(1) Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (GAAP) for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and, accordingly, do not include all information and footnotes required by GAAP for complete financial statements. For further information, refer to the notes to consolidated financial statements included in the Annual Report of Sigma-Aldrich Corporation (the Company) on Form 10-K for the year ended December 31, 2008. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included in these consolidated financial statements. Operating results for the six months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009.

(2) Reclassifications

Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

(3) New Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued Statement No. 168, The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162, in June 2009. The Codification will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. This statement is not intended to change existing GAAP and as such will not have an impact on the consolidated financial statements of the Company.

The FASB issued Staff Position (FSP) No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, in April 2009. This FSP amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The FSP is effective for interim and annual reporting periods ending after June 15, 2009. The issuance of this FSP did not have a significant impact on the consolidated financial statements of the Company.

The FASB issued Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133” (SFAS 161), in March 2008. SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities and expands the disclosure requirements of FASB Statement No. 133. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, and disclosures about credit-risk-related contingent features in derivative agreements. Tabular format disclosure by accounting designation of each type of derivative and its impact on an entity’s financial statements is expected to provide a more complete picture of the impacts of the Company’s use of derivatives. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The adoption of SFAS 161 did not have a significant impact on the consolidated financial statements of the Company or the notes thereto, as the impact of derivatives on the Company’s financial position, results of operations and cash flows is not significant.

The FASB issued Staff Position No. FAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets, in December 2008, to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. This FSP requires enhanced disclosures about fair value of plan assets including major categories of plan assets, inputs and valuation techniques used to measure fair value, significant concentrations of risk, the method used to allocate investments and the effect of fair value measurements using significant unobservable inputs. The disclosures about plan assets required by this FSP shall be provided for fiscal years ending after December 15, 2009. The Company is assessing the impact of this FSP on the notes to the consolidated financial statements.

(4) Uncertainty in Income Taxes

There were no material changes in the unrecognized tax benefits of the Company during the three or six months ended June 30, 2009.

The Company believes it is reasonably possible that the liability for unrecognized tax benefits at June 30, 2009 may decrease by approximately $5.0 due to the completion of examinations and the expiration of statutes in several jurisdictions within twelve months of June 30, 2009.

(5) Inventories

The principal categories of inventories are:

(6) Intangible Assets

The Company’s amortizable and unamortizable intangible assets at June 30, 2009 and December 31, 2008 are as follows:

For the three months ended June 30, 2009 and 2008, the Company recorded amortization expense of $2.7 and $2.8, respectively, related to amortizable intangible assets. For the six months ended June 30, 2009 and 2008, the Company recorded amortization expense of $5.4 and $5.8, respectively, related to amortizable intangible assets. The Company expects to record annual amortization expense for intangible assets of approximately $11.0 in 2009 and in each of the following four years.

The change in the net goodwill for the six months ended June 30, 2009 is as follows:

(7) Debt

Notes payable and long-term debt consist of the following:

The Company has provided guarantees to financial institutions of certain subsidiaries for any outstanding borrowings from the European revolving credit facility and the short-term credit facility of the wholly-owned Korean subsidiary. There are no existing events of default that would require the Company to honor these guarantees.

Total interest expense incurred on short-term and long-term debt, net of amounts capitalized, was $3.2 and $4.9 for the three months ended June 30, 2009 and 2008, respectively. Total interest expense incurred on short-term and long-term debt, net of amounts capitalized, was $6.8 and $11.0 for the six months ended June 30, 2009 and 2008, respectively.

The fair value of long-term debt, as calculated using the aggregate cash flows from principal and interest payments over the life of the debt, was approximately $206.8 at June 30, 2009 based upon a discounted cash flow analysis using current market interest rates.

(8) Earnings per Share

Earnings per share has been calculated using the following share information:

Potential common shares totaling 0.7 and 0.4 were excluded from the calculation of weighted average shares for the three months ended June 30, 2009 and 2008, respectively, because their effect was considered to be antidilutive. Potential common shares totaling 1.6 and 0.2 were excluded from the calculation of weighted average shares for the six months ended June 30, 2009 and 2008, respectively, because their effect was considered to be antidilutive.

(9) Comprehensive Income

Comprehensive income refers to net income adjusted by gains and losses that in conformity with GAAP are excluded from net income. Other comprehensive items are amounts that are included in stockholders’ equity in the consolidated balance sheets, including cumulative translation adjustments net of tax, unrealized gains and losses on securities and pension and post-retirement benefit liability adjustments. For the Company, the difference between net income and comprehensive income is primarily cumulative translation adjustments arising from the translation of assets and liabilities of foreign operating units from their local currency to the reporting currency.

For the three months ended June 30, 2009 and 2008, comprehensive income was $165.6 and $84.3, respectively. For the six months ended June 30, 2009 and 2008, comprehensive income was $198.0 and $234.2, respectively.

(10) Company Operations by Business Unit

The Company consists of four business units, which define the Company’s approach to serving customers and reporting sales rather than any internal division used to allocate resources or assess performance. The Company’s Chief Operating Decision Maker and Board of Directors review profit and loss information on a consolidated basis to assess performance, make overall operating decisions and make resource allocations. The Company’s business units are closely interrelated in their activities and share services such as order entry, billing, technical services, internet, purchasing, inventory control as well as production and distribution facilities. Additionally, centralized functional areas such as finance, human resources, quality, safety and compliance and information technology support these units. Further, the Company’s Chief Operating Decision Maker, Chief Financial Officer and Business Unit presidents participate in compensation programs which reward performance based upon consolidated Company results for sales growth, operating income and free cash flow. Based on these factors, the Company has concluded that it operates in one segment.

Net sales by business unit are as follows:

Sales are attributed to countries based upon the location of product shipped. Geographic financial information is as follows:

The December 31, 2008 long-lived asset balances reflected above have been revised.

(11) Share Repurchases

At June 30, 2009 and December 31, 2008, the Company had repurchased a total of 92.9 and 92.3 shares, respectively, of an authorized repurchase of 100.0 shares. The Company has 7.1 remaining shares authorized for purchase, but the timing and number of shares purchased, if any, depends upon market conditions and other factors. There were 121.8 shares outstanding as of June 30, 2009.

(12) Pension and Other Post-Retirement Benefit Plans

The components of the net periodic benefit costs for the three months ended June 30, 2009 and 2008 are as follows:

The components of the net periodic benefit costs for the six months ended June 30, 2009 and 2008 are as follows:

The Company is not required to make a contribution to its U.S. pension plan in 2009. The Company contributed $2.3 to its international pension plans in the six months ended June 30, 2009. In total, the Company expects to contribute approximately $4.6 to its pension plans in 2009.

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 cost for this plan was $2.2 and $2.3 for the three months ended June 30, 2009 and 2008, respectively, and $4.6 and $4.6 for the six months ended June 30, 2009 and 2008, respectively.

(13) Contingent Liabilities and Commitments

The Company is involved in legal proceedings generally incidental to its business, as described below:

Insurance and Other Contingent Liabilities and Commitments

The Company is a defendant in several lawsuits and claims related to the normal conduct of its business, including lawsuits and claims related to product liability and personal injury matters. The Company accrues for such liabilities when it is probable that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. The Company has self-insured retention limits and has obtained insurance to provide coverage above the self-insured limits for product liability and personal injury claims, subject to certain limitations and exclusions. Reserves have been provided to cover expected payments for these self-insured amounts at June 30, 2009.

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. These claims have been filed in three states. A global settlement has been reached for all cases, which has been approved by the court. The settlement is not significant to the Company’s consolidated financial statements.

In another group of lawsuits and claims, the Company provided a product for use in research activities in developing various vaccines at pharmaceutical companies. The Company, together with other manufacturers and distributors offering the same product and several pharmaceutical companies, has been named as a defendant and served in 294 lawsuits, of which 59 lawsuits have been dismissed to date. Several of the outstanding suits have been stayed by various state and federal courts pending a decision on coverage available under a U.S. federal government relief program. No definite date has been set for this decision. In all cases, the Company believes its products in question were restricted to research use and that proper information for safe use of the products was provided to the customer.

In another group of lawsuits and claims, the Company, as well as others engaged in manufacturing and distributing flavoring products, is a defendant in multiple claims alleging personal injuries from exposure to the products. The Company has been named as a defendant and served in 16 lawsuits, 7 of which have been dismissed or settled. These claims have been filed in four states. On November 4, 2008 a settlement, which was not material to the Company’s consolidated financial condition, results of operations or liquidity, was reached in one case. Additionally, the Company believes the settlement reached does not change its position as it relates to other claims in this group. The Company is vigorously defending its rights as to the remaining claims. The Company believes it is covered by insurance for the above matters, subject to its self-insurance retention limits.

A class action complaint was filed against a subsidiary of the Company in the Montgomery County, Ohio Court of Common Pleas related to a 2003 explosion in a column at the Company’s Isotec facility in Miamisburg, Ohio. The case was separated into the following four phases: phase one – existence of liability, phase two – quantification of any compensatory damages, phase three – existence of any punitive damages and phase four – quantification of any punitive damages. Class certification was granted to phases one, three and four, but denied to phase two. Compensatory damages for all plaintiffs must be established before the case can proceed to the punitive damages phases. The Company has accepted responsibility for phase one, existence of liability. The case is currently in the compensatory damages phase, where, because no class status exists, each plaintiff must individually establish actual damages. The initial phase two, compensatory damages trial for 31 plaintiffs was completed on April 27, 2007 with a jury verdict establishing actual damages of approximately two hundred dollars per plaintiff. The plaintiffs filed an appeal staying further action on the case until the appeal has been resolved. The Ohio Court of Appeals reversed the jury’s verdict on compensatory damages. The Ohio Supreme Court has agreed to hear the case pursuant to the Company’s request with oral argument likely commencing in early 2010. The Company continues to believe it has substantial legal defenses to the allegations, which it will vigorously assert.

The Company believes its reserves and insurance are sufficient to provide for claims outstanding at June 30, 2009. While the outcome of the current claims cannot be predicted with certainty, the possible outcome of the claims is reviewed at least quarterly and reserves adjusted as deemed appropriate based on these reviews. Based on current information available, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on its consolidated financial condition, results of operations or liquidity. Future claims related to the use of these categories of products may not be covered in full by the Company’s insurance program.

At June 30, 2009, there were no other known contingent liabilities that management believes could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity and there were no material commitments outside of the normal course of business. Material commitments in the normal course of business include notes payable, long-term debt, lease commitments and pension and other post-retirement benefit obligations which are disclosed in Note 5, Note 6, Note 8 and Note 13, respectively, to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, as updated in Note 7 and Note 12 of this Quarterly Report on Form 10-Q.

(14) Subsequent Events

The Company has evaluated events and transactions subsequent to June 30, 2009 through August 3, 2009, the date the financial statements were filed with the SEC as part of Form 10-Q. No events require recognition in the consolidated financial statements or disclosures of the Company per the definitions and requirements of Statement of Financial Accounting Standards No. 165, Subsequent Events.