<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarter Ended April 30, 1994
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________to___________
COMMISSION FILE NO. 1-4269
SYNTEX CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
REPUBLIC OF PANAMA 94-1566146
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
3401 HILLVIEW AVENUE, PALO ALTO, CA 94304
(Address of principal executive office)
Registrant's telephone number, including area code: (415) 855-5050
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No_____
The number of shares of the Registrant's Common Stock outstanding as of May
31, 1994: 221,312,398.
- 1 -
<PAGE> 2
PART I -- FINANCIAL INFORMATION
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in millions)
<TABLE>
<CAPTION>
(Unaudited)
April 30 July 31
1994 1993
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 364.1 $ 327.9
Short-term investments 339.1 281.7
Trade receivables, net 226.1 264.2
Inventories, net 345.1 362.1
Other 190.7 153.8
-------- --------
Total current assets 1,465.1 1,389.7
Long-term investments 148.0 180.9
Property, plant and equipment, net 1,089.3 1,085.2
Other assets 295.6 304.9
-------- --------
Total $2,998.0 $2,960.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt $ 142.6 $ 82.4
Accounts payable and accrued expenses 220.5 231.8
Income and other taxes 87.0 87.1
Accrued compensation 79.7 97.4
Other 173.1 293.8
------ -----
Total current liabilities 702.9 792.5
Noncurrent liabilities 429.0 378.0
Long-term debt 591.2 590.8
----- -----
Total Liabilities 1,723.1 1,761.3
------- -------
Contingencies (see notes)
Shareholders' Equity:
Common stock (shares issued--240.9) 240.9 240.9
Retained earnings 1,539.9 1,471.5
Cumulative translation adjustments (14.6) (16.9)
Common stock in treasury--at cost (shares in
treasury 1994--19.7; 1993--19.9) (491.3) (496.1)
-------- --------
Total shareholders' equity 1,274.9 1,199.4
-------- --------
Total $2,998.0 $2,960.7
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 2 -
<PAGE> 3
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(in millions except per-share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30 April 30
-------- --------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $402.1 $584.3 $1,403.5 $1,582.0
------ ------ -------- -------
Costs and expenses:
Costs of goods sold 114 .6 132.5 343.8 332.8
Selling, general and administrative 161.5 189.9 507.8 580.6
Research and development 102 .4 103.1 298.5 300.6
Restructuring charge -- 140.0 -- 320.0
------ ------ -------- -------
Total 378 .5 565.5 1,150.1 1,534.0
------ ------ -------- -------
Operating income 23.6 18.8 253.4 48.0
------ ------ -------- -------
Nonoperating income (expense):
Interest income 9 .2 9.3 26.6 30.8
Interest expense (7.2) (6.9) (20.4) (20.6)
Other -- net (1.8) (8.4) (9.5) (64.4)
------ ------ -------- -------
Total 0.2 (6.0) (3.3) (54.2)
------ ------ -------- -------
Income (loss) before taxes on income and
cumulative effect of accounting changes 23.8 12.8 250.1 (6.2)
Provision (benefit) for taxes on income 1.4 (28.0) 5.6 (160.9)
------ ------ -------- -------
Income before cumulative effect of accounting
changes 22.4 40.8 244.5 154.7
Cumulative effect of accounting changes, net
of tax -- -- -- (0.9)
------ ------ -------- -------
Net income $22.4 $40.8 $ 244.5 $153.8
====== ====== ======== =======
Shares used in computing earnings per
common share (see Exhibit 11) 221.1 220.9 221.0 222.9
====== ====== ======== =======
Earnings per common share $ 0.10 $ 0.18 $1.10 $0.69
====== ====== ======== =======
Dividends per common share $ 0.26 $ 0.26 $ 0.78 $ 0.78
====== ====== ======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
($ in millions)
<TABLE>
<CAPTION>
Nine Months Ended
April 30
--------
1994 1993
---- ----
<S> <C> <C>
Net Cash Provided from Operating Activities $ 298.2 $ 290.3
------- -------
Cash Provided (Used) in Investing Activities:
Capital expenditures (104.7) (141.1)
Purchase of short-term investments (195.7) (225.3)
Proceeds from short-term investments 228.4 434.4
Purchase of long-term investments (57.3) (16.3)
Other investing activities (19.7) (10.5)
------- -------
Net Cash Provided (Used) in Investing Activities (149.0) 41.2
------- -------
Cash Provided (Used) in Financing Activities:
Net change in short-term debt 59.7 (133.0)
Repayment of long-term debt (0.8) (118.8)
Proceeds from issuance of long-term debt 1.1 145.5
Payment of dividends (172.4) (174.4)
Common shares repurchased -- (124.7)
Other financing activities 1.2 5.0
------- -------
Net Cash Used in Financing Activities (111.2) (400.4)
------- -------
Effect of exchange rate changes on cash (1.8) 4.3
------- -------
Increase (Decrease) in Cash and Cash Equivalents 36.2 (64.6)
Cash and Cash Equivalents at Beginning of Period 327.9 296.3
------- -------
Cash and Cash Equivalents at End of Period $ 364.1 $ 231.7
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE> 5
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles for complete financial
statements have been omitted. These interim statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the company's 1993 annual report to shareholders for the fiscal
year ended July 31, 1993.
The information contained herein reflects all adjustments (all of which are
normal and recurring) which are, in the opinion of management, necessary to
a fair statement of the results of operations, financial condition and cash
flows for the interim periods.
2. Note 13 to the consolidated financial statements in the 1993 annual report
to shareholders provides information concerning contingencies related to
certain pending or possible claims, legal actions, and proceedings against
Syntex Corporation (the "Company") and its subsidiaries. No significant
changes or developments have occurred regarding these contingencies, except
as discussed in the following paragraph.
In November 1993, an amended complaint was filed against the Company,
several of its principal officers, former principal officers, a current
director and an outside director. The complaint was filed in the federal
District Court for the Northern District of California by certain
shareholders who claim to represent a class of shareholders that purchased
shares of the Company's common stock between November 25, 1991 and August
6, 1992. The amended complaint was based on provisions of federal
securities laws and sought equitable relief and unspecified damages for
losses allegedly resulting from, among other things, improper disclosure.
In January 1994, the Company, as well as the individually named officers
and directors, filed motions to dismiss the amended complaint. On May 27,
1994, the court granted the motions to dismiss with prejudice. The Court
granted the motions, in part, because the Company's shareholders had
available to them all of the allegedly material information that the
plaintiffs claimed was withheld. Plaintiffs have filed a notice of appeal.
3. Inventories consist of the following ($ in millions):
<TABLE>
<CAPTION>
April 30 July 31
1994 1993
---- ----
<S> <C> <C>
Finished goods $ 92.8 $ 85.4
In process 193.0 198.9
Raw materials and supplies 59.3 77.8
------ ------
Total $345.1 $362.1
====== ======
</TABLE>
- 5 -
<PAGE> 6
4. Property, plant and equipment consist of the following ($ in millions):
<TABLE>
<CAPTION>
April 30 July 31
1994 1993
---- ----
<S> <C> <C>
Property, plant and equipment - at cost $ 1,723.7 $ 1,643.5
Less accumulated depreciation
and amortization (634.4) (558.3)
--------- ---------
Property, plant and equipment - net $ 1,089.3 $ 1,085.2
========= =========
</TABLE>
5. Included in operating expenses are restructuring charges of $140.0 million
and $320.0 million for the third quarter and first nine months of fiscal
1993, respectively, resulting principally from a decision to consolidate
several of the Company's chemical and pharmaceutical manufacturing plants
and to reduce the worldwide workforce. The restructuring charges, net of
the income tax effects, resulted in a reduction of $105.9 million and
$249.0 million in net income for the third quarter and first nine months of
fiscal 1993, respectively.
As of April 30, 1994, cumulative charges to the restructuring reserve
totaled approximately $122.2 million, including approximately $21.8 million
of non-cash charges. Charges to the restructuring reserve have consisted
primarily of severance costs and asset write-offs. The remaining reserve
consists primarily of asset write-offs and severance costs related to
anticipated plant closures.
6. The Company recorded a net provision of $5.6 million for taxes on income
during the first nine months of fiscal 1994, which included a first
quarter credit of $9.4 million resulting from changes in the U.S. tax law
enacted in August 1993. The Company also recorded a net benefit of $160.9
million for taxes on income during the first nine months of fiscal 1993,
resulting principally from the tax benefits of $71.0 million derived from
restructuring charges and a one-time benefit of $102.5 million from the
reduction of certain tax reserves in the first quarter. Excluding the
effect of the first quarter credit, the effective income tax rate for the
third quarter and first nine months of fiscal 1994 was 6 percent, which is
the Company's expected effective tax rate for the remainder of fiscal 1994.
The income tax rate for the fiscal 1993 third quarter and full year was 4
percent, excluding the previously-mentioned tax benefits.
7. Effective August 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." During the first quarter
of fiscal 1993, the Company recorded a charge of $64.6 million ($93.7
million pre-tax) representing the discounted present value of the expected
cost of future healthcare benefits attributed to employees' service
rendered prior to August 1, 1992. This charge represents the cumulative
effect on prior years of the accounting change. The Company also recorded
a benefit of $63.7 million during the first quarter of fiscal 1993 as the
cumulative effect on prior years of the change in accounting for income
taxes, principally relating to tax credits which were not recorded under
the prior accounting standard.
- 6 -
<PAGE> 7
8. Other nonoperating expense in the third quarter and first nine months
of fiscal 1994 included $2.0 million and $5.1 million, respectively, of
additions to reserves relating to environmental matters. Other
nonoperating expense in the first nine months of fiscal 1993 included $43.3
million of additions to reserves related to environmental matters, of which
$42.1 million was recorded in the first quarter. Other nonoperating
expense in the first nine months of fiscal 1993 also included a charge of
$10.0 million for reserves related to other contingencies and $7.7 million
related to fixed asset write-offs.
9. The Company has entered into an Acquisition Agreement and Plan of Merger
(the "Agreement"), dated as of May 1, 1994, with Roche Capital Corporation
("Roche Capital"), an indirect wholly owned subsidiary of Roche Holding Ltd
("Roche"), and with Roche (Panama) Corporation ("Roche Panama"), a wholly
owned subsidiary of Roche Capital. Roche has guaranteed the obligations of
Roche Capital and Roche Panama under the Agreement. In connection with the
Agreement, on May 6, 1994, Roche Capital commenced a tender offer for all
of the Company's outstanding common stock, in which the tendering
shareholders will receive $24.00 in cash per share of common stock (the
"Offer"). On June 6, 1994, the Company and Roche announced that the U.S.
Federal Trade Commission ("FTC") requested additional information under the
Hart-Scott-Rodino Antitrust Improvements Act, extending the waiting period
under such Act until 10 days following substantial compliance by Roche with
such request unless sooner terminated. In connection therewith, Roche
Capital extended the expiration date for its tender offer until midnight,
EDT, on July 1, 1994. Consummation of the Offer remains subject to
certain conditions, including the tender of at least a majority of the
shares of common stock and the receipt of certain regulatory approvals. It
may be necessary to extend the Offer further to allow sufficient time for
compliance with the FTC's request.
The Agreement provides, among other things, for the making of the Offer
and, following consummation of the Offer, the merger of Roche Panama into
the Company (the "Merger"), in which shareholders of the Company whose
shares of common stock are not purchased in the Offer will receive $24.00
in cash or, at their election, subject to certain restrictions, shares of a
limited conversion redeemable preferred stock of Roche Capital.
Consummation of the Merger is subject to certain conditions, including
approval of the Merger by the shareholders of the Company and receipt of
certain regulatory approvals.
- 7 -
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
TENDER OFFER
See Note 9 to the Condensed Consolidated Financial Statements appearing on page
7 of this report on Form 10-Q.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 1994,
COMPARED WITH THE SAME PERIOD IN FISCAL 1993
Operating income in the third quarter of the Company's 1994 fiscal year was
$23.6 million, an increase of 26 percent compared to $18.8 million in the
fiscal 1993 third quarter, which had included a $140.0 million restructuring
charge. Net income in the fiscal 1994 third quarter was $22.4 million versus
$40.8 million in the third quarter of fiscal 1993. Earnings per share in the
fiscal 1994 third quarter decreased by 44 percent to $.10 per share compared
with earnings per share of $.18 in the fiscal 1993 third quarter. The fiscal
1993 third quarter restructuring charge reduced net earnings by $.48 per share.
Sales in the fiscal 1994 third quarter decreased 31 percent to $402.1 million,
compared with sales of $584.3 million in the third quarter a year ago.
THIRD QUARTER RESULTS
<TABLE>
<CAPTION>
($ in millions. except per share data)
Three Months Ended
April 30
-------- Percent
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
Net Sales $ 402.1 $ 584.3 (31)
Operating Income Before Restructuring Charge $ 23.6 $ 158.8 (85)
Restructuring Charge -- 140.0 --
Operating Income After Restructuring Charge 23.6 18.8 26
Net Income $ 22.4 $ 40.8 (45)
Earnings Per Share $ 0.10 $ 0.18 (44)
</TABLE>
The decline in sales and earnings in the fiscal 1994 third quarter compared
with the third quarter a year ago was due primarily to the expiration of the
U.S. patent for Naprosyn(R) (naproxen) and Anaprox(R) (naproxen sodium), and the
shift in sales from those branded products to lower-priced generic naproxen and
naproxen sodium products. The fiscal 1994 third quarter is the first full
quarter in which non- Syntex generic competition for Naprosyn and Anaprox
occurred following the December 1993 expiration of the U.S. patent for these
products.
The gross margin declined to 71.5 percent in the fiscal 1994 third quarter, due
to significantly reduced sales of the higher-margin Naprosyn and Anaprox
branded products in the U.S. and to excess production capacity in the Company's
chemical and pharmaceutical manufacturing plants. In the fiscal 1993 third
quarter, the gross margin was 77.3 percent.
- 8 -
<PAGE> 9
WORLDWIDE HUMAN PHARMACEUTICAL SALES
<TABLE>
<CAPTION>
($ in millions)
Three Months Ended
April 30 Percent
--------
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Sales $ 187.5 $ 371.0 (49)
Non-U.S. Sales 144.1 141.2 2
---------- ----------
Total $ 331.6 $ 512.2 (35)
========== ==========
</TABLE>
NAPROXEN/NAPROXEN SODIUM SALES
($ in millions)
<TABLE>
<CAPTION>
Three Months Ended
April 30 Percent
--------
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Sales $ 36.1 $ 200.0 (82)
Non-U.S. Sales 58.3 61.6 (5)
---------- ----------
Total $ 94.4 $ 261.6 (64)
========== ==========
</TABLE>
Worldwide sales of Toradol(R) (ketorolac tromethamine) in the fiscal 1994 third
quarter decreased 15 percent to $81.1 million from $95.0 million in the
prior-year third quarter due primarily to high sales volume in the fiscal 1993
third quarter, which resulted principally from special terms offered to
wholesalers. The Company is currently in discussions with the United States
Food and Drug Administration ("FDA") concerning revisions to the Toradol label
that would include more prominent precautions and would be more restrictive
than the present U.S. labeling. The Company has advised the FDA of its
willingness to take additional measures to help insure that the product is used
appropriately and in accordance with its labeling.
The Company and The Procter & Gamble Company expect to begin marketing
ALEVE(R), a new, over-the-counter pain reliever with naproxen sodium as its key
ingredient, in the United States in the fiscal 1994 fourth quarter.
EXPENSES
Selling, general and administrative (SG&A) expenses in the fiscal 1994 third
quarter decreased 15 percent to $161.5 million from $189.9 million in the third
quarter a year ago. The Company has significantly reduced quarterly SG&A
expenses since it initiated restructuring activities in November 1992.
Research and development expense in the third quarter of fiscal 1994 was $102.4
million, a 1 percent decrease from the third quarter a year ago.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 1994,
COMPARED WITH THE SAME PERIOD IN FISCAL 1993
Operating income in the first nine months of the Company's 1994 fiscal year was
$253.4 million compared with $48.0 million in the first nine months of fiscal
1993, which had included a $320.0 million restructuring charge. Net income in
the first nine months of fiscal 1994 was $244.5 million compared with
- 9 -
<PAGE> 10
$153.8 million for the same period in fiscal 1993. Earnings per share for the
first nine months of fiscal 1994 increased 59 percent to $1.10 compared with
$.69 for the same period a year ago. Sales decreased 11 percent to $1,403.5
million, down from $1,582.0 million in the fiscal 1993 period.
NINE MONTH RESULTS
($ in millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
April 30
-------- Percent
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
Net Sales $ 1,403.5 $ 1,582.0 (11)
Operating Income Before Restructuring Charge $ 253.4 $ 368.0 (31)
Restructuring Charge -- 320.0 --
Operating Income After Restructuring Charge 253.4 48.0 100+
Net Income $ 244.5 $ 153.8 59
Earnings Per Share $ 1.10 $ 0.69 59
</TABLE>
The decline in sales in the first nine months of fiscal 1994 is due primarily
to the expiration of the U.S. patent for Naprosyn and Anaprox in December 1993,
and the shift in sales from those branded products to lower-priced generic
naproxen and naproxen sodium products.
WORLDWIDE HUMAN PHARMACEUTICAL SALES
($ in millions)
<TABLE>
<CAPTION>
Nine Months Ended
April 30
-------- Percent
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Sales $ 779.1 $ 947.1 (18)
Non-U.S. Sales 417.4 416.4 --
--------- ---------
Total $ 1,196.5 $ 1,363.5 (12)
========= =========
NAPROXEN/NAPROXEN SODIUM SALES
($ in millions)
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
April 30
-------- Percent
1994 1993 Change
---- ---- ------
<S> <C> <C> <C>
U.S. Sales $ 339.8 $ 503.3 (32)
Non-U.S. Sales 175.8 188.3 (7)
--------- ---------
Total $ 515.6 $ 691.6 (25)
========= =========
</TABLE>
The Company's gross margin percentage was 75.5 percent in the first nine months
of fiscal 1994, compared with 79.0 percent in the same period in fiscal 1993.
The decrease is due primarily to a shift in product demand from higher-margin
branded products to lower-margin generic and bulk naproxen and naproxen sodium
products, and to excess capacity in the Company's chemical and pharmaceutical
manufacturing plants.
Operating expenses for the first nine months of fiscal 1993 included
restructuring charges totalling $320.0 million resulting principally from a
decision to consolidate several of the Company's chemical and
- 10 -
<PAGE> 11
pharmaceutical manufacturing plants and to reduce the Company's worldwide
workforce. The restructuring charges, net of the income tax effects, resulted
in a reduction of $249.0 million in net income in the first nine months of
fiscal 1993.
Selling, general and administrative expenses decreased 13 percent to $507.8
million in the first nine months of fiscal 1994, from $580.6 million in the
comparable period in fiscal 1993. The Company has significantly reduced SG&A
expenses since it initiated restructuring activities in November 1992.
Other nonoperating expense in the first nine months of fiscal 1994 included
$5.1 million for additions to reserves related to environmental matters.
Nonoperating items in the first nine months of fiscal 1993 included $43.3
million of additions to reserves related to environmental matters, and charges
of $10.0 million for reserves related to other contingencies and $7.7 million
related to the write- off of fixed assets.
The Company recorded a net provision for taxes on income of $5.6 million during
the first nine months of fiscal 1994, which included a first quarter credit of
$9.4 million resulting from changes in the U.S. tax law enacted in August 1993.
The Company also recorded a net benefit for taxes on income of $160.9 million
during the first nine months of fiscal 1993, resulting principally from the tax
benefits of $71.0 million derived from the restructuring charges and a one-time
benefit of $102.5 million from the reduction of certain tax reserves.
Excluding the effect of the first quarter credit, the effective income tax rate
for the fiscal 1994 first nine months was 6 percent, which is the Company's
expected effective tax rate for the remainder of fiscal 1994. The income tax
rate for the fiscal 1993 first nine months and full year was 4 percent,
excluding the previously-mentioned tax benefits.
The first nine months of fiscal 1993 included a $0.9 million charge from the
cumulative effect on prior years of the adoption of two new accounting
standards. The adoption of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," resulted in a benefit of $63.7 million.
This was more than offset by an after- tax charge of $64.6 million ($93.7
million pre-tax) related to the adoption of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions", for post-retirement healthcare benefits.
PATENTS
The patents and patent applications owned by the Company and its subsidiaries
cover a variety of products and chemical processes. In addition, the Company
has a number of patent licenses from others.
The last principal United States patent on naproxen and naproxen sodium expired
in December 1993.
FINANCIAL CONDITION
The Company continues to maintain a strong financial position and a highly
liquid balance sheet. At April 30, 1994, the Company had $703.2 million in
cash and cash equivalents and short-term investments, which provide it with
ample capacity to satisfy its cash requirements. In the first nine months of
fiscal 1994, net cash of $298.2 million was provided from operating activities.
Capital expenditures in the first nine months of fiscal 1994, primarily in the
pharmaceuticals business segment, totaled $104.7 million compared with $141.1
million in the first nine months of fiscal 1993. The Company plans to fund
capital spending totalling approximately $150.0 million in fiscal 1994 through
cash generated by operations and borrowings.
- 11 -
<PAGE> 12
Dividends paid on common shares amounted to $172.4 million in the first nine
months of fiscal 1994, a decrease of 1 percent from the first nine months of
fiscal 1993, as a result of the share repurchase program undertaken in fiscal
1993. The current dividend rate paid on an annualized basis is $1.04 per
share.
Management believes the Company has sufficient borrowing capacity to meet its
needs. The Company has an A1+ and P1 rating for its commercial paper and an
AA- and A2 bond rating from Standard and Poor's and Moody's, respectively.
At April 30, 1994, commercial paper borrowings of $157.0 million were
outstanding. The Company has unused bank lines of credit totaling $463.4
million, of which $100 million is available for the support of commercial paper
borrowings classified as long-term debt. The Company's earnings for the first
nine months of fiscal 1994 were sufficient to cover fixed charges.
- 12 -
<PAGE> 13
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Notes 2 and 8 to the Condensed Consolidated Financial Statements
appearing on pages 5 and 7 of this report on Form 10-Q for a
discussion of certain matters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit
11. Statement re computation of earnings per common share
12. Calculation of ratio of earnings to fixed charges
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed. However, on May 3, 1994, the Company filed
a report on Form 8-K regarding the Acquisition Agreement and Plan
of Merger discussed in Note 9 to the Condensed Consolidated
Financial Statements appearing on page 7 of this report on Form
10-Q.
- 13 -
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNTEX CORPORATION
(Registrant)
By /s/ Richard P. Powers
---------------------
Richard P. Powers
Senior Vice President and
Chief Financial Officer
and Duly Authorized Officer
of the Registrant
DATE: June 14, 1994
- 14 -
<PAGE> 1
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Unaudited)
($ in millions except per share amounts)
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
April 30 April 30
-------- --------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS APPLICABLE TO COMMON STOCK:
Net Income $ 22.4 $ 40.8 $ 244.5 $ 153.8
========= ======== ======== =========
EARNINGS PER COMMON SHARE (AS REPORTED):
Weighted average shares outstanding 221.1 220.9 221.0 222.9
--------- -------- -------- ---------
Earnings per common share $ 0 .10 $ 0.18 $ 1.10 $ 0.69
========= ======== ======== =========
EARNINGS PER COMMON SHARE (ASSUMING FULL DILUTION):*
Weighted average shares outstanding 221.1 220.9 221.0 222.9
Shares contingently issuable for Stock Option Plans 0.2 0.5 0.3 2.2
--------- -------- -------- ---------
Average shares and share equivalents outstanding 221.3 221.4 221.3 225.1
--------- -------- -------- ---------
Earnings per common share $ 0 .10 $ 0.18 $ 1.10 $ 0.68
========= ======== ======== =========
</TABLE>
* This calculation is submitted in accordance with Regulation S- K
item 601(b)11 although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
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<PAGE> 1
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
($ in millions except per share amounts)
EXHIBIT 12
<TABLE>
<CAPTION>
Nine Months
Ended
April 30, 1994
--------------
<S> <C>
Income Before Taxes on Income $ 250.1
Adjustments:
- - - ------------
Fixed Charges:
Interest Expense 21.7
Add:
Amortization of Capitalized Interest 0.3
Less:
Capitalized Interest (1.3)
-----------
Total Adjusted Income $ 270.8
Divided by Fixed Charges $ 21.7
-----------
Ratio of Earnings to Fixed Charges 12.5
===========
</TABLE>
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