we believe that understanding evolving customer needs enables Sigma-Aldrich to deliver greater value and sales for the Company. Our goal is to provide cus-tomer-focused product and service assistance in the field for growing areas of our business and to not only maintain, but to build customer trust. Our expanded sales force seeks to provide scientists and procurement organizations access and support in the implementa-tion of their research tools and technologies.




We introduced services to assist our SAFC custom-ers in risk mitigation, ensuring supply chain integrity during 2009. We now offer vendor audit services that leverage Sigma-Aldrich’s global access to vendors and provide third-party quality audits on behalf of pharmaceutical clients. We also introduced a new initiative in 2009 to offer our expertise in chemical hazards handling and environmental health and safety via a consulting program that companies can access for employee training purposes.

For the convenience of all of our customers, we added a consolidated portal to our website to provide greater visibility of the types of comple-mentary services available, including basic research, product and process development and facilities operations.

and biological pathways. As we continually strive to improve our website and focus our online marketing efforts, we see an ever growing number of users visit-ing our website with greater frequency, staying longer and purchasing more frequently.

Looking forward, Sigma-Aldrich recognizes the need for continual investment in our web platform and is focused on better serving our customers by advanc-ing web performance, functionality and design. A newly formed Customer Insight practice serves as the foundation as we deploy a more customized and personalized experience for our research and manu-facturing customers, deliver new search and sales capabilities and create new tools to facilitate scientific research and enhance management of manufacturing projects. In addition, a new website optimized for mobile devices launched in 2010 is focused on facili-tating scientific collaboration, information sharing and networking within the scientific community.

Value-added services Our value proposition extends beyond the quality products we offer. We aim to provide our customers with complementary services that leverage our unri-valled scientific knowledge and technical expertise. We believe these value-added services help to drive the Company’s vision to be the trusted global part-ner of choice in the markets we serve.

During 2009, we added several new services to our robust portfolio. For our research customers, cell-engineering services were added to leverage Sigma-Aldrich’s proprietary gene editing tools and provide customized cell lines. A new Services Network was put into place to provide convenient access to a wide variety of laboratory-based services from certified partners. Finally, we significantly expanded the number of technology workshops available to our customers on some of the more novel technologies utilized in biotechnol-ogy research today.




AchieveLeadershipinourMarkets:Sigma-AldrichenterpriseStrategy

Sigma-Aldrich has a long history of successfully serving the scientific community with market-leading products, services and technical support. As the needs of the research and development

community evolve, we plan to change the way we satisfy customers’ needs and our product offering in an effort to remain competitive and enhance our leadership position.



tools that can support our customers’ drive to suc-ceed. To accomplish this, our Company has new strategic initiatives that are expected to help us drive innovation and expand into new markets by leveraging our core scientific strengths: Analytical Chemistry, Biology, and Chemistry-Materials Science (ABCM). Our ABCM initiatives will help us expand our product offering, open new markets and enhance our position in the areas we know best.

innovation in analytical ChemistryAnalytical chemistry has always been a core com-petency and continues to gain importance in the market as the call for environmental and food safety testing continues to rise.

Well-poised to take advantage of this expanding demand, we provide a wide breadth of innovative, high-quality analytical reagents and standards and separation consumables. Our Fluka and Supelco brands provide the highest product quality and per-formance available and come with certifications on which customers can depend.

Used in a large variety of applications, this product portfolio helps chemists determine things such as ingredients, composition, fat content, labeling requirements, purity and nutritional data in foods, beverages and other applications, including water testing, where our HYDRANAL® product is consid-ered the “gold” standard; in herbicide and pesticide

our futureThroughout the last 35 years, customers have trusted Sigma-Aldrich to provide a broad array of high-quality products, innovation and exceptional service. Our improvement culture helps us meet customer expec-tations and drives us to continually refine global operations, enhance alignment across our orga-nization and implement common systems. These well-recognized strengths run throughout our organi-zation and are an integral part of our Company’s core foundation – the solid base on which we plan to build future strategies to ensure continued success.

As our customers move research and manufactur-ing eastward, we plan to continue to expand our presence in emerging markets. To respond to the increases in pharmaceutical outsourcing, we feel we are well positioned to capture opportunities that require our unique services and technologies. Our global sales force is adjusting to ensure close align-ment with customers and to exploit and capture recent increases in government research funding. The world’s growing focus on eBusiness and the Internet is in parallel with our continual upgrades to our website that enhance the customer experience, making purchasing our products easier and provid-ing content that includes critical information the research community needs.

We see many opportunities that closely align with our Company’s core strengths. With the increased focus on energy, the environment and food safety, our high-quality Fluka® and Supelco® analytical lines and Aldrich® brand chemistry and materials science products hold great promise for growth. As research shifts its focus toward biology, Sigma Life Science offers the scientific community a leading portfolio of innovative, biological products and technologies to enable their studies of cells and cell functions, built upon the industry’s largest selection of high-quality biochemical and bioessential products and reagents – all just hours away from delivery to any lab any-where around the globe.

Our future success requires more innovative prod-ucts, faster technologies and more sophisticated


MichaelWrightApplication SpecialistBiochemistry Departmentkings College HospitalLondon, Uk

Sigma-Aldrich’s chromatography support team has been a great asset over the years. Of particular note was

their help with Ascentis® Express fused core technology which revolutionized chromatography in our laboratory. Using standard pressure HPLC systems we are now processing patient samples for various biogenic amines in less than a quarter of the time. This enables same-day lab test results to check for potential tumors, therefore less stress during an already difficult time.



• Lead the market with over 26,000 antibodies, inclu-ding the industry’s most highly-characterized, validated Prestige Antibodies®, powered by Atlas Antibodies;

• Offer the largest number of biomolecules for cell signaling research, and extensive resources in neuroscience research products; and

• Lead the market in comprehensive and innova-tive reagent sets for regenerative medicine and stem cell research.

In Functional Genomics we lead the industry with cutting-edge gene silencing products like: • MISSION® siRNAs and the largest set of validated

lentivirus based shRNA clones;

• CompoZr™ ZFN, rated number five of the top 10 scientific innovations of 2009 in The Scientist magazine, and the first technology to allow researchers to edit a targeted region of the genome of a living cell or organism; and

• Development of the first knockout rat at our SAGE™ Labs, which opened in 2009 to develop novel rodent animal models of human disease.

We continue to build our biology platform with planned, future investments to provide cutting edge products and technologies that support fast-growing research areas.

testing; in testing for dioxins and PCB’s; in monitoring air quality; and in a wide variety of other testing areas.

A close link to the pharmaceutical industry gives us advantages in providing products designed for use throughout the drug discovery and development process. Ascentis® Express, our fused-core silica chro-matography column, has proven itself far superior to a number of other separation tools in this area, and was recently recognized with an Inventors Award by CASSS Scientific Achievement.

In the future, we plan to continue to offer new and exciting analytical products and partnerships that can increase our customers’ quality or productivity without sacrificing results.

innovation in biologyLife science research continues to move toward the understanding of complex biological pathways and entire biological systems. We believe that Sigma Life Science is well positioned to provide high-growth biology segments with new products and technology platforms in this area. Our vision is to be the leading destination for life science researchers to access deep biological information and obtain market-leading products to help address their biological questions. With the launch of our new Sigma Life Science brand, we are becoming the number one place where research-ers can find help in unravelling the complex intra- and intercellular interactions within a tissue, an organ or an organism. We are appropriately positioned as the destination “where biology begins” to help life scien-tists understand life.

Our web information platform supports this proposition with robust biological information and technologies like “Your Favorite Gene” powered by Ingenuity – a dynamic, web-based biological search tool that delivers comprehensive gene-based content to model and evaluate experiments. We are a leading biomolecules provider and:• The world’s largest partner for oligonucleotide

custom services – providing high quality DNA and RNA;


VeraKlenerovaFirst Faculty of Medicine, Charles University in Prague,Prague, Czech Republic

We’ve worked with Sigma-Aldrich for more than 35 years. During that time we were interested in the basic research of various signaling

pathways, and mainly cyclic AMP, adenylyl cyclase, phosphodi-esterase and binding studies of adrenergic receptors. At present we are involved in the research of stress and drugs of abuse on behavioral as well as molecular and cellular level. Sigma chemicals have always been perfect, and we rely on them and trust them for their quality.



“Chemistry Partner” at universities, industrial com-panies and government laboratories, helping to explore technology applications in plastics, semicon-ductors, biomaterials, nanoscience, displays, solar cells and portable communication devices.

Our future plans include expanded investments in R&D and building new centers of excellence to continue on the path of innovation.

The Path aheadSigma-Aldrich has built a successful company with a long track record of value creation. The Company has a strong brand reputation and a loyal customer base. Our unrivalled scientific knowledge, ability to manufacture, source and distribute a broad portfolio of high quality products in a fast, efficient and compliant manner is the foundation of our value creation model.

Our mission is to enable science to improve quality of life. Our vision is to be the trusted global partner of choice for customers in the markets we serve. With a clearly defined strategic roadmap, we believe we can build upon our foundation of trust, innova-tion and service to accelerate customer success and continue to deliver shareholder value.

innovation in Chemistry-Materials scienceMany years ago we established our posture as a leading chemistry products supplier, a role we solidly hold today by reaching out to support the require-ments of chemists in both traditional and new scientific disciplines.

The plan for our Aldrich chemistry brand is to ag-gressively leverage and expand market leadership in boron chemistry, catalysts and organometallics and to offer a growing and increasingly important portfolio of chemistry services like sourcing, custom packaging, housing chemical libraries and chemin-formatics, which is supported by our recent purchase of ChemNavigator®, a searchable database of com-pounds used for efficient compound selection.

There is tremendous interest in advanced materials that can be used to solve the problems faced by soci-ety, such as finding environmentally benign sources of alternative energy or identifying biocompatible implants to support an aging population. We can supply many of these materials, for example, lanthanide halides used in radiation and security detection devices.

Our chemistry initiative embraces these Materials Science applications and the promises they hold for enabling discoveries. We see the opportunity to offer deep chemistry knowledge by being a


LesleyMillarDirector, Office of Technology ManagementUniversity of Illinois at Urbana-Champaign

Sigma-Aldrich reached out to the University of Illinois at Urbana-Champaign after the first publication

on the highly enabling MIDA boronate platform for small mol-ecule synthesis. Based on the Company’s outstanding track record of commercializing new reagents for chemical synthesis, we had great confidence that Sigma-Aldrich possessed the expertise and infrastructure required to make these exceptional chemical build-ing blocks readily accessible to scientists throughout the world.

professorZhenanBaoDepartment of Chemical EngineeringStanford University, Palo Alto, CA

My group has been working in organic electronics for the past fourteen years, and we can just flip through the Aldrich® Materials Sci-

ence catalog and Material Matters™ publication to get the latest materials reported in recent publications. For example, the triple sublimed pentacene allowed my group to make high performance organic transistors as potential lower cost replacements for the electronics found in e-readers and displays. The speed in bringing new products from scientific publications to market and the wide selection of new materials from Aldrich Materials Science has undoubtedly helped the field of organic electronics to progress rapidly and in ways that would be difficult without the company.

18 SIGMA-ALDRICH 2009 ANNUAL REPORT

The following performance graph compares the Company’s cumulative shareholder

return (stock price appreciation plus reinvestment of dividends) for a five year period

ended December 31, 2009, with that of the Standard & Poor’s 500 Composite Stock

Price Index and an index of the companies included in the Wall Street Journal

Specialty Chemicals Industry Group assuming that $100 was invested in each

on December 31, 2004, and that all dividends were reinvested. These indices are

only included for comparative purposes as required by Securities and Exchange

Commission rules and do not necessarily reflect management’s opinion that such

indices are an appropriate measure of the relative performance of the Company’s

common stock, and are not intended to forecast or be indicative of possible future

performance of the common stock.

The Company used as a performance graph comparison index those companies

comprising the Wall Street Journal (WSJ) Specialty Chemicals Industry Group (the

“2009 Group”). The 2009 Group includes the following companies: Avery Dennison

Corp., Cabot Corp., Cambrex Corp., Cytec Industries Inc., Ecolab Inc., Ferro Corp.,

FMC Corp., HB Fuller Co., International Flavors & Fragrances Inc., Lubrizol Corp.,

Monsanto Co., OM Group Inc., PPG Industries Inc., RPM International Inc.,

Sigma-Aldrich Corp., Solutia Inc., Tredegar Corp. and Valspar Corp.

Compared to 2008, the 2009 Group deleted Rohm & Haas Co. With this exception,

which resulted solely from the independent action of WSJ, the 2009 and 2008

Groups are identical.

2004 2005 2006 2007 2008 2009

Sigma-Aldrich Corporation $ 100.00 $ 105.96 $ 131.68 $ 186.91 $ 146.02 $ 176.98

Standard & Poors 500 100.00 103.00 117.03 121.16 74.53 92.01

Specialty Chemicals Index (WSJ) 100.00 104.91 135.98 191.97 123.97 158.99

Performance Graph(Unaudited)

$100.00

$131.68

$146.02

$186.91

$105.96

$176.98

$117.03$121.16

$74.53

$103.00 $92.01

$191.97

$104.91

$158.99

$135.98

$123.97

$0.00

$100.00

$200.00

2004 2005 2006 2007 2008 2009

Sigma-Aldrich Corporation

Standard & Poors 500

WSJ Specialty Chemicals

09_Annual_Report_v33_FINAL.indd 1809_Annual_Report_v33_FINAL.indd 18 2/18/2010 9:53:25 AM2/18/2010 9:53:25 AM

2009 ANNUAL REPORT SIGMA-ALDRICH 19

The Company’s common stock is traded in the National Association of Securities

Dealers Automated Quotation System (“NASDAQ”) Global Select Market. The trading

symbol is SIAL.

On January 31, 2010, there were 721 shareholders of record of the Company’s

common stock.

Common Stock Data (per share):

2009 Price Range 2008 Price Range Dividends

High Low High Low 2009 2008

First Quarter $ 43.45 $ 31.45 $ 60.04 $ 47.13 $ 0.145 $ 0.13

Second Quarter 51.41 36.91 63.04 53.75 0.145 0.13

Third Quarter 55.65 45.80 62.74 50.02 0.145 0.13

Fourth Quarter 56.29 50.31 54.13 34.33 0.145 0.13

Selected Financial Data(Unaudited)

Annual Financial Data ($ In Millions, except per share data):

2009 2008 2007 2006 2005

Net sales $2,147.6 $2,200.7 $2,038.7 $1,797.5 $1,666.5

Net income 346.7 341.5 311.1 276.8 258.3

Per share:

Net income — Basic 2.84 2.70 2.38 2.08 1.90

Net income — Diluted 2.80 2.65 2.34 2.05 1.88

Dividends 0.58 0.52 0.46 0.42 0.38

Cash dividends 70.7 65.4 60.0 55.7 51.3

Total assets 2,713.8 2,556.5 2,629.1 2,334.3 2,131.3

Long-term debt 100.0 200.1 207.0 337.9 283.2

Pension obligations — Long term 50.8 53.1 20.0 29.4 7.7

Post-retirement medical benefit plans 43.0 39.5 36.9 38.5 54.3

Quarterly Financial Data ($ In Millions, except per share data):

2009 Quarter Ended

March 31 June 30 Sept. 30 Dec. 31

Net sales $ 519.3 $522.0 $ 533.8 $ 572.5

Gross profit 268.6 269.3 265.2 286.8

Net income 84.4 83.6 86.1 92.6

Net income per share — Basic 0.69 0.69 0.71 0.76

Net income per share — Diluted 0.68 0.68 0.70 0.75

2008 Quarter Ended

March 31 June 30 Sept. 30 Dec. 31

Net sales $ 569.6 $ 580.7 $ 540.6 $ 509.8

Gross profit 292.2 294.9 277.9 264.9

Net income 84.5 90.8 81.9 84.3

Net income per share — Basic 0.65 0.71 0.65 0.68

Net income per share — Diluted 0.64 0.70 0.64 0.68

All per share and common stock information presented above prior to 2007 has been retroactively adjusted to reflect the December 2006 common stock split.



Sigma-Aldrich

2009 Financial Report

Table of Contents

Management’s Discussion And Analysis 21

Consolidated Statements of Income 28

Consolidated Balance Sheets 29

Consolidated Statements of Stockholders’ Equity 30

Consolidated Statements of Cash Flows 31

Notes To Consolidated Financial Statements 32

Management’s Report On Internal Control Over Financial Reporting 46

Report Of Independent Registered Public Accounting Firm 46



OVERVIEW Sigma-Aldrich Corporation (“the Company”) is a leading Life Science and High

Technology company. The Company develops, manufactures, purchases and

distributes the broadest range of high quality chemicals, biochemicals and

equipment available 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. The

Company operates in 38 countries, manufacturing 48,000 of the 130,000 chemical

products it offers. The Company also offers 40,000 equipment products. The

Company sells into over 160 countries, servicing over 92,000 accounts representing

over one million individual customers.

The Company has four business units featuring the Research units of Essentials,

Specialties and Biotech and the Fine Chemicals unit, SAFC. The 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.

Research Essentials, representing 19% of sales, provides customized, innovative

solutions for our economic buyers. Research Specialties, representing 37% of sales,

facilitates accelerated research by lab scientists through information and innovation

in services and new products. Research Biotech, representing 16% of sales, provides

innovative first-to-market products and technologies for the Life Science researcher.

SAFC, representing 28% of sales, supports the manufacturing needs of commercial

project managers’ through rapid delivery of custom projects.

The Company has a broad customer base of commercial laboratories,

pharmaceutical companies, industrial companies, universities, diagnostics

companies, biotechnology companies, electronics companies, hospitals,

governmental institutions and non-profit organizations located in the United States

and internationally, and would not be significantly impacted by the loss of any one

customer. However, economic conditions and government research funding in the

United States and internationally do impact demand from our customers.

Highlights of our consolidated results for the year ended ended December 31, 2009,

are as follows:

Sales were $2,147.6, a decrease of 2.4% compared to the same period last year. •

Excluding the impact of foreign currency exchange rates, which decreased sales by

4.1%, sales increased by 1.7% year over year.

Gross margin was 50.7%, a decrease of 60 basis points when compared to 2008. •

Pretax income margin was 22.8%, up from 22.2% in 2008.

Diluted income per share was $2.80, compared to $2.65, a 5.7% increase when •

compared to last year.

Net cash provided by operating activities for the year ended December 31, 2009 was •

$515.7, an increase of $111.7 from last year.

Net debt, which includes total debt less cash, declined $273.1 since •

December 31, 2008.

Management’s Discussion And Analysis($ In Millions, Except Per Share Data)

The following should be read in conjunction with the consolidated financial statements and related notes.

COMPANY OUTLOOK The current uncertainty in the global markets reduces future visibility. Demand from

several of the Company’s key markets is expected to increase in 2010 from 2009

levels. New program launches, global sales initiatives and market share gains should

enable the Company to achieve mid single-digit organic sales growth in 2010.

Significant factors that could affect our results and cash flows in fiscal year

2010 include:

Our performance may be affected by the economic conditions in the U.S. and in •

other nations where we do business;

We face significant competition, including changes in pricing;•

Our sales and results of operations are dependent on the research and development •

spending patterns at pharmaceutical, biotechnology and diagnostic companies,

and universities;

Foreign currency exchange rate fluctuations may adversely affect our business;•

Due to heavy reliance on manufacturing and related operations to produce, package •

and distribute the products we sell, our business could be adversely affected by

disruptions of these operations;

Changes in worldwide tax rates or tax benefits may impact our tax expense •

and our profits;

Our failure to protect our intellectual property may significantly harm our results •

of operations;

Our failure to achieve planned cost reductions in global supply chain initiatives; and•

The impact of any restructuring.•

NON-GAAP FINANCIAL MEASURES The Company supplements its disclosures made in accordance with accounting

principles generally accepted in the United States (“U.S. GAAP”) with certain non-

GAAP financial measures. The Company does not, and does not suggest investors

should, consider such non-GAAP financial measures in isolation from, or as a

substitute for, GAAP financial information. These non-GAAP measures may not be

consistent with the presentation by similar companies in the Company’s industry.

Whenever the Company uses such non-GAAP measures, it provides a reconciliation

of such measures to the most closely applicable GAAP measure.

With over 60% of sales denominated in currencies other than the U.S. dollar,

management uses currency adjusted growth, and believes it is useful to investors,

to judge the Company’s local currency performance. Organic sales growth data

presented herein excludes currency, and where indicated, acquisition impacts. While

we are able to report currency impacts after the fact, we are unable to estimate

changes that may occur in 2010 to applicable exchange rates. Any significant

changes in currency exchange rates would likely have a significant impact on our

reported growth rates due to the volume of our sales denominated in foreign

currencies.

Management also uses free cash flow, a non-GAAP measure, to judge its

performance and ability to pursue opportunities that enhance shareholder value.

Management believes this non-GAAP information is useful to investors as well.



CRITICAL ACCOUNTING ESTIMATES The preparation of consolidated financial statements in conformity with U.S. GAAP

requires management to use judgment in making estimates and assumptions that

affect the reported amounts of assets and liabilities, disclosures of contingent assets

and liabilities at the date of the consolidated financial statements and the reported

amounts of revenues and expenses during the years presented. Actual results could

differ from those estimates under different assumptions or conditions.

The following accounting policies are based on, among other things, judgments

and assumptions made by management that include inherent risks and

uncertainties. Management’s estimates are based on the relevant information

available at the end of each period.

Inventories Inventories are valued at the lower of cost or market. 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.

Long-Lived Assets Long-lived assets, including intangibles with definite lives, are

amortized over their expected useful lives. Goodwill and other intangibles with

indefinite lives are not amortized against earnings. Goodwill is assessed annually

for impairment. All long-lived assets are assessed whenever events and changes

in business conditions indicate that the carrying amount of an asset may not be

fully recoverable. If impairment is indicated, the asset value is written down to its

fair market value. Any significant unanticipated changes in business or market

conditions that vary from current expectations could have an impact on the fair

value of these assets and any potential associated impairment.

Pension and Other Post-Retirement Benefits The determination of the

obligation and expense for pension and other post-retirement benefits is dependent

on the Company’s selection of certain assumptions used by actuaries to calculate

such amounts. Those assumptions are described in Note 14 to the consolidated

financial statements and include, among others, the discount rates, expected return

on plan assets and rates of increase in compensation and health care costs.

In accordance with U.S. GAAP, actual results that differ from the assumptions are

accumulated and amortized over future periods and therefore, generally affect

the recognized expense in such future periods. While the Company believes that

the assumptions are appropriate, significant differences in actual experience or

significant changes in the assumptions may materially affect the Company’s pension

and other post-retirement benefit obligations and the Company’s future expense. A

1% increase in the discount rate assumption would have reduced the net periodic

benefit cost by $1.1 for the U.S. plans and $4.4 for the International plans. A 1%

reduction in the discount rate assumption would have increased the net periodic

benefit cost by $0.8 for the U.S. plans and $5.0 for the International plans. A 1%

increase in the expected return on plan assets would have reduced the pension

expense by $0.9 for the U.S. plan and $1.4 for the International plans. A 1% reduction

in the expected return on plan assets would have increased the pension expense by

$0.9 for the U.S. plan and $1.4 for the International plans.

Taxes The Company operates within multiple taxing jurisdictions and is subject

to audit in these jurisdictions. These audits can involve complex issues, which may

require an extended period of time to resolve. The Company regularly reviews its

potential tax liabilities for tax years subject to audit. Changes in the Company’s tax

provision and liability occured in 2009, 2008 and 2007 and may occur in the future

as its assessments change based on the progress of tax examinations in various

jurisdictions and/or changes in worldwide tax regulations. In management’s opinion,

adequate provisions for income taxes have been made for all years presented.

Deferred tax assets and liabilities are recognized for the future tax benefits or

liabilities attributable to differences between the consolidated financial statement

carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected

to apply to taxable income in the years in which those temporary differences are

expected to be recovered or settled. The effect on deferred tax assets and liabilities

of a change in tax rates would be recognized in income in the period that includes

the enactment date. The Company regularly reviews its deferred tax assets for

recoverability and establishes a valuation allowance when it believes that such

assets may not be recovered, taking into consideration historical operating results,

expectations of future earnings, changes in its operations and the expected timing

of the reversals of existing temporary differences.

Management’s Discussion And Analysis (continued)

($ In Millions, Except Per Share Data)




OPERATING RESULTSSales Sales decreased by 2.4% in 2009 and increased by 7.9%

and 13.4% in 2008 and 2007, respectively. The decline in 2009

was primarily driven by changes in foreign currency exchange

rates, which lowered sales by 4.1%, and lower unit volumes

driven primarily from the worldwide recession. These declines

were partially offset by price increases which increased sales

by 4.0%.

The sales growth in 2008 was attributable to unit volume

growth, currency benefits and price increases. The currency benefit in 2008

increased sales by 2.7%. The 2008 price increase by the Company improved sales

by 2.0%.

Reported sales growth (declines), currency impacts, sales increases from

acquisitions and the organic sales changes are as follows:

Year Ended December 31, 2009

Reported

Currency

Impact Acquisition Organic

Research Essentials (0.8)% (4.7)% —% 3.9%

Research Specialties (3.7) (4.3) — 0.6

Research Biotech — (3.6) — 3.6

Research Chemicals (2.2) (4.3) — 2.1

SAFC (3.1) (3.7) — 0.6

Total (2.4)% (4.1)% —% 1.7%


Reported

Currency

Benefit Acquisition Organic

Research Essentials 7.7% 2.8% —% 4.9%

Research Specialties 9.4 3.0 — 6.4

Research Biotech 10.0 3.0 — 7.0

Research Chemicals 9.1 2.9 — 6.2

SAFC 5.2 2.0 0.7 2.5

Total 7.9% 2.7% 0.2% 5.0%


Reported

Currency

Benefit Acquisition Organic

Research Essentials 10.0% 5.0% —% 5.0%

Research Specialties 12.5 5.0 — 7.5

Research Biotech 9.1 4.5 — 4.6

Research Chemicals 11.1 4.9 — 6.2

SAFC 19.5 4.4 7.6 7.5

Total 13.4% 4.8% 2.1% 6.5%

2009 Organic sales growth in Research Essentials, Research Specialties, Research

Biotech and SAFC for 2009 was 3.9%, 0.6%, 3.6% and 0.6%, respectively.

Research Essentials sales growth was due to increased demand in all world areas

with the strongest growth in CAPLA (Canada, Asia Pacific and Latin America).

Customer segments primarily driving the unit’s growth were pharmaceutical and

academic accounts. A significant contributing factor to the organic growth in this

business unit was due to a worldwide shortage of a certain solvent which drove

higher prices and volumes during the first half of the year.

Modest growth compared to 2008 in Research Specialties sales was due

to decreased demand from the chemistry, commercial labs and diagnostic

customer groups, specifically in the U.S. Product groups showing decreased

demand compared to 2008 were Chemistry and Lab Equipment. Analytical

products growth over the prior year was in the mid single digits.

Research Biotech had sales growth in the mid single digits in Europe and CAPLA,

with lower growth rates reflected in the U.S. Product groups contributing the

most to this growth were cell signaling and protein assays.

SAFC growth in 2009 was focused in Europe due primarily to increased demand

for H1N1 vaccine adjuvants. The U.S. reflected a weakness in the chemical

industry segment. Product groups with the best growth compared to 2008

were bioscience and pharmaceutical products, with hitech reflecting the most

pressure on demand.

Our initiative to increase e-commerce sales continued to show progress. Web-

based sales increased to 45% of total Research sales in 2009 from 42% in 2008.

2008 Organic sales growth in Research Essentials, Research Specialties, Research

Biotech and SAFC for 2008 was 4.9%, 6.4%, 7.0% and 2.5%, respectively.

Research Essentials sales growth was due to increased demand in all world areas

with the strongest growth in CAPLA. Customer segments primarily driving the

unit’s growth were commercial labs and industrial companies.

Research Specialties sales growth was due to gains in biotechnology, hospital

and academic accounts. Product initiatives driving this growth were Analytical

and Lab equipment. Europe was the strongest driver of growth from a

geography perspective.

Research Biotech had its strongest growth in CAPLA followed by the U.S.

customer segments. Contributing to this growth were commercial, industrial and

diagnostics companies. Molecular biology was the initiative with the best growth

over the prior year.

SAFC growth in 2008 was driven by strong demand in biotechnology,

diagnostics, commercial labs and academic customer segments. Demand for

SAFC products in CAPLA showed the strongest growth over the prior year

compared to Europe and the U.S. Hitech was the initiative with the highest

growth during 2008.

Our goal to accelerate growth in our non-European International markets was

achieved, increasing sales in these markets to approximately 21% of total sales

for 2009, an increase of 1% from 2008. In the Company’s focus markets of China,

India and Brazil, sales collectively grew organically by 18% for the fourth quarter

and full year of 2009 over the prior year levels.

2010 Outlook Modest improvement in market conditions, the ongoing

implementation of programs already in place and the addition of new initiatives

to enhance our growth over underlying market rates are expected to provide

organic sales growth in the mid single-digit range for 2010, excluding any

benefit from acquisitions. Sales initiatives include new opportunities in analytical

and biology products and exploiting the Company’s broad knowledge of

chemistry with more offerings to the high tech market place. Investments

are also planned to strengthen the e-commerce channel, expand presence

in emerging markets and for selective technology partnerships. This outlook

does not include a significant amount of sales from stimulus and other funding

by the U.S. and other world governments as the timing and level of funding

remains unclear.

2,038.7

2,200.7

2,147.6

Sales(millions of dollars)

‘09 ‘08 ‘07









OPERATING RESULTS (continued)

Gross Profit Margin Gross profit margin was 50.7%, 51.3%,

and 50.8% of sales in 2009, 2008 and 2007, respectively.

The following table reflects the significant contributing

factors to the net change in gross profit margin for the years

ended December 31, 2009, 2008 and 2007, respectively, as

a percentage of sales compared to the same period in the

prior year:

Year Ended December 31,

Contributing Factors 2009 2008 2007

Favorable pricing 2.2% 0.9% 0.6%

Lower/(higher) manufacturing and

distribution costs 1.2 (0.9) (1.8)

Unfavorable product mix and other (1.8) (1.7) (0.9)

(Lower)/higher unit sales volume (0.3) 0.4 0.6

Favorable/(unfavorable) currency impact (1.9) 1.8 1.1

Ne t (decline)/improvement in gross profit margin

as a percentage of sales (0.6)% 0.5% (0.4)%

The decrease in gross profit margin as a percentage of sales of 0.6% in 2009 was

primarily due to the impact of changes in foreign currency rates, unfavorable

product mix and lower unit volumes. These were partially offset by favorable pricing

and lower manufacturing and distribution costs.

The increase in gross profit margin as a percentage of sales of 0.5% in 2008 was

primarily due to the impact of changes in foreign currency rates, favorable pricing

and higher unit volumes. These were offset by unfavorable product mix and higher

manufacturing and distribution costs.

We have various cost containment initiatives underway, including a supply chain

initiative, which we expect to continue to provide benefits in 2010. The Company’s

supply chain project is a five-year project, which commenced in 2007, expected to

improve service and expand margins by up to 150 basis points when complete in

2012. The project is focused on improving how the Company procures goods and

services, manages inventory and optimizes its various other supply chain activities.

We also expect currency to add a small benefit to the gross profit margin in 2010.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were

24.1%, 25.5%, and 25.4% of sales in 2009, 2008 and 2007,

respectively. Changes in foreign currency exchange rates

increased selling, general and administrative expenses by

30 basis points in 2009 compared to 2008. Decreases in

selling, general and administrative expenses in 2009 were

driven largely by the Company’s effort to carefully control

discretionary spending, including travel and entertainment,

catalog and advertising expenses which contributed 0.7% to the overall decrease.

The remaining improvement over 2008 levels relates mainly to non-recurring

2008 investment losses and legal settlement costs.

In 2008, investment losses and a legal settlement were the primary drivers of

the increase in selling general and administrative expenses representing a 0.5%

increase as a percentage of sales from 2007 levels. These amounts were primarily

offset by decreases in salaries and wages and legal and professional consulting

expenses, aggregating 0.4% of sales.

Restructuring Costs During the year ended December 31, 2009, the Company

committed to a plan that includes exit activities at five manufacturing sites in

the U.S. and Europe, which are anticipated to occur over the next 12–18 months.

These exit activities impact approximately 200 employees and are intended

to reduce the Company’s 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. In 2009, restructuring costs were $9.2. The Company

expects to further reduce its workforce by approximately 100 people, some of which

have already occurred in 2010. The remaining reductions will take place over the

next twelve months.

The Company expects that the execution of these activities will result in

additional pre-tax restructuring costs of approximately $21.8 in the next

12–18 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.

Research and Development Expenses Research and development expenses

were 2.9% of sales in 2009, 2008 and 2007. Research and development expenses

relate primarily to efforts to add new manufactured products and enhance

manufacturing processes. All manufactured products currently account for

approximately 65% of total sales.

Interest Expense, Net Net interest expense was $10.0, $14.3, and $22.0 in 2009,

2008 and 2007, respectively. Lower interest rates and debt levels in 2009 reduced

net interest expense compared to 2008. Lower interest rates in 2008 reduced net

interest expense compared to 2007, partially offset by higher debt levels in 2008.

Income Taxes Income taxes, which include federal, state and international taxes

were 29.2%, 30.2%, and 28.9% of pretax income in 2009, 2008 and 2007, respectively.

The lower effective tax rate for the full year of 2009 compared to the same period

in 2008 is primarily due to the reduction of certain tax contingencies resulting from

statute of limitation expirations and audit activity in 2009. The higher effective tax

rate for the full year of 2008 compared to the same period in 2007 is primarily due to

a decrease in the U.S. manufacturing deduction in 2008.

Our effective tax rate for 2010 is expected to be in the range of 30–31%.

Accounting Changes The Financial Accounting Standards Board (“FASB”) issued

Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy

of Generally Accepted Accounting Principles, a replacement of FASB Statement

No. 162 (the “ASC”), in June 2009. Effective for interim and annual periods ended

after September 15, 2009, the ASC became the source of authoritative U.S. GAAP

recognized by the FASB to be applied by nongovernmental entities. Rules and

interpretive releases of the Securities and Exchange Commission (SEC) under

authority of federal securities laws are also sources of authoritative GAAP for SEC

registrants. This statement is not intended to change existing GAAP and as such

did not have an impact on the consolidated financial statements of the Company.

The Company has updated its references to reflect the ASC.

Selling, General andAdministrative Expenses(percent of sales)

25.425.5

24.1

‘09 ‘08 ‘07

Gross Profit Margin(percent of sales)

50.751.3

50.8

‘09 ‘08 ‘07






LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash flows from operating, investing and financing activities, as

reflected in the Consolidated Statements of Cash Flows, are summarized in the

following table:

Years Ended December 31,

2009 2008 2007

Net cash provided by (used in):

Operating activities $ 515.7 $ 404.0 $ 417.0

Investing activities (159.5) (86.7) (149.0)

Financing activities (250.3) (273.9) (212.0)

Operating Activities Net cash provided by operating activities increased $111.7

or 27.6% in 2009 compared to 2008. This increase relates primarily to reductions in

inventory of $108.7 resulting from enhanced inventory management programs that

adjusted lead times and safety stock to reduce inventory levels without impacting

service.

Net cash provided by operating activities decreased $13.0 or 3.1% in 2008 compared

to 2007. This decrease results primarily from higher pension plan contributions and

investments in working capital to support current year growth which were partially

offset by increased net income and lower tax payments.

Investing Activities Cash used in investing activities increased $72.8 in 2009

from 2008 primarily due to increased investment and technology purchases

of $41.9 and increased capital expenditures of $30.0 The primary driver of the

technology investment was an increased interest in Sangamo BioSciences,

Inc. (See Liquidity and Risk Management Section.). Capital expenditures

increased due to the Company’s expansion of its biotech fermentation facility

in Israel and its additional manufacturing capacity for viral products and active

pharmaceutical ingredients in the U.S.

Cash used in investing activities decreased $62.3 in 2008 as compared to 2007

primarily due to lower levels of acquisition activity. Capital expenditures increased

$12.3 from 2007 to $89.9 in 2008 to expand our business information systems and

website capabilities, as well as increasing production and warehousing capacity at

certain locations. At December 31, 2009, the Company had $107.9 of construction in

progress within its consolidated balance sheets, of which the Company expects over

80% to be placed into service during 2010.

For 2010, capital spending is expected to be approximately $130.0.

Financing Activities Cash used in financing activities decreased by $23.6 in

2009 compared to 2008. This decrease was driven by a $354.0 decline in treasury

stock purchases. This decrease was partially offset by the increase of $405.2 in net

repayments of short-term debt.

In 2008, cash used in financing activities increased $61.9 from 2007. This increase

is due primarily to payments for treasury stock purchases of $421.2 compared to

$184.3 in 2007, as well as repayment of $90.0 in long-term debt. These cash outflows

were partially offset by an increase in short-term debt of $270.5 in 2008 compared

to $61.8 in 2007.

Share Repurchases On October 20, 2008, the Board of Directors authorized the

repurchase of up to an additional 10.0 million shares under the existing repurchase

program, to be available for purchase within three years, bringing the total

authorization to 100.0 million shares. At December 31, 2009 and December 31, 2008,

the Company had repurchased a total of 93.7 million shares and 92.3 million shares,

respectively. There were 121.7 million shares outstanding as of December 31, 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.

Liquidity and Risk Management Liquidity risk refers to the risk that the Company

might be unable to meet potential cash outflows promptly and cost effectively.

Factors that could cause such risk to arise might be disruption to the securities and

credit markets, downgrades in the Company’s credit rating or the unavailability

of funds. In addition to the Company’s cash flows from operations, the Company

utilizes commercial paper, its credit facilities and long-term debt as funding sources.

The Company maintains committed bank lines of credit to support its commercial

paper borrowings, term loans and local bank lines of credit to support international

operations. Downgrades in the Company’s credit rating or other limitations on

the ability to access short-term financing, including the ability to refinance short-

term debt as it becomes due, would increase interest costs and adversely affect

profitability.

The Company continues to assess the potential impact of recent trends in the

global economic environment on its liquidity and overall financial condition,

particularly with respect to the Company’s availability of and access to short-term

credit, including the market for commercial paper.

Management does not believe that a significant risk exists of commercial paper

or other credit becoming unavailable within the next 12 months. Management

believes that the Company’s financial condition is such that internal and external

resources are sufficient and available to satisfy the Company’s requirements for debt

service, capital expenditures, acquisitions, dividends, share repurchases, funding of

pension and other post-retirement benefit plan obligations, and working capital

presently and for the next 12 months.

The Company has a $450.0 five-year revolving credit facility with a syndicate of

banks in the U.S. that supports the Company’s 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 December 11, 2012.

At December 31, 2009 and December 31, 2008, the Company did not have any

borrowings outstanding under this facility.

In March 2007, the Company entered into a $200.0 seven-year multi-currency

European revolving credit facility with a syndicate of banks having a maturity date of

March 13, 2014. There were no borrowings outstanding at December 31, 2009 and

$135.9 was outstanding at December 31, 2008.

Sigma-Aldrich Korea Limited has a short-term credit facility denominated in Korean

Won. Although the reported borrowings of the facility were due and repaid on

June 11, 2009, the facility is still available to the Company with a total commitment

of 20 billion Korean Won ($17.2) at December 31, 2009. There were no outstanding

borrowings under this facility at December 31, 2009.

The Company has other short-term credit facilities denominated in foreign

currencies, excluding those mentioned above. Although there were no borrowings

under the facilities supporting this debt at December 31, 2009, the facilities are

available to the Company with total commitments converted into U.S. Dollars of

$25.1 at December 31, 2009.

Long-term debt at December 31, 2009 was $100.0 compared to $200.1 in 2008. This

decline was a result of the Company reclassifying $100.0 to short-term debt as it

comes due on September 12, 2010. Total debt as a percentage of total capitalization

was 25.5% and 34.6% at December 31, 2009 and 2008, respectively. The primary

reason for the reduction in the debt to capitalization ratio is due to a $152.4

reduction in total debt during 2009. Total debt at December 31, 2009 was $576.5

compared to $728.9 at December 31, 2008.

For a description of the Company’s material debt covenants, see Notes 5 and 6 to

the consolidated financial statements.

On October 5, 2009, the Company announced a major expansion of its existing

license agreement with Sangamo BioSciences, Inc. (“Sangamo”) to include

the exclusive rights to develop and distribute zinc finger DNA binding protein

(“ZFP”)-modified cell lines for commercial production of protein pharmaceuticals

and ZFP-engineered transgenic animals for livestock, companion animals and

therapeutic protein production. Under this agreement, the Company made initial

payments of $20.0 to Sangamo, consisting of an upfront license payment of $15.0

and $5.0 for the purchase of shares of Sangamo common stock. Sangamo is eligible

to earn additional contingent commercial license fees of up to $5.0 based on certain

conditions and additional contingent milestone payments of up to $25.0 based on

cumulative sales.



INFLATION Management recognizes that inflationary pressures may have an adverse effect

on the Company through higher asset replacement costs and higher material and

other operating costs. The Company tries to minimize these effects through cost

reductions and productivity improvements as well as price increases to maintain

reasonable profit margins. It is management’s view, however, that inflation has not

had a significant impact on operations in the three years ended December 31, 2009.

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS The market risk inherent in the Company’s financial instruments and positions

represents the potential loss arising from adverse changes in interest rates and

foreign currency exchange rates.

Interest Rates At December 31, 2009, the Company’s outstanding debt represents

25.5% of total capitalization. Approximately 35% of the Company’s outstanding debt

at December 31, 2009 is at a fixed rate. Cash flows from operations and available

credit facilities are sufficient to meet the working capital requirements of the

Company. It is management's view that market risk or variable interest rate risk will

not significantly impact the Company's results of operations.

Foreign Currency Exchange Rates The functional currency of the Company’s

international subsidiaries is generally the currency in the respective country of

residence of the subsidiary. The translation from the functional currencies to the

U.S. dollar for revenues and expenses is based on the average exchange rate

during the period. Changes in foreign currency exchange rates have affected

and may continue to affect the Company’s revenues, expenses, net income and

stockholders’ equity.

The Company transacts business in many parts of the world and is subject to risks

associated with changing foreign currency exchange rates. The Company’s objective

is to minimize the impact of foreign currency exchange rate changes during the

period of time between the original transaction date and its cash settlement.

Accordingly, the Company uses forward exchange contracts to hedge the value

of certain receivables and payables denominated in foreign currencies. Gains and

losses on these contracts, based on the difference in the contract rate and the spot

rate at the end of each month for all contracts still in force, are typically offset either

partially or completely by transaction gains and losses, with any net gains and losses




OTHER MATTERSThe 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 December 31, 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 Company’s 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 Company’s 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 phase four — quantification of any punitive damages. Class

certification was granted to phases one, three and four, but denied to phase two.

Compensatory damages for all plaintiffs must be established before the case can

proceed to the punitive damages phases. The Company has accepted responsibility

for phase one, existence of liability. The case is currently in the compensatory

damages phase, where, because no class status exists, each plaintiff must

individually establish actual damages. The initial phase two, compensatory damages

trial for 31 plaintiffs was completed on April 27, 2007 with a jury verdict establishing

actual damages of approximately two hundred dollars per plaintiff. The plaintiffs filed

an appeal staying further action on the case until the appeal has been resolved. The

Ohio Court of Appeals reversed the jury’s verdict on compensatory damages. The

Ohio Supreme Court has heard oral argument in December 2009, with a decision

expected in early 2010. The Company continues to believe it has substantial legal

defenses to the allegations, which it will vigorously assert.

The Company believes its reserves and insurance for these and other matters

are sufficient to provide for claims outstanding at December 31, 2009. While the

outcome of the current claims cannot be predicted with certainty, the possible

outcome of the claims is reviewed at least quarterly and reserves adjusted as

deemed appropriate based on these reviews. Based on current information

available, the Company believes that the ultimate resolution of these matters will

not have a material adverse effect on its consolidated financial condition, results

of operations or liquidity. Future claims related to the use of these categories of

products may not be covered in full by the Company’s insurance program.

At December 31, 2009, there were no other known contingent liabilities that

management believes could have a material adverse effect on the Company’s

consolidated financial condition, results of operations or liquidity and there were

no material commitments outside of the normal course of business. Material

commitments in the normal course of business include notes payable, long-

term debt, lease commitments and pension and other post-retirement benefit

obligations which are disclosed in Note 5, Note 6, Note 8 and Note 14, respectively,

to the consolidated financial statements contained in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2009.



FORWARD-LOOKING STATEMENTSManagement’s Discussion and Analysis and other sections of this Annual Report

to shareholders should be read in conjunction with the consolidated financial

statements and notes thereto.

Except for historical information, the statements in this discussion may 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. These include “outlook” as well as statements that are preceded

by, followed by, or that include the words “believes,” “expects,” “plans,” “anticipates,”

“should” or similar expressions, and other statements contained herein regarding

matters that are not historical facts. Additionally, this Annual Report to shareholders

contains forward-looking statements relating to future performance, goals, strategic

actions and initiatives and similar intentions and beliefs, including, without limitation,

statements regarding the Company’s expectations, goals, beliefs, intentions and

the like regarding future sales, earnings, return on equity, cost savings, process

improvements, free cash flow, share repurchases, capital expenditures, acquisitions

and other matters. These statements are based on assumptions regarding the

Company operations, investments, acquisitions and conditions in the markets the

Company serves.

The Company believes these assumptions are reasonable and well founded.

The statements in this Annual Report to shareholders 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 this

Annual Report to shareholders, due to, but not limited to, such factors as:

global economic conditions, (1)

changes in pricing and the competitive environment and the global demand (2)

for its products,

fluctuations in foreign currency exchange rates, (3)

changes in research funding and the success of research and development (4)

activities,

dependence on uninterrupted manufacturing operations, (5)

changes in the regulatory environment in which the Company operates,(6)

changes in worldwide tax rates or tax benefits from domestic and international (7)

operations, including the matters described in Note 10 – Income Taxes – to the

consolidated financial statements ,

exposure to litigation including product liability claims, (8)

the ability to maintain adequate quality standards, (9)

reliance on third-party package delivery services, (10)

failure to achieve planned cost reductions in global supply chain initiatives and (11)

restructuring actions,

an unanticipated increase in interest rates,(12)

failure of planned sales initiatives in our Research and SAFC businesses, (13)

other changes in the business environment in which the Company operates, and (14)

the outcome of the outstanding matters described in Note 11 – Contingent (15)

Liabilities and Commitments – to the consolidated financial statements.

A further discussion of the Company’s risk factors can be found in Item 1A of Part I

of the Company’s December 31, 2009 Form 10-K. The Company does not undertake

any obligation to update these forward-looking statements.

AGGREGATE CONTRACTUAL OBLIGATIONS The following table presents contractual obligations of the Company at December 31, 2009:

Payments due by period

Contractual Obligations Total

Less than

1 year 1–3 years 3–5 years

More than

5 years

Long-term debt $ 200.0 $ 100.0 $ 100.0 $ — $ —

Interest payments related to long-term debt 12.8 9.0 3.8 — —

Operating lease obligations 127.8 37.0 50.8 24.0 16.0

Purchase obligations(1) 125.0 59.7 42.7 22.3 0.3

Total $ 465.6 $ 205.7 $ 197.3 $ 46.3 $ 16.3

Purchase obligations include open purchase orders, long-term service and supply agreements and other contractual obligations.(1)

See Notes 6 and 8 to the consolidated financial statements for additional disclosures related to long-term debt and lease commitments, respectively.

See Note 14 to the consolidated financial statements for the Company’s obligations with respect to its pension and post-retirement medical benefit plans.

The above table excludes $24.7 of liabilities related to uncertainty in income taxes. See Note 10 to the consolidated financial statments for detail on this obligation.




included in selling, general and administrative expenses. The market risk of these

forward exchange contracts represents the potential loss in fair value of net currency

positions at year-end due to an adverse change in foreign currency exchange rates.

The Company does not enter into foreign currency contracts for speculative trading

purposes. The Company’s policy is to manage the risks associated with existing

receivables, payables and commitments.


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 market risk of the Company’s forward exchange contracts at December 31,

2009, assuming a hypothetical 10% change in foreign currency exchange rates,

would be less than $1.1 on income before income taxes.

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS (continued)



Years ended December 31,

2009 2008 2007

Net sales $2,147.6 $2,200.7 $2,038.7

Cost of products sold 1,057.7 1,070.8 1,002.7

Gross profit 1,089.9 1,129.9 1,036.0

Selling, general and administrative expenses 518.1 561.6 517.1

Research and development expenses 63.0 64.5 59.3

Restructuring costs 9.2 — —

Operating income 499.6 503.8 459.6

Interest, net 10.0 14.3 22.0

Income before income taxes 489.6 489.5 437.6

Provision for income taxes 142.9 148.0 126.5

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 $ 2.70 $ 2.38

Net income per share — Diluted $ 2.80 $ 2.65 $ 2.34

The accompanying notes are an integral part of these statements.

Consolidated Statements of Income($ In Millions, Except Per Share Data)



December 31,

2009 2008

ASSETS

Current assets:

Cash and cash equivalents $ 372.5 $ 251.8

Accounts receivable 285.2 269.8

Inventories 609.0 661.8

Deferred taxes 53.3 45.9

Other current assets 63.5 79.9

Total current assets 1,383.5 1,309.2

Property, plant and equipment:

Land 49.0 49.0

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 78.0

Total assets $2,713.8 $2,556.5

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Notes payable and current maturities of long-term debt $ 476.5 $ 528.8

Accounts payable 112.4 114.6

Payroll 51.0 58.6

Income taxes 42.2 41.1

Other 59.8 50.8

Total current liabilities 741.9 793.9

Long-term debt 100.0 200.1

Pension and post-retirement benefits 93.9 92.6

Deferred taxes 22.5 18.6

Other liabilities 69.5 72.1

Total liabilities 1,027.8 1,177.3

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 152.8 133.0

Common stock in treasury, at cost, 80.0 million and 79.7 million shares at December 31, 2009

and 2008, respectively (1,983.0) (1,935.3)

Retained earnings 3,230.4 2,954.4

Accumulated other comprehensive income 84.0 25.3

Total stockholders' equity 1,686.0 1,379.2

Total liabilities and stockholders' equity $2,713.8 $2,556.5


Consolidated Balance Sheets($ In Millions, Except Per Share Data)



Common

Stock

Capital in

Excess of

Par Value

Common

Stock in

Treasury

Retained

Earnings

Accumulated Other

Comprehensive

Income/(Loss)

Total

Stockholders'

Equity

Comprehensive

Income

Balance, December 31, 2006 $ 201.8 $ 79.1 $(1,375.4) $2,424.7 $ 80.7 $1,410.9

Net income — — — 311.1 — 311.1 $311.1

Ot her comprehensive income —

Foreign currency translation — — — — 71.5 71.5 71.5

Pension and Post Retirement — — — — 8.4 8.4 8.4

Unrealized gain (loss) on securities, net — — — — (0.7) (0.7) (0.7)

Comprehensive income — — — — — — $390.3

Dividends ($.46 per share) — — — (60.0) — (60.0)

Shares exchanged for stock options — (0.9) — — — (0.9)

Exercise of stock options — 17.3 24.0 — — 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)

Adj ustment to initially apply FIN 48 — — — 3.5 — 3.5

Balance, December 31, 2007 201.8 109.7 (1,534.1) 2,679.3 159.9 1,616.6

Net income — — — 341.5 — 341.5 $ 341.5


Foreign currency translation — — — — (86.4) (86.4) (86.4)

Pension and Post Retirement — — — — (42.2) (42.2) (42.2)

Unrealized gain (loss) on securities, net — — — — (6.0) (6.0) (6.0)

Comprehensive income — — — — — — $ 206.9

Adj ustment to initially apply the measurement date fea-

tures of Statement of Financial Accounting Standards

No. 158, net of tax — — — (1.0) — (1.0)







Balance, December 31, 2008 201.8 133.0 (1,935.3) 2,954.4 25.3 1,379.2

Net income — — — 346.7 — 346.7 $ 346.7


Foreign currency translation — — — — 55.4 55.4 55.4

Pension and Post Retirement — — — — 2.8 2.8 2.8

Unrealized gain (loss) on securities, net — — — — 0.5 0.5 0.5

Comprehensive income — — — — — — $ 405.4







Minority interest purchase — (2.3) — — — (2.3)

Balance, December 31, 2009 $ 201.8 $ 152.8 $(1,983.0) $3,230.4 $ 84.0 $1,686.0

Common stock shares issued and common stock shares in treasury are summarized below (in millions):Common Stock

Issued

Common Stock

in Treasury

Balance, December 31, 2006 201.8 69.8

Exercise of stock options — (1.4)

Stock repurchases — 4.0









Consolidated Statements of Stockholders’ Equity($ In Millions, Except Per Share Data)



Years Ended December 31,

2009 2008 2007

Cash flows from operating activities:

Net income $ 346.7 $ 341.5 $ 311.1

Ad justments 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 17.0 12.2 19.0

Restructuring costs 9.1 — —

Loss on investments, net — 5.3 0.2

Other 3.1 1.7 (2.6)

Changes in operating assets and liabilities:

Accounts receivable (8.7) (4.0) (7.3)

Inventories 71.2 (37.5) (25.2)

Accounts payable (5.2) (12.2) 26.8

Income taxes (5.3) (0.1) 25.0

Pension obligation (0.3) (20.6) 2.6

Other 2.5 1.0 (8.7)

Net cash provided by operating activities 515.7 404.0 417.0

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 (6.0) (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) (149.0)

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) (90.0) (69.7)

Payment of dividends (70.7) (65.4) (60.0)

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) (212.0)

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


Consolidated Statements of Cash Flows($ In Millions)



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 instrument’s 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 December 31, 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 December 31, 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 assets and any potential

associated impairment.

Foreign Currency Translation Assets and liabilities denominated in foreign

currencies are translated at current exchange rates and profit and loss accounts

are translated at weighted average exchange rates. Resulting translation gains and

losses are included as a separate component of stockholders’ equity in accumulated

other comprehensive income or loss.

Use of Estimates The preparation of consolidated financial statements in

conformity with U.S. GAAP requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and

disclosures of contingent assets and liabilities at the date of the consolidated

financial statements and the reported amounts of revenues and expenses during

the years presented. Actual results could differ from those estimates under different

assumptions or conditions.

Reclassifications The accompanying consolidated financial statements for prior

years contain certain reclassifications to conform with the presentation used in 2009.

Effect of New Accounting Standards The Financial Accounting Standards Board

(FASB) issued Statement No. 168, The FASB Accounting Standards Codification and

the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB

Statement No. 162, in June 2009. Effective for interim and annual periods ended

after September 15, 2009, the ASC became the source of authoritative U.S. GAAP

recognized by the FASB to be applied by nongovernmental entities. Rules and

interpretive releases of the Securities and Exchange Commission (SEC) under

authority of federal securities laws are also sources of authoritative GAAP for SEC

registrants. This statement is not intended to change existing GAAP and as such did

not have an impact on the consolidated financial statements of the Company. The

Company has updated its references to reflect the ASC.

Notes To Consolidated Financial Statements($ In Millions, Except Per Share Data)



Notes To Consolidated Financial Statements (continued)


NOTE 2: ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the allowance for doubtful accounts for the years ended

December 31, 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

NOTE 3: INVENTORIESThe principal categories of inventories at December 31, 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 December 31, 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.

NOTE 4: INTANGIBLE ASSETS

The Company’s amortizable and unamortizable intangible assets at December 31, 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 December 31, 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 December 31, 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



NOTE 5: NOTES PAYABLE Notes payable consists of the following at December 31, 2009 and 2008:

December 31, 2009 December 31, 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 March 13, 2014(2) — — 135.9 0.6%

Sigma-Aldrich Korea limited credit

facility, due June 11, 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%

The Company has a $450.0 five-year revolving credit facility with a syndicate of (1)

banks in the U.S. that supports the Company’s 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 December 11,

2012. At December 31, 2009 and December 31, 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 Company’s 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 December 31, 2009.

Facility contains financial covenants that require the maintenance of consolidated (2)

net worth of at least $750.0 and a ratio of consolidated debt to total capitalization

of no more than 55.0%. The Company’s 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 December 31, 2009.

Although the reported borrowings of the facility were due and repaid on (3)

June 11, 2009, a total commitment of 20 billion Korean Won ($17.2) remains at

December 31, 2009. There were no outstanding borrowings under this facility

at December 31, 2009.

Although there were no borrowings under the facilities supporting this debt (4)

at December 31, 2009, the facilities are available to the Company with total

commitments converted into U.S. Dollars of $25.1 at December 31, 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.



NOTE 6: LONG-TERM DEBTLong-term debt consists of the following at December 31, 2009 and 2008:

December 31, 2009 December 31, 2008

Out-

standing

Weighted

Average

Rate

Out-

standing

Weighted

Average

Rate

Senior notes,

due September 12, 2010 (1) $ 100.0 7.7% $ 100.0 7.7%

Senior notes,

due December 5, 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%

The Company, at its option, may redeem all or any portion of the $100.0 of (1)

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 Company’s 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 December 31, 2009.

The Company, at its option, may redeem all or any portion of the $100.0 of 5.11% (2)

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 Company’s 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

December 31, 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 December 31, 2009 and 2008, respectively, based upon a discounted

cash flow analysis using current market interest rates.





NOTE 7: FINANCIAL DERIVATIVES AND RISK MANAGEMENTThe Company transacts business in many parts of the world and is subject to risks

associated with changing foreign currency exchange rates. The Company’s objective

is to minimize the impact of foreign currency exchange rate changes during the

period of time between the original transaction date and its cash settlement.

Accordingly, the Company enters into forward currency exchange contracts in order

to stabilize the value of certain receivables and payables denominated in foreign

currencies. 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.


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 December 31, 2009

and 2008 was $128.1 and $210.1, respectively. The fair value of these contracts was

immaterial at December 31, 2009 and 2008.

NOTE 8: LEASE COMMITMENTSThe 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

December 31, 2009, are as follows:

2010 $ 37.0

2011 29.0

2012 21.8

2013 13.6

2014 10.4

2015 and thereafter 16.0

NOTE 9: RESTRUCTURING ACTIVITIESIn 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 12–18 months. These exit activities impact

approximately 200 employees and are intended to reduce the Company’s 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 restructuring 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:

Incurred during

the year ended

December 31, 2009

Total estimated

amount expected

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 December 31, 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





NOTE 10: INCOME TAXESThe components of income before income taxes consisted of the following for the

years ended December 31:

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

December 31:

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 Company’s effective tax rate are as follows for

years ended December 31:

2009 2008 2007

Statutory tax rate 35.0% 35.0% 35.0%

U.S. manufacturing deduction (1.5) (1.3) (2.1)

Sta te and local income taxes,

net of federal benefit 1.0 1.0 1.0

Res earch 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

Tot al 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 Company’s international subsidiaries amounted to

approximately $552.0 at December 31, 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 December 31, 2009 and 2008, respectively,

result from the following temporary differences:

2009 2008

Deferred tax assets:

Inventories $ 41.2 $ 32.8

Net operating loss carryforwards 23.3 27.7

Pos t-retirement benefits

and other employee benefits 44.3 39.3

Amortization 22.7 27.8

Pension benefits 15.1 11.4

Other 8.2 5.2

Total deferred tax assets 154.8 144.2

Deferred tax liabilities:

Property, plant and equipment (80.0) (74.8)

Total deferred tax liabilities (80.0) (74.8)

Net deferred tax assets (liabilities) $ 74.8 $ 69.4

The net operating loss carryforwards relate to international operations. At

December 31, 2009, $15.6 of these deferred tax assets expire between 2011

and 2015 and the remainder of these assets have no expiration. The Company

believes it will have sufficient taxable income to fully utilize the carryforwards prior

to expiration.

Deferred tax assets and liabilities in the preceding table, netted by taxing jurisdiction,

are included in the following captions in the Consolidated Balance Sheets at

December 31:

2009 2008

Deferred tax assets $ 53.3 $ 45.9

Other assets 44.0 43.6

Other accrued expenses — (1.5)

Deferred tax liabilities (22.5) (18.6)

Net deferred tax assets (liabilities) $ 74.8 $ 69.4





NOTE 10: INCOME TAXES (continued)

Uncertainty in Income Taxes The Company and its subsidiaries file income

tax returns for U.S. federal, and for various state, local and international taxes, as

applicable. The Company is no longer subject to, with limited exceptions, U.S.

federal, state and local, or non-U.S. income tax examinations by tax authorities for

years prior to 2005.

The following table sets forth changes in our total gross unrecognized tax

benefits, excluding interest and penalties, for the years ended December 31:

2009 2008 2007

Balance, beginning of year $ 32.2 $ 32.1 $ 33.5

Tax positions related to current year:

Additions

Reductions

3.8

—

4.1

(0.2)

4.4

—

Tax positions related to prior year:

Additions

Reductions

0.6

(3.6)

4.2

(6.2)

0.6

(4.4)

Settlements (2.2) (1.8) —

Statutes of limitation expirations (6.1) — (2.0)

Balance, end of year $ 24.7 $ 32.2 $ 32.1

At December 31, 2009, 2008, and 2007, respectively, there are $16.3, $19.5 and $20.5

of net unrecognized tax benefits that if recognized would affect the annual effective

tax rate.

The Company believes it is reasonably possible that the unrecognized tax benefits

at December 31, 2009 may decrease by approximately $4.0 to $5.0 due to audit

activity and statute of limitation expirations in several jurisdictions within 12 months

of December 31, 2009.

The Company accrues interest related to unrecognized tax benefits, net of tax, and

penalties as components of its income tax provision. The Company recognized

approximately $0.9 of benefit in 2009, and $0.8 and $0.7 of expense in 2008 and

2007, respectively, related to interest and penalties. The Company had accrued

approximately $5.0 and $6.3 for payment of interest, net of tax, and penalties as of

December 31, 2009 and 2008, respectively.

NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTSThe 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 December 31, 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 Company’s 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 Company’s 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 phase four — quantification of any punitive damages. Class

certification was granted to phases one, three and four, but denied to phase two.

Compensatory damages for all plaintiffs must be established before the case can

proceed to the punitive damages phases. The Company has accepted responsibility

for phase one, existence of liability. The case is currently in the compensatory

damages phase, where, because no class status exists, each plaintiff must

individually establish actual damages. The initial phase two, compensatory damages

trial for 31 plaintiffs was completed on April 27, 2007 with a jury verdict establishing

actual damages of approximately two hundred dollars per plaintiff. The plaintiffs filed

an appeal staying further action on the case until the appeal has been resolved. The

Ohio Court of Appeals reversed the jury’s verdict on compensatory damages. The

Ohio Supreme Court has heard oral argument in December 2009, with a decision

expected in early 2010. The Company continues to believe it has substantial legal

defenses to the allegations, which it will vigorously assert.

The Company believes its reserves and insurance for these and other matters

are sufficient to provide for claims outstanding at December 31, 2009. While the

outcome of the current claims cannot be predicted with certainty, the possible

outcome of the claims is reviewed at least quarterly and reserves adjusted as

deemed appropriate based on these reviews. Based on current information

available, the Company believes that the ultimate resolution of these matters will

not have a material adverse effect on its consolidated financial condition, results

of operations or liquidity. Future claims related to the use of these categories of

products may not be covered in full by the Company’s insurance program.

At December 31, 2009, there were no other known contingent liabilities that

management believes could have a material adverse effect on the Company’s

consolidated financial condition, results of operations or liquidity and there were

no material commitments outside of the normal course of business. Material

commitments in the normal course of business include notes payable, long-

term debt, lease commitments and pension and other post-retirement benefit

obligations which are disclosed in Note 5, Note 6, Note 8 and Note 14, respectively,

to the consolidated financial statements contained in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2009.





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 interest rate 1.82% 2.72% 4.68%

Dividend yield 1.04% 1.03% 1.18%

Expected term — The expected term of the options represents the period of time

between the grant date of the options and the time the options are either exercised

or forfeited, including an estimate of future forfeitures for outstanding options. In

accordance with Securities and Exchange Commission Staff Accounting Bulletin

No. 107, the Company has used the “simplified” method for “plain vanilla” options to

estimate the expected term of options granted prior to 2008.

Expected volatility — The expected volatility is calculated based on an average of

the historical volatility of the Company’s stock price for a period approximating the

expected term.

Risk-free interest rate — The risk-free interest rates are based on the U.S. Treasury

yield curve in effect at the time of grant and a maturity that approximates the

expected term.

Dividend yield — The dividend yield is based on the Company’s authorized quarterly

dividend, approved by the Board of Directors during the respective periods noted

above, and the Company’s expectation for dividend yields over the expected term.

NOTE 12: COMMON STOCKThe Company’s 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 Company’s 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 Company’s common stock remain to

be awarded at December 31, 2009 under this plan.

As of December 31, 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 December 31, 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 December 31, 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 grant’s total cost over the period that the options vest based on its calculated

fair value. During the year ended December 31, 2009, the Company granted a total

of 457,470 stock options under the 2003 LTIP.

The following table presents activity for the Company’s stock option plans, including the 2003 LTIP, the Stock Option Plan of 2000, the 1998 Directors’ Non-Qualified Share

Option Plan and the Share Option Plan of 1995. A summary of the combined stock option activity and other data for the Company’s stock option plans for the year ended

December 31, 2009 is as follows:

Number of Stock

Options

Wtd. Avg.

Exercise Price

Per Share

Wtd. Avg. Remaining

Contractual Life

Aggregate Intrinsic

Value

Stock Options outstanding, January 1, 2009 6,576,781 $ 31.38

Granted 457,470 40.02

Exercised (967,756) 25.28

Forfeited (55,959) 40.53

Stock Options outstanding, December 31, 2009 6,010,536 32.93 64.08 months $ 107.5

Stock Options exercisable at December 31, 2009 5,136,751 31.15 58.11 months $ 100.7

The aggregate intrinsic value of options exercised during the years ended December 31, 2009, 2008 and 2007 was $24.5, $35.6, and $31.9, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2009, 2008 and 2007 was $9.78, $9.96, and $12.58 per share, respectively.





NOTE 12: COMMON STOCK (continued)

Performance Units Performance Unit awards in 2009, 2008 and 2007 were

396,214; 319,845 and 193,580 units, respectively. The Performance Units awarded

in 2009, 2008, and 2007 contain a three-year service period and vest beginning on

the grant date and ending on December 31, 2011, 2010 and 2009, respectively. The

actual Performance Units awarded are determined at the end of the performance

period with possible payouts ranging from 0% to 150% of the target amount based

upon the achievement of specified performance criteria. One-half of the awards

issued are based upon the Company’s three-year average return on equity ratio

calculation and one-half of the awards are based upon the Company’s three-year

average sales growth (adjusted for currency, but including acquisitions). Each

Performance Unit paid will include one-half share of the Company’s common stock

and the cash equivalent of one-half share of the Company’s common stock, except

that the Company will direct that any fractional shares of stock be paid in cash.

The value of the equity portion of a Performance Unit is equivalent to the closing

market price of the Company’s stock on the grant date. The Company expenses

the expected cost of the equity portion over the vesting period beginning on the

grant date and ending on December 31 of the third subsequent fiscal year. The

value of the Performance Unit to be paid in cash is determined based on the closing

market price of the Company’s stock at each quarter-end and ratably expensed

during the remaining performance period. Therefore, the related stock-based

compensation expense will fluctuate with the value of the Company’s stock. The

expense for the entire number of Performance Units awarded is dependant upon

the probability of achieving the specific financial targets and is recorded ratably over

the vesting period.

A summary of the Company’s nonvested Performance Units as of December 31,

2009, and changes during the year then ended, is reflected in the table below. The

Weighted Average Grant Date Fair Value includes both the fair value at grant date for

the equity portion of the Performance Unit and the fair value of the cash portion of

the Performance Unit.

Number of

Performance Units

Wtd. Avg. Grant

Date Fair Value

Nonvested Performance Units outstanding, January 1, 2009 434,027 $ 47.43

Granted 396,214 38.68

Vested (1) (122,553) 45.50

Forfeited (2) (95,252) 52.70

Nonvested Performance Units outstanding, December 31, 2009 612,436 47.94

Represents the entire amount of performance units which vested during the year ended December 31, 2009, all of which were outstanding as of December 31, 2009.(1)

Includes the reduction to the number of units for the expected payout based on the specified performance criteria at the end of the performance period, December 31, 2009, (2)

for the 2007 and 2008 awards at less than 100%.

The weighted average grant date fair value of performance units granted during the year ended December 31, 2009, 2008, and 2007 was $39.00, $57.24 and $40.45,

respectively.

Stock Awards On January 7, 2010 and January 2, 2009 and 2008, each non-

employee Director received an additional 1,200 shares of Company stock. The 2010

stock award will be expensed in the first quarter of 2010 based on the fair market

value of the Company’s common stock at December 31, 2009. The 2009 stock

award was expensed in the first quarter of 2009 based on the fair market value

of the Company’s common stock at December 31, 2008. The 2008 stock award

was expensed in the first quarter of 2008 based on the fair market value of the

Company’s common stock at December 31, 2007.

Restricted Stock Awards On November 17, 2008, the Company issued to certain

executives 18,632 shares of restricted stock with a weighted average grant date fair

value of $39.58, based on the fair market value of the Company’s common stock at

November 17, 2008. These shares will be expensed over a three-year vesting period

beginning on the date of grant.

Common Stock Purchase Rights The Company has outstanding one common

share purchase right (a “Right”) for each outstanding share of common stock of the

Company. Generally, if any person or group acquires 15% or more of the Company’s

outstanding voting stock without prior written consent of the Company’s Board

of Directors, these Rights become exercisable (except for rights held by the

acquiring person). The Rights are currently scheduled to expire in August 2010.



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 Company's

approach to serving customers and reporting sales rather than any internal division

used to allocate resources. Net sales for the Company's 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 Company's 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 Company's 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 Company’s 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





NOTE 14: PENSION AND OTHER POST-RETIREMENT BENEFIT PLANSThe 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 PlansPost-Retirement

Medical Benefit PlansUnited States International

2009 2008 2009 2008 2009 2008

Rec onciliation of funded status of the plans and

the amounts included in the Company's

Consolidated Balance Sheets at December 31:

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 status

Funded status $ (23.2) $ (16.3) $ (27.6) $ (37.2) $ (46.0) $ (41.8)

Net Consolidated Balance Sheet asset/(liability) $ (23.2) $ (16.3) $ (27.6) $ (37.2) $ (46.0) $ (41.8)

Amounts recognized in the Consolidated Balance Sheets:

For years after adoption of the funded status provisions of SFAS 158

Noncurrent assets $ — $ — $ 0.5 $ — $ — $ —

Current liabilities — — (0.4) (0.4) (3.0) (2.3)

Pension and post-retirement benefits (23.2) (16.3) (27.7) (36.8) (43.0) (39.5)

Net amount recognized $ (23.2) $ (16.3) $ (27.6) $ (37.2) $ (46.0) $ (41.8)

Re conciliation of amounts recognized in the Consolidated

Balance Sheets

Initial net (obligation) $ — $ — $ (0.2) $ (0.3) $ — $ —

Prior service (cost) credit (1.1) (1.4) (0.9) (1.1) 7.4 8.5

Net (loss) gain (72.3) (62.7) (28.9) (38.4) 2.5 4.0

Accumulated other comprehensive (loss) income $ (73.4) $ (64.1) $ (30.0) $ (39.8) $ 9.9 $ 12.5

Accumulated contributions in excess (less than) of net periodic benefit cost 50.2 47.8 2.4 2.6 (55.9) (54.3)

Net amount liability recognized in statement of financial position $ (23.2) $ (16.3) $ (27.6) $ (37.2) $ (46.0) $ (41.8)

Approximately $21.0 of the 2009 actuarial loss relates to increases in the present value, due to a reduction in interest rates, of ceratin pension benefits provided to a specific (1)

group of participants.







2009 2008 2007 2009 2008 2007 2009 2008 2007

Cha nges in plan assets and benefit

obligations recognized in other

comprehensive income

Net loss (gain) arising during the year $ 14.1 $ 41.5 $ (1.4) $ (8.4) $ 21.1 $ (7.8) $ 1.5 $ 1.3 $ (2.3)

Eff ect of exchange rates on amounts included

in AOCI — — — 1.8 (4.1) 1.2 — — —

Am ounts recognized as a component of net

periodic benefit cost

Am ortization or curtailment recognition of prior

service credit (cost) (0.4) (0.5) (0.4) (0.3) (0.3) (0.2) 1.0 1.1 1.0

Am ortization or settlement recognition of net

gain (loss) (4.5) (1.1) (1.0) (2.8) (0.3) (1.3) — 0.1 —

Tot al recognized in other comprehensive loss

(income) $ 9.2 $ 39.9 $ (2.8) $ (9.7) $ 16.4 $ (8.1) $ 2.5 $ 2.5 $ (1.3)

Tot al recognized in net periodic benefit cost

and other comprehensive

loss (income) $ 22.7 $ 45.2 $ 1.7 $ 0.9 $ 23.4 $ 0.9 $ 5.8 $ 4.8 $ 1.0

Est imated amounts that will be amortized

from accumulated other comprehensive

income over the next fiscal year

Initial net (obligation) $ — $ — $ — $ (0.1) $ — $ — $ — $ — $ —

Prior service (cost) credit (0.4) (0.4) (0.4) (0.2) (0.2) (0.3) 1.0 1.0 1.0

Net (loss) gain (5.0) (4.5) (1.1) (0.8) (2.4) (0.3) — — 0.1

Total estimated amortization $ (5.4) $ (4.9) $ (1.5) $ (1.1) $ (2.6) $ (0.6) $ 1.0 $ 1.0 $ 1.1

The components of the net periodic benefit costs are as follows:



2009 2008 2007 2009 2008 2007 2009 2008 2007

Service cost $ 6.2 $ 5.8 $ 5.4 $ 6.6 $ 8.0 $ 8.8 $ 1.0 $ 1.0 $ 1.1

Interest cost 6.5 6.0 5.1 7.6 7.9 6.3 2.6 2.4 2.2

Expected return on plan assets (7.1) (7.9) (7.4) (6.7) (9.5) (7.6) — — —

Amortization 4.9 1.4 1.4 3.2 0.6 1.5 (1.1) (1.1) (1.0)

Special termination benefit recognized 3.0 — — — — — 0.7 — —

Settlement (gain)/loss — — — (0.2) — — — — —

Net periodic benefit cost $ 13.5 $ 5.3 $ 4.5 $ 10.5 $ 7.0 $ 9.0 $ 3.2 $ 2.3 $ 2.3



NOTE 14: PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS (continued)




The rate assumptions associated with the pension and post-retirement medical benefit plans to determine benefit obligations and additional year-end information are

as follows:

Pension Plans Post-Retirement


2009 2008 2009 2008 2009 2008

Assumptions to determine benefit obligations

Discount rate 5.65% 6.35% 4.40% 4.16% 5.85% 6.25%

Compensation rate increase 3.60% 3.60% 3.13% 2.98% n/a n/a

Measurement date Dec-31 Dec-31 Dec-31 Dec-31 Dec-31 Dec-31

Additional year-end information

Accumulated benefit obligation $ 139.3 $ 96.8 $ 186.6 $163.1 n/a n/a

Pla ns with accumulated benefit obligations

in excess of plan assets:

Projected benefit obligation $ 148.5 $108.6 $ 15.3 $131.9 n/a n/a

Accumulated benefit obligation 139.3 96.8 12.5 118.1 n/a n/a

Fair value of plan assets 125.3 92.3 — 96.8 n/a n/a

Pla ns with projected benefit obligations

in excess of plan assets:

Projected benefit obligation $ 148.5 $108.6 $ 202.9 $180.8 $ 46.0 $ 41.8

Fair value of plan assets 125.3 92.3 174.7 143.6 — —

The rate assumptions associated with the pension and post-retirement medical benefit plans to determine periodic pension costs are as follows:



2009 2008 2007 2009 2008 2007 2009 2008 2007

Discount rate 6.35% 6.30% 5.55% 4.16% 4.35% 3.60% 6.25% 6.45% 5.55%

Expected rate of return on plan assets 8.25% 8.25% 8.25% 4.84% 5.66% 5.08% n/a n/a n/a

Compensation rate increase 3.60% 3.60% 3.25% 2.98% 3.50% 3.31% n/a n/a n/a

The expected employer contributions and benefit payments are shown in the following table for the pension and post-retirement medical benefit plans:


Medical

Benefit Plans(1)

Expected

Medicare

Subsidy ReceiptsCash Flows

Year

Ending United States International

Ex pected employer contributions 2010 $ — $ 5.2 $ 2.9 n/a

Ex pected benefit payments for fiscal year ending 2010 22.7 3.8 2.9 0.2

2011 8.3 4.0 3.0 0.3

2012 9.4 4.1 3.1 0.3

2013 10.2 4.4 3.2 0.4

2014 10.6 4.7 3.3 0.4

Next 5 years 68.2 28.1 18.2 3.0

Expected payments for Post-Retirement Medical Benefit Plans are shown net of the expected Medicare subsidy receipts.(1)






Pension Plans For purposes of selecting a discount rate, the present value of the

cash flows as of the measurement date is determined using the spot rates from the

Mercer Yield Curve, and based on the present values, a single equivalent discount

rate is developed. This rate is the single uniform discount rate that, when applied

to the same cash flows, results in the same present value of the cash flows as of

the measurement date. The plans are assumed to continue in force for as long as

the assets are expected to be invested. In estimating the expected long-term rate

of return on assets, appropriate consideration is given to historical performance for

the major asset classes held or anticipated to be held by the Plan and to current

forecasts of future rates of return for those asset classes. Cash flow and expenses are

taken into consideration to the extent that the expected return would be affected

by them. Because assets are held in qualified trusts, expected returns are not

reduced for taxes.

The assets of the pension plans are invested in institutionally acceptable

investments to produce a diversified portfolio. The Company believes the

investments are sufficiently diversified to maintain a reasonable level of risk without

unduly sacrificing return. Target asset allocations and weighted average asset

allocations at December 31, 2009 are as follows:

Target Allocations

Weighted Average

Asset Allocations

U.S.

Plans

International

Plans

U.S.

Plans

International

Plans

Equity Securities 75–85% 38–50% 69% 45%

Real Estate — 6–12% — 9%

Debt Securities 15–30% 36–57% 17% 39%

Other 0–10% 0–10% 14% 7%

Fair Value Measurements at December 31, 2009

Assets

Quoted Prices in

Active Markets for

Identical Assets

(Level 1(1))

Significant Other

Observable Inputs

(Level 2(2)) Total

Mutual funds $ — $ — $ —

Corporate stocks – common 35.9 — 35.9

Government debt 52.5 — 52.5

Corporate and

non-government debt — — —

Real estate 7.4 8.4 15.9

Common/collective trust

funds – equity — 130.8 130.8


funds – Government debt — 10.6 10.6


funds – Corporate and other

non-government debt — 28.1 28.1

Insurance group annuity

contracts — — —


funds – real estate — 0.4 0.4

Derivatives — — —

Cash and cash equivalents 2.4 23.0 25.4

Other 0.4 3.0 3.4

Total $ 98.7 $ 204.3 $ 303.0

Level 1 instruments use observable market prices for the identical item in active (1)

markets and have the most reliable valuations.

Level 2 instruments are valued through broker/dealer quotation or through (2)

market-observable inputs for similar items in active markets.

Investment Strategy The U.S. Plan’s overall investment strategy is to hold a mix

of appoximately 80% of investments in U.S. and International equities and 20% in

bonds. Equities are managed in passive and managed funds across various asset

classes. Bond funds contain government and investment-grade bonds.

The trustee has engaged an investment manager for the U.S. Plan that has the

responsibility of selecting investment fund managers with demonstrated experience

and expertise and funds with demonstrated historical performance meeting the

Plan’s investment guidelines.

The UK Plan’s overall investment strategy is to hold a mix of approximately 70%

of investments in equities, 42% UK and 28% non-UK equities, and 30% in bonds.

Equities are managed in passive and managed funds. Bond funds contain

government and investment grade bonds. A small portion of investments are held

in insured annuities.

The Swiss fund’s overall target investment strategy is to achieve a mix of 27.5%

equities, 54.5% bonds, 15% real estate and 3% other. Equities are invested in large

Swiss companies and institutional funds. Bond funds contain government and

investment-grade bonds. Real estate holdings are in an institutional real estate fund.

The Ireland Plan invests with insurance companies. The investments are in insured

arrangements in which a portion have guaranteed annuity rates.

The trustees of the International Plans have engaged institutions that are believed

to be reputable to invest the Plans’ assets in funds with demonstrated historical

performance and manage the Plans’ assets in accordance with investment

guidelines developed by the trustees.

Post-Retirement Medical Benefit Plans For purposes of selecting a discount rate,

the present value of the cash flows as of the measurement date is determined using

the spot rates from the Mercer Yield Curve, and based on the present values, a single

equivalent discount rate is developed. This rate is the single uniform discount rate

that, when applied to the same cash flows, results in the same present value of the

cash flows as of the measurement date. Assumed health care cost trend rates have

a significant effect on the amounts reported for the post-retirement medical benefit

plans. Medical costs were assumed to increase at an annual rate of 9% in 2009,

decreasing ratably to a growth rate of 4.5% in 2030 and remaining at 4.5% per year

thereafter. The effects of a one-percentage point decrease in the assumed health

care cost trend rates on the aggregate service and interest cost components and on

the post-retirement benefit obligations are decreases of $0.1 and $1.0, respectively.

The effects of a one-percentage point increase on the aggregate service and interest

cost components and on the post-retirement benefit obligations are increases of

$0.1 and $1.3, respectively. Benefits are funded as claims are paid.

401(k) Retirement Savings Plan The Company’s 401(k) retirement savings plan

provides retirement benefits to eligible U.S. employees in addition to those provided

by the pension plan. The plan permits participants to voluntarily defer a portion of

their compensation, subject to Internal Revenue Code limitations. The Company

also contributes a fixed amount per year to the account of each eligible employee

plus a percentage of the employee’s salary deferral. The Company’s policy is to fully

fund this plan. The cost for this plan was $9.4, $9.2, and $8.3 for the years ended

December 31, 2009, 2008 and 2007, respectively.





NOTE 17: ACCUMULATED OTHER COMPREHENSIVE INCOME Components of accumulated other comprehensive income, net of tax are as follows:

Foreign Currency

Translation Adjustment

Unrealized Gain (Loss)

on Securities

Pension and

Post-Retirement

Benefit Plans

Accumulated Other

Comprehensive Income

Balance, December 31, 2006 $ 107.3 $ 4.1 $ (30.7) $ 80.7

Current period change 71.5 (0.7) 8.4 79.2

Balance, December 31, 2007 178.8 3.4 (22.3) 159.9

Current period change (86.4) (6.0) (42.2) (134.6)

Balance, December 31, 2008 92.4 (2.6) (64.5) 25.3

Current period change 55.4 0.5 2.8 58.7

Balance, December 31, 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.



NOTE 16: SHARE REPURCHASESAt December 31, 2009 and December 31, 2008, the Company had repurchased a total of 93.7 million shares and 92.3 million shares, respectively. On October 20, 2008, the

Board of Directors authorized the repurchase of up to an additional 10.0 million shares under the existing repurchase program, to be available for purchase within three years,

bringing the total authorization to 100.0 million shares. There were 121.7 million shares outstanding as of December 31, 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.

NOTE 15: EARNINGS PER SHAREA reconciliation of basic and diluted earnings per share, together with the related shares outstanding for the years ended December 31 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 0.3 million stock options were excluded from the calculation of weighted average shares for the year ended December 31, 2009 and

December 31, 2008, respectively, because their effect was considered to be antidilutive.

NOTE 18: SUBSEQUENT EVENTSThe Company has evaluated events and transactions subsequent to December 31, 2009 through February 10, 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.



REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To The Board of Directors and Stockholders

Sigma-Aldrich Corporation:

We have audited the accompanying consolidated balance sheets of Sigma-Aldrich

Corporation and subsidiaries (the Company) as of December 31, 2009 and 2008,

and the related consolidated statements of income, stockholders’ equity and cash

flows for each of the years in the three-year period ended December 31, 2009.

We also have audited the Company’s internal control over financial reporting as

of December 31, 2009, based on criteria established in Internal Control – Integrated

Framework issued by the Committee of Sponsoring Organizations of the Treadway

Commission (COSO). The Company’s management is responsible for these

consolidated financial statements, for maintaining effective internal control over

financial reporting, and for its assessment of the effectiveness of internal control over

financial reporting, included in the accompanying Management’s Report on Internal

Control over Financial Reporting. Our responsibility is to express an opinion on these

consolidated financial statements and an opinion on the Company’s internal control

over financial reporting based on our audits.

We conducted our audits in accordance with generally accepted auditing standards

as established by the Auditing Standards Board (United States) and in accordance

with the auditing standards of the Public Company Accounting Oversight Board

(United States). Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the financial statements are free of

material misstatement and whether effective internal control over financial reporting

was maintained in all material respects. Our audits of the consolidated financial

statements included examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements, assessing the accounting principles

used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. Our audit of internal control over financial

reporting included assessing the risk that a material weakness exists, and testing

and evaluating the design and operating effectiveness of internal control based on

the assessed risk. Our audits also include performing such other procedures as we

considered necessary in the circumstances. We believe that our audits provide a

reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to

provide reasonable assurance regarding the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with

U.S. generally accepted accounting principles. A company’s internal control over

financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company; (2) provide reasonable

assurance that the transactions are recorded as necessary to permit preparation

of financial statements in accordance with U.S. generally accepted accounting

principles, and that receipts and expenditures of the company are being made only

in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use, or disposition of the company’s assets that could have

a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not

prevent or detect misstatements. Also, projections of any evaluation of effectiveness

to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the

policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present

fairly, in all material respects, the financial position of Sigma-Aldrich Corporation

and subsidiaries as of December 31, 2009 and 2008, and the results of their

operations and their cash flows for each of the years in the three-year period

ended December 31, 2009, in conformity with U.S. generally accepted accounting

principles. Also in our opinion, the Company maintained, in all material respects,

effective internal control over financial reporting as of December 31, 2009, based

on criteria established in Internal Control – Integrated Framework issued by the

Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in note 10 to the consolidated financial statements, effective January 1,

2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty

in Income Taxes, an interpretation of Statement of Financial Accounting Standard

No. 109 (ASC 740).

/s/ KPMG LLP

St. Louis, Missouri

February 9, 2010

MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate

internal control over financial reporting (as defined in the Securities Exchange

Act Rule 13a–15 (f )). Under the supervision and with the participation of our

management, including our principal executive officer and our principal financial

officer, we assessed the effectiveness of our internal control over financial

reporting as of December 31, 2009. In making this assessment, our management

used the criteria set forth by the Committee of Sponsoring Organizations of the

Treadway Commission (COSO) in the Internal Control-Integrated Framework. Our

management has concluded that, as of December 31, 2009, our internal control

over financial reporting is effective based on these criteria.


The CompanyEnabling Science to Improve Quality of Life: Sigma-Aldrich has the unrivalled scientific knowledge, backed by unsurpassed service and market-leading innovation, to be the trusted global partner of choice for our customers.

About Sigma-Aldrich Sigma-Aldrich is a leading Life Science and High Technology Materials company. Its biochemical and organic 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. The Company has customers in life science companies, university and government institutions, hospitals and in industry. Over one million scientists and technologists use its products. Sigma-Aldrich operates in 38 countries and has 7,700 employees providing excellent service worldwide. Sigma-Aldrich is committed to Accelerating Customer Success through Innovation and Leadership in Life Science, High Technology Materials and Service.



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Research Biotech2009 Sales: $332 million

Key Competitors: Thermo-Fisher, Life Technologies, Millipore, Qiagen, Techne

Research Essentials2009 Sales: $418 million

Key Competitors: EMerck, Life Technologies, Thermo-Fisher, VWR, Wako

Research Specialties2009 Sales: $793 million

Key Competitors: EMerck, GE Healthcare, Roche Biomolecular, Thermo-Fisher, Wako

SAFC2009 Sales: $605 million

Key Competitors: BASF, Covidien, DSM, Evonik Degussa, Lonza

The CompanyEnabling Science to Improve Quality of Life

Gilles A. CottierPresident, SAFC

Eric M. GreenVice President & Managing Director, International

Michael C.J. Harris Managing Director, Europe, Middle East, Africa

David W. JulienPresident, Global Supply Chain

Michael F. KananVice President & Corporate Controller

George L. MillerSr. Vice President, General Counsel & Secretary

Karen J. MillerSr. Vice President, Corporate Strategy & Development


Douglas W. Rau Vice President, Human Resources

Kirk A. Richter Vice President & Treasurer

Rakesh Sachdev Sr. Vice President, Chief Financial Officer & Chief Administrative Officer

David A. Smoller President, Research Biotech

Gerrit J.C. van den DoolVice President, Sales

Steven G. WaltonVice President, Environmental, Health & Safety

Franklin D. Wicks President, Research Specialties and Research Essentials & Managing Director, North America

Rebecca M. Bergman Vice President, New Therapies and Diagnostics, Cardiac Rhythm Management, Medtronic Inc.

George M. Church Professor of Genetics, Harvard Medical School

David R. Harvey Former Chairman of the Board

W. Lee McCollum Former Executive Vice President and Chief Financial Officer, S.C. Johnson and Son, Inc.


Avi M. Nash Managing Director, Avi Nash LLC; Former Partner, Goldman Sachs

Steven M. Paul, M.D. Former Executive Vice President for Science and Technology and Former President of the Lilly Research Laboratories of Eli Lilly and Company

J. Pedro Reinhard President, Reinhard & Associates; Former Chief Financial Officer, Dow Chemical Company

Timothy R.G. Sear Former Chairman & Chief Executive Officer, Alcon, Inc.

D. Dean Spatz Chief Executive Officer, Watasso Ventures; Former Chairman & Chief Executive Officer, Osmonics, Inc.

Barrett A. Toan Former Chairman & Chief Executive Officer, Express Scripts, Inc.

Annual Meeting Date: May 4, 2010 Time: 11:00 a.m. CDT Place: Sigma-Aldrich Life Science and High Technology Center, 2909 Laclede Ave., St. Louis, MO 63103

General Information Shares traded on NASDAQ Global Select Market, Trading symbol: SIAL

Transfer Agent American Stock Transfer and Trust Company, New York, NY 800-937-5449

10-K A copy of the Company’s Form 10-K annual report, as filed with the Securities and Exchange Commission, may be obtained without charge by writing to the Secretary, Sigma-Aldrich Corporation, P.O. Box 14508, St. Louis, Missouri 63178.

Corporate Offices Sigma-Aldrich Corporation 3050 Spruce Street St. Louis, Missouri 63103 800-521-8956 Fax: 314-286-7874 Email: [email protected] Website: sigma-aldrich.com

Office of the Chief Executive Board of Directors

Corporate Information

For the most up-to-date information about our Company visit our Investor Relations website at sigma-aldrich.com

Sigma-Aldrich®, Sigma®, SAGE™, CompoZr™, Ascentis®, Fluka®, Supelco®, Hydranal®, MISSION®, Prestige Antibodies®, ChemNavigator®, Material Matters™ and Aldrich® are trademarks of Sigma-Aldrich Biotechnology LP and Sigma-Aldrich Co. Sartorius Stedim Biotech® is a trademark of Sartorius Stedim Biotech GmbH. Ingenuity® is a registered trademark of Ingenuity Systems, Inc. The Scientist® is a trademark of Scientist, Inc. Facebook® is a registered trademark of Facebook Inc. Habitat for Humanity® is a registered trademark of Habitat for Humanity International.

This annual report is printed on FSC-certified paper. The pages are printed on 10% recycled stock.

3050 Spruce Street, St. Louis, Missouri 63103 sigma-aldrich.com

2009 Annual R epor t


Service

Innovation

Trust

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