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Executive Employment Agreement - SIGMA ALDRICH CORP - 3-26-2003

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Executive Employment Agreement - SIGMA ALDRICH CORP - 3-26-2003 Powered By Docstoc
					Exhibit 10(g) EXECUTIVE EMPLOYMENT AGREEMENT THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") dated January 1, 2003 ("Effective Date") by and between the Sigma-Aldrich Corporation, a Delaware corporation ("Company") and David Harvey ("Executive"). WHEREAS, Executive has been effective in his service to the Company and its subsidiaries; and WHEREAS, Company recognizes the valuable services that Executive has rendered and desires to be assured that Executive will continue his active participation in the business of the Company during management transition and thereafter and in the event there is any change in corporate structure which results in a Change of Control, as defined herein; and WHEREAS, Executive is willing to continue serving the Company and its subsidiaries and in exchange for the protection and other consideration set forth in this Agreement, is willing to give the Company, under certain circumstances, his covenant not to compete. NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein, the Company and Executive hereby agree as follows: ARTICLE I Definitions 1.1 Definitions. As used herein, the following terms shall have the following meanings. (a) "Affiliate" when used with reference to a Change of Control, shall be defined by reference to the Securities Exchange Act of 1934 and rules in effect thereunder as of the Effective Date of this Agreement. (b) "Associate" when used with reference to a Change of Control, shall be defined by reference to the Securities Exchange Act of 1934 and rules in effect thereunder as of the Effective Date of this Agreement. (c) "Beneficial Owner" when used with reference to a Change of Control, shall be defined by reference to the Securities and Exchange Act of 1934 and rules in effect thereunder as of the Effective Date of this Agreement. (d) "Board" means the board of directors of the Company. (e) "Cause" means (i) engaging by Executive in willful misconduct which is materially injurious to Company; (ii) conviction of Executive by a court of competent jurisdiction of, or entry of a plea of nolo contendere with respect to a felony; (iii) engaging by Executive in fraud, material dishonesty or gross misconduct in connection with the business of Company; (iv) engaging by Executive in any act of moral turpitude reasonably likely to materially and adversely affect Company or its business; or (v) Executive's current chronic abuse of or dependency on alcohol or drugs (illicit or otherwise).

(f) "Change of Control" occurs if any individual, corporation, partnership or other Person or entity, together with its Affiliates and Associates, acquires as the Beneficial Owner more than twenty-five percent (25%) in the aggregate of the outstanding shares of the Company entitled to vote in the election of directors, or a majority of directors elected to the Board, or a majority of the persons constituting a group authorized to hire or terminate employment of officers, if other than the Board, are different from the directors or persons constituting the Board or group just prior to the start of such period or a group other than the Board is created to hire or terminate employment of officers. (g) "Confidential Information" as used in Sections 2.5, 2.6 and 2.7 of this Agreement, shall mean all technical and

(f) "Change of Control" occurs if any individual, corporation, partnership or other Person or entity, together with its Affiliates and Associates, acquires as the Beneficial Owner more than twenty-five percent (25%) in the aggregate of the outstanding shares of the Company entitled to vote in the election of directors, or a majority of directors elected to the Board, or a majority of the persons constituting a group authorized to hire or terminate employment of officers, if other than the Board, are different from the directors or persons constituting the Board or group just prior to the start of such period or a group other than the Board is created to hire or terminate employment of officers. (g) "Confidential Information" as used in Sections 2.5, 2.6 and 2.7 of this Agreement, shall mean all technical and business information of the Company, or which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, similar information is revealed to the Company, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by Executive (alone or with others) or to which Executive shall have had access during his employment. Confidential Information shall include (among other things) all confidential data, designs, plans, notes, memoranda, work sheets, formulas, processes, and Customer and supplier lists. (h) "Customer" means any Person or entity to whom the Company has sold any products (i) in the case of ongoing employment, during the twenty-four (24) calendar months immediately preceding any dispute under Section 2.6 of this Agreement, and, (ii) in the case of the employment having ended, the twenty-four (24) calendar months preceding Executive's termination of employment. (i) "Good Reason" when used with reference to a voluntary termination by Executive from his employment with Company, shall mean (i) a reduction in Executive's base salary as in effect on the date hereof, or as the same may be increased from time to time, during the Employment Period; (ii) a reduction in Executive's status, position, responsibilities or duties during the Employment Period; or (iii) notice of termination of this Agreement by the Company pursuant to Section 2.4(a), provided Executive terminates employment with the Company within six months of the expiration of the Term. (j) "Person" means an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof. (k) "Potential Customer" shall mean any Person or entity who, during the applicable twenty-four (24) month period described above in Section 1.1(h) of this Agreement, has (i) been involved in discussions or negotiations with the Company for products sold by the Company; (ii) initiated contact with the Company in order to obtain information regarding products sold by the Company; (iii) been the subject of repeated personal contacts by Executive and/or any other Company employee for purposes of soliciting business for the Company; or (d) been the subject of the Company's efforts to gather, learn or evaluate information which may help the Company obtain any future order from such Person or entity. 2

ARTICLE II Employment 2.1 Employment. Company agrees to continue to employ Executive and Executive hereby accepts such employment with the Company, upon the terms and conditions set forth in this Agreement, for the period beginning on January 1, 2003 ("Start Date") and ending as provided in Section 2.4 of this Agreement (the "Employment Period"). 2.2 Position and Duties. (a) Commencing on the Start Date and continuing during the Employment Period, Executive shall serve as Chief Executive Officer of the Company or in such other capacity as the Board may determine. (b) Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company. The

ARTICLE II Employment 2.1 Employment. Company agrees to continue to employ Executive and Executive hereby accepts such employment with the Company, upon the terms and conditions set forth in this Agreement, for the period beginning on January 1, 2003 ("Start Date") and ending as provided in Section 2.4 of this Agreement (the "Employment Period"). 2.2 Position and Duties. (a) Commencing on the Start Date and continuing during the Employment Period, Executive shall serve as Chief Executive Officer of the Company or in such other capacity as the Board may determine. (b) Executive shall devote his best efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company. The Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. In the performance of his duties hereunder, Executive shall at all times report and be subject to the lawful direction of the Board and perform his duties hereunder subject to and in accordance with the resolutions or any other determinations of the Board and the certificate of incorporation and by-laws of the Company and applicable law. During the Employment Period, Executive shall not become an employee of any Person or entity other than the Company. This section shall not be construed to prohibit Executive from serving on the board of directors of one or more other entities (with the consent of the Board in the case of a forprofit entity) or from investing in a business to the extent consistent with the provisions of Section 2.6(a). 2.3 Base Salary, Bonus and Benefits. (a) Subject to the terms of this Agreement, in consideration of Executive's agreements contained herein, for the period beginning January 1, 2003, Executive's base salary shall be $725,000 per annum ("Base Salary"), which shall be payable in semi-monthly or other agreed-upon equal installments during the year and shall be subject to deductions for customary withholdings, including, without limitation, federal and state withholding taxes and social security taxes. Executive shall be entitled to the opportunity to earn annual performance bonuses (with a target bonus equal to 67% of base salary) in accordance with the Board-approved annual bonus program. In addition to the Base Salary, Executive shall be entitled, during the Employment Period to participate in all retirement, disability, pension, savings, health, medical, dental, insurance and other fringe benefits or plans of the Company generally available to executive employees. (b) Executive's cash compensation and bonus opportunity for 2004 and future years shall be reviewed and set annually by the Compensation Committee of the Board, but his base salary shall not be reduced below $725,000 per annum. (c) During the two-year period commencing on a Change of Control, Executive's Base Salary and bonus opportunity may not be reduced below the level established by the Compensation Committee of the Board immediately prior to the Change of Control. 3

(d) The Compensation Committee shall grant to the Executive 40,000 options to purchase Company stock (with an exercise price equal to the fair market value of the Company stock on the date of grant), 20,000 shares of restricted Company stock (subject to approval by Company stockholders), and a performance bonus award under which the Executive may earn up to $1,000,000 cash as of December 31, 2005. These awards shall be subject to a vesting schedule under which one-half of the value of the awards shall vest if the Executive is employed on December 31, 2005. All or a portion of the other half of the package will vest if the Executive is both employed on December 31, 2005 and the Company achieves performance goals to be established by the Board in accordance with the principles set forth in Section 2.3(e) below. If the Company achieves such performance goals in calendar years 2003, 2004, and/or 2005, 16-2/3% of the package will vest for each year such performance is achieved provided the Executive is employed on December 31, 2005. Even if the Company does not achieve the desired level of performance in each of 2003, 2004, and 2005, the other half of the package will nonetheless vest in full if the Executive is employed on December 31, 2005 and the Company achieves the desired performance for the three-year period beginning January 1, 2003 and ending December 31,

(d) The Compensation Committee shall grant to the Executive 40,000 options to purchase Company stock (with an exercise price equal to the fair market value of the Company stock on the date of grant), 20,000 shares of restricted Company stock (subject to approval by Company stockholders), and a performance bonus award under which the Executive may earn up to $1,000,000 cash as of December 31, 2005. These awards shall be subject to a vesting schedule under which one-half of the value of the awards shall vest if the Executive is employed on December 31, 2005. All or a portion of the other half of the package will vest if the Executive is both employed on December 31, 2005 and the Company achieves performance goals to be established by the Board in accordance with the principles set forth in Section 2.3(e) below. If the Company achieves such performance goals in calendar years 2003, 2004, and/or 2005, 16-2/3% of the package will vest for each year such performance is achieved provided the Executive is employed on December 31, 2005. Even if the Company does not achieve the desired level of performance in each of 2003, 2004, and 2005, the other half of the package will nonetheless vest in full if the Executive is employed on December 31, 2005 and the Company achieves the desired performance for the three-year period beginning January 1, 2003 and ending December 31, 2005. Accelerated vesting of the entire package shall occur in the event of Executive's employment termination prior to December 31, 2005 under the circumstances described in Sections 2.4(c)(ii) or 2.4(d). A pro rata portion of the awards shall vest in the event of the Executive's death or disability prior to December 31, 2005. A pro rata portion of 50% of the awards shall vest in the event of Executive's involuntary termination without Cause prior to December 31, 2005. (e) The performance goals used to measure vesting under Section 2.3(d) above will be based upon the Company's achievement of performance equal to or better than the average performance of its peers with respect to one or more or a combination of revenue growth, earnings per share growth, and growth in operating cashflow, as determined by the Board in its discretion. One possible peer group is set forth in Exhibit A to this Agreement. In recognition of the fact that no other business constitutes an exact peer to the Company, the Board may modify the peer group annually, or may determine that the Company's performance will be measured against a weighted market basket index of companies in the three sectors corresponding to the Company's business - life sciences, biotech and chemicals. These three sectors will be appropriately weighted to reflect the percentage of the Company's business in each such sector. In determining performance of the Company relative to its peers, the Board in its discretion shall make appropriate adjustments for acquisitions or divestitures, unusual or nonrecurring items which have a material effect, and the impact of currency adjustments. 2.4 Term. (a) General Term. This Agreement shall commence on the Effective Date and terminate on December 31, 2005 unless extended prior to that date. The Term shall automatically be extended for successive additional one-year periods unless either party to this Agreement provides the other party with notice of termination of this Agreement at least one hundred and eighty (180) days prior to the expiration of the original three-year period or any oneyear period thereafter. (b) Termination for Cause or Voluntary Termination. If the Executive is terminated by the Company for Cause or if the Executive voluntarily terminates his employment in any manner except as provided in Section 2.4(d) prior to the end of the Employment Period, the 4

Executive shall be entitled only to his Base Salary through the date of termination, but shall not be entitled to any further Base Salary or any applicable bonus or Benefits for that year or any future year, except as may be provided in an applicable benefit plan or program, or to any severance compensation of any kind, nature or amount. (c) Termination Without Cause. (i) Before or More Than Twenty-Four Months Following Change of Control. If the Executive is involuntarily terminated by the Company prior to the end of the Employment Period without Cause before a Change in Control (excluding any involuntary termination which is a direct result of a Change in Control and which occurs within 60 days before a Change in Control) or more than twenty-four months following a Change of Control, the Executive shall be entitled to all previously earned and accrued but unpaid Base Salary up to the date of such termination and severance pay equal to one year of Base Salary. Such severance payments will be made in equal installments over a one-year period payable on the dates on which the Executive's Base Salary would have

Executive shall be entitled only to his Base Salary through the date of termination, but shall not be entitled to any further Base Salary or any applicable bonus or Benefits for that year or any future year, except as may be provided in an applicable benefit plan or program, or to any severance compensation of any kind, nature or amount. (c) Termination Without Cause. (i) Before or More Than Twenty-Four Months Following Change of Control. If the Executive is involuntarily terminated by the Company prior to the end of the Employment Period without Cause before a Change in Control (excluding any involuntary termination which is a direct result of a Change in Control and which occurs within 60 days before a Change in Control) or more than twenty-four months following a Change of Control, the Executive shall be entitled to all previously earned and accrued but unpaid Base Salary up to the date of such termination and severance pay equal to one year of Base Salary. Such severance payments will be made in equal installments over a one-year period payable on the dates on which the Executive's Base Salary would have otherwise been paid if Executive's employment had continued. All payments shall be subject to deductions for customary withholdings, including, without limitation, federal and state withholding taxes and social security taxes. (ii) Within Twenty-Four Months After Change of Control. If the Executive is involuntarily terminated by the Company without Cause prior to the end of the Employment Period within twenty-four months after a Change of Control or within 60 days before a Change in Control if such involuntary termination without Cause is a direct result of the Change in Control, the Executive shall be entitled to all previously earned and accrued but unpaid Base Salary up to the date of such termination and severance pay equal to three (3) years of Base Salary. Such severance payments will be made in equal installments over a three-year period payable on the dates on which the Executive's Base Salary would have otherwise been paid if Executive's employment had continued. All payments shall be subject to deductions for customary withholdings, including, without limitation, federal and state withholding taxes and social security taxes. (d) Voluntary Termination for Good Reason. If Executive voluntarily terminates his employment for Good Reason within twenty-four (24) months after a Change of Control, Executive shall notify Company in writing if he believes the termination is for Good Reason. Executive shall set forth in reasonable detail why Executive believes Good Reason exists. If such termination is determined to be for Good Reason, Executive shall be entitled to all previously earned and accrued but unpaid Base Salary up to the date of such termination and severance pay equal to three (3) years of Base Salary. Such severance payments will be made in equal installments over a threeyear period payable on the dates on which the Executive's Base Salary would have otherwise been paid if Executive's employment had continued. All payments shall be subject to deductions for customary withholdings, including, without limitation, federal and state withholding taxes and social security taxes. (e) No Mitigation. To the extent that Executive shall receive compensation for personal services from employment other than with the Company subsequent to a termination of Executive's employment with the Company, the amounts so earned shall not be offset 5

against the amounts (if any) due under this Agreement following Executive's termination of employment. (f) Limitation on Certain Additional Payments. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Company to or for the benefit of Executive ("Payments") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended ("Code"), then the Payments due under this Agreement shall be decreased to the greatest amount that could be paid to Executive such that receipt of Payments would not give rise to any such excise tax. (g) Severance Forfeiture. Executive agrees that the Executive shall be entitled to the severance pay as set forth in this Section 2.4 only if the Executive has not materially breached as of the date of termination any provisions of this Agreement and does not materially breach such provisions at any time during the period for which such payments are to be made. The Company's obligation to make such payments will terminate upon the occurrence of any such material breach during the severance period. (h) No Additional Severance. Executive hereby agrees that no severance compensation of any kind, nature or

against the amounts (if any) due under this Agreement following Executive's termination of employment. (f) Limitation on Certain Additional Payments. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Company to or for the benefit of Executive ("Payments") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended ("Code"), then the Payments due under this Agreement shall be decreased to the greatest amount that could be paid to Executive such that receipt of Payments would not give rise to any such excise tax. (g) Severance Forfeiture. Executive agrees that the Executive shall be entitled to the severance pay as set forth in this Section 2.4 only if the Executive has not materially breached as of the date of termination any provisions of this Agreement and does not materially breach such provisions at any time during the period for which such payments are to be made. The Company's obligation to make such payments will terminate upon the occurrence of any such material breach during the severance period. (h) No Additional Severance. Executive hereby agrees that no severance compensation of any kind, nature or amount shall be payable to Executive, except as expressly set forth in this Section 2.4, and Executive hereby irrevocably waives any claim for any other severance compensation. (i) Death or Disability. The Company's obligation under this Agreement terminates on the last day of the month in which the Executive's death occurs or on the date as of which Executive first becomes entitled to receive disability benefits under the Company's long-term disability plan. The Company shall pay to Executive or the Executive's estate all previously earned and accrued but unpaid Base Salary up to such date. Thereafter, the Executive or his estate shall not be entitled to any further Base Salary, bonus or Benefits for that year or any subsequent year, except as may be provided in an applicable benefit plan or program. 2.5 Confidential Information. (a) Executive recognizes that the Company is engaged in the business of research, development, manufacture and sale of chemicals, chemical products and allied activities throughout the world (the "Company's Business"), which business requires for its successful operation the fullest security of its Confidential Information of which Executive will acquire knowledge during the course of his employment. (b) Executive shall use his best efforts and diligence both during and after his employment with the Company, regardless of how, when or why Executive's employment ends, to protect the confidential, trade secret and/or proprietary character of all Confidential Information. Executive shall not, directly or indirectly, use (for himself or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of Executive's duties for the Company. 6

(c) Executive shall promptly deliver to the Company, at the termination of the Employment Period or at any other time at the Company's request, without retaining any copies, all documents, information and other material in Executive's possession or control containing, reflecting and/or relating, directly or indirectly, to any Confidential Information. (d) Executive's obligations under this Section 2.5 shall also extend to the confidential, trade secret and proprietary information learned or acquired by Executive during his employment from others with whom the Company has a business relationship. (e) Executive's breach of Section 2.5 of this Agreement shall relieve Company of its obligations (if any) to pay any further severance benefits under this Agreement. 2.6 Competitive Activity. (a) Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during his employment with the Company and for a period of two (2) years following his employment with the Company, regardless of how, when or why Executive's employment terminates, (i) engage in or invest in any business that is engaged in any work or activity that involves a product, process, service or development

(c) Executive shall promptly deliver to the Company, at the termination of the Employment Period or at any other time at the Company's request, without retaining any copies, all documents, information and other material in Executive's possession or control containing, reflecting and/or relating, directly or indirectly, to any Confidential Information. (d) Executive's obligations under this Section 2.5 shall also extend to the confidential, trade secret and proprietary information learned or acquired by Executive during his employment from others with whom the Company has a business relationship. (e) Executive's breach of Section 2.5 of this Agreement shall relieve Company of its obligations (if any) to pay any further severance benefits under this Agreement. 2.6 Competitive Activity. (a) Executive shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during his employment with the Company and for a period of two (2) years following his employment with the Company, regardless of how, when or why Executive's employment terminates, (i) engage in or invest in any business that is engaged in any work or activity that involves a product, process, service or development which is then competitive with and the same as or similar to a product, process, service or development on which Executive worked or with respect to which Executive had access to Confidential Information while with the Company, or (ii) otherwise compete against the Company's Business. (b) Following expiration of the two-year period in Section 2.6(a) of this Agreement, Executive shall continue to be obligated under Section 2.5 of this Agreement not to use or to disclose Confidential Information so long as it shall remain proprietary or protectible as confidential or trade secret information. (c) Following termination of Executive's employment with the Company for any reason, Executive agrees to advise the Company of his new employer, work location and job responsibilities within three (3) days after accepting new employment if such new employment commences within two (2) years following Executive's termination of employment with the Company. Executive further agrees to keep the Company so advised of any change in his employment for two (2) years following the termination of his employment with the Company. (d) Executive understands that the intention of Sections 2.5 and 2.6 of this Agreement is not to prevent the Executive from earning a livelihood and Executive agrees nothing in this Agreement would prevent Executive from earning a livelihood utilizing his general purchasing, sales, professional or technical skills in any of the hospitals, businesses, research or manufacturing facilities of companies which are not directly or indirectly in competition with the Company. (e) Executive agrees that during his employment with the Company and for a period of two (2) years following Executive's termination of employment, regardless of how, when or why employment ceased, Executive shall not in any manner or in any capacity, directly or indirectly, for himself or any other Person or entity, actually or attempt to: (i) solicit any Customer or Potential Customer of the Company for the purpose of selling any products 7

competitive with products sold by the Company, or otherwise interfere with or take away any Customer or Potential Customer of the Company or the business of any such Customer or Potential Customer; or (ii) interfere with the Company's relationship with any Customer or supplier of the Company. (f) During Executive's employment with the Company and for a period of two (2) years following Executive's termination of employment, regardless of how, why or when employment ceased, Executive shall not, directly or indirectly, solicit for employment, hire or offer employment to, or otherwise aid or assist (by disclosing information about employees or otherwise) any other person or entity other than the Company in soliciting for employment, hiring or offering employment to, any employee of the Company. (g) Executive's breach of Section 2.6 of this Agreement shall relieve Company of its obligations (if any) to pay any further severance benefits under this Agreement.

competitive with products sold by the Company, or otherwise interfere with or take away any Customer or Potential Customer of the Company or the business of any such Customer or Potential Customer; or (ii) interfere with the Company's relationship with any Customer or supplier of the Company. (f) During Executive's employment with the Company and for a period of two (2) years following Executive's termination of employment, regardless of how, why or when employment ceased, Executive shall not, directly or indirectly, solicit for employment, hire or offer employment to, or otherwise aid or assist (by disclosing information about employees or otherwise) any other person or entity other than the Company in soliciting for employment, hiring or offering employment to, any employee of the Company. (g) Executive's breach of Section 2.6 of this Agreement shall relieve Company of its obligations (if any) to pay any further severance benefits under this Agreement. 2.7 Ideas, Inventions and Discoveries. (a) Executive shall promptly disclose to the Company any ideas, inventions or discoveries, whether or not patentable, which Executive may conceive or make (alone or with others) during the Employment Period, whether or not during working hours, and which, directly or indirectly (i) relate to matters within the scope of Executive's duties or field of responsibility during Executive's employment with the Company; or (ii) are based on Executive's knowledge of the actual or anticipated business or interest of the Company; or (iii) are aided by the use of time, materials, facilities or information of the Company. (b) Executive hereby assigns to the Company or its designee, without further compensation, all of the right, title and interest in all such ideas, inventions or discoveries in all countries of the world except for patents currently held by Executive developed outside of employment with the Company. (c) Without further compensation but at the Company's expense, Executive shall give all testimony and execute all patent applications, rights of priority, assignments and other documents and in general do all lawful things requested of Executive by the Company to enable the Company to obtain, maintain and enforce protection of such ideas, inventions and discoveries for and in the name of the Company or its designee, as the case may be, in all countries of the world. However, should Executive render any of the services in this Section 2.7(c) during a two-year period following termination of Executive's employment, Executive shall be compensated at a rate per hour equal to the base salary Executive received from the Company at the time of termination and shall be reimbursed for reasonable out-of-pocket expenses incurred in rendering the services. (d) Executive's breach of Section 2.7 of this Agreement shall relieve Company of its obligations (if any) to pay any further severance benefits under this Agreement. 8

ARTICLE III Miscellaneous 3.1 Executive's Representations. Employee hereby represents and warrants to the Company that (i) Executive's execution, delivery and performance of this Agreement do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he fully understands the terms and conditions contained herein. 3.2 Survival. Sections 2.5, 2.6 and 2.7 and Sections 3.3 through 3.12 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 3.3 Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally

ARTICLE III Miscellaneous 3.1 Executive's Representations. Employee hereby represents and warrants to the Company that (i) Executive's execution, delivery and performance of this Agreement do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he fully understands the terms and conditions contained herein. 3.2 Survival. Sections 2.5, 2.6 and 2.7 and Sections 3.3 through 3.12 shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period. 3.3 Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally, mailed by certified or registered mail, return receipt requested and postage prepaid, or sent via a nationally recognized overnight courier, or sent via facsimile to the recipient. Such notices, demands and other communications will be sent to the address indicated below: To the Company: Mr. Kirk Richter Sigma-Aldrich Corporation 3050 Spruce St. Louis, MO 63103 To Executive: Mr. David Harvey 1470 East Bay Point Road Whitefish Bay, Wisconsin 53217 With a copy to: Mr. Joseph T. Porter, Jr. Polsinelli Shalton Welte 100 South Fourth Street, Suite 1100 St. Louis, MO 63102 or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. 3.4 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any 9

jurisdiction, (a) the parties agree that such provision(s) will be enforced to the maximum extent permissible under the applicable law, and (b) any invalidity, illegality or unenforceability of a particular provision will not affect any other provision of this Agreement. 3.5 Successors and Assigns. Except as otherwise provided herein, all covenants and agreements contained in this Agreement shall bind and inure to the benefit of and be enforceable by the Company, and their respective successors and assigns. This Agreement is personal to Executive and except as otherwise specifically provided

jurisdiction, (a) the parties agree that such provision(s) will be enforced to the maximum extent permissible under the applicable law, and (b) any invalidity, illegality or unenforceability of a particular provision will not affect any other provision of this Agreement. 3.5 Successors and Assigns. Except as otherwise provided herein, all covenants and agreements contained in this Agreement shall bind and inure to the benefit of and be enforceable by the Company, and their respective successors and assigns. This Agreement is personal to Executive and except as otherwise specifically provided herein, this Agreement, including the obligations and benefits hereunder, may not be assigned to any party by Executive. 3.6 Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 3.7 Counterparts. This Agreement may be executed in one or more identical counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 3.8 Waiver. Neither any course of dealing nor any failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of such right, power or privilege or of any other right, power or privilege or of the same right, power or privilege in any other instance. Without limiting the generality of the foregoing, Executive's continued employment without objection shall not constitute Executive's consent to, or a waiver of Executive's rights with respect to, any circumstances constituting Good Reason. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged therewith, and, in the case of Company, by its duly authorized officer. 3.9 Entire Agreement. This instrument constitutes the entire agreement of the parties in this matter and shall supersede any other agreement between the parties, oral or written, concerning the same subject matter including, but not limited to, any prior employment and severance agreements, including the Employment Agreement executed by the parties on May 1, 1984 and the agreement regarding confidential information and competitive activities executed by the parties on August 30, 1982. 3.10 Amendment. This Agreement may be amended only by a writing which makes express reference to this Agreement as the subject of such amendment and which is signed by Executive and by a duly authorized officer of the Company. 3.11 Governing Law. This Agreement shall be signed by the parties in St. Louis, Missouri. All questions concerning the construction, validity and interpretation of this Agreement and exhibits and schedules hereto will be governed by and construed in accordance with the domestic law of the State of Missouri, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Missouri or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Missouri. Any litigation relating to or arising out of this Agreement shall be filed and litigated exclusively in the St. Louis County Circuit Court or the United States District Court for the Eastern District of Missouri. 3.12 Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys' fees) 10

caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including, without limitation, Sections 2.5, 2.6 and 2.7 hereof, and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. 3.13 Exit Interview. To ensure a clear understanding of this Agreement, Executive agrees, at the time of termination of Employee's employment, to engage in an exit interview with the Company at a time and place designated by the Company and at the Company's expense. Executive understands and agrees that during said

caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including, without limitation, Sections 2.5, 2.6 and 2.7 hereof, and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. 3.13 Exit Interview. To ensure a clear understanding of this Agreement, Executive agrees, at the time of termination of Employee's employment, to engage in an exit interview with the Company at a time and place designated by the Company and at the Company's expense. Executive understands and agrees that during said exit interview, Executive may be required to confirm that he will comply with his on-going obligations under this Agreement. The Company may elect, at its option, to conduct the exit interview by telephone. 3.14 Future Employment. Executive shall disclose the existence of this Agreement to any new employer or potential new employer which offers products or services that compete with the Company's Business if such new employment commences within two (2) years following Executive's termination of employment with the Company. Executive consents to the Company informing any subsequent employer of Executive, or any entity which the Company in good faith believes is, or is likely to be, considering employing Executive, of the existence and terms of this Agreement if such subsequent employment commences (or is expected to commence) within two (2) years following the Executive's termination of employment with the Company. IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first written above. SIGMA-ALDRICH CORPORATION
By: /s/ Kirk Richter ------------------

Name: Kirk Richter Title: Treasurer

EXECUTIVE
By: /s/ David Harvey -----------------Name: David Harvey

11

EXHIBIT A INITIAL PEER GROUP Apogent Technologies, Inc. Applied Biosystems Group Fisher Scientific International, Inc. Invitrogen Corporation Waters Corporation 12

Exhibit 10(q)

EXHIBIT A INITIAL PEER GROUP Apogent Technologies, Inc. Applied Biosystems Group Fisher Scientific International, Inc. Invitrogen Corporation Waters Corporation 12

Exhibit 10(q) EMPLOYMENT AGREEMENT This AGREEMENT ("Agreement") effective as of _______________ is entered into by and between the Sigma-Aldrich Corporation, a Delaware corporation ("Company") and _______________ ("Executive"), an individual. WITNESS THAT: WHEREAS, Executive has been effective in his or her service to the Company and its subsidiaries, and the Company recognizes the valuable services that Executive has rendered and desires to be assured that Executive will continue his or her active participation in the business of the Company; and WHEREAS, Executive is willing to serve the Company and its subsidiaries but desires assurance that in the event of any change in control of the Company that Executive will continue to have the opportunity of employment as provided under the terms of this Agreement; NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein, Company and Executive hereby agree as follows: 1. Term. This Agreement shall commence on the date hereof and end on the last day of April, 2005 unless terminated or extended prior to that date. On April 30, 2003 and the last day of April every year thereafter, this Agreement shall be automatically extended one additional year unless, prior to such last day of April, the Company shall have delivered to Executive or Executive shall have delivered to the Company written notice that the Executive's employment hereunder will not be so extended. Anything in this Paragraph 1 to the contrary notwithstanding, Executive and Company shall each have the right to terminate this Agreement at any time by a 60 day written notice to the other; provided, however, that such 60 day termination right shall no longer be available to the Company after a change in control of the Company. 2. Compensation. Executive's cash compensation shall be reviewed and set annually either by the Board of Directors of the Company or by the Compensation Committee of the Board of Directors. Such cash compensation shall be paid either by the Company or by a subsidiary of the Company designated by the Board of Directors of the Company. The salary portion of cash compensation shall be paid to Executive in (1)

twenty-four equal installments during the year. The cash bonus portion, if any, shall be paid no later than 90 days following the end of the year in which it is earned. Subsequent to a change in control of the Company, Executive's total cash compensation (salary plus bonus) may not be reduced below the level in effect immediately prior to the change in control. 3. Duties. Executive shall perform the duties assigned from time to time by the Board of Directors of the Company.

Exhibit 10(q) EMPLOYMENT AGREEMENT This AGREEMENT ("Agreement") effective as of _______________ is entered into by and between the Sigma-Aldrich Corporation, a Delaware corporation ("Company") and _______________ ("Executive"), an individual. WITNESS THAT: WHEREAS, Executive has been effective in his or her service to the Company and its subsidiaries, and the Company recognizes the valuable services that Executive has rendered and desires to be assured that Executive will continue his or her active participation in the business of the Company; and WHEREAS, Executive is willing to serve the Company and its subsidiaries but desires assurance that in the event of any change in control of the Company that Executive will continue to have the opportunity of employment as provided under the terms of this Agreement; NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein, Company and Executive hereby agree as follows: 1. Term. This Agreement shall commence on the date hereof and end on the last day of April, 2005 unless terminated or extended prior to that date. On April 30, 2003 and the last day of April every year thereafter, this Agreement shall be automatically extended one additional year unless, prior to such last day of April, the Company shall have delivered to Executive or Executive shall have delivered to the Company written notice that the Executive's employment hereunder will not be so extended. Anything in this Paragraph 1 to the contrary notwithstanding, Executive and Company shall each have the right to terminate this Agreement at any time by a 60 day written notice to the other; provided, however, that such 60 day termination right shall no longer be available to the Company after a change in control of the Company. 2. Compensation. Executive's cash compensation shall be reviewed and set annually either by the Board of Directors of the Company or by the Compensation Committee of the Board of Directors. Such cash compensation shall be paid either by the Company or by a subsidiary of the Company designated by the Board of Directors of the Company. The salary portion of cash compensation shall be paid to Executive in (1)

twenty-four equal installments during the year. The cash bonus portion, if any, shall be paid no later than 90 days following the end of the year in which it is earned. Subsequent to a change in control of the Company, Executive's total cash compensation (salary plus bonus) may not be reduced below the level in effect immediately prior to the change in control. 3. Duties. Executive shall perform the duties assigned from time to time by the Board of Directors of the Company. 4. Death. The Company's obligations under this Agreement shall terminate on the last day of the month in which Executive's death occurs. Any payments then due to Executive shall be made to Executive's estate. Such payments shall include the cash salary payment for the month in which Executive's death occurred (if not previously made) and a cash bonus payment in accordance with the Company's cash bonus program. 5. Executive Departure. If either the Company or Executive believes, after a change in control of the Company, that Executive is not able, or will not in the future be able, to perform the assigned duties hereunder, Company or Executive, as the case may be, shall so notify the other whereupon Executive's employment shall cease without jeopardizing any rights to compensation under the terms of Paragraph 2 for the remaining term of the Agreement. The compensation paid Executive after cessation of employment pursuant to this Paragraph 5 shall be considered severance pay.

twenty-four equal installments during the year. The cash bonus portion, if any, shall be paid no later than 90 days following the end of the year in which it is earned. Subsequent to a change in control of the Company, Executive's total cash compensation (salary plus bonus) may not be reduced below the level in effect immediately prior to the change in control. 3. Duties. Executive shall perform the duties assigned from time to time by the Board of Directors of the Company. 4. Death. The Company's obligations under this Agreement shall terminate on the last day of the month in which Executive's death occurs. Any payments then due to Executive shall be made to Executive's estate. Such payments shall include the cash salary payment for the month in which Executive's death occurred (if not previously made) and a cash bonus payment in accordance with the Company's cash bonus program. 5. Executive Departure. If either the Company or Executive believes, after a change in control of the Company, that Executive is not able, or will not in the future be able, to perform the assigned duties hereunder, Company or Executive, as the case may be, shall so notify the other whereupon Executive's employment shall cease without jeopardizing any rights to compensation under the terms of Paragraph 2 for the remaining term of the Agreement. The compensation paid Executive after cessation of employment pursuant to this Paragraph 5 shall be considered severance pay. 6. Noncompete and Secrets. Anything in this Agreement to the contrary notwithstanding, Executive's breach of the Sigma-Aldrich Company Employment Agreement and Supplement to Agreement, which is expressly made a part hereof and is appended hereto as Exhibit 1, shall relieve the Company of its obligations under this Agreement except for the payment of any compensation due Executive to the date of such breach. 7. For purposes of this Agreement, a "change in control" of the Company shall be deemed to have occurred if: (a) Individuals who constitute the incumbent board cease for any reason to constitute at least a majority of the Board of Directors. The "incumbent board" means the group of directors consisting of (i) those individuals who, as of the effective date of this Agreement, constituted the Board of Directors and (ii) any individuals who become directors subsequent to such effective date whose appointment, (2)

election or nomination for election by the shareholders of the Company was approved by a vote of at least a majority of the directors then comprising the incumbent board, excluding, however, members of the incumbent board who are no longer serving as directors. The incumbent board shall exclude any individual whose initial assumption of office occurred (i) as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person (other than a solicitation of proxies by the incumbent board) or (ii) with the approval of the incumbent board but by reason of any agreement intended to avoid or settle a proxy contest. (b) More than 25% of (i) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors ("outstanding Company voting securities") or (ii) the then outstanding shares of the Company's common stock ("outstanding Company common stock") is directly or indirectly acquired or beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule thereto) by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided, however, that the following acquisitions and beneficial ownership shall not constitute changes in control pursuant to this subsection (b): (A) any acquisition or beneficial ownership by the Company or a subsidiary, or (B) any acquisition or beneficial ownership by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of more of its subsidiaries. (c) Consummation of a reorganization, merger, share exchange or consolidation (a "business combination"), unless in each case following such business combination:

election or nomination for election by the shareholders of the Company was approved by a vote of at least a majority of the directors then comprising the incumbent board, excluding, however, members of the incumbent board who are no longer serving as directors. The incumbent board shall exclude any individual whose initial assumption of office occurred (i) as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person (other than a solicitation of proxies by the incumbent board) or (ii) with the approval of the incumbent board but by reason of any agreement intended to avoid or settle a proxy contest. (b) More than 25% of (i) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors ("outstanding Company voting securities") or (ii) the then outstanding shares of the Company's common stock ("outstanding Company common stock") is directly or indirectly acquired or beneficially owned (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule thereto) by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided, however, that the following acquisitions and beneficial ownership shall not constitute changes in control pursuant to this subsection (b): (A) any acquisition or beneficial ownership by the Company or a subsidiary, or (B) any acquisition or beneficial ownership by any employee benefit plan (or related trust) sponsored or maintained by the Company or one of more of its subsidiaries. (c) Consummation of a reorganization, merger, share exchange or consolidation (a "business combination"), unless in each case following such business combination: (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the outstanding Company common stock and outstanding Company voting securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors or other governing body, as the case may be, of the entity resulting from such business (3)

combination (including, without limitation, an entity that as a result of such transaction owns the Company through one or more subsidiaries); (ii) no individual, entity or group (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such business combination) beneficially owns, directly or indirectly, more than 25% of, respectively, the then outstanding shares of common stock of the corporation resulting from such business combination or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors or other governing body of the entity resulting from such business combination, except to the extent that such individual, entity or group owned more than 25% of the outstanding Company common stock or outstanding Company voting securities prior to the business combination; and (iii) at least a majority of the members of the board of directors or other governing body of the entity resulting from such business combination were members of the incumbent board at the time of the execution of the initial agreement, or of the action of the Board of Directors, approving such business combination. (d) The Company shall sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of transactions). (e) The shareholders of the Company shall approve a plan liquidate or dissolve the Company, and the Company shall commence such liquidation or dissolution. 8. Offset. Subsequent to a change in control and a cessation of Executive's employment with the Company or any subsidiary, to the extent that Executive shall receive compensation for personal services from employment other than with Company during the term of this Agreement, the amounts so earned shall be offset against the amounts

combination (including, without limitation, an entity that as a result of such transaction owns the Company through one or more subsidiaries); (ii) no individual, entity or group (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such business combination) beneficially owns, directly or indirectly, more than 25% of, respectively, the then outstanding shares of common stock of the corporation resulting from such business combination or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors or other governing body of the entity resulting from such business combination, except to the extent that such individual, entity or group owned more than 25% of the outstanding Company common stock or outstanding Company voting securities prior to the business combination; and (iii) at least a majority of the members of the board of directors or other governing body of the entity resulting from such business combination were members of the incumbent board at the time of the execution of the initial agreement, or of the action of the Board of Directors, approving such business combination. (d) The Company shall sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of transactions). (e) The shareholders of the Company shall approve a plan liquidate or dissolve the Company, and the Company shall commence such liquidation or dissolution. 8. Offset. Subsequent to a change in control and a cessation of Executive's employment with the Company or any subsidiary, to the extent that Executive shall receive compensation for personal services from employment other than with Company during the term of this Agreement, the amounts so earned shall be offset against the amounts due under this Agreement and shall serve to reduce such amounts due. 9. Modification. This Agreement may be modified only upon the written consent of the Company and Executive. (4)

10. Legal Expenses. In the event that Executive institutes any legal action to enforce the rights under, or to recover damages for breach of this Agreement, Executive, if the prevailing party, shall be entitled to recover from the Company any reasonable expenses actually incurred for attorney's fees and disbursements. IN WITNESS WHEREOF, the parties have executed this Agreement on the specified date indicated.
COMPANY: EXECUTIVE:

By: ------------------------------Name: ----------------------Title: ---------------------Date: -----------------------------

By: -------------------------------Name: -----------------------Title: -----------------------

(5)

Exhibit 1

[LOGO OF SIGMA-ALDRICH CORPORATION APPEARS HERE] AGREEMENT between SIGMA-ALDRICH CORPORATION and

10. Legal Expenses. In the event that Executive institutes any legal action to enforce the rights under, or to recover damages for breach of this Agreement, Executive, if the prevailing party, shall be entitled to recover from the Company any reasonable expenses actually incurred for attorney's fees and disbursements. IN WITNESS WHEREOF, the parties have executed this Agreement on the specified date indicated.
COMPANY: EXECUTIVE:

By: ------------------------------Name: ----------------------Title: ---------------------Date: -----------------------------

By: -------------------------------Name: -----------------------Title: -----------------------

(5)

Exhibit 1

[LOGO OF SIGMA-ALDRICH CORPORATION APPEARS HERE] AGREEMENT between SIGMA-ALDRICH CORPORATION and

In consideration of the compensation and other benefits of my employment or continued employment by SigmaAldrich Corporation (the Company) and of other valuable consideration, I agree as follows: CONFIDENTIAL INFORMATION I recognize that the Company is engaged in the business of research, development, manufacture and sale of chemicals, chemical products and allied activities, which business requires for its successful operation the fullest security of its Confidential Information of which I will acquire knowledge during the course of my employment. As used in this agreement, "Confidential Information" means all technical and business information of the Company, or which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, similar information is revealed to the Company, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by me (alone or with others) or to which I shall have had access during my employment. Confidential Information shall include all data, designs, plans, notes, memoranda, work sheets, formulas, processes, patents, customer and supplier lists. I shall use my best efforts and diligence both during and after my employment with the Company, regardless of how, when or why my employment ends to protect the confidential, trade secret and/or proprietary character of all Confidential Information. I shall not, directly or indirectly, use (for myself or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of my duties for the Company. I shall promptly deliver to the Company, at the termination of my employment or at any other time at the Company's request, without retaining any copies, all documents and other material in my possession relating, directly or indirectly, to any Confidential Information. Each of my obligations in this section shall also apply to the confidential, trade secret and proprietary information learned or acquired by me during my employment from others with whom the Company has a business relationship.

Exhibit 1

[LOGO OF SIGMA-ALDRICH CORPORATION APPEARS HERE] AGREEMENT between SIGMA-ALDRICH CORPORATION and

In consideration of the compensation and other benefits of my employment or continued employment by SigmaAldrich Corporation (the Company) and of other valuable consideration, I agree as follows: CONFIDENTIAL INFORMATION I recognize that the Company is engaged in the business of research, development, manufacture and sale of chemicals, chemical products and allied activities, which business requires for its successful operation the fullest security of its Confidential Information of which I will acquire knowledge during the course of my employment. As used in this agreement, "Confidential Information" means all technical and business information of the Company, or which is learned or acquired by the Company from others with whom the Company has a business relationship in which, and as a result of which, similar information is revealed to the Company, whether patentable or not, which is of a confidential, trade secret and/or proprietary character and which is either developed by me (alone or with others) or to which I shall have had access during my employment. Confidential Information shall include all data, designs, plans, notes, memoranda, work sheets, formulas, processes, patents, customer and supplier lists. I shall use my best efforts and diligence both during and after my employment with the Company, regardless of how, when or why my employment ends to protect the confidential, trade secret and/or proprietary character of all Confidential Information. I shall not, directly or indirectly, use (for myself or another) or disclose any Confidential Information, for so long as it shall remain proprietary or protectible as confidential or trade secret information, except as may be necessary for the performance of my duties for the Company. I shall promptly deliver to the Company, at the termination of my employment or at any other time at the Company's request, without retaining any copies, all documents and other material in my possession relating, directly or indirectly, to any Confidential Information. Each of my obligations in this section shall also apply to the confidential, trade secret and proprietary information learned or acquired by me during my employment from others with whom the Company has a business relationship. COMPETITIVE ACTIVITY I shall not, directly or indirectly (whether as owner, partner, consultant, employee or otherwise), at any time during the period of my employment by the Company and for a period of two years following termination of my employment, regardless of how, when or why my employment ends, engage in or contribute my knowledge to or invest in any business that is engaged in any work or activity that involves a product, process, service or development which is then competitive with and the same as or similar to a product, process, service or development on which I worked or with respect to which I had access to Confidential Information while with the Company. However, I shall be permitted to engage in such proposed work or activity, and the Company shall furnish me a written consent to that effect signed by an officer, if I shall have furnished to the Company clear and convincing written evidence, including assurances from me and my new employer, that the fulfillment of my duties in such proposed work or activity would not cause me to disclose, base judgments upon, or use any Confidential Information, including information relating to the identity of or products supplied to or purchased from the customers or suppliers of the Company. Following expiration of said two-year period, I shall continue to be obligated under the "Confidential A-1

Information" section of this Agreement not to use or to disclose Confidential Information so long as it shall remain proprietary or protectible as confidential or trade secret information. Following termination of my employment for any reason, I agree to advise the Company of my new employer, work location and job responsibilities within ten days after accepting new employment. I further agree to keep the Company so advised of any change in my employment for two years following termination of my employment with the Company. I understand that it is not the intention of this Agreement to prevent me from earning a livelihood, and I agree nothing in this Agreement would prevent me from earning a livelihood utilizing my general purchasing, sales, professional or technical skills in any of the hospitals, businesses, research or manufacturing facilities of companies which are not directly or indirectly in competition with the Company. I agree that while employed by the Company and for a period of two (2) years following termination of employment, regardless of how, when or why my employment ends, I shall not in any manner or in any capacity, directly or indirectly, for myself or any other person or entity, actually or attempt: (a) to solicit any customer or potential customer of the Company for the purpose of selling any products competitive with products sold by the Company, or otherwise interfere with or take away any customer or potential customer of the Company or the business of any such customer or potential customer; or (b) to interfere with the Company's relationship with any customer or supplier of the Company. The term "customer" shall mean any person or entity to whom the Company has sold any products (a) in the case of on-going employment, during the twenty-four (24) calendar months immediately preceding any dispute under this paragraph and, (b) in the case of employment having ended, the twenty-four (24) calendar months preceding termination of employment. The term "potential customer" shall mean any person or entity who, during the applicable twentyfour (24) month period described above has (a) been involved in discussions or negotiations with the Company for products sold by the Company; (b) initiated contact with the Company in order to obtain information regarding products sold by the Company; (c) been the subject of repeated personal contacts by me and/or any other Company employee for purposes of soliciting business for the Company; or (d) been the subject of the Company's efforts to gather, learn or evaluate information which may help the Company obtain any future order from such person or entity. IDEAS, INVENTIONS, DISCOVERIES I shall promptly disclose to the Company all ideas, inventions or discoveries, whether or not patentable, which I may conceive or make (alone or with others) during my employment, whether or not during working hours, and which, directly or indirectly, (a) relate to matters within the scope of my duties or field of responsibility during my employment with the Company; or (b) are based on my knowledge of the actual or anticipated business or interest of the Company; or (c) are aided by the use of time, materials, facilities or information of the Company. I hereby assign to the Company or its designee, without further compensation, all of the right, title and interest in all such ideas, inventions or discoveries in all countries of the world. Without further compensation but at the Company's expense, I shall give all testimony and execute all patent applications, rights of priority, assignments and other documents and in general do all lawful things requested of me by the Company to enable the Company to obtain, maintain and enforce protection of such ideas, inventions and discoveries for and in the name of the Company or its designee (as the case may be) in all countries of the world. However, should I render any of these services during a two-year period following termination of my employment, I shall be compensated at a rate per hour equal to the basic salary I received from the Company at the time of termination and shall be reimbursed for reasonable out-of-pocket expenses incurred in rendering the services. GENERAL If I am employed by an affiliate of the Company and have not entered into a superseding agreement with my new

employer covering the subject matter of this Agreement, then this Agreement shall continue in effect and my new employer shall be termed "the Company" for all purposes hereunder and shall have the right to enforce this Agreement as my employer. In the event of any subsequent employment by the Company or any other affiliate, my new employer shall succeed to all rights under this Agreement so long as such employer shall be an affiliate of the Company and so long as this Agreement has not been superseded. A-2

As used in this Agreement, an "affiliate" of the Company shall mean any parent or subsidiary of the Company, and company owned or controlled by any parent of the Company as well as any subsidiary of such companies and any company or corporation with which the Company has a contractual or ongoing business relationship which requires the Company and such other company or corporation to agree to noncompetition or nondisclosure covenants similar to or the same as those contained herein. The Company and I shall have the right to terminate my employment at any time by giving at least 14 days written notice to the other party; provided, however, the Company may terminate my employment without notice at any time for any cause deemed by it to be a breach of my employment duties or of any of my obligations under this Agreement. The Company, at its option, may elect to pay my salary for the notice period instead of continuing my active employment during that period. I hereby acknowledge that damages for the violation of the provisions contained in this Agreement will not give full and sufficient relief to the Company, and I agree that in the event of any violation of any of said provisions the Company shall be entitled to injunctive relief against violation thereof, in addition to any other rights it may have by reason of said violation. This Agreement shall be interpreted under the laws of the State of Missouri, St. Louis County Circuit Court or the U.S. District Court for the Eastern District of Missouri as the exclusive Forum to resolve any dispute. If any provision of this Agreement is held invalid in any respect, it shall not affect the validity of any other provision of this Agreement. If any provision of this Agreement is held to be unreasonable as to time, scope or otherwise, it shall be construed by limiting and reducing it so as to be enforceable under then applicable law. This Agreement is signed in duplicate, as of the __ day of ______________, 2001. SIGMA-ALDRICH CORPORATION
By ----------------------------------------Terry Colvin V.P. Human Resources ------------------------------------------Typed Name and Title

------------------------------------------Signature of Employee

------------------------------------------Typed Name of Employee

A-3

SIGMA CHEMICAL COMPANY Supplement to Agreement In addition to the AGREEMENT, which Sigma Chemical Company (the Company) and I have signed, the conditions of my employment with the Company include the following:
Date of Employment Salary

As used in this Agreement, an "affiliate" of the Company shall mean any parent or subsidiary of the Company, and company owned or controlled by any parent of the Company as well as any subsidiary of such companies and any company or corporation with which the Company has a contractual or ongoing business relationship which requires the Company and such other company or corporation to agree to noncompetition or nondisclosure covenants similar to or the same as those contained herein. The Company and I shall have the right to terminate my employment at any time by giving at least 14 days written notice to the other party; provided, however, the Company may terminate my employment without notice at any time for any cause deemed by it to be a breach of my employment duties or of any of my obligations under this Agreement. The Company, at its option, may elect to pay my salary for the notice period instead of continuing my active employment during that period. I hereby acknowledge that damages for the violation of the provisions contained in this Agreement will not give full and sufficient relief to the Company, and I agree that in the event of any violation of any of said provisions the Company shall be entitled to injunctive relief against violation thereof, in addition to any other rights it may have by reason of said violation. This Agreement shall be interpreted under the laws of the State of Missouri, St. Louis County Circuit Court or the U.S. District Court for the Eastern District of Missouri as the exclusive Forum to resolve any dispute. If any provision of this Agreement is held invalid in any respect, it shall not affect the validity of any other provision of this Agreement. If any provision of this Agreement is held to be unreasonable as to time, scope or otherwise, it shall be construed by limiting and reducing it so as to be enforceable under then applicable law. This Agreement is signed in duplicate, as of the __ day of ______________, 2001. SIGMA-ALDRICH CORPORATION
By ----------------------------------------Terry Colvin V.P. Human Resources ------------------------------------------Typed Name and Title

------------------------------------------Signature of Employee

------------------------------------------Typed Name of Employee

A-3

SIGMA CHEMICAL COMPANY Supplement to Agreement In addition to the AGREEMENT, which Sigma Chemical Company (the Company) and I have signed, the conditions of my employment with the Company include the following:
Date of Employment ----------------------Position --------------------------------Salary ---------------------------Department ------------------------

PAY PERIOD - Semi-Monthly. VACATION - The vacation year begins on April 1 and ends on March 31. I will receive .83 days of vacation

SIGMA CHEMICAL COMPANY Supplement to Agreement In addition to the AGREEMENT, which Sigma Chemical Company (the Company) and I have signed, the conditions of my employment with the Company include the following:
Date of Employment ----------------------Position --------------------------------Salary ---------------------------Department ------------------------

PAY PERIOD - Semi-Monthly. VACATION - The vacation year begins on April 1 and ends on March 31. I will receive .83 days of vacation for each full month of service until I reach April 1 following completion of one year of service. I may use this time in full-day and half-day increments. Upon completion of the specified number of years of service, I will be entitled to the following vacations: 1 year: 2 weeks 5 years: 3 weeks 15 years: 4 weeks 25 years: 5 weeks In addition, upon completion of the anniversary years of 25, 30, 40 and 45 years of service, employees receive an additional bonus week of vacation for a total of 6 weeks. In order to be eligible for any unused vacation pay on termination of employment, I must give _____ days written notice. PAID HOLIDAYS - New Year's Day, Memorial Day, July 4, Labor Day, Thanksgiving Day, Friday after Thanksgiving and Christmas Day. PERSONAL CHOICE PAID HOLIDAYS - I may take one Personal Choice Holiday (PCH) as of the following dates: Then beginning in _____, I may take four Personal Choice Holidays during each calendar year. MAJOR MEDICAL INSURANCE - I will be eligible to participate in a Major Medical Insurance Program for such expenses as hospital care, surgery, in-hospital doctor visits, diagnostic services, and certain out-patient and emergency care, beginning 30 days after date of employment. (Please check with a benefits coordinator in reference to pre-existing conditions and related benefit limitations.) Dependent coverage is available. LIFE INSURANCE - I will be covered by a Company-paid Life Insurance Program beginning 30 days after date of employment. The value of the policy is equal to one and one-half of my annual salary. In addition to Life Insurance, the Program provides Accidental Death and Dismemberment Insurance equal to the Life Insurance coverage. DISABILITY INSURANCE - I will be covered by a Company-paid Disability Insurance Program beginning 6 months after date of employment with benefits of two-thirds of my salary. DENTAL INSURANCE - I will be eligible to participate in a Dental Insurance Program beginning 30 days after date of employment. RETIREMENT - A Company-paid Retirement Plan is in addition to Social Security benefits. TUTITION REIMBURSEMENT - After 6 months of employment, regular full-time employees can be reimbursed for up to $2,500 of tuition expense annually for job related courses or courses taken in pursuit of a degree that would prepare the employee to advance within the Company. I will receive a performance evaluation at intervals during the first six months of my employment.

I will devote my full-time and effort to the conscientious performance of my duties and while employed by the Company, will refrain from engaging, directly or indirectly, in any other business. Sigma Chemical Company is an Equal Opportunity Employer and will not discriminate against any employee on the basis of age, race, color, religion, sex, national origin or handicap. I have received the Employee Handbook that explains what I can expect of the Company and what the Company expects of me. SIGMA CHEMICAL COMPANY
By ----------------------------------Human Resources -------------------------------------Typed Name and Title -------------------------------------Signature of Employee Date -------------------------------------Typed Name of Employee

A-4

Management's Discussion and Analysis The following should be read in conjunction with the consolidated financial statements and related notes. INTRODUCTION The net income summaries below present the results of our operations before and after goodwill amortization and unusual items affecting our business. These summaries show the impact goodwill amortization and unusual items had on our net income and basic and diluted net income per share. Due to the discontinuance of the Diagnostics business in 2002 and the sale of the metal business in 2000, we present results separately for our continuing and discontinued operations.

Years Ended December 31 Net income from continuing operations before goodwill amortization and unusual items Goodwill amortization for continuing operations Net income from continuing operations before unusual items Department of Commerce settlement Gain on sale of Milwaukee facility One-time international tax benefit Purchased in-process research & development Total unusual items Net Net Net Net income from continuing operations after unusual items loss from operations of discontinued business -- Diagnostics income from operations of discontinued business -- metal (loss) gain on disposition of discontinued operations

20 $ 16 ---16 ---( 1

---1 ---18 ( (5 ---$ 13 ====

Net income

Net 20 --------------------------------------------------------------------------------------------------------Net income from continuing operations before goodwill amortization and unusual items $ 2 Goodwill amortization for continuing operations ---Net income from continuing operations before unusual items 2 ---Department of Commerce settlement ( Gain on sale of Milwaukee facility One-time international tax benefit

Management's Discussion and Analysis The following should be read in conjunction with the consolidated financial statements and related notes. INTRODUCTION The net income summaries below present the results of our operations before and after goodwill amortization and unusual items affecting our business. These summaries show the impact goodwill amortization and unusual items had on our net income and basic and diluted net income per share. Due to the discontinuance of the Diagnostics business in 2002 and the sale of the metal business in 2000, we present results separately for our continuing and discontinued operations.

Years Ended December 31 Net income from continuing operations before goodwill amortization and unusual items Goodwill amortization for continuing operations Net income from continuing operations before unusual items Department of Commerce settlement Gain on sale of Milwaukee facility One-time international tax benefit Purchased in-process research & development Total unusual items Net Net Net Net income from continuing operations after unusual items loss from operations of discontinued business -- Diagnostics income from operations of discontinued business -- metal (loss) gain on disposition of discontinued operations

20 $ 16 ---16 ---( 1

---1 ---18 ( (5 ---$ 13 ====

Net income

Net 20 --------------------------------------------------------------------------------------------------------Net income from continuing operations before goodwill amortization and unusual items $ 2 Goodwill amortization for continuing operations ---Net income from continuing operations before unusual items 2 ---Department of Commerce settlement ( Gain on sale of Milwaukee facility One-time international tax benefit Purchased in-process research & development ---Total unusual items ---Net income from continuing operations after unusual items 2 Net loss from operations of discontinued business -- Diagnostics ( Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations ( ---Net income $ 1 ====

Net I 20 --------------------------------------------------------------------------------------------------------Net income from continuing operations before goodwill amortization and unusual items $ 2 Goodwill amortization for continuing operations ---Net income from continuing operations before unusual items 2 ---Department of Commerce settlement ( Gain on sale of Milwaukee facility One-time international tax benefit Purchased in-process research & development ---Total unusual items ----

Net Net Net Net

income from continuing operations after unusual items loss from operations of discontinued business -- Diagnostics income from operations of discontinued business -- metal (loss) gain on disposition of discontinued operations

2 ( ( ---$ 1 ====

Net income

17

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. HIGHLIGHTS Net income from continuing operations in 2002 increased 22.2% to $186.7 from $152.8. The net income increase in 2002 included a gain on the sale of a major production facility in Milwaukee of $18.1 and a one-time international tax benefit of $1.6 offset by a charge incurred in a settlement with the Department of Commerce of $1.8. Net income from continuing operations before these unusual items was $168.8 compared to $158.6 in 2001, excluding goodwill amortization and a one-time charge for purchased in-process research and development in 2001. This increase in net income resulted from sales growth, process improvement savings and lower interest costs. Net income from continuing operations in 2001 increased 1.8% to $152.8 from $150.1 in 2000. Diluted earnings per share from continuing operations for 2002 is $2.54 compared to $2.03 in 2001. Diluted earnings per share in 2002 benefited from a $.24 gain on the sale of a Milwaukee facility and a one-time international tax benefit of $.02, which was offset by a $.02 Department of Commerce settlement. Diluted earnings per share before these unusual items for 2002 increased 9.0% to $2.30 from $2.11 in 2001, excluding goodwill amortization and a one-time charge for purchased in-process research and development in 2001. Diluted earnings per share from continuing operations in 2001 was $2.03 compared to $1.80 for 2000. The discontinuance of the Diagnostics business in 2002 reduced diluted earnings per share by $.76, including the one-time charge of $52.3. ITEMS AFFECTING COMPARABILITY OF RESULTS The following items affect the comparability of our results: . On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. The operations of the Diagnostics business are accounted for as discontinued operations, and accordingly, operating results, including cash flows, and related assets and liabilities, are segregated in the accompanying consolidated financial statements. . On February 16, 2001, the Company purchased Isotec, Inc. . On May 26, 2000, the Company purchased ARK Scientific GmbH. . On May 1, 2000, the sale of B-Line Systems was completed. The metal operations are accounted for as discontinued operations, and accordingly, operating results, including cash flows, are segregated in the accompanying Consolidated Statements of Income and Cash Flows. . At December 31, 2002, 2001 and 2000, the Company had repurchased 32.2 million, 29.7 million and 25.6 million of its outstanding shares, respectively. CRITICAL ACCOUNTING POLICIES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements and the reported amounts of revenues and expenses during the years presented. Actual results could

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. HIGHLIGHTS Net income from continuing operations in 2002 increased 22.2% to $186.7 from $152.8. The net income increase in 2002 included a gain on the sale of a major production facility in Milwaukee of $18.1 and a one-time international tax benefit of $1.6 offset by a charge incurred in a settlement with the Department of Commerce of $1.8. Net income from continuing operations before these unusual items was $168.8 compared to $158.6 in 2001, excluding goodwill amortization and a one-time charge for purchased in-process research and development in 2001. This increase in net income resulted from sales growth, process improvement savings and lower interest costs. Net income from continuing operations in 2001 increased 1.8% to $152.8 from $150.1 in 2000. Diluted earnings per share from continuing operations for 2002 is $2.54 compared to $2.03 in 2001. Diluted earnings per share in 2002 benefited from a $.24 gain on the sale of a Milwaukee facility and a one-time international tax benefit of $.02, which was offset by a $.02 Department of Commerce settlement. Diluted earnings per share before these unusual items for 2002 increased 9.0% to $2.30 from $2.11 in 2001, excluding goodwill amortization and a one-time charge for purchased in-process research and development in 2001. Diluted earnings per share from continuing operations in 2001 was $2.03 compared to $1.80 for 2000. The discontinuance of the Diagnostics business in 2002 reduced diluted earnings per share by $.76, including the one-time charge of $52.3. ITEMS AFFECTING COMPARABILITY OF RESULTS The following items affect the comparability of our results: . On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. The operations of the Diagnostics business are accounted for as discontinued operations, and accordingly, operating results, including cash flows, and related assets and liabilities, are segregated in the accompanying consolidated financial statements. . On February 16, 2001, the Company purchased Isotec, Inc. . On May 26, 2000, the Company purchased ARK Scientific GmbH. . On May 1, 2000, the sale of B-Line Systems was completed. The metal operations are accounted for as discontinued operations, and accordingly, operating results, including cash flows, are segregated in the accompanying Consolidated Statements of Income and Cash Flows. . At December 31, 2002, 2001 and 2000, the Company had repurchased 32.2 million, 29.7 million and 25.6 million of its outstanding shares, respectively. CRITICAL ACCOUNTING POLICIES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 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 initiatives. 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 no longer systematically amortized against earnings. Goodwill and other intangibles with indefinite lives are assessed annually for impairment and whenever events or 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. 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 rate, expected return on plan assets and rates of increase in compensation and health care costs. In accordance with generally accepted accounting principles, actual results that differ from the assumptions are accumulated and amortized over future periods and therefore, generally affect the recognized expense and recorded obligation 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 obligations and the Company's future expense. A 1% change in the expected return on plan assets for the U.S. pension plan would have a $0.6 impact on the Company's pension expense. 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. In management's opinion, adequate provisions for income taxes have been made for all years presented. 18

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. OPERATING RESULTS FROM CONTINUING OPERATIONS Sales Sales increased 8.3%, 7.7% and 4.5% in 2002, 2001 and 2000, respectively. The sales growth is primarily attributed to price increases, the annual addition of new products and volume gains driven by improved service, enhanced web site capabilities and sales and marketing activities. Price increases for products listed in the sales catalogs averaged 4.2%, 4.6% and 3.8% in 2002, 2001 and 2000, respectively. New product sales, while not material in the year introduced, do contribute to sales growth in subsequent years. The acquisition of Isotec, Inc. contributed 1.3% to growth in 2001. The effect of translating foreign currency sales into U.S. dollars increased the 2002 sales growth by 1.4%, while it reduced the 2001 and 2000 sales growth by 3.0% and 4.3%, respectively. Currency adjusted sales growth in Scientific Research, Biotechnology and Fine Chemicals for 2002 was 5.4%, 11.2% and 6.5%, respectively. After achieving targeted, internal currency adjusted sales growth goals of 8.0% in Scientific Research and 12.0% for both Biotechnology and Fine Chemicals in 2001 and continuing at above market growth rates early in 2002, economic uncertainties and lower demand from pharmaceutical and other commercial customers slowed growth late in 2002. Scientific Research sales growth in 2002 continued to benefit

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. OPERATING RESULTS FROM CONTINUING OPERATIONS Sales Sales increased 8.3%, 7.7% and 4.5% in 2002, 2001 and 2000, respectively. The sales growth is primarily attributed to price increases, the annual addition of new products and volume gains driven by improved service, enhanced web site capabilities and sales and marketing activities. Price increases for products listed in the sales catalogs averaged 4.2%, 4.6% and 3.8% in 2002, 2001 and 2000, respectively. New product sales, while not material in the year introduced, do contribute to sales growth in subsequent years. The acquisition of Isotec, Inc. contributed 1.3% to growth in 2001. The effect of translating foreign currency sales into U.S. dollars increased the 2002 sales growth by 1.4%, while it reduced the 2001 and 2000 sales growth by 3.0% and 4.3%, respectively. Currency adjusted sales growth in Scientific Research, Biotechnology and Fine Chemicals for 2002 was 5.4%, 11.2% and 6.5%, respectively. After achieving targeted, internal currency adjusted sales growth goals of 8.0% in Scientific Research and 12.0% for both Biotechnology and Fine Chemicals in 2001 and continuing at above market growth rates early in 2002, economic uncertainties and lower demand from pharmaceutical and other commercial customers slowed growth late in 2002. Scientific Research sales growth in 2002 continued to benefit from pricing gains and sales strength in the Company's International markets. Biotechnology experienced price increases of 3.0% and maintained strong sales to Europe and other International customers throughout 2002. Fine Chemicals achieved double-digit growth in the Company's International markets, which was offset by weaker demand for custom orders from U.S. pharmaceutical customers in 2002. Scientific Research currency adjusted sales growth was 10.0% in 2001, including benefits of 2.1% from the Isotec acquisition. An internal (currency adjusted) gain of 7.9% for 2001 continued to exceed market rates, benefiting from pricing gains and strong growth in the Company's International markets. Biotechnology sales gains met growth expectations for the year, with an increase of 12.2% in 2001, excluding currency impacts. The currency adjusted sales gain in Fine Chemicals of 11.5% for 2001 was also in line with growth expectations. A summary of reported and currency adjusted sales growth is as follows:
Reported Sales Growth Years Ended December 31, -----------------------------------------------------2002 2001 2000 -----------------------------------------------------Scientific Research 6.9% 6.9% 0.8% Biotechnology 12.4% 8.7% 11.1% Fine Chemicals 8.1% 9.5% 10.5% Total 8.3% 7.7% 4.5% Currency Adjusted Sales Growth Years Ended December 31, -----------------------------------------------------2002 2001 2000 -----------------------------------------------------Scientific Research 5.4% 10.0% 5.2% Biotechnology 11.2% 12.2% 14.2% Fine Chemicals 6.5% 11.5% 15.4% Total 6.9% 10.7% 8.8%

Excluding currency impacts, international direct sales increased 9.7%, 10.6% and 10.2% in 2002, 2001 and 2000, respectively. Cost of Products Sold

Cost of Products Sold was 49.1%, 47.8% and 47.7% of net sales in 2002, 2001 and 2000, respectively. The decrease in the gross profit rate in 2002 reflects increased growth in lower margin product lines, higher levels of inventory write-offs, increases in insurance rates (experienced by many companies due to market conditions) and increased employee benefit costs. There was only a slight decrease in the gross profit rate in 2001 compared to 2000. Overall, the cost of products sold increased 11.3% and 7.8% compared to a sales increase of 8.3% and 7.7% in 2002 and 2001, respectively. Selling, General and Administrative Expenses Selling, general and administrative expenses were 26.3%, 27.6% and 27.5% of sales in 2002, 2001, and 2000, respectively. Excluding unusual items and goodwill amortization, selling, general and administrative expenses were 26.2% of sales in 2002, and 27.0% in both 2001 and 2000. In 2002, selling, general and administrative expenses as a percent of sales decreased 0.8% (excluding unusual items and goodwill amortization) as the impact of process improvement savings and the leverage of fixed costs against a higher sales base more than offset increases in insurance and employee benefit costs. In 2001, selling, general and administrative expenses as a percent of sales were comparable to 2000. Research and Development Expenses Research and development expenses were 3.4% of sales in 2002 and 2001, and 3.1% in 2000. The research and development expenses relate primarily to efforts to add new manufactured products. All manufactured products currently account for approximately 55% of total sales. The majority of these expenses had been included in Cost of Products Sold in previously issued Consolidated Statements of Income. Interest Expense, Net Net interest expense reduced pretax earnings by $13.8, $16.5 and $6.6 in 2002, 2001 and 2000, respectively. The decrease in net interest expense in 2002 resulted from interest rate reductions and lower short-term borrowing levels due to reduced tax payments, significantly lower capital expenditures and benefits from working capital management initiatives in 2002. The increase in net interest expense in 2001 resulted from borrowings for acquisitions and share repurchases. Income Taxes Income taxes, which include federal, state and international taxes were 31.4%, 30.3% and 31.0% of pretax income from continuing operations in 2002, 2001 and 2000, respectively. The increase in the income tax rate in 2002 is a result of the non-deductibility of the Commerce Department settlement and a higher incremental tax rate on the Milwaukee property sale, offset by the one-time international tax benefit. The reduction in the income tax rate in 2001 is a result of an increase in the Foreign Sales Corporation (FSC) benefit, partially offset by an increase in international taxes. 19

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. OPERATING RESULTS FROM CONTINUING OPERATIONS (continued) Accounting Changes Recently enacted accounting standards resulted in the elimination of goodwill amortization for all companies in 2002. The Company's goodwill amortization from continuing operations was $6.3 ($.07 per diluted share, after tax) for 2001 and $5.2 ($.05 per diluted share, after tax) for 2000.

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. OPERATING RESULTS FROM CONTINUING OPERATIONS (continued) Accounting Changes Recently enacted accounting standards resulted in the elimination of goodwill amortization for all companies in 2002. The Company's goodwill amortization from continuing operations was $6.3 ($.07 per diluted share, after tax) for 2001 and $5.2 ($.05 per diluted share, after tax) for 2000. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144). The Company adopted the provisions of SFAS 144 for the year ending December 2002 as a result of the decision to discontinue the Diagnostics business. The effects of its decision and the implementation of this Statement is reflected in the Company's consolidated financial statements and discussed further in Note 5 to the consolidated financial statements. LIQUIDITY AND CAPITAL RESOURCES The Company's cash flows from operating, investing and financing activities for continuing operations, as reflected in the Consolidated Statements of Cash Flows, are summarized in the following table:
Years Ended December 31, ------------------------------------------------------------------------2002 2001 2000 ------------------------------------------------------------------------Net cash provided by (used in): Operating activities $ 345.2 $ 165.9 $ 105.6 Investing activities (19.2) (143.8) 323.9 Financing activities (307.7) (5.8) (442.4) -------------------------------------------------------------------------

Operating Activities The increase in net cash provided by operating activities in 2002 primarily resulted from increased net income from continuing operations, declines in inventory levels and accounts receivable and lower tax payments due to the tax benefit of the one-time charge related to discontinuing the Diagnostics business. Working capital management initiatives improved accounts receivable days sales outstanding by three days from year-end 2001, providing more than $19.0 in cash in 2002, while active inventory management programs reduced inventory levels by one month from year-end 2001, representing a reduction in quantities of $30.0 in 2002. The increase in net cash in 2001 primarily resulted from lower growth in inventories in 2001 compared to 2000 and reduced accounts receivable levels. Investing Activities In 2002, cash used for investing activities related primarily to capital expenditures of $60.7, including capital spending for the Company's new Life Science and High Technology Center, a lab expansion in Switzerland, an expansion of the oligo production facility in Texas, an expansion of a production facility in Scotland and continuing investment in the SAP computer software system. Cash used for investing activities was offset by cash proceeds of $32.5 from the sale of the Milwaukee production facility. In 2001, cash used for investing activities related primarily to capital expenditures of $108.1 and the acquisition of Isotec, Inc. for $37.2. In 2000, the Company received cash proceeds of $430.4 from the sale of the B-Line Systems metal business, and used $64.9 for capital expenditures and $41.2 for the acquisitions of ARK Scientific GmbH, First Medical, Inc. and Amelung GmbH. During 2003, we anticipate capital spending to be roughly equal to the $60.0 expenditures for 2002.

During 2003, we anticipate capital spending to be roughly equal to the $60.0 expenditures for 2002. Financing Activities In 2002, the Company used cash of $307.7 in financing activities for stock repurchases, payment of dividends and repayment of short-term debt. These cash outflows were offset by the exercise of stock options. Cash outflows totaled $25.2 and $125.1 for dividend payments and stock repurchases, respectively, in 2002 compared to dividends paid of $24.5 and $26.1 for 2001 and 2000, respectively, and stock repurchases of $173.9 and $700.5 for 2001 and 2000, respectively. At December 31, 2002, the Company had short-term credit facilities totaling $350, of which the total $350 was available at December 31, 2002. These facilities provide back-up liquidity for a commercial paper program launched in January 2002, at which time loans outstanding from the facilities were repaid with the commercial paper proceeds. In 2002, $180.5 of this short-term debt was repaid. During 2001 and 2000, the Company borrowed $91.4 and $159.4, respectively, on short-term debt to fund acquisitions, share repurchases and for general Corporate purposes. Long-term debt at December 31, 2002 was $176.8 compared to $177.7 in 2001. In 2001, the Company issued $75.0 of senior notes, payable in 2006 and other long-term debt of $1.9. Total debt as a percentage of total capitalization was 23.2% and 35.6% at December 31, 2002 and 2001, respectively. For a description of the Company's debt covenants, see Notes 6 and 7 to the consolidated financial statements. Share Repurchases At December 31, 2002 and December 31, 2001 the Company had repurchased a total of 32.2 million shares and 29.7 million shares, respectively, of an authorized repurchase of 35 million shares. There were 71.3 million shares outstanding as of December 31, 2002. Additional purchases through February 6, 2003 brought the total shares repurchased to approximately 32.4 million. The Company expects to acquire the remaining 2.6 million authorized shares, however, the timing of the repurchases and number of shares repurchased, if any, will depend upon 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 market, downgrades in the Company's credit rating or the unavailability of funds. The primary funding source is the Company's commercial paper and long-term debt programs. The Company maintains committed bank lines of credit to support its commercial paper borrowings 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. Management believes that the Company's financial condition is such that internal and external resources are sufficient and available to satisfy the Company's present and future requirements for debt service, capital expenditures, acquisitions, dividends, share repurchases and working capital. 20

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. ENVIRONMENTAL AND OTHER MATTERS Environmental Matters

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. ENVIRONMENTAL AND OTHER MATTERS Environmental Matters The operations of the Company, like those of other companies engaged in similar lines of business, are subject to various federal, state, foreign and local laws and regulations intended to protect the public health and the environment. These regulations primarily relate to worker safety, air and water quality and waste handling. The Company believes it is in compliance in all material respects with these regulations. Other Matters The Company is involved in legal and regulatory proceedings generally incidental to its business, as described below: Export Matter Settlement On November 4, 2002, the Company, its wholly-owned subsidiary Research Biochemicals, Inc. ("RBI") and an intermediate subsidiary reached a formal agreement with the U.S. Department of Commerce (the "Department") to settle allegations that they had exported certain scientific research toxins without first obtaining requisite licenses from the Department. This matter was inherited through the Company's acquisition of the assets of Research Biochemicals Limited Partnership in April 1997 and was discovered and corrected in April 1998. RBI has since applied for and received licenses for all subsequent shipments of such toxins. RBI paid $1.8 to the Department in 2002 to dispose of this matter. Property Acquisition by Legal Authority In December 2002, the State of Wisconsin's Department of Transportation (WISDOT) acquired the Company's major production facility in Milwaukee as part of the State's overall project to reconstruct the Marquette Interchange section of that city's freeway system. In a separate agreement, WISDOT has agreed to permit the Company to lease and continue to operate that existing production facility through July 1, 2005, during which time the Company will design, construct and occupy replacement facilities adjacent to other local sites it currently owns. The Company received $32.5 in cash and recorded a one-time pretax gain of $29.3. The Company will reinvest the proceeds and additional funds from its ongoing capital budgets to construct replacement facilities over the next two-and-one-half years. Management expects productivity from the more modern and cost effective design of its new facilities to fully offset all incremental costs upon completion of the new facilities in mid-2005. While the Company believes that it will be able to avoid potential business interruptions by constructing and occupying fullyfunctional replacement facilities by mid-2005, any such interruptions could have a material adverse effect on the Company's business and results of operations. 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 has self-insured retention limits and has obtained insurance to provide coverage above the self-insured limits for pending product liability and personal injury claims, subject to certain limits and exclusions. Reserves have been provided to cover expected payments for these self-insured amounts. As a result of the Company being named as one of several defendants in two groups of related lawsuits claiming personal injury from the use of certain categories of the Company's products, insurance carriers have, in recent years, limited or eliminated coverage related to the Company's sale of such products, as well as certain costs to defend the Company in these and similar matters.

In one group of lawsuits and claims, the Company, as well as others engaged in manufacturing and distributing similar products, is a defendant in multiple claims alleging injuries from exposure to various chemicals by a limited number of employees of one electronics manufacturer. The Company has been dismissed from one of these claims, with payments made by the Company and/or its insurance carrier consisting entirely of legal fees to defend the Company's position. In the other group of lawsuits and claims, the Company provided a product used as a preservative in testing various vaccines, generally 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 in 155 lawsuits through February 6, 2003. Several of these suits have been stayed by various state and federal courts pending a decision on coverage available under a Federal government relief program, which is not expected before July 2004. 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. The Company believes its reserves and insurance are sufficient to provide for claims received to date. 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 are adjusted as deemed appropriate based on information currently available. 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 but could have a material adverse effect on the Company's results of operations in any given quarter or year. However, future claims related to the use of these categories of products may not be covered by the Company's insurance program. The Company and its subsidiary, Sigma Chemical Company, Inc., are two of several defendants in a lawsuit filed October 23, 2002 in the United States District Court for the Southern District of New York. In the lawsuit, Enzo Biochem, Inc. and Enzo Life Sciences, Inc. ("Enzo") allege breach of contract, commercial torts and patent infringement with respect to the manufacture and/or sale of certain products by the Company. Enzo contends that these actions violate a distributorship agreement that allegedly existed between the Company and Enzo from January 5, 1996 until April 8, 2001. Enzo also alleges that the manufacture and/or sale of these products infringes one or more of nine patents owned by or licensed to Enzo. The complaint seeks actual and enhanced damages but does not specify the amount sought. The Company believes there are substantial legal defenses to the allegations contained in the complaint. Although the Company intends to vigorously defend these allegations, given the inherent uncertainty of litigation and the very early stage of the proceedings, it is unable to predict the ultimate resolution of this matter. Based on current information available, the Company believes that the ultimate resolution of this matter would not have a material adverse effect on its consolidated financial condition but could have a material adverse effect on the Company's results of operations in any given quarter or year. Except as noted above, at December 31, 2002, there were no other known contingent liabilities that management believes could have a material adverse effect on the Company's results of operations or financial condition, nor were there any material commitments outside the normal course of business. 21

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. INFLATION Management recognizes that inflationary pressures may have an adverse effect on the Company through higher asset replacement costs and higher material costs. The Company tries to minimize these effects through cost reductions and productivity improvements as well as price increases to maintain reasonable profit margins. It is management's view, however, that inflation has not had a significant impact on operations in the three years ended December 31, 2002. MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. INFLATION Management recognizes that inflationary pressures may have an adverse effect on the Company through higher asset replacement costs and higher material costs. The Company tries to minimize these effects through cost reductions and productivity improvements as well as price increases to maintain reasonable profit margins. It is management's view, however, that inflation has not had a significant impact on operations in the three years ended December 31, 2002. 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, 2002, the Company's outstanding debt represents 23.2% of total capitalization. Approximately 66% of the Company's outstanding debt at December 31, 2002 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 foreign subsidiaries is generally the dominant currency in the respective country of residence of the subsidiary. The translation from the functional currency to the U.S. Dollar for revenues and expenses is based on the average exchange rate during the period. Large increases or decreases in the spread between currencies have affected and may continue to affect the Company's revenues, revenue growth rates, gross margins and net income. 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 stabilize the value of certain receivables and payables denominated in foreign currencies. Most of the contracts are single currency. Gains and losses on these contracts, based on the difference in the contract rate and the spot rate at the end of each month for all contracts still in force, are typically offset either partially or completely by transaction gains and losses, with any net gains and losses included in selling, general and administrative expenses. The market risk of foreign currency rate changes represents the potential loss in fair value of net currency positions at year-end due to an adverse change in foreign currency exchange rates. The Company does not enter into foreign currency contracts for speculative trading purposes. The Company's policy is to manage the risks associated with existing receivables, payables and commitments. The market risk of the Company's foreign currency positions at December 31, 2002, assuming a hypothetical 10% change in foreign currency exchange rates, would be $1.4. AGGREGATE CONTRACTUAL OBLIGATIONS The following table represents contractual obligations of the Company as of December 31, 2002:
Payments due by period ----------------------------------------------------------------------------------------------------Less than More than Contractual Obligations Total 1 year 1-3 years 3-5 years 5 years -----------------------------------------------------------------------------------------------------

Long-term debt $ 177,473 $ 668 $ 1,805 $ 75,000 $100,000 Operating lease obligations 85,026 20,470 23,786 12,681 28,089 ----------------------------------------------------------------------------------------------------Total $ 262,499 $ 21,138 $ 25,591 $ 87,681 $128,089 -----------------------------------------------------------------------------------------------------

See Notes 7 and 9 to the consolidated financial statements for additional disclosures related to long-term debt and lease commitments, respectively. 22

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. DISCONTINUED OPERATIONS Results from discontinued operations represent the activities of the Diagnostics business and the B-Line Systems metal business (B-Line). On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. Efforts to sell the assets of and discontinue the Diagnostics business resulted in the sale of the EIA product line to IVAX Diagnostics, Inc. in May 2002 and the sale of the coagulation product line to Trinity Biotech plc in August 2002. These two product lines, along with other product lines sold during 2002, represented approximately 70% of Diagnostics sales in 2001 after reclassifying products that contributed $11.0 and $10.0 in Diagnostics sales for 2001 and 2000, respectively, to the Company's Scientific Research unit. Efforts to sell other product lines and reduce inventories through sales to customers continue, with the expectation that all such activities will be substantially concluded by the end of the first quarter of 2003. Net loss from discontinued operations of the Diagnostics business was $3.7, $12.1 and $11.1 for the years ended December 31, 2002, 2001 and 2000, respectively. The Company recorded a one-time charge of $52.3, net of taxes, in 2002 as a result of discontinuing the Diagnostics business. This one-time charge included reductions in the carrying value of applicable assets, including the write-off of unamortized goodwill and other intangible assets of $21.0 from the acquisition of First Medical, Inc. and Amelung GmbH, costs of staff reductions and other costs related to discontinuing the business, all net of applicable taxes. Operating results of Diagnostics through December 31, 2002 and the loss on the disposition of Diagnostics are included as discontinued operations in the Consolidated Statements of Income. The sale of B-Line for $430.4, which was completed on May 1, 2000, resulted in a $171.1 gain. Operating results of B-Line through April 30, 2000 and the gain on the sale of B-Line are included as discontinued operations in the Consolidated Statements of Income. FORWARD-LOOKING STATEMENTS Management's Discussion and Analysis and other sections of 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 constitute forward- looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as statements that are preceded by, followed by, or that include the words "believes," "expects," "anticipates," "should" or similar expressions, and other statements contained herein regarding matters that are not historical facts. Additionally, the 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, the discontinuance of its Diagnostics business, including the effect on earnings from running the discontinued business as assets are held for sale and other matters. These statements involve assumptions regarding Company operations, investments, acquisitions and conditions in the markets the Company serves and the sale of assets and

Management's Discussion and Analysis (CONTINUED) ($ In Millions, Except Per Share Data) The following should be read in conjunction with the consolidated financial statements and related notes. DISCONTINUED OPERATIONS Results from discontinued operations represent the activities of the Diagnostics business and the B-Line Systems metal business (B-Line). On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. Efforts to sell the assets of and discontinue the Diagnostics business resulted in the sale of the EIA product line to IVAX Diagnostics, Inc. in May 2002 and the sale of the coagulation product line to Trinity Biotech plc in August 2002. These two product lines, along with other product lines sold during 2002, represented approximately 70% of Diagnostics sales in 2001 after reclassifying products that contributed $11.0 and $10.0 in Diagnostics sales for 2001 and 2000, respectively, to the Company's Scientific Research unit. Efforts to sell other product lines and reduce inventories through sales to customers continue, with the expectation that all such activities will be substantially concluded by the end of the first quarter of 2003. Net loss from discontinued operations of the Diagnostics business was $3.7, $12.1 and $11.1 for the years ended December 31, 2002, 2001 and 2000, respectively. The Company recorded a one-time charge of $52.3, net of taxes, in 2002 as a result of discontinuing the Diagnostics business. This one-time charge included reductions in the carrying value of applicable assets, including the write-off of unamortized goodwill and other intangible assets of $21.0 from the acquisition of First Medical, Inc. and Amelung GmbH, costs of staff reductions and other costs related to discontinuing the business, all net of applicable taxes. Operating results of Diagnostics through December 31, 2002 and the loss on the disposition of Diagnostics are included as discontinued operations in the Consolidated Statements of Income. The sale of B-Line for $430.4, which was completed on May 1, 2000, resulted in a $171.1 gain. Operating results of B-Line through April 30, 2000 and the gain on the sale of B-Line are included as discontinued operations in the Consolidated Statements of Income. FORWARD-LOOKING STATEMENTS Management's Discussion and Analysis and other sections of 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 constitute forward- looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risk and uncertainty, including financial, business environment and projections, as well as statements that are preceded by, followed by, or that include the words "believes," "expects," "anticipates," "should" or similar expressions, and other statements contained herein regarding matters that are not historical facts. Additionally, the 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, the discontinuance of its Diagnostics business, including the effect on earnings from running the discontinued business as assets are held for sale and other matters. These statements involve assumptions regarding Company operations, investments, acquisitions and conditions in the markets the Company serves and the sale of assets and actions related to the discontinuance of its Diagnostics business. Although the Company believes its expectations are based on reasonable assumptions, such statements are subject to risks and uncertainties, including, among others, certain economic, political and technological factors. Actual results could differ materially from those stated or implied in this Annual Report to shareholders, due to, but not limited to, such factors as (1) changes in pricing and the competitive environment, (2) other changes in the business environment in which the Company operates, (3) changes in research funding, (4) uncertainties surrounding government health care reform, (5) government regulations applicable to the business, (6) the impact of fluctuations in interest rates and foreign currency exchange rates, (7) the effectiveness of the Company's further implementation of its global software systems, (8) expectations for the discontinuance of the Diagnostics business, (9) the ability to retain customers, suppliers, and employees and (10) the outcome of the matters described in Note 11 -- Contingent Liabilities and Commitments to the

consolidated financial statements. The Company does not undertake any obligation to update these forwardlooking statements. 23

Consolidated Statements of Income (In Thousands, Except Per Share Data)
Years ended December 31, 2002 2001 --------------------------------------------------------------------------------------------------------Net sales $ 1,206,982 $ 1,114,488 $1, Cost of products sold 592,447 532,266 --------------------------------------------------------------------------------------------------------Gross Profit 614,535 582,222 Selling, general and administrative expenses 317,433 307,441 Research and development expenses 40,468 37,922 Gain on sale of Milwaukee facility (29,342) Interest, net 13,837 16,542 Purchased in-process research and development 1,200 --------------------------------------------------------------------------------------------------------Income from continuing operations before income taxes 272,139 219,117 Provision for income taxes 85,404 66,348 --------------------------------------------------------------------------------------------------------Net income from continuing operations 186,735 152,769 Discontinued operations: Net loss from operations of discontinued business -- Diagnostics (3,736) (12,064) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (52,285) --------------------------------------------------------------------------------------------------------Net income $ 130,714 $ 140,705 $ --------------------------------------------------------------------------------------------------------Supplemental net income information Net income from continuing operations $ 186,735 $ 152,769 $ Add back: goodwill amortization, net of taxes 5,070 --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations $ 186,735 $ 157,839 $ --------------------------------------------------------------------------------------------------------Weighted average number of shares outstanding -- Basic Weighted average number of shares outstanding -- Diluted 72,749 73,412 74,559 75,175

Net Income per share -- Basic Net income from continuing operations $ 2.57 $ 2.05 $ Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (0.72) --------------------------------------------------------------------------------------------------------Net income $ 1.80 $ 1.89 $ --------------------------------------------------------------------------------------------------------Net Income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (0.71) --------------------------------------------------------------------------------------------------------Net income $ 1.78 $ 1.87 $ --------------------------------------------------------------------------------------------------------Supplemental net income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ Add back: goodwill amortization, net of taxes 0.07 --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations $ 2.54 $ 2.10 $ ---------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these statements. 24

Consolidated Balance Sheets

Consolidated Statements of Income (In Thousands, Except Per Share Data)
Years ended December 31, 2002 2001 --------------------------------------------------------------------------------------------------------Net sales $ 1,206,982 $ 1,114,488 $1, Cost of products sold 592,447 532,266 --------------------------------------------------------------------------------------------------------Gross Profit 614,535 582,222 Selling, general and administrative expenses 317,433 307,441 Research and development expenses 40,468 37,922 Gain on sale of Milwaukee facility (29,342) Interest, net 13,837 16,542 Purchased in-process research and development 1,200 --------------------------------------------------------------------------------------------------------Income from continuing operations before income taxes 272,139 219,117 Provision for income taxes 85,404 66,348 --------------------------------------------------------------------------------------------------------Net income from continuing operations 186,735 152,769 Discontinued operations: Net loss from operations of discontinued business -- Diagnostics (3,736) (12,064) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (52,285) --------------------------------------------------------------------------------------------------------Net income $ 130,714 $ 140,705 $ --------------------------------------------------------------------------------------------------------Supplemental net income information Net income from continuing operations $ 186,735 $ 152,769 $ Add back: goodwill amortization, net of taxes 5,070 --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations $ 186,735 $ 157,839 $ --------------------------------------------------------------------------------------------------------Weighted average number of shares outstanding -- Basic Weighted average number of shares outstanding -- Diluted 72,749 73,412 74,559 75,175

Net Income per share -- Basic Net income from continuing operations $ 2.57 $ 2.05 $ Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (0.72) --------------------------------------------------------------------------------------------------------Net income $ 1.80 $ 1.89 $ --------------------------------------------------------------------------------------------------------Net Income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) Net income from operations of discontinued business -- metal Net (loss) gain on disposition of discontinued operations (0.71) --------------------------------------------------------------------------------------------------------Net income $ 1.78 $ 1.87 $ --------------------------------------------------------------------------------------------------------Supplemental net income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ Add back: goodwill amortization, net of taxes 0.07 --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations $ 2.54 $ 2.10 $ ---------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these statements. 24

Consolidated Balance Sheets (In Thousands, Except Per Share Data)
Decemb 2002 --------------------------------------------------------------------------------------------------------ASSETS

Consolidated Balance Sheets (In Thousands, Except Per Share Data)
Decemb 2002 --------------------------------------------------------------------------------------------------------ASSETS Current assets: Cash and cash equivalents $ 52,382 Accounts receivable, less allowance for doubtful accounts of $6,072 and $6,176, respectively 175,356 Inventories 421,368 Other current assets 45,396 Current assets held for sale 385 --------------------------------------------------------------------------------------------------------Total current assets 694,887 --------------------------------------------------------------------------------------------------------Property, plant and equipment: Land 37,600 Buildings and improvements 435,018 Machinery and equipment 496,594 Construction in progress 26,994 Less -- accumulated depreciation (460,409) --------------------------------------------------------------------------------------------------------Property, plant and equipment, net 535,797 --------------------------------------------------------------------------------------------------------Goodwill, net 105,548 Other assets 53,424 Noncurrent assets held for sale --------------------------------------------------------------------------------------------------------Total assets $ 1,389,656 --------------------------------------------------------------------------------------------------------LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current maturities of long-term debt $ 89,930 Accounts payable 69,184 Accrued payroll and payroll taxes 32,769 Accrued income taxes 25,949 Other accrued expenses 43,961 Current liabilities of discontinued operations 3,860 --------------------------------------------------------------------------------------------------------Total current liabilities 265,653 --------------------------------------------------------------------------------------------------------Long-term debt 176,805 Deferred post-retirement benefits 48,675 Other liabilities 16,349 --------------------------------------------------------------------------------------------------------Total liabilities 507,482 --------------------------------------------------------------------------------------------------------Stockholders' equity: Common stock, $1.00 par value; 200,000 shares authorized; 101,001 and 101,040 shares issued at December 31, 2002 and 2001, respectively; 71,253 and 73,014 shares outstanding at December 31, 2002 and 2001, respectively 101,001 Capital in excess of par value 45,751 Common stock in treasury, at cost, 29,748 and 28,026 shares at December 31, 2002 and 2001, respectively (1,002,950) Retained earnings 1,753,737 Accumulated other comprehensive loss (15,365) --------------------------------------------------------------------------------------------------------Total stockholders' equity 882,174 --------------------------------------------------------------------------------------------------------Total liabilities and stockholders' equity $ 1,389,656 ---------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these statements. 25

Consolidated Statements of Stockholders' Equity (In Thousands, Except Per Share Data)
--------------------------------------------------------------------------------------------------------Accumulated Capital Other Common Excess of Common Stock Retained Comprehensive S Stock Par Value in Treasury Earnings Earnings --------------------------------------------------------------------------------------------------------Balance, December 31, 1999 $100,905 $35,783 $ (77,785) $ 1,240,184 $ (39,736) Net income 320,198 Other comprehensive loss -foreign currency translation (18,250) Comprehensive income -

Dividends ($.3150 per share) (26,077) Awards under deferred compensation plan 381 Exercise of stock options 151 5,346 20,928 (2,261) Stock repurchases (700,492) --------------------------------------------------------------------------------------------------------Balance, December 31, 2000 101,056 41,129 (756,968) 1,532,044 (57,986) Net income 140,705 Other comprehensive loss -foreign currency translation (21,447) Comprehensive income -

Dividends ($.3325 per share) (24,535) Awards under deferred compensation plan (372) 1,781 Shares exchanged for stock options (16) Exercise of stock options 2,616 25,607 Stock repurchases (173,899) --------------------------------------------------------------------------------------------------------Balance, December 31, 2001 101,040 43,373 (903,479) 1,648,214 (79,433) Net income 130,714 Other comprehensive income -foreign currency translation 68,388 Minimum pension liability (4,320) Comprehensive income -

Dividends ($.3450 per share) (25,191) Awards under deferred compensation plan 124 373 Shares exchanged for stock options (39) (1,872) Exercise of stock options 4,126 25,299 Stock repurchases (125,143) --------------------------------------------------------------------------------------------------------Balance, December 31, 2002 $101,001 $45,751 $(1,002,950) $ 1,753,737 $ (15,365) ---------------------------------------------------------------------------------------------------------

Common stock shares issued and common stock shares in treasury are summarized below:
Common Stock Common Stock Issued in Treasury --------------------------------------------------------------------------------------------------------Balance, December 31, 1999 100,905 2,613 Awards under deferred compensation plan (8) Exercise of stock options 151 (704) Stock repurchases 22,939 ---------------------------------------------------------------------------------------------------Balance, December 31, 2000 101,056 24,840 Awards under deferred compensation plan (60) Shares exchanged for stock options (16) Exercise of stock options (818) Stock repurchases 4,064 ---------------------------------------------------------------------------------------------------Balance, December 31, 2001 101,040 28,026 Awards under deferred compensation plan (12) Shares exchanged for stock options (39) Exercise of stock options (850) Stock repurchases 2,584 ----------------------------------------------------------------------------------------------------

Balance, December 31, 2002 101,001 29,748 ----------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these statements. 26

Consolidated Statements of Cash Flows (In Thousands)
Years ended De 2002 2001 --------------------------------------------------------------------------------------------------------Cash flows from operating activities: Net income $ 130,714 $ 140,7 Adjustments to reconcile net income to net cash provided by operating activities: Net loss from operations of discontinued business -- Diagnostics 3,736 12,0 Net income from operations of discontinued business -- metal Net loss (gain) on disposition of discontinued operations 52,285 Gain on sale of Milwaukee facility (29,342) Depreciation and amortization 66,326 66,4 Purchased in-process research and development 1,2 Deferred income taxes 7,799 4,7

Consolidated Statements of Cash Flows (In Thousands)
Years ended De 2002 2001 --------------------------------------------------------------------------------------------------------Cash flows from operating activities: Net income $ 130,714 $ 140,7 Adjustments to reconcile net income to net cash provided by operating activities: Net loss from operations of discontinued business -- Diagnostics 3,736 12,0 Net income from operations of discontinued business -- metal Net loss (gain) on disposition of discontinued operations 52,285 Gain on sale of Milwaukee facility (29,342) Depreciation and amortization 66,326 66,4 Purchased in-process research and development 1,2 Deferred income taxes 7,799 4,7 Post-retirement benefits expense 4,818 4,3 Deferred compensation, net (208) (1,5 Changes in assets and liabilities: Decrease (increase) in accounts receivable 19,373 2,4 Decrease (increase) in inventories 29,773 (26,0 Increase (decrease) in accrued income taxes 46,616 (33,7 Other 13,354 (4,7 --------------------------------------------------------------------------------------------------------Net cash provided by operating activities of continuing operations 345,244 165,9 Net cash provided by operating activities of discontinued business -- metal Net cash provided by (used in) operating activities of discontinued business -- Diagnostics 5,998 (6,8 --------------------------------------------------------------------------------------------------------Net cash provided by operating activities 351,242 159,0 --------------------------------------------------------------------------------------------------------Cash flows from investing activities: Property, plant and equipment additions (60,739) (108,0 Sale of equipment 4,177 1,3 Acquisitions of businesses (37,2 Proceeds from sale of Milwaukee facility 32,500 Proceeds from disposition of discontinued businesses 6,099 Other, net (1,235) --------------------------------------------------------------------------------------------------------Net cash (used in) provided by investing activities of continuing operations (19,198) (143,8 Net cash used in investing activities of discontinued business -- metal Net cash used in investing activities of discontinued business -- Diagnostics (2,286) (4,5 --------------------------------------------------------------------------------------------------------Net cash (used in) provided by investing activities (21,484) (148,3 --------------------------------------------------------------------------------------------------------Cash flows from financing activities: Net (repayment) borrowing of short-term debt (180,452) 91,3 Issuance of long-term debt 77,2 Repayment of long-term debt (1,248) (2 Payment of dividends (25,191) (24,5 Treasury stock purchases (125,143) (173,8 Exercise of stock options 24,324 24,1 --------------------------------------------------------------------------------------------------------Net cash used in financing activities (307,710) (5,8 --------------------------------------------------------------------------------------------------------Effect of exchange rate changes on cash (7,303) 1,6 --------------------------------------------------------------------------------------------------------Net change in cash and cash equivalents 14,745 6,5 Cash and cash equivalents at beginning of year 37,637 31,0 --------------------------------------------------------------------------------------------------------Cash and cash equivalents at end of year $ 52,382 $ 37,6 --------------------------------------------------------------------------------------------------------Supplemental disclosures of cash flow information: Income taxes paid Interest paid, net of capitalized interest

$

26,635 16,167

$

90,5 18,1

The accompanying notes are an integral part of these statements. 27

Notes to Consolidated Financial Statements ($ In Thousands, Except Per Share Data) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations: Sigma-Aldrich Corporation ("the Company") develops, manufactures and distributes the broadest range of high quality biochemicals and organic chemicals available in the world. These products are used in scientific and genomic research, biotechnology, pharmaceutical development, the diagnosis of disease and chemical 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: Except as described in Note 7, the Company has no financial instruments that have a materially different fair value than the respective instrument's carrying value. 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. 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. Legal Costs: The Company expenses legal costs, including those costs expected to be incurred in connection with a loss contingency, as incurred. 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 $64,394, $58,444 and $52,801 for the years ended December 31, 2002, 2001 and 2000, respectively. The Company capitalizes interest as part of the cost of constructing major facilities and equipment. Goodwill: Goodwill and other intangible assets not subject to amortization are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. This testing requires comparison of carrying values to fair values and when appropriate, the carrying value of the impaired assets is reduced to fair value. The Company performed an impairment assessment at December 31, 2002 and determined that no impairment existed. 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 or using discounted cash flows if the fair market value is not readily determinable. Stock Options: The Company grants incentive and non-qualified stock options under various share option plans. The Company has adopted the disclosure-only provisions (intrinsic value methodology) of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost is recognized in the consolidated financial statements for the stock option plans. However, the Company does disclose pro-forma net income based on the fair value of stock options granted. The fair value of stock options granted is dependent on certain assumptions used to calculate such amounts. Those assumptions are described in Note 12 and include the expected life of the option, risk-free interest rate, expected volatility of the underlying stock and dividend yield. 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 as accumulated other comprehensive income or loss. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 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 2002. Effect of New Accounting Standards: In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). The Company adopted the provisions of SFAS 142 in January 2002. See Note 4 for the impact on the Company's consolidated financial statements. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" (SFAS 143). SFAS 143 addresses the financial reporting and obligations associated with the retirement of tangible long-term assets and associated asset retirement costs. This Statement will be effective for the Company for the year ending December 31, 2003. The Company is currently evaluating the impact of SFAS 143 on its financial statements. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long- Lived Assets" (SFAS 144). The Company adopted the provisions of SFAS 144 for the year ending December 2002 as a result of the decision to discontinue the Diagnostics business. The effects of its decision and the implementation of this Statement is reflected in the Company's consolidated financial statements and discussed further in Note 5. In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 requires that a liability be recognized for 28

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) those costs only when the liability is incurred and establishes fair value as the objective for the initial measurement of liabilities related to exit or disposal activities. The Company will apply the requirements of this Statement to any exit or disposal activities initiated after December 31, 2002. In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure -- an amendment of FASB No. 123" (SFAS 148). SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement of Financial Accounting Standards No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted the disclosure provisions of SFAS 148 (see Note 12), however, the Company does not currently plan to adopt the fair value based method of accounting and will continue to use the intrinsic value methodology for stock-based employee compensation. NOTE 2: ALLOWANCE FOR DOUBTFUL ACCOUNTS Changes in the allowance for doubtful accounts for the years ended December 31, 2002, 2001 and 2000 are as follows:
2002 2001 2000 ------------------------------------------------------------------------------Balance, beginning of year $ 6,176 $ 5,550 $ 9,695 Additions to reserves 3,375 5,060 3,285 Deductions from reserves 3,479 4,434 7,430 ------------------------------------------------------------------------------Balance, end of year $ 6,072 $ 6,176 $ 5,550 -------------------------------------------------------------------------------

NOTE 3: INVENTORIES The principal categories of inventories are:
December 31, 2002 2001 ---------------------------------------------------------------Finished goods $ 360,914 $358,348 Work in process 18,366 25,084 Raw materials 42,088 43,662 ---------------------------------------------------------------Total $ 421,368 $427,094 ----------------------------------------------------------------

Inventories are valued at the lower of cost or market. Costs for certain domestic inventories (26% of total inventories at December 31, 2002) are determined using the last-in, first-out method. Costs for other inventories are based on actual costs using purchase price and costs to manufacture, which includes material, labor and overhead. If the value of all chemical inventories had been determined using actual cost as noted above, inventories would have been $335, $1,513 and $1,178 higher than reported at December 31, 2002, 2001 and 2000, respectively. NOTE 4: INTANGIBLE ASSETS SFAS 142 requires the Company to assess goodwill and intangible assets with indefinite lives for impairment rather than systematically amortize these assets against earnings. The Company performed an impairment assessment of goodwill and intangible assets during the second quarter of 2002 and determined that no

impairment existed at January 1, 2002. The Company performed an impairment assessment of goodwill and intangible assets at year-end 2002 and determined that no impairment of goodwill or intangible assets existed at December 31, 2002. As a result of the Company's decision to discontinue the Diagnostics business, goodwill associated with this business was written off as disclosed in Note 5. The following table provides information relating to the Company's amortizable and unamortizable intangible assets at December 31:
Remaining Accumulated Amortizat Cost Amortization Period (in --------------------------------------------------------------------------------------------------------2002 2001 2002 2001 2002 2 --------------------------------------------------------------------------------------------------------Amortizable intangible assets: Patents $ 3,897 $ 4,002 $ 2,188 $ 2,087 4 Trademarks 8,270 8,270 4,537 3,864 4 Licenses 3,096 1,108 826 557 8 Other 4,794 3,910 3,742 2,604 2 --------------------------------------------------------------------------------------------------------Total $ 20,057 $ 17,290 $ 11,293 $ 9,112 5 --------------------------------------------------------------------------------------------------------Unamortizable intangible assets: Goodwill $129,860 $121,996 $ 24,312 $ 23,321 Pension 1,302 323 ------------------------------------------------------------------------------------------Total $131,162 $122,319 $ 24,312 $ 23,321 -------------------------------------------------------------------------------------------

29

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 4: INTANGIBLE ASSETS (continued) The Company recorded amortization expense of $1,932, $1,673 and $3,071 for the years ended December 31, 2002, 2001 and 2000, respectively, related to amortizable intangible assets. The Company expects to record annual amortization expense of approximately $2,010 in each of the next five years for intangible assets. Changes in goodwill for 2002 are as follows:
Balance at December 31, 2001 $ 98,675 Impact of foreign exchange rates 6,873 -----------------------------------------------------------------------Balance at December 31, 2002 $ 105,548 ------------------------------------------------------------------------

The effect of the adoption of SFAS 142 on reported net income is as follows:
Years en 2002 --------------------------------------------------------------------------------------------------------Net income: Net income from continuing operations $ 186,735 Add back: goodwill amortization related to continuing operations, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations 186,735 Net loss from operations of discontinued business -- Diagnostics (3,736) Net income from operations of discontinued business -- metal Add back: goodwill amortization related to discontinued business, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income before net (loss) gain on disposition of discontinued operations 182,999

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 4: INTANGIBLE ASSETS (continued) The Company recorded amortization expense of $1,932, $1,673 and $3,071 for the years ended December 31, 2002, 2001 and 2000, respectively, related to amortizable intangible assets. The Company expects to record annual amortization expense of approximately $2,010 in each of the next five years for intangible assets. Changes in goodwill for 2002 are as follows:
Balance at December 31, 2001 $ 98,675 Impact of foreign exchange rates 6,873 -----------------------------------------------------------------------Balance at December 31, 2002 $ 105,548 ------------------------------------------------------------------------

The effect of the adoption of SFAS 142 on reported net income is as follows:
Years en 2002 --------------------------------------------------------------------------------------------------------Net income: Net income from continuing operations $ 186,735 Add back: goodwill amortization related to continuing operations, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations 186,735 Net loss from operations of discontinued business -- Diagnostics (3,736) Net income from operations of discontinued business -- metal Add back: goodwill amortization related to discontinued business, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income before net (loss) gain on disposition of discontinued operations 182,999 Net (loss) gain on disposition of discontinued operations (52,285) --------------------------------------------------------------------------------------------------------Adjusted net income $ 130,714 --------------------------------------------------------------------------------------------------------Net income per share -- Basic: Net income from continuing operations $ 2.57 Add back: goodwill amortization related to continuing operations, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations 2.57 Net loss from operations of discontinued business-- Diagnostics (0.05) Net income from operations of discontinued business-- metal Add back: goodwill amortization related to discontinued business, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income before net (loss) gain on disposition of discontinued operations 2.52 Net (loss) gain on disposition of discontinued operations (0.72) --------------------------------------------------------------------------------------------------------Adjusted net income $ 1.80 --------------------------------------------------------------------------------------------------------Net income per share -- Diluted: Net income from continuing operations $ 2.54 Add back: goodwill amortization related to continuing operations, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income from continuing operations 2.54 Net loss from operations of discontinued business-- Diagnostics (0.05) Net income from operations of discontinued business-- metal Add back: goodwill amortization related to discontinued business, net of taxes --------------------------------------------------------------------------------------------------------Adjusted net income before net (loss) gain on disposition of discontinued operations 2.49 Net (loss) gain on disposition of discontinued operations (0.71) --------------------------------------------------------------------------------------------------------Adjusted net income $ 1.78 ---------------------------------------------------------------------------------------------------------

30

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 5: DISCONTINUED OPERATIONS On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. The operations of the Diagnostics business are accounted for as discontinued operations, and accordingly, operating results, including cash flows, and related assets and liabilities of discontinued operations are segregated in the accompanying Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows for all periods presented. Certain catalog-based products marketed by the discontinued Diagnostics unit that contributed approximately $11,000 and $10,000 in sales for 2001 and 2000, respectively, and a modest positive contribution to diluted earnings per share in 2001 and 2000, respectively, were classified out of Diagnostics and into the Company's Scientific Research unit. Data for all periods has been restated to reflect this reclassification. Operating results for the discontinued Diagnostics business are as follows:
Years ended December 31, 2002 2001 2000 -------------------------------------------------------------------------Net sales $ 43,944 $ 64,959 $ 61,830 -------------------------------------------------------------------------Loss before income taxes $ (5,411) $ (17,484) $(14,658) Income tax benefit 1,675 5,420 3,587 -------------------------------------------------------------------------Net loss $ (3,736) $ (12,064) $(11,071) --------------------------------------------------------------------------

The Company recorded a net loss for the year ended December 31, 2002 of $52,285, net of a tax benefit of $34,136. The one-time charge includes reductions in the carrying value of applicable assets, including the writeoff of unamortized goodwill and other intangible assets of $21,000 from the acquisitions of First Medical, Inc. and Amelung GmbH, costs of staff reductions and other costs related to discontinuing the business, all net of applicable taxes. At December 31, 2002 and December 31, 2001, assets of this discontinued operation totaled $385 and $86,155, respectively. At December 31, 2002, the assets are written down to an expected net realizable value. Assets of this discontinued operation at December 31, 2002 included inventories while assets of this discontinued operation at December 31, 2001 included inventories, property, plant and equipment, goodwill and other assets. Current liabilities of this discontinued operation at December 31, 2002 included costs to meet contractual and other obligations and costs of staff reductions. The Company completed the sale of its B-Line Systems metal business in May 2000 for $430,389, resulting in a net gain of $171,067, after deducting taxes of $102,301. Operating results for the metal business prior to its sale are included in the Consolidated Statements of Income as net income from operations of discontinued business -- metal. Results for the discontinued business -- metal are as follows:
Year ended December 31, 2000 ------------------------------------------------------------------------Net sales $ 101,093 ------------------------------------------------------------------------Income before income taxes $ 16,002 Provision for income taxes 5,921 ------------------------------------------------------------------------Net income $ 10,081 -------------------------------------------------------------------------

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 5: DISCONTINUED OPERATIONS On April 23, 2002, the Company announced its decision to sell substantially all the assets of its Diagnostics business and continue to supply customers under contract while seeking to transfer these commitments to other vendors as it seeks to discontinue this business. The operations of the Diagnostics business are accounted for as discontinued operations, and accordingly, operating results, including cash flows, and related assets and liabilities of discontinued operations are segregated in the accompanying Consolidated Statements of Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows for all periods presented. Certain catalog-based products marketed by the discontinued Diagnostics unit that contributed approximately $11,000 and $10,000 in sales for 2001 and 2000, respectively, and a modest positive contribution to diluted earnings per share in 2001 and 2000, respectively, were classified out of Diagnostics and into the Company's Scientific Research unit. Data for all periods has been restated to reflect this reclassification. Operating results for the discontinued Diagnostics business are as follows:
Years ended December 31, 2002 2001 2000 -------------------------------------------------------------------------Net sales $ 43,944 $ 64,959 $ 61,830 -------------------------------------------------------------------------Loss before income taxes $ (5,411) $ (17,484) $(14,658) Income tax benefit 1,675 5,420 3,587 -------------------------------------------------------------------------Net loss $ (3,736) $ (12,064) $(11,071) --------------------------------------------------------------------------

The Company recorded a net loss for the year ended December 31, 2002 of $52,285, net of a tax benefit of $34,136. The one-time charge includes reductions in the carrying value of applicable assets, including the writeoff of unamortized goodwill and other intangible assets of $21,000 from the acquisitions of First Medical, Inc. and Amelung GmbH, costs of staff reductions and other costs related to discontinuing the business, all net of applicable taxes. At December 31, 2002 and December 31, 2001, assets of this discontinued operation totaled $385 and $86,155, respectively. At December 31, 2002, the assets are written down to an expected net realizable value. Assets of this discontinued operation at December 31, 2002 included inventories while assets of this discontinued operation at December 31, 2001 included inventories, property, plant and equipment, goodwill and other assets. Current liabilities of this discontinued operation at December 31, 2002 included costs to meet contractual and other obligations and costs of staff reductions. The Company completed the sale of its B-Line Systems metal business in May 2000 for $430,389, resulting in a net gain of $171,067, after deducting taxes of $102,301. Operating results for the metal business prior to its sale are included in the Consolidated Statements of Income as net income from operations of discontinued business -- metal. Results for the discontinued business -- metal are as follows:
Year ended December 31, 2000 ------------------------------------------------------------------------Net sales $ 101,093 ------------------------------------------------------------------------Income before income taxes $ 16,002 Provision for income taxes 5,921 ------------------------------------------------------------------------Net income $ 10,081 -------------------------------------------------------------------------

NOTE 6: NOTES PAYABLE The Company has short-term credit facilities totaling $350,000, consisting of a 364-day committed facility in the amount of $200,000 expiring on December 8, 2003, and a five-year committed facility in the amount of $150,000 expiring on December 11, 2006. These facilities support the Company's commercial paper program launched in January 2002. The facilities are provided by a syndicate of banks. The Company did not have any borrowings outstanding under these facilities at December 31, 2002. Borrowings under these facilities of $255,000 at a weighted average interest rate of 2.7% were outstanding at December 31, 2001. The syndicated facilities contain financial covenants that require the maintenance of net worth of at least $750,000 and a ratio of debt levels to total capitalization of at least 45%. The Company is in full compliance with these covenants. The Company intends to renew these facilities as they expire. At December 31, 2002, the Company had commercial paper outstanding in the amount of $80,000 with an average interest rate of 1.5%. Notes payable by international subsidiaries were $9,262 and $14,881 at December 31, 2002 and 2001, respectively. The notes are payable in local currencies with weighted average interest rates of 0.7% and 0.8% at December 31, 2002 and 2001, respectively. 31

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 7: LONG-TERM DEBT Long-term debt consists of the following:
December 31, 2002 2001 -------------------------------------------------------------------------7.687% Senior Notes, due September 12, 2010 $100,000 $100,000 5.16% Senior Notes, due November 20, 2006 75,000 75,000 Other 2,473 3,201 -------------------------------------------------------------------------Total 177,473 178,201 Less-Current maturities (668) (501) -------------------------------------------------------------------------$176,805 $177,700 --------------------------------------------------------------------------

The Company, at its option, may redeem all or any portion of the Senior Notes by notice to the holder. The Senior Notes contain certain covenants that require the maintenance of net worth of at least $750,000 and restricts the ratio of debt to total capitalization to no more than 55%. The Company is in full compliance with these covenants. Total interest expense incurred by the Company, net of amounts capitalized, was $15,295, $18,161 and $10,189 in 2002, 2001 and 2000, respectively. The fair value of long-term debt for the Company, including current maturities, was approximately $192,217 and $193,406 at December 31, 2002 and 2001, respectively, based upon a discounted cash flow analysis using current market interest rates. NOTE 8: FINANCIAL DERIVATIVES AND RISK MANAGEMENT The Company transacts business in many parts of the world and is subject to risks associated with changing foreign currency exchange rates. The Company's objective is to minimize the impact of foreign currency exchange rate changes during the period of time between the original transaction date and its cash settlement. Accordingly, the Company enters into forward currency exchange contracts in order to stabilize the value of certain receivables and payables denominated in foreign currencies. The Company does not enter into foreign currency transactions for speculative trading purposes. The Company's policy is to manage the risks associated with existing

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 7: LONG-TERM DEBT Long-term debt consists of the following:
December 31, 2002 2001 -------------------------------------------------------------------------7.687% Senior Notes, due September 12, 2010 $100,000 $100,000 5.16% Senior Notes, due November 20, 2006 75,000 75,000 Other 2,473 3,201 -------------------------------------------------------------------------Total 177,473 178,201 Less-Current maturities (668) (501) -------------------------------------------------------------------------$176,805 $177,700 --------------------------------------------------------------------------

The Company, at its option, may redeem all or any portion of the Senior Notes by notice to the holder. The Senior Notes contain certain covenants that require the maintenance of net worth of at least $750,000 and restricts the ratio of debt to total capitalization to no more than 55%. The Company is in full compliance with these covenants. Total interest expense incurred by the Company, net of amounts capitalized, was $15,295, $18,161 and $10,189 in 2002, 2001 and 2000, respectively. The fair value of long-term debt for the Company, including current maturities, was approximately $192,217 and $193,406 at December 31, 2002 and 2001, respectively, based upon a discounted cash flow analysis using current market interest rates. NOTE 8: FINANCIAL DERIVATIVES AND RISK MANAGEMENT The Company transacts business in many parts of the world and is subject to risks associated with changing foreign currency exchange rates. The Company's objective is to minimize the impact of foreign currency exchange rate changes during the period of time between the original transaction date and its cash settlement. Accordingly, the Company enters into forward currency exchange contracts in order to stabilize the value of certain receivables and payables denominated in foreign currencies. The Company does not enter into foreign currency transactions for speculative trading purposes. The Company's policy is to manage the risks associated with existing receivables, payables and commitments. The principal forward currency exchange contracts are for the British pound, the Euro, Swiss franc, Japanese yen and Canadian dollar. These contracts are recorded at fair value and are included in other current assets. Resulting gains and losses are recorded in selling, general and administrative expenses and are partially or completely offset by changes in the value of related exposures. The duration of the contracts typically does not exceed six months. The counterparties to the contracts are large, reputable commercial banks and, accordingly, the Company expects all counterparties to meet their obligations. The notional amount of open forward exchange contracts at December 31, 2002 and 2001 was $227,809 and $178,569, respectively. NOTE 9: LEASE COMMITMENTS The Company and its subsidiaries lease manufacturing, office and warehouse facilities and computer equipment under non-cancelable operating leases expiring at various dates. Rent charged to operations was $27,061, $22,916 and $18,962 in 2002, 2001 and 2000, respectively. Minimum rental commitments for non-cancelable leases in effect at December 31, 2002, are as follows:

2003 2004 2005 2006 2007 2008 and thereafter

$ 20,470 14,499 9,287 7,137 5,544 28,089

32

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 10: INCOME TAXES The provision for income taxes from continuing operations consists of the following:
2002 2001 2000 -------------------------------------------------------------------------Current: Federal $ 54,860 $ 44,941 $ 51,973 State 4,079 5,256 6,597 International 20,747 11,405 39,019 -------------------------------------------------------------------------Total current 79,686 61,602 97,589 -------------------------------------------------------------------------Deferred: Federal 9,537 2,381 (5,652) State 1,764 326 (691) International (5,583) 2,039 (23,800) -------------------------------------------------------------------------Total deferred 5,718 4,746 (30,143) -------------------------------------------------------------------------Provision for income taxes $ 85,404 $ 66,348 $ 67,446 --------------------------------------------------------------------------

A reconciliation of statutory and effective tax rates is as follows:
2002 2001 2000 ----------------------------------------------------------Statutory tax rate 35.0% 35.0% 35.0% EIE/FSC benefits (3.0) (4.4) (2.7) State income taxes, net of federal benefits 1.3 2.1 1.6 Research and development credits (1.0) (1.4) (1.1) International taxes (1.9) (.8) (3.4) Other, net 1.0 (.2) 1.6 ----------------------------------------------------------Total effective tax rate on continuing operations 31.4% 30.3% 31.0% -----------------------------------------------------------

The Extraterritorial Income Exclusion (EIE) on the Company's U.S. export sales replaced the benefit previously realized by the Company's Foreign Sales Corporation (FSC). The EIE lowered the effective tax rate on income from U.S. export sales and produced approximately the same benefit as the FSC. The increase in FSC benefit in 2001 results from prior year redeterminations. Research and development credits are a benefit of the Company's commitment of resources to new and enhanced products. The international tax rate reductions in 2002 and 2000 result from a one-time tax benefit and the benefit from international restructurings, respectively. Deferred income tax provisions reflect the effect of temporary differences between financial statement and tax reporting of income and expense items. The net deferred tax liability and asset at December 31, 2002 and 2001, respectively, results from the following temporary differences:

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 10: INCOME TAXES The provision for income taxes from continuing operations consists of the following:
2002 2001 2000 -------------------------------------------------------------------------Current: Federal $ 54,860 $ 44,941 $ 51,973 State 4,079 5,256 6,597 International 20,747 11,405 39,019 -------------------------------------------------------------------------Total current 79,686 61,602 97,589 -------------------------------------------------------------------------Deferred: Federal 9,537 2,381 (5,652) State 1,764 326 (691) International (5,583) 2,039 (23,800) -------------------------------------------------------------------------Total deferred 5,718 4,746 (30,143) -------------------------------------------------------------------------Provision for income taxes $ 85,404 $ 66,348 $ 67,446 --------------------------------------------------------------------------

A reconciliation of statutory and effective tax rates is as follows:
2002 2001 2000 ----------------------------------------------------------Statutory tax rate 35.0% 35.0% 35.0% EIE/FSC benefits (3.0) (4.4) (2.7) State income taxes, net of federal benefits 1.3 2.1 1.6 Research and development credits (1.0) (1.4) (1.1) International taxes (1.9) (.8) (3.4) Other, net 1.0 (.2) 1.6 ----------------------------------------------------------Total effective tax rate on continuing operations 31.4% 30.3% 31.0% -----------------------------------------------------------

The Extraterritorial Income Exclusion (EIE) on the Company's U.S. export sales replaced the benefit previously realized by the Company's Foreign Sales Corporation (FSC). The EIE lowered the effective tax rate on income from U.S. export sales and produced approximately the same benefit as the FSC. The increase in FSC benefit in 2001 results from prior year redeterminations. Research and development credits are a benefit of the Company's commitment of resources to new and enhanced products. The international tax rate reductions in 2002 and 2000 result from a one-time tax benefit and the benefit from international restructurings, respectively. Deferred income tax provisions reflect the effect of temporary differences between financial statement and tax reporting of income and expense items. The net deferred tax liability and asset at December 31, 2002 and 2001, respectively, results from the following temporary differences:
2002 2001 ------------------------------------------------------------------------Deferred tax assets: Inventories $ 29,405 $ 25,774 Pension and post-retirement benefit plans 9,391 6,767 ------------------------------------------------------------------------Total 38,796 32,541 Deferred tax liabilities: Depreciation and amortization (40,214) (22,118) Other (2,606) (6,648) -------------------------------------------------------------------------

Total (42,820) (28,766) ------------------------------------------------------------------------Net deferred tax (liability) asset $ (4,024) $ 3,775 -------------------------------------------------------------------------

United States taxes are not provided on unremitted earnings and related cumulative translation adjustments of international subsidiaries because the Company intends to reinvest the earnings indefinitely. NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTS The Company is involved in legal and regulatory proceedings generally incidental to its business, as described below: Property Acquisition by Legal Authority In December 2002, the State of Wisconsin's Department of Transportation (WISDOT) acquired the Company's major production facility in Milwaukee as part of the State's overall project to reconstruct the Marquette Interchange section of that city's freeway system. In a separate agreement, WISDOT has agreed to permit the Company to lease and continue to operate that production facility through July 1, 2005, during which time the Company will design, construct and occupy replacement facilities adjacent to other local sites it currently owns. The Company received $32.5 in cash and recorded a one-time pretax gain of $29.3. The Company will reinvest the proceeds and additional funds from its ongoing capital budgets to construct replacement facilities over the next two-and-one-half years. Management expects productivity from the more modern and cost effective design of its new facilities to fully offset all incremental costs upon completion of the new facilities in mid-2005. While the Company believes that it will be able to avoid potential business interruptions by constructing and occupying a fully-functional replacement facility by mid-2005, any such interruptions could have a material adverse effect on the Company's business and results of operations. 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 has self-insured retention limits and has obtained insurance to provide coverage above the self-insured limits for pending product liability and personal injury claims, subject to certain limits and exclusions. Reserves have been provided to cover expected payments for these self-insured amounts. As a result of the Company being named as one of several defendants in two groups of related lawsuits claiming personal injury from the use of certain categories of the Company's products, insurance carriers have, in recent years, limited or eliminated coverage related to the Company's sale of such products, as well as certain costs to defend the Company in these and similar matters. In one group of lawsuits and claims, the Company, as well as others engaged in manufacturing and distributing similar products, is a defendant in multiple claims alleging injuries from exposure to various chemicals by a limited number of employees of one electronics manufacturer. The Company has been dismissed from one of these claims, with payments made by the Company and/or its insurance carrier consisting entirely of legal fees to defend the Company's position. In the other group of lawsuits and claims, the Company provided a 33

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTS (continued) product used as a preservative in testing various vaccines, generally at pharmaceutical companies. The Company,

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 11: CONTINGENT LIABILITIES AND COMMITMENTS (continued) product used as a preservative in testing various vaccines, generally 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 in 155 lawsuits through February 6, 2003. Several of these suits have been stayed by various state and federal courts pending a decision on coverage available under a Federal government relief program, which is not expected before July 2004. 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. The Company believes its reserves and insurance are sufficient to provide for claims received through December 31, 2002. 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 are adjusted as deemed appropriate based on information currently available. 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 but could have a material adverse effect on the Company's results of operations in any given quarter or year. However, future claims related to the use of these categories of products may not be covered by the Company's insurance program. The Company and its subsidiary, Sigma Chemical Company, Inc., are two of several defendants in a lawsuit filed October 23, 2002 in the United States District Court for the Southern District of New York. In the lawsuit, Enzo Biochem, Inc. and Enzo Life Sciences, Inc. ("Enzo") allege breach of contract, commercial torts and patent infringement with respect to the manufacture and/or sale of certain products by the Company. Enzo contends that these actions violate a distributorship agreement that allegedly existed between the Company and Enzo from January 5, 1996 until April 8, 2001. Enzo also alleges that the manufacture and/or sale of these products infringes one or more of nine patents owned by or licensed to Enzo. The complaint seeks actual and enhanced damages but does not specify the amount sought. The Company believes there are substantial legal defenses to the allegations contained in the complaint. Although the Company intends to vigorously defend these allegations, given the inherent uncertainty of litigation and the very early stage of the proceedings, it is unable to predict the ultimate resolution of this matter. Based on current information available, the Company believes that the ultimate resolution of this matter would not have a material adverse effect on its consolidated financial condition but could have a material adverse effect on the Company's results of operations in any given quarter or year. Except as noted above, at December 31, 2002, there were no other known contingent liabilities that management believes could have a material adverse effect on the Company's results of operations or financial condition, nor were there any material commitments outside the normal course of business. NOTE 12: COMMON STOCK The Company's deferred compensation plan provides for cash and common stock payments to certain key employees. Under this plan, a bonus pool is calculated by a formula based on the amount of increase in profitability. Bonus units are then awarded. Bonus units are distributed five years after being awarded in the form of one share of common stock for each bonus unit. In addition, the Company makes cash payments equal to the amount of Federal income taxes the employee would be required to pay for the receipt of such stock and cash at the highest marginal Federal income tax rate. During 2002, 2001 and 2000, 12,400, 60,400, and 7,800 shares of treasury shares, respectively, were issued under this plan. At December 31, 2002, 8,150 bonus units were awarded but not distributed. This plan permits the issuance of a maximum of 2,400,000 shares of the Company's common stock, of which 1,521,000 shares remain to be awarded. The Company has a Directors' Non-Qualified Share Option Plan. This plan permits the award of non-qualified stock options to purchase up to 400,000 shares of the Company's common stock to those members of the Board of Directors who are not employees of the Company. Under this plan, the seven non-employee Directors received an initial option to purchase 10,000 shares of common stock. Additional awards of options to purchase 2,000 shares are made to each eligible Director on the day after each annual shareholders' meeting. Options were

granted in the amounts of 8,000, 44,000 and 14,000 shares for 2002, 2001 and 2000, respectively, at prices ranging from $28.625 to $50.63 per share. Options for 236,000 shares remain to be granted at December 31, 2002. The Company's Share Option Plan of 2000, which replaced the Share Option Plan of 1995, permits the granting of incentive stock options or non-qualified options to purchase up to 4,500,000 shares of the Company's common stock. Incentive stock options may not have an option price of less than the fair market value of the shares at the date of the grant. Options generally become exercisable one year following the grant date and expire ten years after the grant date. Options granted in 2002 and 2001 for 385,950 and 67,500 shares, respectively, become exercisable over a one to five year period. Options to purchase 2,021,750 shares of the Company's common stock under this plan remained to be granted at December 31, 2002. Options granted under the 1995 Plan in 2000 to purchase 31,000 shares become exercisable over one to five years. The Company has adopted the disclosure-only provisions (intrinsic value methodology) of Statements of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plans. Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards in 2002, 2001 and 2000, consistent with the provisions of this Statement, the Company's net income and net income per share would have been as follows:
2002 2001 2000 ----------------------------------------------------------------------------Pro-forma net income $120,752 $129,049 $314,912 Net income per share -- Basic $ 1.66 $ 1.73 $ 3.78 Net income per share -- Diluted $ 1.64 $ 1.72 $ 3.77 -----------------------------------------------------------------------------

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following 34

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 12: COMMON STOCK (continued) weighted-average assumptions for 2002: dividend yield of .82%, expected volatility of 30.5%, risk-free interest rate of 2.89% and expected life based on historical exercise periods of 6.1 years. The weighted-average assumptions for 2001 and 2000 are as follows: dividend yields of .85% and .91%, expected volatility of 30.4% and 47.1%, risk-free interest rates of 4.78% and 5.14% and expected life based on historical exercise of 6.5 and 6.3 years. The following table summarizes information about stock options outstanding at December 31, 2002:
Options Outstanding Options Exercisa ------------------------------------------------------------------------Wtd. Avg. Wt Number Wtd. Avg. Exercise Number Ex Outstanding at Remaining Price Per Exercisable at Pr Range of Exercise Prices 12/31/02 Contractual Life Share 12/31/02 --------------------------------------------------------------------------------------------------------$18.125 to $24.00 145,565 22.54 months $18.35 145,565 $ $25.50 to $30.75 823,198 64.02 months 26.98 823,198 $32.3125 to $36.00 458,500 59.49 months 35.53 458,500 $36.50 to $39.875 1,200,002 91.05 months 36.92 1,200,002 $40.11 to $50.63 1,139,250 112.72 months 50.17 68,750 --------------------------------------------------------------------------------------------------------3,766,515 85.21 months $37.87 2,696,015 $ ---------------------------------------------------------------------------------------------------------

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 12: COMMON STOCK (continued) weighted-average assumptions for 2002: dividend yield of .82%, expected volatility of 30.5%, risk-free interest rate of 2.89% and expected life based on historical exercise periods of 6.1 years. The weighted-average assumptions for 2001 and 2000 are as follows: dividend yields of .85% and .91%, expected volatility of 30.4% and 47.1%, risk-free interest rates of 4.78% and 5.14% and expected life based on historical exercise of 6.5 and 6.3 years. The following table summarizes information about stock options outstanding at December 31, 2002:
Options Outstanding Options Exercisa ------------------------------------------------------------------------Wtd. Avg. Wt Number Wtd. Avg. Exercise Number Ex Outstanding at Remaining Price Per Exercisable at Pr Range of Exercise Prices 12/31/02 Contractual Life Share 12/31/02 --------------------------------------------------------------------------------------------------------$18.125 to $24.00 145,565 22.54 months $18.35 145,565 $ $25.50 to $30.75 823,198 64.02 months 26.98 823,198 $32.3125 to $36.00 458,500 59.49 months 35.53 458,500 $36.50 to $39.875 1,200,002 91.05 months 36.92 1,200,002 $40.11 to $50.63 1,139,250 112.72 months 50.17 68,750 --------------------------------------------------------------------------------------------------------3,766,515 85.21 months $37.87 2,696,015 $ ---------------------------------------------------------------------------------------------------------

A summary of the combined activity and balan ces for the Company's stock options for all plans as of December 31, 2002, 2001 and 2000 and changes during the years ended on those dates is as follows:
2002 2001 --------------------------------------------------------------------------------------------------------Wtd. Avg. Wtd. Avg. Exercise Exercise Shares Price Shares Price Shares ---------------------------------------------------------------Options outstanding, beginning of year 3,565,183 $32.39 4,363,121 $31.44 3,898,0 Options granted 1,114,500 50.40 111,500 41.61 1,341,2 Options exercised (849,668) 30.88 (818,188) 29.43 (855,1 Options cancelled (63,500) 42.13 (91,250) 35.32 (21,0 --------------------------------------------------------------------------------------------------------Options outstanding, end of year 3,766,515 $37.87 3,565,183 $32.39 4,363,1 --------------------------------------------------------------------------------------------------------Options exercisable at year-end 2,696,015 $32.81 3,327,383 $32.08 3,021,8 Weighted average fair value of options granted during the year $16.22 $15.47

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. 35

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 13: COMPANY OPERATIONS BY BUSINESS UNIT The Company is organized into three business units based on their product offerings and markets they serve. The

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 13: COMPANY OPERATIONS BY BUSINESS UNIT The Company is organized into three business units based on their product offerings and markets they serve. The Company's chief operating decision maker and Board of Directors review net sales for the Company's three business units to assess performance and make overall operating decisions and resource allocations. Because the business units share production and distribution facilities, specific cost and income information is not provided for each business unit. Profit and loss information is reported on a consolidated basis to the chief operating decision maker and the Company's Board of Directors. Based on these factors, the Company concludes it has one reportable segment. Certain catalog-based products marketed by the discontinued Diagnostics unit that contributed approximately $11,000 and $10,000 in sales for 2001 and 2000, respectively, and a modest positive contribution to diluted earnings per share in 2001 and 2000, respectively, were classified out of Diagnostics and into the Company's Scientific Research Unit. Data for all periods has been restated to reflect this reclassification. Net sales by business unit are as follows:
2002 2001 2000 ---------------------------------------------------------------------------------------Scientific Research $ 712,744 $ 666,755 $ 623,974 Biotechnology 269,869 240,163 220,969 Fine Chemicals 224,369 207,570 189,497 ---------------------------------------------------------------------------------------Total $ 1,206,982 $ 1,114,488 $ 1,034,440 ----------------------------------------------------------------------------------------

The United States sales to unaffiliated customers presented in the summary below include sales to international markets as follows:
Year ---2002 Amount -----$37,194 Year ---2001 Amount -----$35,620 Year ---2000 Amount -----$28,406

--------------------------------------------------------------------------------------------------------2002 2001 --------------------------------------------------------------------------------------------------------Net sales to unaffiliated customers: United States $ 585,731 $ 562,765 $ International 621,251 551,723 Net intercompany sales between geographic areas: United States 264,446 228,682 International 53,386 48,697 Eliminations (317,832) (277,379) --------------------------------------------------------------------------------------------------------Total $ 1,206,982 $ 1,114,488 $ --------------------------------------------------------------------------------------------------------Income from continuing operations before provision for income taxes: United States $ 221,022 $ 174,194 $ International 58,180 44,615 Eliminations (7,063) 308 --------------------------------------------------------------------------------------------------------Total $ 272,139 $ 219,117 $ --------------------------------------------------------------------------------------------------------Long-lived assets at December 31: United States $ 387,031 $ 399,844 $ International 192,124 161,440 Long-lived assets of discontinued operations 11,265 --------------------------------------------------------------------------------------------------------Total $ 579,155 $ 572,549 $ ---------------------------------------------------------------------------------------------------------

36

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 14: PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS The Company maintains several retirement plans covering substantially all U.S. employees and employees of certain international subsidiaries. Pension benefits are generally based on years of service and compensation. The Company also maintains post-retirement medical benefit plans covering most of its U.S. employees. Benefits are subject to deductibles, co-payment provisions and coordination with benefits available under Medicare. The Company may amend the plans periodically. The following chart summarizes the balance sheet impact, as well as the benefit obligations, assets, funded status and rate assumptions associated with the pension and post-retirement medical benefit plans.
Pension Plans ------------------------------------------------United States International --------------------------------------------------------------------------------------------------------2002 2001 2002 2001 --------------------------------------------------------------------------------------------------------Reconciliation of funded status of the plans and the amounts included in the Company's Consolidated Balance Sheets: Change in benefit obligations Beginning obligations $ 58,380 $ 57,086 $ 61,389 $ 56,99 Service cost 3,256 2,858 3,701 3,03 Interest cost 3,974 4,129 3,908 2,93 Plan participant contributions 1,570 1,27 Amendments/New plans 66 Foreign currency exchange rate changes 10,788 (1,60 Actuarial (gains)/losses 1,706 (63) 153 3,51 Effect of curtailment -- Diagnostics participants (141) Effect of settlement -- Diagnostics participants (774) Benefits paid (5,310) (5,630) (1,218) (5,42 --------------------------------------------------------------------------------------------------------Ending obligations $ 61,091 $ 58,380 $ 80,291 $ 61,38 --------------------------------------------------------------------------------------------------------Changes in plans' assets Beginning fair value $ 70,395 $ 71,133 $ 60,628 $ 63,50 Actual return on plans' assets (9,159) (5,031) (4,819) 59 Foreign currency exchange rate changes 10,861 (1,74 Employer contributions 5,037 9,923 3,189 2,42 Plan participant contributions 1,570 1,27 Effect of settlement -- Diagnostics participants (774) Benefits paid (5,310) (5,630) (1,218) (5,42 --------------------------------------------------------------------------------------------------------Ending fair value $ 60,189 $ 70,395 $ 70,211 $ 60,62 --------------------------------------------------------------------------------------------------------Balance sheet amount Funded status $ (902) $ 12,015 $ (10,080) $ (76 Unrecognized net actuarial (gains) losses 28,127 11,644 14,129 3,92 Unrecognized prior service cost 4,687 5,408 2,070 1,96 Unrecognized net transition asset (159) (241) (3 Additional liability (7,563) (61 --------------------------------------------------------------------------------------------------------Net balance sheet asset/(liability) $ 31,753 $ 28,826 $ (1,444) $ 4,47 --------------------------------------------------------------------------------------------------------Weighted average assumptions as of December 31 Discount rate 6.75% 7.00% 4.80% 5.4 Expected return on plan assets 9.50% 9.50% 6.30% 6.7 Compensation rate increase 4.25% 4.50% 3.60% 4.2

The components of the net periodic benefit costs are as follows:
Pension Plans P ---------------------------------------------------------------United States International ------------------------------------------------------------2002 2001 2000 2002 2001 2000 20 ---------------------------------------------------------------------------------------------------------

Service cost $ 3,256 $ 2,858 $ 2,728 $ 3,701 $ 3,034 $ 2,623 $ 1, Interest cost 3,974 4,129 4,850 3,908 2,932 2,851 2, Expected return on plan assets (6,467) (6,565) (7,410) (4,729) (3,943) (4,281) Plan settlement and curtailment 471 250 Amortization 876 525 479 276 131 (57) --------------------------------------------------------------------------------------------------------Net periodic benefit cost $ 2,110 $ 947 $ 897 $ 3,156 $ 2,154 $ 1,136 $ 4, ---------------------------------------------------------------------------------------------------------

37

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 14: PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS (continued) 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 7.0% in 2002, decreasing ratably to a growth rate of 5.0% in 2004 and remaining at 5.0% per year thereafter. The effects of a onepercentage 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 $240 and $1,850, 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 $250 and $2,010, respectively. Benefits are funded as claims are paid. The Company will reduce its expected return on plan assets to 9.0% for the year ending December 31, 2003. 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 $5,708, $5,553, and $5,393 for the years ended December 31, 2002, 2001 and 2000, respectively. NOTE 15: EARNINGS PER SHARE A reconciliation of basic and diluted earnings per share, together with the related shares outstanding is as follows:
2002 2001 200 --------------------------------------------------------------------------------------------------------Net income available to common shareholders Net income from continuing operations $ 186,735 $ 152,769 $ 150, Net loss from operations of discontinued business -- Diagnostics (3,736) (12,064) (11, Net income from operations of discontinued business -- metal 10, Net (loss) gain on disposition of discontinued operations (52,285) 171, --------------------------------------------------------------------------------------------------------Net income $ 130,714 $ 140,705 $ 320, --------------------------------------------------------------------------------------------------------Weighted average shares Basic shares 72,749 74,559 83, Effect of dilutive securities -- options outstanding 663 616 --------------------------------------------------------------------------------------------------------Diluted shares 73,412 75,175 83, --------------------------------------------------------------------------------------------------------Net income per share -- Basic Net income from continuing operations $ 2.57 $ 2.05 $ 1 Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) (0 Net income from operations of discontinued business -- metal 0 Net (loss) gain on disposition of discontinued operations (0.72) 2 --------------------------------------------------------------------------------------------------------Net income $ 1.80 $ 1.89 $ 3 --------------------------------------------------------------------------------------------------------Net income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ 1 Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) (0 Net income from operations of discontinued business -- metal 0 Net (loss) gain on disposition of discontinued operations (0.71) 2

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 14: PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS (continued) 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 7.0% in 2002, decreasing ratably to a growth rate of 5.0% in 2004 and remaining at 5.0% per year thereafter. The effects of a onepercentage 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 $240 and $1,850, 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 $250 and $2,010, respectively. Benefits are funded as claims are paid. The Company will reduce its expected return on plan assets to 9.0% for the year ending December 31, 2003. 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 $5,708, $5,553, and $5,393 for the years ended December 31, 2002, 2001 and 2000, respectively. NOTE 15: EARNINGS PER SHARE A reconciliation of basic and diluted earnings per share, together with the related shares outstanding is as follows:
2002 2001 200 --------------------------------------------------------------------------------------------------------Net income available to common shareholders Net income from continuing operations $ 186,735 $ 152,769 $ 150, Net loss from operations of discontinued business -- Diagnostics (3,736) (12,064) (11, Net income from operations of discontinued business -- metal 10, Net (loss) gain on disposition of discontinued operations (52,285) 171, --------------------------------------------------------------------------------------------------------Net income $ 130,714 $ 140,705 $ 320, --------------------------------------------------------------------------------------------------------Weighted average shares Basic shares 72,749 74,559 83, Effect of dilutive securities -- options outstanding 663 616 --------------------------------------------------------------------------------------------------------Diluted shares 73,412 75,175 83, --------------------------------------------------------------------------------------------------------Net income per share -- Basic Net income from continuing operations $ 2.57 $ 2.05 $ 1 Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) (0 Net income from operations of discontinued business -- metal 0 Net (loss) gain on disposition of discontinued operations (0.72) 2 --------------------------------------------------------------------------------------------------------Net income $ 1.80 $ 1.89 $ 3 --------------------------------------------------------------------------------------------------------Net income per share -- Diluted Net income from continuing operations $ 2.54 $ 2.03 $ 1 Net loss from operations of discontinued business -- Diagnostics (0.05) (0.16) (0 Net income from operations of discontinued business -- metal 0 Net (loss) gain on disposition of discontinued operations (0.71) 2 --------------------------------------------------------------------------------------------------------Net income $ 1.78 $ 1.87 $ 3 ---------------------------------------------------------------------------------------------------------

NOTE 16: ACQUISITIONS On February 16, 2001, the Company acquired the stock of Isotec, Inc., a leading producer and supplier of stable isotopes and isotopically labeled compounds used in life science research, medical diagnostics and PET imaging applications. The purchase price was approximately $37,200.

In May 2000, the Company acquired the stock of ARK Scientific GmbH for approximately $2,000. The above transactions have been accounted for using the purchase method of accounting and accordingly are included in the Company's consolidated financial statements from the date of acquisition. The acquisitions were immaterial for proforma presentation requirements. 38

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 17: PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT Continuing one-time pretax charges for purchased in-process research and development (IPR&D) from the acquisition of Isotec, Inc. amounted to $1,200 in 2001. IPR&D represents the value assigned to research and development projects of the acquired businesses that had commenced but had not yet been completed at the date of acquisition. It is the Company's belief that the projects in process were currently not technologically feasible and the projects had no alternative future use for the Company and accordingly the amount of purchase price assigned to these projects was immediately written off to the income statement. The method used to determine the value of IPR&D was a net present value cash flow method. NOTE 18: SHARE REPURCHASES At December 31, 2002, the Company had repurchased approximately 32.2 million shares of an authorized 35 million shares. The shares were acquired at an average purchase price of $33.41. Additional purchases through February 6, 2003 brought the total shares repurchased to approximately 32.4 million. As of February 6, 2003, approximately 2.6 million shares remained available under the repurchase program. The Company expects to continue share repurchases to acquire the remaining shares, but the timing and number of shares repurchased, if any, will depend upon market conditions and other factors. REPORT OF MANAGEMENT The management of Sigma-Aldrich Corporation (the Company) prepared and is responsible for the consolidated financial statements and other information in this Annual Report. The statements have been prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on estimates and judgments that management believes are reasonable under the circumstances. The Company established and maintains a system of internal controls designed to provide reasonable assurance as to the integrity and reliability of the consolidated financial statements, the protection of assets from unauthorized use and the execution and recording of transactions in accordance with management's authorization. These systems and controls are reviewed by our internal auditors in order to ensure compliance and by our independent accountants to support their audit opinion. The Audit Committee of the Board of Directors meets regularly with management, internal auditors and our independent public accountants to review accounting, auditing and financial matters. Our Audit Committee is composed of only outside, non-employee Directors. To ensure complete independence, the Audit Committee, internal auditors and the independent accountants have free access to each other with or without management being present, to discuss the results of their examinations, internal controls and the quality of financial reporting.
/c/ David R. Harvey Chairman, President and Chief Executive Officer REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS /c/ Michael R. Hogan Chief Administrative Officer, Chief Financial Officer and Secretary

Notes to Consolidated Financial Statements (CONTINUED) ($ In Thousands, Except Per Share Data) NOTE 17: PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT Continuing one-time pretax charges for purchased in-process research and development (IPR&D) from the acquisition of Isotec, Inc. amounted to $1,200 in 2001. IPR&D represents the value assigned to research and development projects of the acquired businesses that had commenced but had not yet been completed at the date of acquisition. It is the Company's belief that the projects in process were currently not technologically feasible and the projects had no alternative future use for the Company and accordingly the amount of purchase price assigned to these projects was immediately written off to the income statement. The method used to determine the value of IPR&D was a net present value cash flow method. NOTE 18: SHARE REPURCHASES At December 31, 2002, the Company had repurchased approximately 32.2 million shares of an authorized 35 million shares. The shares were acquired at an average purchase price of $33.41. Additional purchases through February 6, 2003 brought the total shares repurchased to approximately 32.4 million. As of February 6, 2003, approximately 2.6 million shares remained available under the repurchase program. The Company expects to continue share repurchases to acquire the remaining shares, but the timing and number of shares repurchased, if any, will depend upon market conditions and other factors. REPORT OF MANAGEMENT The management of Sigma-Aldrich Corporation (the Company) prepared and is responsible for the consolidated financial statements and other information in this Annual Report. The statements have been prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on estimates and judgments that management believes are reasonable under the circumstances. The Company established and maintains a system of internal controls designed to provide reasonable assurance as to the integrity and reliability of the consolidated financial statements, the protection of assets from unauthorized use and the execution and recording of transactions in accordance with management's authorization. These systems and controls are reviewed by our internal auditors in order to ensure compliance and by our independent accountants to support their audit opinion. The Audit Committee of the Board of Directors meets regularly with management, internal auditors and our independent public accountants to review accounting, auditing and financial matters. Our Audit Committee is composed of only outside, non-employee Directors. To ensure complete independence, the Audit Committee, internal auditors and the independent accountants have free access to each other with or without management being present, to discuss the results of their examinations, internal controls and the quality of financial reporting.
/c/ David R. Harvey Chairman, President and Chief Executive Officer REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS /c/ Michael R. Hogan Chief Administrative Officer, Chief Financial Officer and Secretary

To Sigma-Aldrich Corporation: We have audited the accompanying consolidated balance sheets of Sigma-Aldrich Corporation (a Delaware corporation) and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sigma-Aldrich Corporation and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. As described in Note 4 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" in the year ending December 31, 2002. /c/ KPMG LLP St. Louis, Missouri February 6, 2003 39

Selected Financial Data (Unaudited)
Common Stock Data (per share): ------------------------------------------------------------------------------------------------2002 Price Range 2001 Price Range Dividends -----------------------------------------------------------------High Low High Low 2002 2001 -----------------------------------------------------------------First Quarter $48.20 $38.16 $50.21 $ 37.09 $ .0850 $ .0825 Second Quarter 51.45 43.67 51.20 38.47 .0850 .0825 Third Quarter 52.80 39.00 47.23 38.38 .0850 .0825 Fourth Quarter 51.72 41.53 47.65 36.17 .0900 .0850 -------------------------------------------------------------------------------------------------

The common stock is traded on the National Market System ("NMS") of the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). The trading symbol is SIAL. Options in the Company's common stock are traded on the Chicago Board Options Exchange. On March 7, 2003, there were 1,107 record holders of the Company's common stock. See Management's Discussion and Analysis related to items affecting the comparability of results and accounting changes for the financial data presented below.
Annual Financial Data (in millions, except per share data): --------------------------------------------------------------------------------------------------------2002 2001 2000 1999 --------------------------------------------------------------------------------------------------------Net sales $1,207.0 $1,114.5 $1,034.4 $ 989.5 Net income from continuing operations 186.7 152.8 150.1 148.6 Per share: Net income from continuing operations -- Basic 2.57 2.05 1.80 1.48 Net income from continuing operations -- Diluted 2.54 2.03 1.80 1.47 Dividends .3450 .3325 .3150 .2950 Total assets 1,389.7 1,439.8 1,347.7 1,432.0 Long-term debt 176.8 177.7 100.8 0.2

Quarterly Financial Data (in millions, except per share data): --------------------------------------------------------------------------------------------------------2002 Quarter Ended ------------------------------------------

Selected Financial Data (Unaudited)
Common Stock Data (per share): ------------------------------------------------------------------------------------------------2002 Price Range 2001 Price Range Dividends -----------------------------------------------------------------High Low High Low 2002 2001 -----------------------------------------------------------------First Quarter $48.20 $38.16 $50.21 $ 37.09 $ .0850 $ .0825 Second Quarter 51.45 43.67 51.20 38.47 .0850 .0825 Third Quarter 52.80 39.00 47.23 38.38 .0850 .0825 Fourth Quarter 51.72 41.53 47.65 36.17 .0900 .0850 -------------------------------------------------------------------------------------------------

The common stock is traded on the National Market System ("NMS") of the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). The trading symbol is SIAL. Options in the Company's common stock are traded on the Chicago Board Options Exchange. On March 7, 2003, there were 1,107 record holders of the Company's common stock. See Management's Discussion and Analysis related to items affecting the comparability of results and accounting changes for the financial data presented below.
Annual Financial Data (in millions, except per share data): --------------------------------------------------------------------------------------------------------2002 2001 2000 1999 --------------------------------------------------------------------------------------------------------Net sales $1,207.0 $1,114.5 $1,034.4 $ 989.5 Net income from continuing operations 186.7 152.8 150.1 148.6 Per share: Net income from continuing operations -- Basic 2.57 2.05 1.80 1.48 Net income from continuing operations -- Diluted 2.54 2.03 1.80 1.47 Dividends .3450 .3325 .3150 .2950 Total assets 1,389.7 1,439.8 1,347.7 1,432.0 Long-term debt 176.8 177.7 100.8 0.2

Quarterly Financial Data (in millions, except per share data): --------------------------------------------------------------------------------------------------------2002 Quarter Ended -----------------------------------------March 31 June 30 Sept. 30 -----------------------------------------Net sales $ 301.6 $ 304.3 $ 304.8 Gross profit 154.8 155.8 152.7 Net income from continuing operations 42.6 42.9 40.3 Net (loss) income from operations of discontinued business (2.9) (2.2) 0.6 Net (loss) gain on disposition of discontinued operations (63.0) 5.6 --------------------------------------------------------------------------------------------------------Net income (loss) $ 39.7 $ (22.3) $ 46.5 --------------------------------------------------------------------------------------------------------Net income per share -- Basic: Net income from continuing operations $ 0.58 $ 0.59 $ 0.55 Net (loss) income from operations of discontinued business (0.04) (0.03) 0.01 Net (loss) gain on disposition of discontinued operations (0.86) 0.08 --------------------------------------------------------------------------------------------------------Net income (loss) $ 0.54 $ (0.30) $ 0.64 --------------------------------------------------------------------------------------------------------Net income per share -- Diluted: Net income from continuing operations $ 0.58 $ 0.58 $ 0.55 Net (loss) income from operations of discontinued business (0.04) (0.03) 0.01 Net (loss) gain on disposition of discontinued operations (0.85) 0.07 --------------------------------------------------------------------------------------------------------Net income (loss) $ 0.54 $ (0.30) $ 0.63 --------------------------------------------------------------------------------------------------------2001 Quarter Ended -----------------------------------------March 31 June 30 Sept. 30

-----------------------------------------Net sales $ 288.4 $ 277.5 $ 272.8 Gross profit 151.5 146.4 138.4 Net income from continuing operations 39.4 40.2 37.0 Net loss from operations of discontinued business (2.8) (3.1) (3.2) --------------------------------------------------------------------------------------------------------Net income $ 36.6 $ 37.1 $ 33.8 --------------------------------------------------------------------------------------------------------Net income per share -- Basic: Net income from continuing operations $ 0.53 $ 0.53 $ 0.50 Net loss from operations of discontinued business (0.04) (0.04) (0.04) --------------------------------------------------------------------------------------------------------Net income $ 0.49 $ 0.49 $ 0.46 --------------------------------------------------------------------------------------------------------Net income per share -- Diluted: Net income from continuing operations $ 0.52 $ 0.53 $ 0.49 Net loss from operations of discontinued business (0.04) (0.04) (0.04) --------------------------------------------------------------------------------------------------------Net income $ 0.48 $ 0.49 $ 0.45 ---------------------------------------------------------------------------------------------------------

40

Exhibit 21 SIGMA-ALDRICH CORPORATION SUBSIDIARIES Sigma-Aldrich Corporation (Delaware), the Registrant: 1) Sigma-Aldrich Co. (Illinois) (A) Sigma-Aldrich Israel, Ltd. (Israel) (B) Aldrich Chemical Company, Inc. (Delaware) (C) Sigma-Aldrich N.V./S.A. (Belgium) (1) Sigma-Aldrich Chemie B.V. (Netherlands) (D) Sigma-Aldrich B.V. (Netherlands) (1) Sigma-Aldrich Holding B.V. (Netherlands) (a) Sigma-Aldrich Chemie Holding GmbH (Germany) (i) Sigma-Aldrich Chemie GmbH (Germany) (ii) Sigma-Aldrich Laborchemikalien GmbH (Germany) (iii) Sigma-Aldrich Producktions GmbH (Germany) (iv) Sigma Ark GmbH (Germany) (E) Sigma-Aldrich Chemie Verwaltungs GmbH (Germany) (F) Sigma-Aldrich Grundstucks-Verwaltung Gmbh & Co. KG (Germany) (G) Sigma-Aldrich Italia S.r.l. (Italy) (1) Sigma-Aldrich S.r.l. (Italy) (H) Aldrich Chemical Foreign Holding Company (Missouri) (1) Sigma-Aldrich Chimie S.N.C. (France) (2) Sigma-Aldrich Chimie S.a.r.l. (France) (I) Sigma Chemical Foreign Holding Company (Missouri) (J) Supelco, Inc. (Delaware) (K) Sigma-Aldrich Biotechnology Holding Company, Inc. (Missouri) (L) Sigma-Aldrich Biotechnology Investment LLC (Missouri) (M) Sigma-Aldrich Biotechnology LP (Missouri) (N) Sigma-Genosys of Texas, Inc. (Texas) (1)Sigma-Genosys Japan KK (Japan) (O) Sigma-Genosys Holding LLC (Missouri) (P) Sigma-Genosys LP (Texas) (Q) Sigma-Aldrich Business Holdings, Inc. (Delaware) (1) Sigma-Aldrich Research Biochemicals, Inc. (Massachusetts) (R) Sigma-Aldrich Lancaster, Inc. (Missouri) (1) Techcare Systems, Inc. (California)

Exhibit 21 SIGMA-ALDRICH CORPORATION SUBSIDIARIES Sigma-Aldrich Corporation (Delaware), the Registrant: 1) Sigma-Aldrich Co. (Illinois) (A) Sigma-Aldrich Israel, Ltd. (Israel) (B) Aldrich Chemical Company, Inc. (Delaware) (C) Sigma-Aldrich N.V./S.A. (Belgium) (1) Sigma-Aldrich Chemie B.V. (Netherlands) (D) Sigma-Aldrich B.V. (Netherlands) (1) Sigma-Aldrich Holding B.V. (Netherlands) (a) Sigma-Aldrich Chemie Holding GmbH (Germany) (i) Sigma-Aldrich Chemie GmbH (Germany) (ii) Sigma-Aldrich Laborchemikalien GmbH (Germany) (iii) Sigma-Aldrich Producktions GmbH (Germany) (iv) Sigma Ark GmbH (Germany) (E) Sigma-Aldrich Chemie Verwaltungs GmbH (Germany) (F) Sigma-Aldrich Grundstucks-Verwaltung Gmbh & Co. KG (Germany) (G) Sigma-Aldrich Italia S.r.l. (Italy) (1) Sigma-Aldrich S.r.l. (Italy) (H) Aldrich Chemical Foreign Holding Company (Missouri) (1) Sigma-Aldrich Chimie S.N.C. (France) (2) Sigma-Aldrich Chimie S.a.r.l. (France) (I) Sigma Chemical Foreign Holding Company (Missouri) (J) Supelco, Inc. (Delaware) (K) Sigma-Aldrich Biotechnology Holding Company, Inc. (Missouri) (L) Sigma-Aldrich Biotechnology Investment LLC (Missouri) (M) Sigma-Aldrich Biotechnology LP (Missouri) (N) Sigma-Genosys of Texas, Inc. (Texas) (1)Sigma-Genosys Japan KK (Japan) (O) Sigma-Genosys Holding LLC (Missouri) (P) Sigma-Genosys LP (Texas) (Q) Sigma-Aldrich Business Holdings, Inc. (Delaware) (1) Sigma-Aldrich Research Biochemicals, Inc. (Massachusetts) (R) Sigma-Aldrich Lancaster, Inc. (Missouri) (1) Techcare Systems, Inc. (California) (2) Chemical Trade, Ltd. (Russia) (3) Medchem, Ltd. (Russia) (a) TechMed Biochem, Ltd. (Russia) (b) SAF-LAB (Russia) (4) Carbolabs, Inc. (Connecticut) (S) Sigma Diagnostics, Inc. (Missouri) (1) FMI Holdings, Inc. (Delaware) (T) Sigma-Aldrich China, Inc. (Missouri) 2) Sigma-Aldrich, Inc. (Wisconsin) 3) Sigma-Aldrich Finance Co. (Missouri) 4) Sigma-Aldrich & Subs Foreign Sales Corporation (Barbados) 5) Fluka Holding AG (Switzerland) (A) Fluka Chemie GmbH (Switzerland) (B) Fluka Production GmbH (Switzerland) (C) Fluka GmbH (Switzerland)

6) Sigma-Aldrich Company, Ltd. (UK) (A) Sigma-Genosys Limited (UK)

Exhibit 21 (continued) 7) Sigma-Aldrich Foreign Holding Co. (Missouri) (A) Sigma-Aldrich Handels GmbH (Austria) (B) Sigma-Aldrich spol.s.r.o. (Czech Republic) (C) Sigma-Aldrich Denmark A/S (Denmark) (D) Ya-Kemia Oy (Finland) (E) Sigma-Aldrich (O M) Ltd. (Greece) (F) Sigma-Aldrich Kft (Hungary) (G) Sigma-Aldrich Financial Services Limited (Ireland) (H) Sigma-Aldrich Ireland Ltd. (Ireland) (I) Sigma-Aldrich Norway AS (Norway) (J) Sigma-Aldrich Sp. z.o.o. (Poland) (K) Sigma-Aldrich Quimica S.A. (Spain) (L) Sigma-Aldrich Sweden AB (Sweden) (M) Sigma-Aldrich de Argentina S.A. (Argentina) (N) Sigma-Aldrich Pty., Limited (Australia) (O) Sigma-Aldrich Quimica Brasil Ltda. (Brazil) (P) Sigma-Aldrich Canada Ltd. (Canada) (Q) Sigma-Aldrich Japan KK (Japan) (R) Sigma-Aldrich Korea Ltd. (Korea) (S) Sigma-Aldrich Quimica S.A. de C.V. (Mexico) (T) Sigma-Aldrich Pte. Ltd. (Singapore) (1) Sigma-Aldrich (M)Sdn. Bhd. (Malaysia) (U) Sigma-Aldrich Pty. Ltd. (South Africa) 8) Sigma-Aldrich Insurance Company Ltd. (Bermuda)

Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statement (No. 33-74163) on Form S-3 and registration statement (No. 333-49912, 33-24415, 33-62541, 33-64661 and 333-30528) on Form S-8 of Sigma Aldrich Corporation of our report dated February 6, 2003 with respect to the consolidated balance sheets of Sigma Aldrich Corporation as of December 31, 2002 and 2001, 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, 2002, which report appears in the December 31, 2002 annual report on Form 10-K of Sigma Aldrich Corporation. Our report refers to a change in accounting for goodwill and other intangible assets. KPMG LLP St. Louis, Missouri March 21, 2003

Exhibit 99.1 CERTIFICATION PURSUANT TO

Exhibit 21 (continued) 7) Sigma-Aldrich Foreign Holding Co. (Missouri) (A) Sigma-Aldrich Handels GmbH (Austria) (B) Sigma-Aldrich spol.s.r.o. (Czech Republic) (C) Sigma-Aldrich Denmark A/S (Denmark) (D) Ya-Kemia Oy (Finland) (E) Sigma-Aldrich (O M) Ltd. (Greece) (F) Sigma-Aldrich Kft (Hungary) (G) Sigma-Aldrich Financial Services Limited (Ireland) (H) Sigma-Aldrich Ireland Ltd. (Ireland) (I) Sigma-Aldrich Norway AS (Norway) (J) Sigma-Aldrich Sp. z.o.o. (Poland) (K) Sigma-Aldrich Quimica S.A. (Spain) (L) Sigma-Aldrich Sweden AB (Sweden) (M) Sigma-Aldrich de Argentina S.A. (Argentina) (N) Sigma-Aldrich Pty., Limited (Australia) (O) Sigma-Aldrich Quimica Brasil Ltda. (Brazil) (P) Sigma-Aldrich Canada Ltd. (Canada) (Q) Sigma-Aldrich Japan KK (Japan) (R) Sigma-Aldrich Korea Ltd. (Korea) (S) Sigma-Aldrich Quimica S.A. de C.V. (Mexico) (T) Sigma-Aldrich Pte. Ltd. (Singapore) (1) Sigma-Aldrich (M)Sdn. Bhd. (Malaysia) (U) Sigma-Aldrich Pty. Ltd. (South Africa) 8) Sigma-Aldrich Insurance Company Ltd. (Bermuda)

Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statement (No. 33-74163) on Form S-3 and registration statement (No. 333-49912, 33-24415, 33-62541, 33-64661 and 333-30528) on Form S-8 of Sigma Aldrich Corporation of our report dated February 6, 2003 with respect to the consolidated balance sheets of Sigma Aldrich Corporation as of December 31, 2002 and 2001, 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, 2002, which report appears in the December 31, 2002 annual report on Form 10-K of Sigma Aldrich Corporation. Our report refers to a change in accounting for goodwill and other intangible assets. KPMG LLP St. Louis, Missouri March 21, 2003

Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statement (No. 33-74163) on Form S-3 and registration statement (No. 333-49912, 33-24415, 33-62541, 33-64661 and 333-30528) on Form S-8 of Sigma Aldrich Corporation of our report dated February 6, 2003 with respect to the consolidated balance sheets of Sigma Aldrich Corporation as of December 31, 2002 and 2001, 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, 2002, which report appears in the December 31, 2002 annual report on Form 10-K of Sigma Aldrich Corporation. Our report refers to a change in accounting for goodwill and other intangible assets. KPMG LLP St. Louis, Missouri March 21, 2003

Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Sigma-Aldrich Corporation (the "Company") on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David R. Harvey, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ David R. Harvey ------------------David R. Harvey Chairman, President and Chief Executive Officer Sigma-Aldrich Corporation March 21, 2003

Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Sigma-Aldrich Corporation (the "Company") on Form 10-K for the

Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Sigma-Aldrich Corporation (the "Company") on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David R. Harvey, Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ David R. Harvey ------------------David R. Harvey Chairman, President and Chief Executive Officer Sigma-Aldrich Corporation March 21, 2003

Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Sigma-Aldrich Corporation (the "Company") on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael R. Hogan, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Michael R. Hogan -------------------Michael R. Hogan Chief Administrative Officer and Chief Financial Officer Sigma-Aldrich Corporation March 21, 2003

Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual report of Sigma-Aldrich Corporation (the "Company") on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael R. Hogan, Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. (S) 1350, as adopted pursuant to (S) 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Michael R. Hogan -------------------Michael R. Hogan Chief Administrative Officer and Chief Financial Officer Sigma-Aldrich Corporation March 21, 2003