<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 January 31, 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)
Republic of Panama 94-1566146
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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
February 28, 1994: 221,083,080.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEET
($ and shares in millions)
<TABLE>
<CAPTION>
(Unaudited)
January 31 July 31
1994 1993
----------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $396.7 $327.9
Short-term investments 314.9 281.7
Trade receivables, net 226.7 264.2
Inventories, net 349.6 362.1
Other 193.7 153.8
-------- --------
Total current assets 1,481.6 1,389.7
Long-term investments 159.7 180.9
Property, plant and equipment, net 1,078.9 1,085.2
Other assets 273.3 304.9
-------- --------
Total $2,993.5 $2,960.7
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt $104.4 $82.4
Accounts payable and accrued
expenses 206.6 231.8
Income and other taxes 89.3 87.1
Accrued compensation 75.4 97.4
Other 197.5 293.8
-------- --------
Total current liabilities 673.2 792.5
Noncurrent liabilities 425.4 378.0
Long-term debt 590.7 590.8
-------- --------
Total Liabilities 1,689.3 1,761.3
-------- --------
Contingencies (see notes)
Shareholders' Equity:
Common stock (shares issued
--240.9) 240.9 240.9
Retained earnings 1,577.2 1,471.5
Cumulative translation
adjustments (19.8) (16.9)
Common stock in treasury
--at cost (shares in
treasury 1994 and 1993--19.9) (494.1) (496.1)
-------- --------
Total shareholders' equity 1,304.2 1,199.4
-------- --------
Total $2,993.5 $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 Six Months Ended
January 31 January 31
----------------- --------------------
1994 1993 1994 1993
------ ------ -------- ------
<S> <C> <C> <C> <C>
Net Sales $489.1 $505.5 $1,001.4 $997.7
------ ------ -------- ------
Costs and expenses:
Costs of goods sold 118.5 96.2 229.2 200.3
Selling, general and administrative 170.0 187.6 346.3 390.7
Research and development 99.1 100.1 196.1 197.5
Restructuring charge -- -- -- 180.0
------ ------ -------- ------
Total 387.6 383.9 771.6 968.5
------ ------ -------- ------
Operating income 101.5 121.6 229.8 29.2
------ ------ -------- ------
Nonoperating income (expense):
Interest income 8.8 9.9 17.4 21.5
Interest expense (6.9) (7.4) (13.2) (13.7)
Other -- net (1.5) -- (7.7) (56.0)
------ ------ -------- ------
Total 0.4 2.5 (3.5) (48.2)
------ ------ -------- ------
Income (loss) before taxes on income and
cumulative effect of accounting changes 101.9 124.1 226.3 (19.0)
Provision (benefit) for taxes on income 6.1 5.0 4.2 (132.9)
------ ------ -------- ------
Income before cumulative effect of accounting
changes 95.8 119.1 222.1 113.9
Cumulative effect of accounting changes, net
of tax -- -- -- (0.9)
------ ------ -------- ------
Net income $95.8 $119.1 $222.1 $113.0
====== ====== ======== ======
Shares used in computing earnings per
common share (see Exhibit 11) 221.0 222.3 221.0 223.7
====== ====== ======== ======
Earnings per common share $0.43 $0.54 $1.00 $0.51
====== ====== ======== ======
Dividends per common share $0.26 $0.26 $0.52 $0.52
====== ====== ======== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE> 4
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
($ in millions)
<TABLE>
<CAPTION>
Six Months Ended
January 31
-----------------
1994 1993
------ ------
<S> <C> <C>
Net Cash Provided from Operating Activities $264.2 $135.4
------ ------
Cash Provided (Used) in Investing Activities:
Capital expenditures (65.3) (100.6)
Purchase of short-term investments (146.0) (148.6)
Proceeds from short-term investments 181.0 306.7
Purchase of long-term investments (47.1) (16.7)
Other investing activities (24.6) 0.0
------ ------
Net Cash Provided (Used) in Investing Activities (102.0) 40.8
------ ------
Cash Provided (Used) in Financing Activities:
Net change in short-term debt 22.3 (93.2)
Repayment of long-term debt (0.1) (103.7)
Proceeds from issuance of long-term debt 0.7 100.8
Payment of dividends (114.9) (117.0)
Common shares repurchased -- (124.7)
Other financing activities 0.6 4.6
------ ------
Net Cash Used in Financing Activities (91.4) (333.2)
------ ------
Effect of exchange rate changes on cash (2.0) (1.5)
------ ------
Increase (Decrease) in Cash and Cash Equivalents 68.8 (158.5)
Cash and Cash Equivalents at Beginning of Period 327.9 296.3
------ ------
Cash and Cash Equivalents at End of Period $396.7 $137.8
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE> 5
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
SALES BY LOCATION AND BUSINESS SEGMENT
(Unaudited)
($ in millions)
<TABLE>
<CAPTION>
Three Months Six Months
Ended January 31 Ended January 31
---------------- Percent ------------------- Percent
1994 1993 Change 1994 1993 Change
------ ------ ------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
LOCATION
U.S. sales $327.9 $348.4 (6) $682.8 $676.6 1
Non-U.S. sales 161.2 157.1 3 318.6 321.1 (1)
------ ------ -------- ------
Total $489.1 $505.5 (3) $1,001.4 $997.7 --
====== ====== ======== ======
BUSINESS SEGMENT
Pharmaceuticals:
Pain and inflammation:
Naproxen/Naproxen Sodium
U.S. sales $126.7 $156.3 (19) $303.7 $303.3 --
Non-U.S. sales 60.6 61.4 (1) 117.5 126.7 (7)
------ ------ -------- ------
Total Naproxen/Naproxen Sodium 187.3 217.7 (14) 421.2 430.0 (2)
------ ------ -------- ------
Ketorolac
U.S. sales
Oral 34.4 31.6 9 66.9 55.8 20
Intramuscular 30.9 31.1 (1) 60.2 59.3 1
Non-U.S. sales 15.0 15.5 (4) 32.3 30.9 4
------ ------ -------- ------
Total Ketorolac 80.3 78.2 3 159.4 146.0 9
------ ------ -------- ------
Subtotal 267.6 295.9 (10) 580.6 576.0 1
------ ------ -------- ------
Reproductivity and endocrinology:
Oral contraceptives 17.7 20.6 (14) 37.5 41.1 (9)
Nafarelin 3.9 5.6 (30) 7.0 12.2 (42)
Other 2.6 2.8 (7) 4.8 5.3 (9)
------ ------ -------- ------
Subtotal 24.2 29.0 (17) 49.3 58.6 (16)
------ ------ -------- ------
Cardio and cerebrovascular:
Nicardipine 20.5 17.8 15 35.2 33.7 5
Ticlopidine 17.7 10.4 70 31.2 18.5 68
------ ------ -------- ------
Subtotal 38.2 28.2 35 66.4 52.2 27
------ ------ -------- ------
Dermatological 18.7 21.7 (14) 36.7 44.3 (17)
Ganciclovir 24.3 19.6 24 44.1 38.7 14
Other human pharmaceuticals 47.6 41.9 14 87.8 81.5 8
Animal Health 18.0 18.2 (1) 35.6 40.7 (13)
------ ------ -------- ------
Total Pharmaceuticals 438.6 454.5 (4) 900.5 892.0 1
------ ------ -------- ------
Diagnostics 50.5 51.0 (1) 100.9 105.7 (5)
------ ------ -------- ------
Total $489.1 $505.5 (3) $1,001.4 $997.7 --
====== ====== ======== ======
WORLDWIDE HUMAN PHARMACEUTICAL SALES
U.S. sales $281.8 $300.9 (6) $591.6 $576.1 3
Non-U.S. sales 138.8 135.4 3 273.3 275.2 (1)
------ ------ -------- ------
Total $420.6 $436.3 (3) $864.9 $851.3 2
====== ====== ======== ======
</TABLE>
-5-
<PAGE> 6
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles for complete
financial statements have been omitted. These interim statements should
be read in conjunction with the consolidated financial statements and
notes thereto included in the company's 1993 annual report to
shareholders for the fiscal year ended July 31, 1993.
The information contained herein reflects all adjustments (all of which
are normal and recurring) which are, in the opinion of management,
necessary to a fair statement of the results of operations, financial
condition and cash flows for the interim periods.
2. Note 13 to the consolidated financial statements in the 1993 annual report
to shareholders provides information concerning contingencies related to
certain pending or possible claims, legal actions, and proceedings against
the company and its subsidiaries. No significant changes or developments
have occurred regarding these contingencies.
3. Inventories consist of the following ($ in millions):
<TABLE>
<CAPTION>
January 31 July 31
1994 1993
---------- -------
<S> <C> <C>
Finished goods $85.9 $85.4
In process 193.8 198.9
Raw materials and supplies 69.9 77.8
------ ------
Total $349.6 $362.1
====== ======
</TABLE>
4. Property, plant and equipment consist of the following ($ in millions):
<TABLE>
<CAPTION>
January 31 July 31
1994 1993
---------- --------
<S> <C> <C>
Property, plant and equipment - at cost $1,686.5 $1,643.5
Less accumulated depreciation
and amortization (607.6) (558.3)
-------- --------
Property, plant and equipment - net $1,078.9 $1,085.2
======== ========
</TABLE>
-6-
<PAGE> 7
5. Included in operating expenses for the first half of fiscal 1993 is a
first quarter restructuring charge of $180.0 million 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 charge resulted in a reduction of $143.1 million in net
income in the first half of fiscal 1993.
6. The company recorded a net provision of $4.2 million for taxes on income
during the first half 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 $132.9 million
for taxes on income during the first half of fiscal 1993, resulting
principally from the first quarter tax benefits of $36.9 million derived
from the restructuring charge and a one-time benefit of $102.5 million
from the reduction of certain tax reserves. Excluding the effect of the
benefit, the effective income tax rate for the second quarter and first
half 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 second 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.
8. Other nonoperating expense in the first quarter and half of fiscal 1994
included $3.1 million of additions to reserves relating to environmental
matters. Other nonoperating expense in the first half of fiscal 1993
included $42.4 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 quarter and half of fiscal 1993 also
included a charge of $10.0 million for reserves related to other
contingencies.
9. There were no repayments of commercial paper with a maturity period of
greater than three months during the first half of either fiscal 1994 or
fiscal 1993.
-7-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 1994,
COMPARED WITH THE SAME PERIOD IN FISCAL 1993
Earnings per share in the second quarter of the company's 1994 fiscal year were
$.43 compared with $.54 in the second quarter a year ago. Net sales decreased
3 percent to $489.1 million, down from $505.5 million in the second quarter of
fiscal 1993.
SECOND QUARTER RESULTS
($ in millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
January 31
----------------- Percent
1994 1993 Change
------ ------ -------
<S> <C> <C> <C>
Net Sales $489.1 $505.5 (3)
Operating Expenses 387.6 383.9 1
Operating Income 101.5 121.6 (17)
Net Income 95.8 119.1 (20)
Earnings Per Share $0.43 $0.54 (20)
</TABLE>
The decline in earnings in the second quarter of fiscal 1994 compared with the
second quarter a year ago was due primarily to the loss of U.S. market share
of Naprosyn(R) (naproxen) and Anaprox(R) (naproxen sodium) branded products to
lower-priced generic naproxen and naproxen sodium products, including those
sold by Hamilton Pharma, Inc., a Syntex subsidiary.
The last principal U.S. patent for Naprosyn and Anaprox, the company's leading
products, expired during the fiscal 1994 second quarter on December 21, 1993.
The patents elsewhere in the world expired a number of years ago.
Earnings declined at a greater rate than sales in the fiscal 1994 second
quarter compared with the prior-year quarter due to a shift in product demand
from the higher-margin branded products to the lower-margin generic and bulk
naproxen and naproxen sodium products and to excess production capacity in the
company's chemical and pharmaceutical manufacturing plants. In the fiscal 1994
second quarter, the company's gross profit margin was 75.8 percent, down from
81.0 percent in the second quarter of fiscal 1993.
WORLDWIDE HUMAN PHARMACEUTICAL SALES
($ in millions)
<TABLE>
<CAPTION>
Three Months Ended
January 31
----------------- Percent
1994 1993 Change
------ ------ -------
<S> <C> <C> <C>
U.S. Sales $281.8 $300.9 (6)
Non-U.S. Sales 138.8 135.4 3
------ ------
Total $420.6 $436.3 (3)
====== ======
</TABLE>
-8-
<PAGE> 9
Worldwide human pharmaceutical sales decreased 3 percent in the second quarter
of fiscal 1994 compared to the prior-year second quarter due primarily to the
decline of Naprosyn and Anaprox sales in the United States. In the fiscal 1994
second quarter, non-United States pharmaceutical sales were $8.3 million lower
than they would have been had currency exchange rates that were in effect in
the second quarter of fiscal 1993 remained constant.
NAPROXEN/NAPROXEN SODIUM SALES
($ in millions)
<TABLE>
<CAPTION>
Three Months Ended
January 31
----------------- Percent
1994 1993 Change
------ ------ -------
<S> <C> <C> <C>
U.S. Sales $126.7 $156.3 (19)
Non-U.S. Sales 60.6 61.4 (1)
------ ------
Total $187.3 $217.7 (14)
====== ======
</TABLE>
United States sales of naproxen and naproxen sodium include sales of branded
Naprosyn and Anaprox, sales of generic naproxen and naproxen sodium by Hamilton
Pharma, Inc., and sales of the bulk chemicals naproxen and naproxen sodium to
non-related generic manufacturers. Hamilton Pharma, Inc., began selling generic
naproxen and naproxen sodium in October 1993.
January 1994 is the first full month in which non-Syntex generic competition
for naproxen and naproxen sodium occurred in the United States following patent
expiration in the United States in December 1993.
Independent audit data for the United States indicate that the share of new
prescriptions for all forms of naproxen in the prescription, nonsteroidal
anti-inflammatory anti-arthritis market for the month of January 1994 was 17.4
percent; in December 1993, the share was 17.2 percent; and in January 1993,
before any generic products were available, the share was 17.6 percent. Of the
new prescriptions filled for the naproxen molecule in January 1994, 64 percent
were filled with generic naproxen sold by Hamilton Pharma, Inc., 31 percent
were filled with branded Naprosyn and 5 percent were filled with generic
naproxen sold by non-related companies.
The rate of shift from brand to generic in the case of Naprosyn is more rapid
than any previous prescription product after patent expiration as far as the
company is aware. The company believes that changes in the healthcare
environment are contributing to this shift.
Following the expiration of the U.S. patent for Naprosyn and Anaprox, the
company now faces competition from approximately 10 companies marketing generic
naproxen and/or naproxen sodium. This competition has resulted in a shift from
branded to generic products and in a fast and steep decline in the price of
generic naproxen and naproxen sodium, including the price of the products sold
by the company's Hamilton subsidiary.
With the advent of so many companies now supplying naproxen and naproxen
sodium, customer inventories for those products in the United States appear to
be at levels higher than the current market demand. Most of the companies
marketing generic forms of naproxen and naproxen sodium in the United States
are purchasing bulk chemicals from Syntex.
Given the negative impact of the Naprosyn/Anaprox patent expiration, which was
not fully reflected in the fiscal 1994 second quarter because the patent
expired mid-quarter but which is expected to continue, the company expects that
the next two years will be difficult years.
-9-
<PAGE> 10
Syntex and The Procter & Gamble Company received clearance from the United
States Food and Drug Administration in January 1994 to market ALEVE(R), a new
over-the-counter (OTC) pain reliever with naproxen sodium as its key
ingredient, in the United States.
ALEVE has three years of marketing exclusivity from the date of approval.
Heavy up-front marketing expenses will prevent the company from realizing
profits on ALEVE for the first few years, but the company believes that once
established in the marketplace, OTC products have the potential to be
profitable for decades. The U.S. market for OTC analgesics is estimated at $2.7
billion in annual sales.
KETOROLAC
Worldwide sales of Toradol(R) (ketorolac tromethamine) in the second quarter of
fiscal 1994 increased 3 percent over the 1993 second quarter.
In 1993, regulatory authorities in Germany and France suspended the product
license pending further review of available worldwide ketorolac usage data, and
in the case of France, pending further deliberations of the European Committee
for Proprietary Medicinal Products (CPMP). Final results of a U.S. epidemiology
study of 10,000 hospitalized patients treated with intramuscular injectable
ketorolac compared with 10,000 patients treated with injectable opioid
analgesics have been submitted to regulatory agencies and the CPMP. The CPMP
is expected to discuss the worldwide safety data as well as the results of the
epidemiology study data at a meeting in March.
The company believes that the data from controlled clinical trials, from
worldwide post-marketing reports and from the large retrospective U.S.
epidemiological study offer strong evidence that ketorolac has a favorable
risk/benefit profile when prescribed for properly selected patients and used
according to the product label.
OTHER PRODUCTS
Sales of Cytovene(R) (ganciclovir sodium), Cardene(R) (nicardipine
hydrochloride) and Ticlid(R) (ticlopidine hydrochloride) increased in the
fiscal 1994 second quarter over the prior-year second quarter. However, second
quarter fiscal 1994 sales of oral contraceptives, dermatological products and
Synarel(R) (nafarelin acetate) declined from sales levels in the second quarter
last year.
EXPENSES
Selling, general and administrative (SG&A) expense decreased 9 percent to
$170.0 million in the fiscal 1994 second quarter from $187.6 million in the
second quarter a year ago. As a result of efforts to reduce costs, second
quarter fiscal 1994 SG&A spending was at the lowest level since the second
quarter of fiscal 1991.
Research and development expense decreased 1 percent to $99.1 million in the
fiscal 1994 second quarter, compared with $100.1 million in the fiscal 1993
second quarter.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 1994,
COMPARED WITH THE SAME PERIOD IN FISCAL 1993
Earnings per share for the first six months of fiscal 1994 increased 96 percent
to $1.00 compared with $0.51 for the same period a year ago. Sales increased
slightly to $1,001.4 million, up from $997.7 million in the fiscal 1993 period.
-10-
<PAGE> 11
SIX MONTH RESULTS
($ in millions, except per share data)
<TABLE>
<CAPTION>
Six Months Ended
January 31
------------------- Percent
1994 1993 Change
-------- ------ -------
<S> <C> <C> <C>
Net Sales $1,001.4 $997.7 --
Operating Expenses
excluding restructuring charge 771.6 788.5 (2)
Restructuring Charge -- 180.2 (100+)
Operating Income 229.8 29.2 100+
Net Income 222.1 113.0 97
Earnings Per Share $1.00 $0.51 96
</TABLE>
The increase in worldwide sales in the first half of fiscal 1994 was primarily
due to higher sales of human pharmaceutical products in the United States,
partially offset by lower sales outside the United States. United States sales
of naproxen and naproxen sodium were $303.7 million in the first half of fiscal
1994 compared with $303.3 million in the first half of fiscal 1993. However,
the last patent on these products expired in the United States on December 21,
1993, and sales during the second fiscal quarter of fiscal 1994 were lower than
fiscal 1993. (See previous discussion.) Sales of ketorolac intramuscular
injectable and oral tablets, nicardipine, ticlopidine, and ganciclovir
increased in the first half of fiscal 1994 compared with the prior year period.
However, sales of dermatologic, reproductive and endocrinology products
declined in the first half of fiscal 1994 as compared with the prior year
period.
WORLDWIDE HUMAN PHARMACEUTICAL SALES
($ in millions)
<TABLE>
<CAPTION>
Six Month Ended
January 31
----------------- Percent
1994 1993 Change
------ ------ -------
<S> <C> <C> <C>
U.S. Sales $591.6 $576.1 3
Non-U.S. Sales 273.3 275.2 (1)
------ ------
Total $864.9 $851.3 2
====== ======
</TABLE>
NAPROXEN/NAPROXEN SODIUM SALES
($ in millions)
<TABLE>
<CAPTION>
Six Month Ended
January 31
----------------- Percent
1994 1993 Change
------ ------ -------
<S> <C> <C> <C>
U.S. Sales $303.7 $303.3 --
Non-U.S. Sales 117.5 126.7 (7)
------ ------
Total $421.2 $430.0 (2)
====== ======
</TABLE>
Sales of diagnostic products decreased 5 percent to $100.9 million in the first
half of fiscal 1994 compared with sales of $105.7 million in the year earlier
period.
The company's gross margin percentage was 77.1 percent in the first half of
fiscal 1994, compared with 79.9 percent in the first half of fiscal 1993. As
discussed under Second Quarter Results, the decrease is primarily due to a
shift in product demand from the higher-margin branded products to the
lower-margin
-11-
<PAGE> 12
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 half of fiscal 1993 included a restructuring
charge of $180.0 million resulting principally from a decision to consolidate
several of the company's chemical and pharmaceutical manufacturing plants and
to reduce the company's worldwide workforce. The restructuring charge resulted
in a reduction of $143.1 million in net income in the first half of fiscal
1993.
Other nonoperating expense in the first half of fiscal 1994 included $3.1
million for additions to reserves related to environmental matters.
Nonoperating items in the first half of fiscal 1993 included $42.4 million of
additions to reserves related to environmental matters and a charge of $10.0
million for reserves related to other contingencies.
The company recorded a net provision for taxes on income of $4.2 million during
the first half 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 $132.9 million
during the first half of fiscal 1993, resulting principally from the first
quarter tax benefits of $36.9 million derived from the restructuring charge and
a one-time benefit of $102.5 million from the reduction of certain tax
reserves. Excluding the effect of the benefit, the fiscal 1994 first half tax
rate was 6 percent, which is the company's expected effective tax rate for the
remainder of fiscal 1994. The tax rate for the fiscal 1993 first half and full
year was 4 percent, excluding the previously-mentioned tax benefits.
The first half 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 January 31, 1994, the company had $711.6 million in
cash and cash equivalents and short-term investments, which provide it with
ample capacity to satisfy its cash requirements. In the first half of fiscal
1994, net cash of $264.2 million was provided from operating activities.
Capital expenditures in the first half of fiscal 1994, primarily in the
pharmaceuticals business segment, totaled $65.3 million compared with $100.6
million in the first half of fiscal 1993. The company plans to fund capital
spending of approximately $175.0 million in fiscal 1994 through cash generated
by operations and borrowings.
-12-
<PAGE> 13
Dividends paid on common shares amounted to $114.9 million in the first half of
fiscal 1994, a decrease of 2 percent from the first half 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+ rating for its commercial paper and an AA- bond
rating from Standard and Poor's. The company has a P1 rating for its
commercial paper from Moody's. As of March 9, 1994, Moody's revised the
company's bond rating to A2.
At January 31, 1994, commercial paper borrowings of $114.5 million were
outstanding. The company has unused bank lines of credit totaling $461.0
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
six months of fiscal 1994 were sufficient to cover fixed charges.
-13-
<PAGE> 14
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See notes 2 and 8 to the Condensed Consolidated Financial Statements
appearing on pages 6 and 7 of this report on Form 10-Q for a discussion of
certain matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The following votes were cast for and withheld from the nominees for
director at the annual meeting of shareholders held on December 6, 1993:
<TABLE>
<CAPTION>
Shares Voted
Nominee For Withheld
- ------- ------------ ---------
<S> <C> <C>
Dana G. Leavitt 179,980,951 4,410,852
Robert S. Miller, Jr. 179,747,902 4,643,903
Miriam Stoppard 179,657,476 4,734,329
James N. Wilson 180,093,207 4,298,598
</TABLE>
Two proposals were submitted to the shareholders at the annual
meeting. The first proposal, to amend the Syntex Corporation 1984 Stock Option
and Stock Appreciation Rights Plan, was approved by a vote of 168,134,142
shares in favor, 14,104,662 shares opposed, and 2,153,001 shares abstaining.
The second proposal, to adopt the Syntex Corporation Call-to-Action Incentive
Plan, was approved by a vote of 168,324,169 shares in favor, 13,937,068 shares
opposed, and 2,130,568 shares abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibit
3. Articles and By-Laws
By-Laws of Syntex Corporation, as last amended December 6, 1993,
10. Material Contracts
a) Syntex Corporation 1984 Stock Option and Stock Appreciation Rights
Plan (As Amended July 29, 1993)
b) Amendment to Syntex US Employee Supplemental Retirement Savings
Plan (Effective as of January 1, 1994)
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.
-14-
<PAGE> 15
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: March 11, 1994
-15-
<PAGE> 1
EXHIBIT 3
AS OF 12-06-93
______________________________________________________________________________
______________________________________________________________________________
BY-LAWS
OF
SYNTEX CORPORATION
___________________
Adopted July 22, 1957
As Amended to December 6, 1993
______________________________________________________________________________
______________________________________________________________________________
<PAGE> 2
-2-
BY-LAWS
OF
SYNTEX CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meeting. The Annual Meeting of the stockholders of
the Corporation shall be held at 11:00 o'clock in the forenoon, local time, on
the second Friday in December, or on such other date as the Board of Directors
may from time to time determine, for the purpose of electing Directors and for
the transaction of such other business as may be properly brought before the
meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders may
be called at any time by the Board of Directors, the Chairman of the Board, or
the President for the transaction of such business as may be properly brought
before the meeting.
SECTION 3. Place of Meeting. Every annual meeting of the stockholders
and every other meeting of the stockholders shall be held at such location as
the Board of Directors from time to time by resolution may determine.
SECTION 4. Notice of Meeting. Whenever an annual or special meeting
of the stockholders is to be held, the Chairman of the Board or a Vice Chairman
of the Board or the President or a Vice President or the Secretary or an
Assistant Secretary shall sign a written notice thereof. Such notice shall
state the purpose or purposes for which the meeting is
<PAGE> 3
-3-
called and the time when and the place where it is to be held, and a copy
thereof shall be served either personally or by mail upon each stockholder of
record entitled to vote at such meeting not less than ten or more than sixty
days before the meeting. If mailed, it shall be directed to a stockholder at
his address as it appears on the Stock Register unless he shall have filed with
the Secretary of the Corporation a written request that notices intended for
him be mailed to some other address, in which case it shall be mailed to the
address designated in such request. Stockholders shall be given at least
thirty (30) days notice of any annual or special meeting of stockholders unless
the Board of Directors, the Chairman of the Board, any Vice Chairman of the
Board, or the President prescribes otherwise.
SECTION 5. Quorum. At any meeting of the stockholders, the holders of
a majority in number of the shares of stock of the Corporation, issued and
outstanding and entitled to vote at such meeting, present in person or
represented by proxy, shall constitute a quorum of the stockholders for all
purposes, unless the representation of a larger number of shares shall be
required by law, by the Articles of Incorporation or by these By-Laws and in
that case the representation of the number of shares so required shall
constitute a quorum.
If the holders of the number of shares of stock necessary to
constitute a quorum shall fail to attend in person or by proxy at the time and
place fixed, the holders of a majority in number of the shares of stock of the
Corporation present in person or by proxy may adjourn the meeting from time to
time without notice other than by announcement at the meeting, until holders of
the amount of stock requisite to constitute a quorum shall be present, and at
any such adjourned meeting at which a quorum shall be present, any business may
be transacted at the meeting as originally noticed.
<PAGE> 4
-4-
SECTION 6. Organization. The Chairman of the Board, or in his
absence, any Vice Chairman of the Board, or in his absence, the President or,
in his absence, any Vice President, shall call meetings of the stockholders to
order, and shall act as Chairman of such meetings. In the absence of the
Chairman of the Board, all Vice Chairmen of the Board, the President and all
Vice Presidents, the stockholders present in person or by proxy shall elect a
Chairman.
The Secretary of the Corporation, or, in his absence, an Assistant
Secretary, shall act as Secretary of all meetings of the stockholders; but in
the absence of the Secretary and of all Assistant Secretaries at any meeting of
the stockholders, the Chairman may appoint any person to act as Secretary of
the meeting.
SECTION 7. Qualification of Voters. The Board of Directors may
prescribe a period, not exceeding forty days prior to the date of meetings of
the stockholders during which no transfer of stock on the books of the
Corporation may be made; or in lieu of prohibiting the transfer of stock may
fix a time not more than forty days prior to the date of any meeting of
stockholders as the time as of which stockholders entitled to notice of and to
vote at such meeting shall be determined, and all persons who were holders of
record of voting stock at such time and no others shall be entitled to notice
of and to vote at such meeting.
SECTION 8. Voting. Unless otherwise provided in the Articles of
Incorporation or other certificates filed pursuant to law, every stockholder of
record shall be entitled at every meeting of the Corporation to one vote in
person or by proxy for every share standing in his name on the books of the
Corporation. No vote shall be given upon any stock while owned by the
Corporation or that is acquired in violation of applicable law, nor shall any
stock so
<PAGE> 5
-5-
owned be counted in determining if a quorum is present at any meeting. The
votes for Directors, and, upon the demand of any stockholder, the votes upon
any question before the meeting, shall be by ballot.
SECTION 9. Inspectors. The Board of Directors shall appoint at least
two Inspectors of Election to serve at any election of Directors by
stockholders or in any other case in which Inspectors may act. If Inspectors
of Election are not so appointed and a stockholder present and entitled to vote
at such meeting requests that Inspectors be appointed, or if any Inspector so
appointed shall be absent or fail to act, or if his office becomes vacant, such
Inspector or Inspectors shall be appointed by the person presiding at the
meeting, provided, however, that if any stockholder shall demand an election,
such Inspector or Inspectors shall be elected by the votes cast in person or by
proxy by the holders of record of a plurality of the shares voted at the
meeting, and the person presiding at the meeting shall conduct such election.
The Inspectors appointed to act at any meeting of the stockholders, before
entering upon the discharge of their duties, shall be sworn faithfully to
execute the duties of Inspectors at such meeting with strict impartiality, and
according to the best of their ability, and the oath so taken shall be
subscribed by them.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number and Term of Office. The business of the Corporation shall be
<PAGE> 6
-6-
managed by a Board of thirteen Directors, who need not be stockholders of the
Corporation or residents or citizens of the Republic of Panama. The Directors
shall, except as hereinafter otherwise provided for filling vacancies, be
elected by ballot at the annual meeting of the stockholders (at which a quorum
is present) by a plurality of the votes cast at such election, and shall
continue in office until their respective successors shall have been elected
and shall qualify. If pursuant to a change in these By-Laws, the number of
Directors be increased, the additional Directors may be elected by a majority
of the Directors in office at the time of the increase, or, if not so elected
prior to the next annual meeting of stockholders, they shall be elected by vote
of the stockholders.
SECTION 2. Vacancies. Any vacancy occurring in the Board of
Directors, between terms, by reason of death, resignation, disqualification or
otherwise may be filled by the affirmative vote of a majority of the Directors
in office when such vote is taken. Any Directors elected to fill a vacancy
shall hold office for the unexpired term of the Director whose place shall be
so vacated and until the successor of the Director so elected shall have been
elected and shall qualify.
SECTION 3. Place of Meeting. The Board of Directors may hold their
meetings and may have an office and keep the books of the Corporation (except
as may be otherwise provided by law) in such place or places as the Board from
time to time by resolution may determine.
SECTION 4. Regular Meetings. Regular meetings of the Board of
Directors shall be
<PAGE> 7
-7-
held at such time as the Board of Directors may from time to time by resolution
determine. No notice shall be required for any such regular meeting of the
Board of Directors; but a copy of every resolution fixing or changing the time
or place of such meetings shall be mailed to every Director at least five days
before the first meeting held in pursuance thereof.
SECTION 5. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by direction of the Chairman of the
Board, or any Vice Chairman of the Board, or the President, or by one-third or
more of the Directors for the time being in office. The Secretary or an
Assistant Secretary shall give notice of the time and place of holding each
special meeting by mailing the same at least two days before the meeting or by
telegraphing the same at least one day before the meeting, to each Director,
but such notice may be waived by any Director. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at any special
meeting. At any meeting at which every Director shall be present, even though
without any notice, any business may be transacted.
SECTION 6. Quorum. At all meetings of the Board of Directors four
Directors shall constitute a quorum for the transaction of business and the act
of a majority of the Directors present at any meeting of the Board of Directors
at which a quorum is present shall be the act of the Board of Directors. If at
any meeting of said Board there be less than a quorum present, a majority of
those present may adjourn the meeting from time to time.
SECTION 7. Finance Committee. The Board of Directors may by
resolution designate from among its own members a Finance Committee to consist
of at least three members. The
<PAGE> 8
-8-
Finance Committee shall designate from among its own members a Chairman of said
Committee. The Finance Committee shall hold its meetings on such notice and at
such time and place as the Chairman thereof may designate, and a majority shall
constitute a quorum for the transaction of business. The Finance Committee
shall have such powers, functions and duties as may be determined from time to
time by the Board of Directors.
SECTION 8. Compensation and Benefits Committee. The Board of
Directors may by resolution designate from among its own members a Compensation
and Benefits Committee to consist of at least three members, none of whom shall
be officers or employees of the Corporation or any of its subsidiaries. The
Compensation and Benefits Committee shall designate from among its own members
a Chairman of said Committee. The Compensation and Benefits Committee shall
hold its meetings on such notice and at such time and place as the Chairman
thereof may designate, and a majority shall constitute a quorum for the
transaction of business. The Compensation and Benefits Committee shall have
such powers, functions and duties as may be determined from time to time by the
Board of Directors.
SECTION 9. Audit Committee. The Board of Directors may by resolution
designate from among its own members an Audit Committee to consist of at least
three, and no more than five, members, all of whom shall be independent of
management and free from any relationship that in the opinion of the Board of
Directors, would interfere with the exercise of independent judgement as Audit
Committee members. The Audit Committee shall designate from among its own
members a Chairman of said Committee. The Audit Committee shall hold its
meetings on such notice and at such time and place as the Chairman thereof may
<PAGE> 9
-9-
designate, and two members shall constitute a quorum for the transaction of
business. The Audit Committee shall have such powers, functions and duties as
may be determined from time to time by the Board of Directors.
SECTION 10. Nominating Committee. The Board of Directors may by
resolution designate from among its own members a Nominating Committee to
consist of at least three members. The Nominating Committee shall designate
from among its own members a Chairman of said Committee. The Nominating
Committee shall hold its meetings on such notice and at such time and place as
the Chairman thereof may designate, and a majority shall constitute a quorum
for the transaction of business. The Nominating Committee shall have such
powers, functions and duties as may be determined from time to time by the
Board of Directors.
SECTION 11. Directors Emeritus. The Board of Directors may from
time to time appoint a retired Director or retired Directors to the honorary
position of Director Emeritus, to act in an advisory capacity to the Board in
such matters as the Chairman may request. Directors Emeritus shall not be
elected by the stockholders and shall not be entitled to vote on matters
presented to the Board. Directors Emeritus shall not have the duties or
responsibilities of Directors but rather of advisors to the Corporation and
shall not be personally liable to the Corporation or its stockholders for
monetary damages on account of their acts or omissions as Directors Emeritus
other than acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law. Directors Emeritus shall not be
counted in establishing a quorum for the transaction of business.
<PAGE> 10
-10-
ARTICLE III
OFFICERS
SECTION 1. Officers. The officers of the Corporation shall be a
Chairman of the Board, one or more Vice Chairmen of the Board, a President, one
or more Vice Presidents, a Treasurer and a Secretary. At the discretion of the
Board of Directors, the Corporation may have one or more Assistant Secretaries,
one or more Assistant Treasurers and such other officers as the Board of
Directors may deem advisable. All such officers shall be elected by the Board
of Directors at the first meeting of the Board following each annual meeting of
the stockholders. The Chairman of the Board, all Vice Chairmen of the Board,
and the President shall be members of the Board of Directors; the other
officers may but need not be Directors. The officers of the Corporation (in
addition to their powers and duties as set forth in these By-Laws) shall
respectively have such authority and perform such duties, subject to the
control of the Board of Directors, as from time to time may be prescribed by
the Board of Directors. All officers, agents and employees shall be subject to
removal at any time by a majority vote of the Board of Directors, and all
agents and employees other than officers elected or appointed by the Board of
Directors shall also be subject to removal at any time by the officer
appointing them.
SECTION 2. Powers and Duties of the Chairman of the Board. The
Chairman of the Board, subject to the control of the Board of Directors, shall
be the chief executive officer of the Corporation and shall have general charge
and control of all of its business and affairs. He shall preside at all
meetings of the stockholders and of the Board of Directors. He shall
<PAGE> 11
-11-
from time to time secure information concerning the business and affairs of the
Corporation and shall promptly lay such information before the Board of
Directors. He shall communicate to the said Board all matters presented by any
officer of the Corporation for its consideration, and shall from time to time
communicate to the officers such action of the Board of Directors as may in his
judgment affect the performance of their official duties.
The Chairman of the Board may sign certificates for shares of stock
with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, and may sign and execute contracts in the name of the Corporation
when authorized so to do by the Board of Directors.
SECTION 3. Powers and Duties of the Vice Chairmen of the Board. A
Vice Chairman of the Board, in the absence of the Chairman of the Board, shall
preside at all meetings of the stockholders and of the Board of Directors.
Each Vice Chairman of the Board may sign and execute contracts in the name of
the Corporation when authorized to do so by the Board of Directors and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe. A Vice Chairman of the Board may be
designated to be the chief administrative officer of the Corporation with such
duties as the Board of Directors may from time to time determine.
SECTION 4. Powers and Duties of the President. The President, subject
to the direction of the Board of Directors and the Chairman of the Board, shall
be the chief operating officer of the Corporation and shall exercise
supervision of such areas of business of the
<PAGE> 12
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Corporation (including subsidiaries) as the Board of Directors shall from time
to time determine.
The President may sign certificates for shares of stock with the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary,
and may sign and execute contracts in the name of the Corporation when
authorized so to do by the Board of Directors.
SECTION 5. Powers and Duties of the Vice Presidents. Each Vice
President may sign certificates for shares of stock with the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, and shall have
such other powers and perform such other duties as may from time to time be
assigned to him by these By-Laws or by the Board of Directors. At the
discretion of the Board of Directors, one or more of the Vice Presidents may be
designated as Executive Vice President, Senior Vice President or Group Vice
President or may be given other designations.
SECTION 6. Powers and Duties of the Treasurer. The Treasurer shall
have custody of all the funds and securities of the Corporation which may have
come into his hands; he may endorse on behalf of the Corporation for collection
checks, notes and other obligations and shall deposit the same to the credit of
the Corporation in such bank or banks or depositary or depositaries as the
Board of Directors may designate; he shall sign receipts and vouchers for
payments made to the Corporation; he may sign with the President or a Vice
President certificates for shares of stock; he shall enter regularly in the
books of the Corporation to be kept by him for the purpose a full and accurate
account of all moneys received and paid by him on account of the Corporation;
he shall, at all reasonable times, exhibit his books and
<PAGE> 13
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accounts to any Director of the Corporation upon application at the office of
the Corporation during business hours; and he shall perform all acts incident
to the position of Treasurer, subject to the control of the Board of Directors.
SECTION 7. Powers and Duties of the Secretary. The Secretary shall
keep in books provided for that purpose the minutes of all meetings of the
Board of Directors and the minutes of all meetings of the stockholders; he
shall attend to the giving or serving of all notices of the Corporation; he may
sign with the President or a Vice President certificates for shares of stock,
and, in the name of the Corporation, all contracts authorized by the Board of
Directors; when authorized, he shall affix the seal of the Corporation; he
shall have charge of the Stock Register, transfer books and stock ledgers and
such other books and papers as the Board of Directors shall direct, all of
which shall, at all reasonable times, be open to the examination of any
Director upon application at the office of the Corporation during business
hours; and he shall in general perform all the duties incident to the office of
the Secretary, subject to the control of the Board of Directors.
SECTION 8. Powers and Duties of Additional Officers. The Board of
Directors may from time to time by resolution delegate to any Comptroller,
Assistant Comptroller or Assistant Comptrollers and/or any Assistant Treasurer
or Assistant Treasurers appointed by the Board, any of the powers and duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries appointed by the Board any of the powers and
duties herein assigned to the Secretary.
<PAGE> 14
-14-
SECTION 9. Giving of Bond by Officers. All officers of the
Corporation, if required to do so by the Board of Directors, shall furnish
bonds to the Corporation for the faithful performance of their duties with such
penalties, conditions and security as the Board may require.
ARTICLE IV
CAPITAL STOCK-SEAL-FISCAL YEAR
SECTION 1. Certificates for Shares. The certificates for shares of
stock of the Corporation shall be in such form not inconsistent with the
Articles of Incorporation as shall be approved by the Board of Directors. The
certificates shall be signed by the Chairman of the Board, the President or a
Vice President and the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary (except that no person shall sign in more than one
capacity) and sealed with the seal of the Corporation, and (except as
hereinafter provided) shall not be valid unless so signed and sealed. In the
event that the Corporation has appointed a Transfer Agent, the signatures and
seal may be facsimiles. All certificates shall be consecutively numbered. The
name of the person owning the shares represented thereby with the number of
such shares and the date of issue thereof shall be entered on the Corporation's
books.
All certificates surrendered to the Corporation shall be cancelled and
no new certificates shall be issued until former certificates for the same
number of shares of the same class shall have been surrendered and cancelled,
subject, however, to such provision not
<PAGE> 15
-15-
inconsistent with law as the Board of Directors in its discretion may make for
the issue of new certificates in lieu of certificates alleged to have been
lost, stolen or destroyed.
SECTION 2. Transfer of Shares. A transfer book, known as the Stock
Register, shall be kept by the Corporation, or by a Transfer Agent, in which
the shares of stock of the Corporation shall be registered and transferred.
The Stock Register shall contain the names alphabetically arranged of all
persons who are stockholders of the Corporation, showing their place of
residence, the number of shares held by them respectively, the time when they
respectively became the owners thereof and the amount paid thereon or that they
are fully paid and non-assessable. Shares of stock of the Corporation shall be
transferred on the books of the Corporation (or a Transfer Agent) by the holder
thereof in person or by his attorney duly authorized in writing, upon surrender
and cancellation of certificates for a like number of shares.
SECTION 3. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 4. Determination of Stockholders of Record for Certain
Purposes. The Board of Directors may fix a time, not exceeding forty days
preceding the date fixed for the payment of any dividend or the making of any
distribution, or for the delivery of evidences of rights or evidences of
interest arising out of any change, conversion or exchange of capital stock, as
a record time for the determination of the stockholders entitled to receive any
such dividend,
<PAGE> 16
-16-
distribution, rights or interests, and in such case only stockholders of record
at the time so fixed shall be entitled to receive such dividend, distribution,
rights or interests. The Board of Directors at its option, in lieu of so
fixing a record time, may prescribe a period not exceeding forty days prior to
the date for such payment, distribution or delivery during which no transfer of
stock on the books of the Corporation may be made.
SECTION 5. Corporate Seal. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be in
charge of the Secretary. A duplicate of the seal may be kept and be used by
the Treasurer or by any Assistant Secretary or Assistant Treasurer.
SECTION 6. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of August and terminate on the 31st day of July in each
year.
ARTICLE V
MISCELLANEOUS
SECTION 1. Checks, etc. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money
shall be signed by such officers of the Corporation and/or other persons as the
Board of Directors may from time to time by resolution designate. Except as
may be otherwise expressly provided by resolution of the Board of Directors,
endorsements for or on behalf of the Corporation upon checks, drafts, bills
<PAGE> 17
-17-
of exchange, acceptances, notes, obligations or orders for the payment of money
deposited with a duly authorized depositary of the Corporation for deposit or
collection may be written or stamped endorsements of the Corporation without
any designation of the party making such endorsements. All endorsements other
than endorsements for deposit or collection shall be signed by such officers of
the Corporation or other persons as the Board of Directors may from time to
time by resolution designate.
SECTION 2. Voting Upon Stocks. Unless otherwise ordered by the Board
of Directors, the Chairman of the Board, any Vice Chairman of the Board and the
President, acting singly, shall have full power and authority in behalf of the
Corporation to attend and to act and to vote, or in the name of the Corporation
to execute proxies to vote, at any meetings of the stockholders of any
corporation in which the Corporation may hold stock, and at any such meeting
shall possess and may exercise in person or by proxy any and all rights, powers
and privileges incident to the ownership of such stock, and which as the owner
thereof the Corporation might have possessed and exercised if present. The
Board of Directors by resolution from time to time may confer like powers upon
any other person or persons.
SECTION 3. Waivers of Notice. Whenever under the provisions of any
corporate law or under the provisions of the Articles of Incorporation or
By-Laws of the Corporation, the Corporation or the Board of Directors or any
committee thereof is authorized to take any action after notice to its members
or after the lapse of a prescribed period of time, such action may be taken
without notice and without the lapse of any period of time, if at any time
before or after such action be completed such requirements be waived in writing
by the person or
<PAGE> 18
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persons entitled to said notice or entitled to participate in the action to be
taken or, in the case of a stockholder, by his attorney thereunto authorized.
ARTICLE VI
AMENDMENTS
These By-Laws and any amendments thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors by the
affirmative vote of a majority of the members of the Board then in office at
any regular or special meeting at which a quorum is present provided that,
unless all Directors are present, the notice of such meeting must have stated
the amendment of the By-Laws as one of the purposes of the meeting.
<PAGE> 1
EXHIBIT 10A
SYNTEX CORPORATION
1984 STOCK OPTION AND
STOCK APPRECIATION RIGHTS PLAN
(AS AMENDED JULY 29, 1993)
1. Purpose of the Plan. The Plan authorizes:
a. the grant to key employees of the Corporation or
any Subsidiary of options to purchase shares of Common
Stock; and
b. the grant of stock appreciation rights
to such key employees who hold senior management positions
with the Corporation.
The objectives of such grants and awards are:
a. to attract and retain outstanding individuals as
key employees;
b. to provide additional incentive to the recipients
of such grants to achieve improved long-term performance;
c. to give such individuals a greater personal
interest in the long-term success of the Corporation; and
d. by assisting and encouraging such individuals to
become owners of Common Stock, to align their interests more
closely with the interests of the Corporation's stockholders
generally.
Section I
General Provisions
2. Definitions.
a. "Board" means the Board of Directors of the
Corporation.
<PAGE> 2
b. "Change in Control" means the acquisition by any "person" of
"beneficial ownership", directly or indirectly, of securities of
Syntex Corporation representing more than fifty percent (50%) of the
combined voting power of Syntex Corporation's then outstanding
securities; provided in any event that a reorganization or re-
incorporation shall not be considered a "Change in Control" as long
as the persons holding the right to exercise actual control of Syntex
Corporation are substantially the same immediately after the re-
organization or reincorporation as before the reorganization or
reincorporation. "Person" and "beneficial ownership" have special
meanings under Sections 13(d) and 14(d) of the United States Securi-
ties Exchange Act of 1934 (the "Exchange Act") and Rule 13d-3 adopted
under the Exchange Act, and those meanings are incorporated into this
Plan.
c. "Code" means United States Internal Revenue Code of 1986, as
amended from time to time, and any successor legislation thereto.
d. "Committee" means the committee appointed from time to time
by the Board to administer the Plan.
e. "Common Stock" means Common Stock of the Corporation.
f. "Corporation" means Syntex Corporation.
g. "Fair Market Value" means, with respect to
Common Stock: (1) for purposes of determining such value on the date
of grant of an option or SAR, the mean between the high and low sell-
ing prices of the Common Stock as reported on the consolidated trans-
action reporting system of the principal national securities exchange
upon which the Common Stock is listed, on such date, or, if no sale
of the Common Stock was made on such exchange on such date, then on
the next preceding day on which such a sale was made; and (2) for
purposes of determining such value on the date of a Grantee's exer-
cise of an SAR, the average of the mean between the high and low
selling prices of the Common Stock, as reported on the consolidated
transaction reporting system of the principal national securities ex-
change upon which the Common Stock is listed, on each of the
business days on which a sale of the Common Stock was made on such
exchange and which fall within the period beginning on the third
business day following the release of the statements of the Corpora-
tion's quarterly or annual financial results and ending on the
twelfth business day following such date. If no such sale was made
on any business day within such a period, "Fair Market Value" shall
be the mean between the high and low selling prices of the Common
Stock on the day next preceding the beginning of such period and on
which a sale of the Common Stock was made on such exchange.
h. "Grantee" means a key employee of the Corporation or any
Subsidiary who has been granted an SAR.
i. "Plan" means the Syntex Corporation 1984 Stock Option and
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<PAGE> 3
Stock Appreciation Rights Plan as set forth herein, and as the same
may be amended from time to time.
j. "SAR" means the right to receive an amount, payable as
provided in paragraph 24, equal to the excess of the Fair Market
Value of one share of Common Stock on the date of the Grantee's
exercise of such right over the Fair Market Value of such a share on
the date of grant of such right.
k. "Subsidiary" means any of the Corporation's present or
future subsidiaries which is a "subsidiary corporation" as defined
in Section 425(f) of the Code.
3. Administration. The Plan shall be administered by the
Committee and shall consist of not less than three of the then members of the
Board. No member of the Committee shall be eligible to participate in the
Plan. The Corporation shall effect the grant of options and SARs under the
Plan in accordance with determinations made by the Committee pursuant to the
provisions of the Plan and by execution of instruments in writing in form
approved by the Committee. The Committee shall select one of its members as
its Chairman and shall hold its meetings at such times and places as it shall
deem advisable. A majority of its members shall constitute a quorum and all
determinations of the Committee shall be made by a majority of its members.
Any decision or determination reduced to writing and signed by a majority of
the members shall be fully as effective as if made by a majority vote at a
meeting duly called and held. The Committee may appoint a Secretary, shall
keep minutes of its meetings and shall have full power to make and amend such
rules and regulations for the conduct of its business and for the
administration of the Plan as it shall deem appropriate. The interpretation
and construction by the Committee of any provision of the Plan and of the
options and SARs granted thereunder shall, unless otherwise determined by the
Board, be final and conclusive on all persons having any interest thereunder.
4. Shares and SARs Subject to Plan. Subject to adjustment
under the provisions of paragraph 6 hereof, the number of shares of the
Corporation's Common Stock of the par value of $1.00 per share
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<PAGE> 4
which may be issued and sold under the Plan will not exceed the number of
shares that were subject to options granted under the Plan on or before July
31, 1993, and an additional 6,500,000 shares, together with any shares
authorized for issuance under the Corporation's Call-to- Action Incentive Plan
that are not subject to options as of July 31, 1995, or that are subject to
options as of July 31, 1995, that terminate or expire without being wholly
exercised, to the extent of the number of shares to which such termination or
expiration relates. Such shares may be either authorized and unissued shares
or shares issued and thereafter acquired by the Corporation, and such shares
will not be offered to the Corporation's stockholders prior to their issuance
under the Plan. If options granted under the Plan after July 31, 1993, shall
terminate or expire without being wholly exercised, or shall be surrendered
pursuant to paragraph 16(e) upon the exercise of SARs, new options may be
granted under the Plan covering the number of shares to which such termination,
expiration or surrender relates; provided, however, that no new options may be
granted with respect to shares subject to options granted under the Plan on or
before July 31, 1993 that shall terminate or expire without being wholly
exercised, or that shall be surrendered pursuant to paragraph 16(e) upon the
exercise of SARs. The Corporation shall not, upon the exercise of any option,
be required to issue or deliver any shares of stock prior to (a) the admission
of such shares to listing on any stock exchange on which the Corporation's
Common Stock is then listed and (b) the completion of such registration or
other qualification of such shares under any state or federal law, rule or
regulation as the Corporation shall determine to be necessary or advisable.
The maximum number of SARs which may be granted under the Plan shall
be 300,000; provided that, except as provided in paragraph 28 below, if SARs
granted under the Plan shall terminate or expire without having been exercised,
new SARs may be granted under the Plan equal to the number of SARs which have
so terminated or expired.
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<PAGE> 5
5. Registration Under the Securities Act of 1933. The
Corporation contemplates having an effective Registration Statement under the
United States Securities Act of 1933 at such time as options or SARs granted
under the Plan are exercised. The Corporation will use its best efforts to
keep such Registration Statement effective at all times necessary to permit the
holders of options or SARs to exercise them. The Corporation will also use its
best efforts to keep a Registration Statement effective, if necessary, for
resales of shares received upon exercise of options or SARs, but only if such
Registration Statement can be filed on Form S-8 or a similar form.
6. Adjustments in Shares Subject to Plan. Options and SARs
granted under the Plan shall contain such provisions as the Committee may
determine with respect to adjustments to be made in the number of SARs, in the
number and kind of shares covered by such options and in the option price, in
the event of a reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, rights offering or any other
change in the corporate structure or shares of the Corporation; and in the
event of any such change, the maximum number of SARs which may be granted under
the Plan, the aggregate number and kind of shares available under the Plan and
the maximum number of shares as to which options may be granted, shall be
appropriately adjusted.
7. Period, Expiration and Termination of the Plan. Options and SARs
may be granted under the Plan at any time prior to July 29, 2003, on which date
the Plan will expire except as to options and SARs then outstanding thereunder,
which options and SARs shall remain in effect in accordance with their
respective terms until they have been exercised or have expired; provided,
however, that the term of an option or SAR which is outstanding on the
expiration date of the Plan may be extended after the Plan expires as provided
in paragraph 16(b) hereof. The Plan may be abandoned or terminated at any time
by the Corporation's Board of Directors except with respect to any options and
SARs then outstanding under the Plan.
8. Amendment of the Plan. The Board from time to time may
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<PAGE> 6
make such changes in and additions to the Plan as it may deem proper and in the
best interests of the Corporation or any Subsidiary, without action on the part
of the stockholders of the Corporation, provided, however, that (subject to the
provisions of paragraph 6 hereof) no such change or addition by the Board shall
(a) impair, without the consent of the optionee or Grantee, any option or SAR
theretofore granted to such individual under the Plan or deprive any such
individual of any shares of Common Stock which he may have acquired through or
as a result of the Plan, (b) increase the total number of shares which may be
purchased, or the total number of SARs which may be granted, under the Plan,
(c) change the minimum purchase price, (d) change the basis for valuation of
SARs, (e) except as permitted by paragraph 16(b) hereof, extend the period
during which any option or SAR may be granted or exercised, (f) withdraw the
administration of the Plan from a Committee of Directors of the Corporation
none of whose members is eligible to receive an option or SAR under the Plan,
or (g) change the provisions of the Plan relating to eligibility.
9. Employment Rights. Nothing in this Plan,or any modification
thereof, and no grant of an option or SAR, or any term thereof, shall be deemed
an agreement or condition of employment limiting the right of the Corporation
or any Subsidiary to terminate the employment of, or to alter the terms of
employment, services, responsibilities, duties or authority of any employee, or
giving any employee a right to continue in the employ of the Corporation or any
Subsidiary in order to become eligible for or entitled to exercise any option
or SAR, in whole or in part, or for any other reason.
10. Headings of Sections and Paragraphs. Headings of Sections
and Paragraphs in this Plan are for convenience of reference only, and shall
not be used in the construction or interpretation of the Plan.
11. Number and Gender. Whenever appropriate, words used herein
in the singular may include the plural, or the plural may be read as the
singular, and the masculine may include the feminine.
12. Effective Date of the Plan. The Plan shall become
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<PAGE> 7
effective October 16, 1984, provided that no option or SAR granted under the
Plan on or after such date may be exercised unless and until the Plan has been
approved by the holders of a majority of the shares of Common Stock of the
Corporation outstanding and entitled to vote at a stockholders' meeting.
Section II
Option Program
13. Eligibility. Options may be granted only to key employees of
the Corporation or any Subsidiary.
Subject to the foregoing, the Committee shall have full and final
authority to determine the persons who are to be granted options under the
Plan and the number of shares to be subject to each option; provided,
however, that anything contained herein to the contrary notwithstanding,
no employee of the Corporation or any Subsidiary who owns stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Corporation or any parent or Subsidiary shall be granted an option
under this Plan.
14. Types of Options: Incentive and Non-Qualified. An option
granted under this Plan shall, as determined by the Committee, be either an
incentive stock option conforming to the provisions of Section 422A of the
Code or a non-qualified option.
To the extent that the aggregate Fair Market Value (determined at
the time the option is granted) of Stock with respect to which incentive
stock options are exercisable for the first time by an optionee during any
calendar year (under all stock option plans of the Corporation and its
Subsidiaries) exceeds the maximum amount permitted by Section 422A of the
Code (presently $100,000), such options shall be treated as options which
are not incentive stock options.
15. Price. The purchase price under each option will be
determined by the Committee but will not be less than 100% of the Fair Market
Value of the Stock at the time of the grant of the option. In no event
shall the purchase price be less than the par
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<PAGE> 8
value of the stock.
16. Period of Option and Rights to Exercise. Each optionee must
remain in the continuous employ of the Corporation and/or its Subsidiaries for
one year from the date his option is granted before he can exercise any part
thereof. Thereafter, subject to the provisions of this paragraph 16 and
paragraphs 18 and 19 below, options granted under the Plan will be exercisable
as follows:
(a) Each option will be exercisable 25% after one year
from grant, 50% after two years from grant, 75% after three years from grant
and 100% after four years from grant, except that the Committee may, when in
its judgment circumstances warrant, authorize in writing the earlier exercise
of options granted previously to the employee under the Plan. Any such earlier
exercise shall be permitted only to the extent provided by and in accordance
with the Committee's written authorization thereof, and in no event prior to
one year from the date of grant. The preceding provisions of this subparagraph
(a) notwithstanding, in the event a Change in Control shall occur, each option
which is then outstanding shall thereupon automatically become 100%
exercisable.
(b) The right to exercise an option will expire upon
the expiration date of the option as determined by the Committee at the time
the option was granted, which date shall in no event be more than ten years
from the date the option was granted; provided, however, that if an option is
by its terms due to expire while the optionee is on an assignment which the
Committee, in its sole discretion, determines to be "foreign service," the
Committee, if it deems it proper and in the interest of the Corporation, and if
the optionee agrees, may extend the term of the option to such date as the
Committee shall determine, but not more than two years after the optionee's
foreign service assignment ends.
(c) The right to purchase the shares included in each
installment is cumulative; i.e., once such right has become exercisable it may
be exercised in whole at any time or in part from time to time until the
expiration of the option, whether or not any option previously granted to the
optionee remains
-8-
<PAGE> 9
outstanding at the time of such exercise.
(d) The shares to be purchased upon each exercise of
any option shall be paid for in full at the time of such exercise, such payment
to be made in cash, in Common Stock of the Corporation owned by the optionee
and having a Fair Market Value on the date of exercise equal to the aggregate
purchase price of the shares of Common Stock to be purchased upon such
exercise, or in a combination of Common Stock owned by the optionee and cash.
When payment is made in whole or in part with shares of Common Stock owned by
the optionee, such shares as are surrendered by the optionee shall be exchanged
share for share for an equal number of the shares being issued upon the
exercise of the option, but the aggregate Fair Market Value of such surrendered
shares shall be credited against the aggregate purchase price of all of the
shares with respect to which the option is then being exercised.
(e) If an optionee who has been granted SARs shall
exercise one or more of such SARs, the options related to such SARs shall
become non-exercisable and shall be surrendered to the Corporation.
Except as provided in paragraphs 18 and 19, no option may be
exercised unless the optionee is then in the employ of the Corporation or any
Subsidiary and shall have been continuously employed by one or more of the
Corporation and its Subsidiaries since the grant of his option. Absence on
leave approved by an officer of the Corporation or of any Subsidiary authorized
to give such approval shall not be considered an interruption of employment for
any purpose of the Plan.
17. Non-Transferability of Option. No option granted under the
Plan to an employee shall be transferable by him otherwise than by will or by
the laws of descent and distribution, and such option shall be exercisable,
during his lifetime, only by him.
18. Termination of Employment. If an optionee shall have remained
in the continuous employ of the Corporation and/or its Subsidiaries for one
year from the date his option was granted and thereafter shall cease to be so
employed:
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<PAGE> 10
(a) For any reason (other than disability or
retirement, as defined or described below, or death) he may, but only within
the period of three months next succeeding such cessation of employment,
exercise his option if and to the extent that he would have been entitled to
exercise it had he remained in the employ of the Corporation or any Subsidiary
during said three-month period.
(b) Because of his disability, as determined by the
Committee in its sole discretion, he may, but only within the period of twelve
months next succeeding such cessation of employment, exercise his option if and
to the extent he would have been entitled to exercise it had he remained in the
employ of the Corporation or any Subsidiary during said twelve-month period.
(c) Solely because of his retirement pursuant to a
retirement plan to which the Corporation or any Subsidiary makes contributions
and under which he is eligible for and has elected to receive retirement
benefits commencing upon such cessation of employment, he may exercise his
option if and to the extent he would have been entitled to do so had he
remained in the employ of the Corporation or any Subsidiary until the option
expiration date as last determined by the Committee. Notwithstanding the
foregoing, if the option is an incentive stock option granted prior to July 26,
1990, the optionee may exercise his option only during the "permitted period"
and only if and to the extent he would have been entitled to do so had he
remained in the employ of the Corporation or any Subsidiary for three months
following such cessation of employment. The "permitted period" shall commence
with the day following his cessation of employment and shall end on the first
to occur of the following:
(i) The option expiration date as last
determined by the Committee; or
(ii) The date which is five years following
such cessation of employment.
19. Death of Optionee. In the event of the death of an optionee
while in the employ of the Corporation or any Subsidiary,
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<PAGE> 11
or within the period after cessation of employment during which the optionee
may exercise his option in accordance with paragraph 18, the option theretofore
granted to him shall continue to be exercisable for a period of up to one year
following his death, but only if and to the extent that the optionee would have
been entitled to exercise it if he had lived during said one-year period.
20. Substitution or Assumption of Options. Notwithstanding any
other provision of the Plan to the contrary, by action of the Board, the
Corporation or any of its Subsidiaries may as an incident to or by reason of
any corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, substitute new options on stock of
the Corporation for options granted by another employer to its employee on
stock of such employer or may assume options granted by another employer to its
employees, at such purchase prices and under such conditions as may be
permitted by Section 425(a) of the Code, and the Committee is hereby expressly
authorized to take such action as may be required to effectuate any such
issuance or assumption. Shares of the Corporation subject to any option so
issued or assumed shall be charged against the total number of shares available
for issuance under the Plan.
Section III
SAR Program
21. Eligibility. SARs may be granted only to key employees who
hold senior management positions with the Corporation or any Subsidiary
(including officers who are also directors of the Corporation or any
Subsidiary) and who are responsible for the management, operation and
development of the enterprise. Subject to the foregoing, the Committee shall
have full and final authority to determine the persons who are to be granted
SARs and the number of SARs to be granted to each such person.
22. Grant of SARs. SARs shall be granted by the Committee
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<PAGE> 12
only in connection with and at the same time as non-qualified stock options
granted pursuant to the Plan. Each SAR shall relate to a non- qualified option
on one share of Common Stock which was granted under the Plan at the same time
as the SAR (the related option) and shall expire at the earlier of the
expiration date of the related option or the termination of employment for any
reason other than death. The grant of an SAR shall be evidenced by a written
agreement between the Corporation and the Grantee which shall contain the terms
and conditions required by this Plan and such other terms and conditions not
inconsistent therewith as the Committee may deem appropriate in each case.
23. Exercise of SARs. Each Grantee must remain in the
continuous employ of the Corporation or any Subsidiary for one year from the
date his SARs are granted before he can exercise any part thereof. Thereafter,
subject to the provisions of this paragraph and paragraph 27 below, the SARs
will be exercisable as follows:
(a) SARs granted to an employee will be 25%
exercisable after one year from grant, 50% after two years from grant, 75%
after three years from grant, and 100% after four years from grant; provided,
however, that notwithstanding the foregoing, in the event a Change in Control
shall occur, all SARs which are then outstanding shall thereupon automatically
become 100% exercisable.
(b) SARs which are exercisable pursuant to
subparagraph (a) above may be exercised only during the period beginning on the
third business day following the date of release of the statements of the
Corporation's quarterly or annual financial results and ending on the twelfth
business day following such date.
(c) The right to exercise SARs included in each
installment is cumulative; i.e., once such right has become exercisable, it may
be exercised, subject to subparagraph (b) above, in whole at any time or in
part from time to time until the expiration of the SARs.
(d) Except as provided in paragraph 27 below, no SAR
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<PAGE> 13
may be exercised unless the grantee is then in the employ of the Corporation or
any Subsidiary and shall have been continuously so employed since the grant of
his SAR. Absence on leave approved by an officer of the Corporation authorized
to give such approval shall not be considered an interruption of employment for
any purpose of the Plan.
24. Payment of SARs. Payments under the Plan shall be made (net
of any applicable withholding taxes) wholly in cash or wholly in shares of
Common Stock or partly in cash and partly in shares of Common Stock in such
proportions as the Committee in its sole discretion shall determine. When
payment is to be made wholly or partly in shares of Common Stock, such shares
shall be valued for such purpose at their Fair Market Value on the date of the
Grantee's exercise of the SAR; provided that in no instance shall a share of
Common Stock be valued for payment purposes at less than the par value of such
a share.
25. Non-Transferability of SARs. No SARs granted under the Plan
to an employee shall be transferable by him otherwise than by will or the laws
of descent and distribution, and such SARs shall be exercisable, during his
lifetime, only by him.
26. Surrender of SAR. If a Grantee shall exercise a related
option, the SAR to which such option related shall be automatically cancelled
as of the date of such exercise, and such cancelled SAR shall not be available
for issuance to the same or any other Grantee thereafter.
27. Death. In the event of the death of a Grantee while in the
employ of the Corporation, the SARs theretofore granted to him shall be
exercisable within, but only within, the period of one year next succeeding his
death, and in no event after the expiration of the related options, and then
only if and to the extent that the Grantee would have been entitled to exercise
the SARs if he had lived during said one-year period.
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<PAGE> 14
Section IV
Arrangements for Granting Options to Employees
Working in the United Kingdom of Great Britain
and Northern Ireland
28. Notwithstanding any other provisions of the Plan, options
may be granted under the Plan in accordance with the provisions of the Syntex
1987 U.K. Stock Option Scheme which forms part of the Plan and is set out in
the appendix hereto.
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<PAGE> 1
EXHIBIT 10B
AMENDMENT TO
SYNTEX U.S. EMPLOYEES
SUPPLEMENTAL RETIREMENT SAVINGS PLAN
(Effective as of January 1, 1994)
Section 2.1(k) of the Plan is hereby amended to read as follows:
(k) "Eligible Employee" means for any Plan Year (i) an Employee who
on the Entry Date for such Plan Year is a participant in the
ERSP, and who on such Entry Date the Company anticipates will
have Covered Compensation in excess of the ERSP Compensation
Limit for the Plan Year commencing on such Entry Date; (ii) an
Employee who on the Entry Date for such Plan Year is not a
participant in the ERSP, but who on such Entry Date is scheduled
to have an ERSP Entry Date within such Plan Year and who the
Company anticipates will have Covered Compensation in excess of
the ERSP Compensation Limit during the portion of the Plan Year
commencing on such ERSP Entry Date; and (iii) a former Employee
who is not an Employee on the Entry Date for such Plan Year, but
who becomes an Employee again during such Plan Year and who at
the time of such reemployment is scheduled to have an ERSP Entry
Date within such Plan Year and who the Company anticipates will
have Covered Compensation in excess of the ERSP Compensation
Limit during the portion of the Plan Year commencing on such
ERSP Entry Date.
Section 2.1(o) of the Plan is hereby deleted and replaced by the following:
(o) "ERSP Compensation Limit" means for each Plan Year the maximum
amount of Covered Compensation permitted to be taken into
account under Section 401(a)(17) of the Code for purposes of
making contributions to the ERSP for any Participant for such
Plan Year. For 1994, the ERSP Contribution Limit is $150,000.
Section 2.1(p) of the Plan is hereby deleted and replaced by the following:
(p) "ERSP Entry Date" means the date during a Plan Year on which an
Employee first becomes eligible to participate or to resume
participation in the ERSP.
1
<PAGE> 2
Section 2.1(r) of the Plan is hereby amended to read as follows:
(r) "Participant" means for any Plan Year an Eligible Employee who
on or before the Entry Date for such Plan Year executes and
delivers to the Company a Salary Reduction Agreement for such
Plan Year pursuant to Section 4.2, or, if such Eligible Employee
is a former Employee on such Entry Date, who on or before his
ERSP Entry Date during such Plan Year executes and delivers to
the Company a Salary Reduction Agreement for such Plan Year
pursuant to Section 4.2.
Section 3.1 of the Plan is hereby amended to read as follows:
3.1 Start of Participation. An Employee who is an Eligible Employee
for a Plan Year shall become a Participant in the Plan on the Entry Date for
such Plan Year, and a former Employee who becomes an Eligible Employee during a
Plan Year shall become a Participant on his ERSP Entry Date during such Plan
Year; provided that the Eligible Employee executes and delivers to the Company
a Salary Reduction Agreement pursuant to Section 4.2 on or before such Entry
Date or, if applicable, such ERSP Entry Date.
Section 4.1 of the Plan is hereby amended to read as follows:
4.1 Salary Reduction Amounts. Each Eligible Employee may elect to
have the Company credit his Participant's Account under the Plan for any Plan
Year any whole percentage, up to fifteen percent (15%) (or such lower
percentage as the Company may establish from time to time as the maximum salary
reduction percentage under the ERSP) of the excess of his Covered Compensation
for such Plan Year (excluding any Covered Compensation received prior to his
ERSP Entry Date during such Plan Year if the individual is not a participant in
the ERSP on the Entry Date for such Plan Year) over the ERSP Compensation Limit
for such Plan Year. Each such election shall be made by execution and delivery
of a Salary Reduction Agreement pursuant to Section 4.2 in accordance with such
rules and procedures as the Company may from time to time prescribe.
Section 4.2 of the Plan is hereby amended to read as follows:
4.2 Salary Reduction Agreements. Each Eligible Employee who makes
an election described in Section 4.1 for any Plan Year shall enter into a
Salary Reduction Agreement with the Company on or before the Entry Date for
such Plan Year, or, if the Eligible Employee is a former Employee on such Entry
Date who is subsequently reemployed, on or before his ERSP Entry Date during
such Plan Year, under which the Participant shall
2
<PAGE> 3
agree to have his Covered Compensation for such Plan Year reduced by an amount
equal to his Salary Reduction Amount for such Plan Year.
Section 5.1 of the Plan is hereby amended to read as follows:
5.1 Company Matching Amounts. Each Participant for whom a Salary
Reduction Amount is credited for a pay period shall be entitled to be credited
with a Company Matching Amount on the last day of such pay period. The first
five percent (5%) of Covered Compensation in excess of the ERSP Compensation
Limit for each Plan Year that is credited as a Salary Reduction Amount on
behalf of each Participant hereunder will be matched in accordance with the
schedule set forth below:
<TABLE>
<CAPTION>
Percentage of Salary
Years of Service Reduction Amount Matched
---------------- ------------------------
<S> <C>
1 but less than 2 50%
2 but less than 4 75%
4 or more 100%
</TABLE>
This Amendment is adopted by the chief administrative officer of the Company on
February 23, 1994, pursuant to Section 11.1 of the Plan.
SYNTEX CORPORATION
By PAUL E. FREIMAN
________________________________________
Paul E. Freiman, Chief Executive Officer
3
<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 Six Months
Ended Ended
January 31 January 31
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
EARNINGS APPLICABLE TO COMMON STOCK:
Net Income $95.8 $119.1 $222.1 $113.0
===== ====== ====== ======
EARNINGS PER COMMON SHARE (AS REPORTED):
Weighted average shares outstanding 221.0 222.3 221.0 223.7
----- ----- ----- -----
Earnings per common share $0.43 $0.54 $1.00 $0.51
===== ===== ===== =====
EARNINGS PER COMMON SHARE (ASSUMING FULL DILUTION):*
Weighted average shares outstanding 221.0 222.3 221.0 223.7
Shares continentally issuable for Stock Option Plans 0.4 0.4 0.3 1.7
----- ----- ----- -----
Average shares and share equivalents outstanding 221.4 222.7 221.3 225.4
----- ----- ----- -----
Earnings per common share $0.43 $0.53 $1.00 $0.50
===== ===== ===== =====
</TABLE>
* This calculation is submitted in accordance with Regulation S-K item
601(b)11 although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
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<PAGE> 1
SYNTEX CORPORATION AND SUBSIDIARY COMPANIES
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Unaudited)
($ in millions except per share amounts)
EXHIBIT 12
<TABLE>
<CAPTION>
Six Months
Ended
January 31, 1994
----------------
<S> <C>
Income Before Taxes on Income $226.3
Adjustments:
Fixed Charges:
Interest Expense 14.1
Add:
Amortization of Capitalized Interest 0.2
Less:
Capitalized Interest (0.9)
------
Total Adjusted Income $239.7
Divided by Fixed Charges 14.1
------
Ratio of Earnings to Fixed Charges 17.0
======
</TABLE>
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