SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended April 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From to
Commission file number 1-9467
DAVIS WATER & WASTE INDUSTRIES, Inc.
(Exact name of Registrant as specified in its charter)
Georgia 58-0959907
(State of incorporation) ( I.R.S. Employer
Identification Number)
1820 Metcalf Avenue, Thomasville, Georgia 31792
(Address of principal executive offices, including zip code)
(912) 226-5733
(Registrant's telephone number, including area code)
_____________________________
Securities registered pursuant to Section 12(g) of the Act:
Name of each
Title of each exchange on
class which registered
--------------- ----------------
Common Stock, New York Stock
$0.01 par value Exchange
Common Stock New York Stock
Purchase Rights Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
________________________
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, and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
The aggregate market value of the Registrant's outstanding
Common Stock held by non-affiliates of the Registrant on
June 24, 1996 was $71,154,649. There were 3, 236,179
shares of Common Stock outstanding as of June 24, 1996.
<PAGE> 1
DAVIS WATER & WASTE INDUSTRIES, Inc.
Annual Report on Form 10-K
For the Fiscal Year Ended April 30, 1996
Table of Contents
<TABLE>
<CAPTION>
Item Page
Number PART I Number
------ ------ ------
<C> <S> <C>
1. Business 3
2. Properties 12
3. Legal Proceedings 13
4. Submission of Matters to a Vote of Security Holders 13
PART II
5. Market for the Company s Common Stock and Related
Stockholder Matters 14
6. Selected Consolidated Financial Data 15
7. Management s Discussion and Analysis of 16
Financial Condition and Results of Operations
8. Financial Statements and Supplementary Data 24
9. Changes in and Disagreement with Accountants on
Accounting and Financial Disclosure 41
PART III
10. Directors and Executive Officers of the Company 42
11. Executive Compensation 44
12. Security Ownership of Certain Beneficial Owners
and Management 52
13. Certain Relationships and Related Transactions 54
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 55
SIGNATURES 61
INDEX OF FINANCIAL STATEMENT SCHEDULES 64
INDEX OF EXHIBITS 67
</TABLE>
<PAGE> 2
PART I
ITEM 1. BUSINESS
General
Davis Water & Waste Industries, Inc. (the "Company" or the
"Registrant") manufactures and markets products relating to
the distribution of water and the treatment of water and
wastewater. The Company markets a broad line of water
distribution equipment and supplies, including underground
pipe, pipe fittings, valves, fire hydrants, water meters and
related equipment. The Company believes that it is one of
the largest distributors of water distribution equipment and
supplies in the Southeast based on annual revenues from
sales of such products. The Company also designs,
engineers, manufactures, sells and installs water and
wastewater treatment and pumping equipment and distributes
certain process materials used to treat water and wastewater
to comply with applicable health and water quality
standards. The Company's products are sold from 33
distribution and sales facilities to more than 25,000
independent contractors, developers, industrial customers,
municipalities and other government agencies, and private
utilities located principally in the Southeastern,
Southwestern, Midwestern and Western areas of the United
States.
The Company was organized as a Georgia corporation in
1956 as the successor to a business which had operated since
1938. The Company has two wholly owned subsidiaries, The
Taulman Company ("Taulman"), which it acquired in August
1990, and a Mexican subsidiary, Grupo de Tratamiento de
Aguas Davis, S.A. de C.V., which it organized in October
1994. The Company discontinued substantially all of
Taulman's operations in fiscal 1994. See "Discontinuation
of Taulman Operations" below. As used herein, the term
"Company" refers to Davis Water & Waste Industries, Inc.,
its divisions and its wholly-owned subsidiaries, Taulman and
Grupo de Tratamiento de Aguas Davis, S.A. de C.V., unless
otherwise indicated.
Recent Developments
On June 10, 1996, the Company and United States Filter
Corporation ("U.S. Filter") entered into a definitive
agreement ( the "Merger Agreement") for the acquisition of
the Company by U.S. Filter. The acquisition is to be
effected through the merger of the Company into a wholly
owned subsidiary of U.S. Filter (the "Merger") and the
issuance to the shareholders of the Company of .933 share of
U.S. Filter Common Stock for each outstanding share of the
Company's Common Stock (the "Exchange Ratio"). The Exchange
Ratio is subject to adjustment in the event that the average
closing price of the U.S. Filter Common Stock during the 20
consecutive trading day period beginning on the 25th trading
day prior to the date the Company's shareholders vote on the
Merger (the "Average Market Price") is less than $28.00 per
share or more than $34.00 per share, in which event the
Exchange Ratio shall be equal to $26.12 (calculated by
multiplying the Exchange Ratio by $28.00) divided by the
Average Market Price or $31.72 (calculated by multiplying
the Exchange Ratio by $34.00) divided by the Average Market
Price, as the case may be. The Company may terminate the
Merger Agreement if the Average Market Price of the U.S.
Filter Common Stock is less than $25.25, and U.S. Filter may
terminate the Merger Agreement if the Average Market Price
is more than $37.25.
<PAGE> 3
At the effective time of the Merger, all outstanding
unexercised stock options of the Company, whether or not
then exercisable, will be converted into .933 share of U.S.
Filter Common Stock (the "Option Exchange Ratio"). The
Option Exchange Ratio is subject to adjustment in the same
manner as the Exchange Ratio, as described above.
The transaction is subject to various conditions,
including approval by the Company's shareholders, clearance
under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and pooling-of-interests accounting treatment for the
transaction. The transaction is expected to be closed
during the Company's second fiscal quarter ending October
31, 1996.
Discontinuation of Taulman Operations
In August 1990, the Company, through a wholly owned
subsidiary, purchased certain assets and assumed certain
liabilities of The Taulman Company, a privately held
pollution control business headquartered in Atlanta,
Georgia. Through May 1994, Taulman, through its Turbitrol
Instrumentation and Controls division ("Turbitrol"), was
engaged primarily in the design, manufacture and sale of
process equipment and control systems used in municipal
water and wastewater treatment facilities nationwide.
Through its Taulman Composting Systems division, Taulman
also marketed composting systems manufactured by others.
In fiscal 1994, Turbitrol accounted for substantially all of
Taulman's net sales, and the Taulman Composting Systems
division was an immaterial component of Taulman's operation.
In fiscal 1994, the Company terminated the operations
of Turbitrol due to continuing significant declines in sales
and relatively high levels of selling, general and
administrative expenses required to fulfill contractual
obligations. Turbitrol ceased bidding on new contracts,
terminated its sales force and will continue operations only
for the estimated two and one half year period from the
decision to shut down as necessary to complete its
obligations under existing contracts. In fiscal 1994 and
1993, Taulman's net sales were $15,871,000 and $24,739,000,
respectively, which equaled 7.8%, and 13.0%, respectively,
of the Company's net sales in such fiscal years. Taulman's
pre-tax operating (losses) income for such fiscal years were
($2,903,000) and $18,000, respectively. Taulman had net
sales of $4,843,000 and pre-tax operating loss of
($2,425,000) in fiscal 1996 and net sales of $11,252,000 and
pre-tax operating loss of ($2,158,000) in fiscal 1995. The
Taulman Composting Systems division began operating within
the Company's Davis Process division in June 1994. See Note
3 of Notes to Consolidated Financial Statements set forth in
Item 8 hereof.
Principal Products
The Company markets a broad line of water distribution
equipment and supplies purchased from independent
manufacturers and suppliers, including underground pipe,
pipe fittings, valves, fire hydrants, water meters and
related equipment. The Company also designs, engineers,
manufactures, sells and installs water and wastewater
treatment and pumping equipment and related control system,
and distributes certain process materials used to treat
water and wastewater to comply with applicable health and
water quality standards. For information regarding the
amount and percentage of net sales attributable to each of
<PAGE> 4
the Company's principal product classes for each of the past
three fiscal years, see "Item 7 Management s Discussion and
Analysis of Financial Condition and Results of Operations -
Results of Operations - Net Sales."
Water Distribution Equipment and Supplies .The divisions of
the Davis Distribution Group operate under the Davis Meter &
Supply, Taylor-Jett Co., Waterworks Equipment Company and
McAllen Pipe & Supply Co. names. These divisions supply
water, sewer and storm products and services primarily to
the contractor and municipal markets. These products
include pipe, valves, fire hydrants, water meters, fittings,
and other related equipment necessary to underground
construction. The Company believes that it is one of the
largest suppliers of water distribution and sewer products
in the Southeast based on annual revenues from the sales of
such products. The Company purchases more than 20,000
products from approximately 3,000 manufacturers and
suppliers located principally in the southeastern United
States. These products are marketed through a network of 25
service centers located in Arizona, California, Florida,
Georgia, Nevada, North Carolina, Tennessee, Texas and Utah.
Each service center covers a radius of 50 to 150 miles.
Each service center maintains an inventory of water and
sewer products that are sold to the industry at large. More
than 95% of orders are filled and shipped from the service
centers on the date that the order is placed. Products are
transported to customers through the use of leased vehicles,
with larger orders being shipped direct from the
manufacturer. All districts are electronically linked
through an on line system maintained at the Company's
headquarters in Thomasville, Georgia. The system gives the
individual service centers the ability to utilize inventory
located throughout the country to service their accounts.
This system also includes an inventory management system
which ensures that sufficient levels of inventory are
available at each service center.
Each service center is under the direction of both a
service center manager and a district manager. The service
center manager is responsible for all operational functions
of his or her service center, while the district manager is
primarily responsible for all sales and marketing within his
or her district. The Distribution Group sales manager is
responsible for the overall management of the Davis
Distribution Group. All major decisions affecting policy,
facilities, or capital outlays of the Davis Distribution
Group are reviewed by the Company's executive officers.
Water and Wastewater Treatment and Pumping Equipment
and Control Systems. The Company's Davco division
engineers, designs, manufactures, sells and installs water
and wastewater treatment and pumping equipment used in the
processing and handling of domestic and industrial water and
wastewater. This equipment is used to process water and
wastewater to comply with applicable health and water
quality standards.
The water and wastewater treatment equipment
manufactured by the Davco division is composed primarily of
fabricated and coated steel treatment plants. This equipment
is sold principally to commercial and residential land
developers, industrial plants and municipalities. Most of
such equipment is delivered to the job site, ready for
erection. The fully prefabricated wastewater treatment
systems are designed to process from 10,000 to 120,000
gallons of wastewater per day, thereby serving from 100 to
120 persons. The larger wastewater treatment plants process
up to 5 million gallons of wastewater per day and serve
<PAGE> 5
communities of up to 50,000 persons. The Davco division
manufactures a variety of products for inclusion in these
treatment plants, including denitrification filters,
traveling bridge filters, solids contact clarifiers,
clarifiers, aeration systems and selector processes.
The Davco\ EMU division's water and wastewater pumping
equipment consists of submersible pumps used in municipal,
industrial and privately owned systems for pumping
wastewater. These units are designed and built by the German
company EMU Unterwasserpumpen GmbH both for underground and
above ground installation and are used to pump wastewater to
centrally located treatment or collection points or to
maintain desired pressure in water distribution systems. The
equipment is sold principally to general contractors for
incorporation in utility systems being constructed for
municipalities, industries, governmental agencies and
private utilities.
Taking advantage of its expertise in steel fabrication
and erection, the Davco division provides specialty steel
fabrication and on-site construction erection services to
major contractors and industrial customers. These services
relate principally to the fabrication and installation of
steel components used in water and air pollution control
equipment.
Through May 1994, the Turbitrol division of Taulman was
engaged primarily in the design, manufacture, sale and
servicing of instrumentation, control and telemetry systems
primarily for municipal water and wastewater treatment
facilities. These systems provided for the monitoring and
storage of performance data and the computation of
sophisticated control strategies required for water and
wastewater treatment facilities. Turbitrol also
manufactured a broad line of remote telemetry units used in
the monitoring and control of potable water distribution
systems and wastewater collection systems. In fiscal 1994,
the Company terminated the operations of Turbitrol except to
the extent necessary to complete its obligations under
existing contracts. Turbitrol has ceased bidding on new
contracts and has terminated its sales force. See
"Discontinuation of Taulman Operations" above and Note 3 of
Notes to Consolidated Financial Statements set forth in Item
8 hereof.
In June 1994, the Taulman Composting Systems division
was consolidated within the Company's Davis Process
division. The composting operations were combined with the
Process Division's residuals services operations. The
Residuals Equipment and Services group designs and markets
wastewater residuals composting and drying systems utilizing
equipment and technology provided by others. The composting
systems consist of a completely enclosed in-vessel process
for the biological decomposition and stabilization of the
organic residuals from wastewater treatment facilities. The
drying systems utilize proprietary indirect drying
technology which efficiently produces dehydration and
stabilization of the residuals. Both the composting and
drying systems process and generate residuals which meet
regulatory criteria for the safe and beneficial reuse of
these nutrient rich, organic materials. These systems are
sold to municipal and industrial customers and are capable
of processing compost in volumes ranging from less than one
to several hundred dry tons per day.
The in-vessel composting systems utilize patented
technology for which Taulman had the exclusive license to
market in North America, and these systems were marketed by
the Taulman Composting Systems division through May 1994.
In the fourth quarter of fiscal 1994, the Company, in
response to changing marketplace demands and the development
by others of more economical methods for waste composting,
elected to forego the exclusive North American marketing
<PAGE> 6
rights to the technology and to write-off the licensing
agreement. See Note 3 of Notes to Consolidated Financial
Statements and Discontinuation of Taulman Operations
above.
The Company's water and wastewater treatment equipment
and special fabrications are produced at the Company's
manufacturing facilities. These products generally are
designed, engineered and custom manufactured for a specific
customer application. The process usually involves a
consulting engineer who specifies the product for use in
conjunction with a project, a contractor who purchases the
product from the Company for installation on the project and
an owner who is the end user of the product. The owner may
be either a governmental body (such as a municipality, sewer
district or state or federal agency) or a private entity
(such as a developer, industrial manufacturer or motel or
campground owner).
In connection with the water and wastewater treatment
products manufactured by the Company, a time interval of 12
weeks generally is experienced between the time of
acceptance of the Company's bid and final approval of design
and engineering specifications by customers, their engineers
and any regulatory agencies. After such approval is granted,
there is typically a further time interval of approximately
25 weeks, depending on the complexity and size of the units
in question, between approval for construction and shipment
and the installation of the completed products. The
Company's water and waste water control systems and
composting systems generally experience a time interval of
between six months and two years from the time of bid
acceptance to contract completion. In recognition of the
substantial time interval between the submission of a bid by
the Company and completion of the contract, the Company
protects itself through contract clauses allowing for the
renegotiation of the selling price or cancellation of the
contract if specified time limits are not met.
The Company's specialty metal products and on-site
erection services normally are sold to major contractors
responsible for the entire construction or modification of
the facility, and normally the construction period extends
over a period of up to three years. As a result, the Company
has contract provisions which provide for price escalations
based on changes in published indices for material and labor
and for progress payments for the equipment manufactured.
Operations and management of the Davco division are the
responsibility of a Company Vice President/Division General
Manager, while operations and management of Turbitrol are
the responsibility of the President of Turbitrol. Major
decisions affecting Davco or Turbitrol policy, facilities or
capital outlays are reviewed by the Company's executive
officers.
Process Materials and Services. The Company's Davis
Process division supplies a product line of material used to
control malodorous hydrogen sulfide in wastewater collection
systems, to treat water and wastewater to comply with
applicable health and water quality standards and to
condition sludge for disposal. The products also are used in
certain areas to remove phosphorous from discharged waste.
The raw material for this product line is shipped to the
Company in solid or granular form and stored in the
Company's facilities in California, Delaware, Florida,
Georgia, Illinois, South Carolina and Texas. At these
locations, other minor component materials are added and the
resulting mixture is shipped to customers, which consist
primarily of municipalities and private water and wastewater
treatment facilities.
<PAGE> 7
The Process division has developed and patented a
series of multistage air scrubber systems, sold under the
"Polystage" trademark, used for the treatment and removal
of odors from contaminated air. The Process division sells,
manufactures, installs and maintains these "Polystage"
scrubber systems. In connection with the scrubber systems,
the Process division also markets and services state of the
art hydrogen sulfide monitoring and control equipment used
to document and control the performance of these systems.
The Process division also has developed and patented a
biological process control system, "Alka-Pro", which
incorporates leading edge technology to provide operators of
biological wastewater treatment systems a means of
maximizing the level of treatment and minimizing the
operating cost.
Operations and management of the Davis Process division
are under the direction of a Vice President/Division General
Manager who is responsible for purchasing, warehousing,
processing, marketing, distributing and selling the product
lines. Major decisions affecting division policy, facilities
or capital outlays are reviewed by the Company's executive
officers.
Marketing
The Company's water distribution equipment and supplies
are marketed by approximately 63 Company-employed salesmen,
each of whom operates from one of the 25 service center
warehouses and reports to the service center district
manager. Salesmen call directly on customers within their
assigned territories and work with architects, engineers and
government agencies to assist customers in determining their
product needs. Salesmen are compensated by a base salary
plus a commission based on a percentage of gross profits
from their sales.
The Davco division's water and wastewater treatment and
pumping equipment is marketed through a network of
approximately 55 manufacturers' representative organizations
and 5 Company-employed salesmen. The manufacturers'
representatives are independent businessmen who are paid on
a commission basis and have the exclusive right to sell the
Company's products in a specified geographical area. The
Company-employed salesmen are compensated by salary and
incentives based on the volume and profitability of their
sales. The manufacturers' representatives and
Company-employed salesmen call on and work with consulting
engineers and owners in an effort to have them specify the
Company's products for use in a project. They also work with
regulatory agencies to assure approval of the Company's
products for the uses specified. They then attempt to make
the sale through a negotiated price or a competitive bidding
process. A general sales manager and a regional sales staff
are responsible for the activities of the manufacturers'
representatives, and the Company's home office sales support
staff provides technical assistance and pricing information
for the manufacturers' representatives and Company-employed
salesmen.
The Company's specialty metal products and on-site
erection services are marketed by a sales staff under the
direction of a general sales manager. Sales staff personnel
are compensated on a fixed salary plus an incentive based on
the profitability of the sales of the product or by
commissions. The sales staff calls on owners, contractors
and engineers in an effort to have them specify and approve
the Company's products for use in a project. They then
attempt to make the sale either through a negotiated price
or a competitive bidding process. A home office sales
support staff provides technical assistance and pricing
information for the field sales staff and in some instances
quotes the price of the job directly to the customer.
<PAGE> 8
Sales of the Davis Process division's process
materials, odor control equipment, residuals systems,
process control technology and services are made by 14
Company-employed salesmen who directly service California,
Colorado, Delaware, Florida, Georgia, Kentucky,
Massachusetts, Missouri, South Carolina, Texas and
Washington. Salesmen call directly on the end users and
consulting engineers. They are compensated with a base
salary plus commissions, based on a percentage of gross
profits from their sales.
The Company presently serves more than 25,000
customers. No customer accounts for more than 5% of net
sales annually. For information regarding the amount of net
sales, operating income (loss) and assets attributable to
each of the Company's principal geographic areas for each of
the past three fiscal years, together with information
regarding export sales for each of such fiscal years, see
"Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations - Overview."
Market Factors
The Company's sales of water distribution equipment and
supplies are significantly affected by the level of housing
starts, which in turn is impacted by the level of interest
rates and the overall health of the economy. Sales of the
Company's water and wastewater treatment and pumping
products, composting systems, specialty metal products and
on-site erection services are dependent to a large extent
upon the amount of capital spending by industry and
governmental bodies. Sales of process materials products and
services are dependent on operating expenditures of
municipal and industrial water and wastewater treatment
customers.
In addition, the enactment and enforcement of federal
and state laws relating to water quality standards also may
materially influence the level of sales of all of the
Company's products. The Company's business therefore is
linked to some extent to certain water quality control
standards imposed by the Environmental Protection Agency
("EPA") under the Clean Water Act. The Clean Water Act and
related EPA regulations establish comprehensive and, in some
cases, stringent guidelines for the control of toxic
pollutants. Of particular importance to the Company is the
level of enforcement maintained with respect to industrial
wastewater. If regulated entities fail to comply with the
EPA regulations, they may be faced with civil or criminal
penalties. In addition, the government's financial
commitment to assist with water pollution control and the
enforcement penalties for violating water quality control
standards create a need for the Company's products. At the
same time, other regulatory initiatives, combined with
actual and potential cutbacks in legal requirements and
funding for the EPA, have the potential to reduce the future
market for municipal and industrial water and wastewater
treatment equipment. The net effect of these competing
factors cannot be predicted.
Sources and Availability of Supplies
Purchases of products for resale, raw materials and
components are made from various unaffiliated manufacturers
and vendors. In fiscal 1996, purchases from the Company's
three largest suppliers accounted for approximately 10.4%,
6.0% and 4.5%, respectively, of total purchases made by the
Company. The Company has not experienced, and does not
<PAGE> 9
anticipate, any shortages or other difficulties in obtaining
any required materials.
Backlog of Orders
Backlogs for water treatment and pumping products
result from the interval between the date of receipt by the
Company of the purchase contract and the shipment,
completion or on-site erection of the equipment. The
backlog of firm orders for the Company's water and
wastewater treatment and pumping products and control
systems as of April 30, 1996 was approximately $17,000,000,
which approximated the Company s backlog at the same date in
1995. The Company anticipates that all of its backlog as of
April 30, 1996 will be shipped within twelve months
thereafter. See "Principal Products - Water and Wastewater
Treatment and Pumping Equipment and Control Systems" above.
There is no material backlog for water distribution
equipment and supplies since these orders normally are
shipped within one to ten days following receipt of an
order. Process materials and services frequently are
provided over a defined contract period as required by each
contract.
Competitive Conditions
In connection with the marketing of water distribution
equipment and supplies, the Company competes with a large
number of independent wholesalers, other distribution chains
similar to the Company and manufacturers who sell directly
to customers. The principal methods of competition include
product knowledge by the sales force, prompt delivery
following receipt of an order, service and price. Due to the
various sources and methods of competition and types of
products sold by the Company, the Company knows of no
reliable statistics upon which there might be based an
estimate of the Company's relative competitive position in
this market. However, the Company believes that it is one of
the largest distributors of water distribution equipment and
supplies in the Southeast based on annual revenues from
sales of such products.
The Company encounters substantial competition in its
markets for water and wastewater treatment and pumping
equipment and control systems from several competitors which
operate in the Company's major marketing areas. In addition,
the Company competes with a substantial number of companies
with regard to its specialty metal and process materials
and services. The Company knows of no reliable statistics
which might be used to estimate the Company's relative
competitive position in these markets. No one competitor is
considered dominant. The principal methods of competition in
the markets for water and wastewater treatment and pumping
equipment and control systems are price, timely product
delivery, service and product knowledge.
The Company believes that in its markets, its
capabilities meet or exceed the capabilities of its
competitors.
Product Warranties and Insurance
The Company warrants the water and wastewater treatment
and pumping equipment, control and composting systems and
specialty metal equipment manufactured by it normally for a
period of one year against defects in materials and
workmanship. The Company does not warrant products purchased
from other manufacturers beyond the warranty expressly
provided by such manufacturer nor does the Company warrant
<PAGE> 10
its process materials. Warranty expense was approximately
$444,000, $388,000 and $748,000 for fiscal years 1996, 1995
and 1994, respectively. The Company had accruals for
warranty costs of $1,022,000 and $874,000 as of April 30,
1996 and 1995, respectively.
The Company maintains product liability insurance with
total coverage of $20,000,000 for any single occurrence
relating to injury or damage to property. The Company,
however, distributes and transports a process material which
is classified by the Company's insurance carrier as a
pollutant and therefore is excluded from insurance coverage.
In addition, such material is designated by the EPA as a
hazardous material. If released into drinking water sources
in sufficient quantities, this product could be toxic. The
product also may corrode metal products with which it comes
into contact. The Company self-insures the risks associated
with this product. The Company has distributed and
transported this product for over twelve years, and no
claims have been filed or governmental inquiries or actions
commenced against the Company with respect to the product.
Management believes the Company's insurance coverage is
adequate for the other types of business which it conducts.
No assurance can be given, however, that events will not
occur which result in damage claims against the Company in
excess of policy limits or outside the coverage maintained
by the Company or which result in governmental actions or
penalties against the Company. Such claims, actions or
penalties could have a material adverse effect on the
Company.
Product Development
The Company maintains a product development and
enhancement program to modify and develop product lines and
processes to meet the rapidly changing opportunities in its
markets. Products developed by the Davis Process division
include "Alka-Pro", a patented biological process control
system for the effective and efficient control of biological
treatment processes. Products developed by the Company's
Davco division include a sequencing batch reactor for
industrial wastes, the "Gravisand" traveling bridge filter for
concrete tankage, the "Denitrifilt" denitrification filter for
biological removal of total nitrogen and mechanical
suspended solids removal, an oxidation ditch for
municipalities, and the Bio-Web process enhancement media.
The Company spent approximately $334,200, $230,600 and
$762,900 on its product development program in fiscal 1996,
1995 and 1994, respectively. The Company must incur a
certain amount of product development costs to meet the
rapidly changing advancements in technology. During the
last two years the Company has reduced the amount spent on
product development due to management's effort to control
cost.
Management believes that the goodwill associated with
the tradenames of the Company's various divisions is of
significant value to the Company but does not consider any
of the Company's patents, trademarks, licenses, franchises
or concessions to be of material importance to its business.
Employees
On May 31, 1996, the Company employed 631 persons, of
which 36 were in executive and administrative positions, 82
were sales personnel, 32 were in engineering positions, 112
<PAGE> 11
were office personnel and 369 were in production,
warehousing and trucking positions. None of the Company's
employees is subject to collective bargaining agreements.
The Company believes that its relations with its employees
are good.
Environmental Compliance Matters
The Company does not anticipate that compliance by it
with present provisions of federal, state and local statutes
and regulations which regulate the protection of the
environment will have any material effect upon the Company's
capital expenditures, earnings or competitive position in
the foreseeable future. The Company is not aware of any
pending or anticipated governmental inquiry or action
against the Company for noncompliance with environmental
laws and regulations.
ITEM 2. PROPERTIES
The principal executive offices of the Company are
located in an 18,500 square-foot Company-owned building. The
Company also owns a water and wastewater treatment
manufacturing facility totaling 67,600 square feet adjacent
to the Company's executive offices. All of these facilities
are located on 28 acres of land in Thomasville, Georgia. The
Company also owns or leases 25 water distribution and
supplies warehouses, and 7 process material warehouses in 12
states. Additionally, Taulman leases an executive and
administrative office in the Atlanta, Georgia area which
contains a total of 80,100 square feet of space. The Company
believes that its facilities and equipment are in good
condition and sufficient to meet the Company's present
needs. The following table sets forth information with
regard to the facilities operated by the Company and Taulman
as of May 31, 1996.
<PAGE> 12
<TABLE>
<CAPTION>
Total
Square
Type of Total Footage
State Facility Facilities (incl. land) Owned Leased
- ----------------- -------------------------------------------------- ---------- ------------ ------- --------
<S> <S> <C> <C> <C> <C>
Arizona Water distribution and supplies service center
warehouse 1 46,857 1
California Water distribution and supplies service center
warehouse 1 127,197 1
Process material warehouse 1 991 1
Delaware Process material warehouse 1 48,200 1
Florida Water distribution and supplies service center
warehouse 9 477,930 4 5
Process material warehouse 1 354,313 1
Georgia Water distribution and supplies service center
warehouse 3 200,166 1 2
Water and wastewater treatment manufacturing
facilities 1 737,910 1
Process material warehouse 1 10,000 1
Principal executive and administrative office 1 100,150 1
Taulman executive and administrative offices 1 80,100 1
Illinois Process material warehouse 1 86,528 1
Nevada Water distribution and supplies service center
warehouse 1 68,340 1
North Carolina Water distribution and supplies service center
warehouse 3 132,200 1 2
South Carolina Process material warehouse 1 10,500 1
Tennessee Water distribution and supplies service center
warehouse 2 81,850 2
Texas Water distribution and supplies service center
warehouse 4 849,078 4
Process material warehouse 1 13,500 1
Utah Water distribution and supplies service center
warehouse 1 25,879 1
--- ---------- --- ---
Total 35 3,451,689 9 26
=== ========== === ===
SUMMARY
-------
Water distribution and supplies service center
warehouses 25 2,009,497 6 19
Process material warehouses 7 524,032 1 6
Water and wastewater treatment manufacturing
facilities 1 737,910 1
Taulman executive and administrative office 1 80,100 1
Executive and administrative offices 1 100,150 1
--- --------- --- ---
Total 35 3,451,689 9 26
=== ========= === ===
</TABLE>
The Company also owns or leases approximately 60 transport tractors and
delivery trucks and 80 transport trailers used in the sale and
distribution of its products.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party
or of which any of its property is the subject other than routine
litigation incidental to business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted by the Company to a vote of its
stockholders during the fiscal quarter ended April 30, 1996.
<PAGE> 13
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Stock Prices and Cash Dividends
The Company's Common Stock is listed on the New York Stock Exchange and
traded under the symbol "DWW." The table below sets forth the high and
low closing sales prices of the Common Stock and the cash dividends paid
per share for each quarter during fiscal 1996 and fiscal 1995.
<TABLE>
<CAPTION>
1996 1995
--------------------------------------------- ----------------------------------------------
Dividends Dividends
paid per paid per
High Low share High Low share
--------------- --------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $13.875 $ 9.375 $0.140 $ 8.875 $7.500 $0.000
Second Quarter 16.875 12.875 0.000 9.250 7.875 0.000
Third Quarter 17.125 13.750 0.150 10.000 7.625 0.080
Fourth Quarter 19.000 13.750 0.100 10.000 8.500 0.000
</TABLE>
As of June 14, 1996, there were approximately 603 record holders of the
Company's Common Stock.
The payment of cash dividends is approved by the Board of Directors and
depends, among other factors, on earnings, capital requirements, and the
operating and financial condition of the Company. Additionally, under the
terms of the Company's line of credit with SunTrust Bank Central Florida,
National Association ("SunTrust Bank"), any cash dividend payment requires
the prior approval of SunTrust Bank unless certain financial requirements are
met. See Note 5 of Notes to Consolidated Financial Statement set forth in
Item 8 hereof.
During the third quarter of fiscal 1992, as a result of losses sustained by
the Company, the Board of Directors elected to forego the payment of
quarterly cash dividends. Due to improved operating results during fiscal
1995, the Board of Directors, with the approval of SunTrust Bank, resumed
payment of semi-annual cash dividends. Cash dividends of $0.08 per share
were paid during the third quarter of fiscal 1995, and cash dividends of
$0.14 per share were paid in the first quarter of fiscal 1996. As a result
of continued improvements in profitability, the Board resumed payment of
quarterly cash dividends in the third quarter of fiscal 1996. During the
third and fourth quarters of fiscal 1996 the Board of Directors authorized
cash dividends of $0.15 and $0.10 per share, respectively. On June 14,
1996, the Company's Board of Directors authorized a cash dividend of $0.11
per share, which is payable on July 3, 1996 to stockholders of record on
June 24, 1996.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------------------------------------------------------------
(In thousands, except share
data, percentages and ratios) 1996 1995 1994 1993 1992
--------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Net sales.................. $226,489 $215,649 $202,621 $190,990 $186,719
Income (loss) before
income taxes and the
cumulative effect of the
change in the method of
accounting for income
taxes......... $ 10,076 $ 5,807 ($ 8,395) $ 390 ($ 1,250)
Net income (loss) before
the cumulative effect of
the change in the method
of accounting for income
taxes.................... $ 5,749 $ 3,448 ($ 5,340) $ 194 ($ 844)
Cumulative effect of the
change in the method of
accounting for income
taxes.................... $ 0 $ 0 $ 0 $ 459 $ 0
Net income (loss)...... $ 5,749 $ 3,448 ($ 5,340) $ 653 ($ 844)
PRIMARY EANINGS PER SHARE:
Net income (loss) per
share before the
cumulative effect of the
change in the method of
accounting for income
taxes................. $1.78 $1.06 ($1.64) $0.06 ($0.26)
Cumulative effect per
share of the change in
the method of accounting
forincome taxes.......... $0.00 $0.00 $0.00 $0.14 $0.00
Net income (loss) per
share................... $1.78 $1.06 ($1.64) $0.20 ($0.26)
FULLY DILUTED EARNINGS PER
SHARE:
Net income (loss) per
share before the
cumulative effect of the
change in the method of
accounting for income
taxes.......... $1.72 $1.05 ($1.64) $0.06 ($0.26)
Cumulative effect per
share of the change in
the method of accounting
for income taxes... $0.00 $0.00 $0.00 $0.14 $0.00
Net income (loss) per
share.................... $1.72 $1.05 ($1.64) $0.20 ($0.26)
Cash dividends per share $0.39 $0.08 $0.00 $0.00 $0.10
Average shares outstanding 3,236 3,261 3,261 3,265 3,266
Gross margin as a
percentage of net sales. 16.7% 14.8% 14.8% 16.5% 15.5%
Net income (loss) as a
percentage of net sales 2.5% 1.6% -2.6% 0.3% -0.5%
Net income (loss) as a
percentage of beginning
stockholders' equity. 22.7% 15.5% -19.3% 2.4% -3.0%
AT YEAR-END
Total assets............ $74,632 $81,536 $82,085 $79,341 $82,402
Working capital....... 25,805 30,593 31,731 33,782 41,891
Current ratio........... 1.74 1.78 1.84 2.19 2.98
Long-term debt, less
current portion..... 6,845 14,787 19,425 20,719 30,051
Stockholders' equity.. 29,657 25,332 22,309 27,635 27,089
Ratio of stockholders'
equity to total
liabilities........ 0.66 0.45 0.37 0.53 0.49
Stockholders' equity per
share.............. $9.16 $7.77 $6.83 $8.50 $8.30
</TABLE>
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The Company generates the major portion of its revenues
from its traditional business of marketing water
distribution equipment and supplies, including underground
pipe, pipe fittings, valves, fire hydrants and water
meters. These products are purchased from numerous
manufacturers for distribution through a network of 25
service center warehouses in 9 southeastern, southwestern
and western states. These products are sold principally to
independent contractors, industrial customers,
municipalities and other government agencies and private
utilities. The Company believes that it is one of the
largest distributors of water distribution equipment and
supplies in the Southeast, based on annual sales of such
products.
The Company also offers comprehensive, turnkey
solutions to the growing public concern about water quality
and wastewater treatment. The Company custom designs,
manufacturers and installs water and wastewater treatment
equipment custom tailored for municipal and industrial use
and distributes related materials that enable municipalities
and industry to meet applicable health and water quality
standards. Water treatment plants and wastewater systems
that process up to five million gallons of water per day are
among the large systems built by the Company at its
Thomasville, Georgia facilities and sold throughout the
United States by the Company's sales force and
manufacturers' representatives. The Company also sells
process materials that are used to control odor in municipal
wastewater collection and treatment systems and other
process materials that treat water and condition sludge for
disposal. These products are distributed by the Company
through its own sales force and manufacturers'
representatives primarily to municipal and industrial
customers.
The following table illustrates the contributions to
the Company's annual net sales, operating income (loss), and
assets attributable to regions of the United States served
by the Company. Export sales are included in "Other".
<TABLE>
<CAPTION>
Operating
(Dollars in thousands) Net Sales Income (Loss) Assets
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fiscal 1996:
Southeastern $142,062 63% $ 6,087 60% $59,745 80%
Midwestern 38,683 17% 1,844 18% 8,107 11%
Western 8,558 4% 58 1% 1,473 2%
Rocky Mountain 27,921 12% 1,487 15% 4,813 6%
Other 9,265 4% 600 6% 494 1%
-------- ---- ------- ---- ------- ----
$226,489 100% $10,076 100% $74,632 100%
======== ==== ======= ==== ======= ====
Fiscal 1995:
Southeastern $131,569 61% $4,236 73% $65,787 81%
Midwestern 33,777 16% 1,018 18% 7,911 10%
Western 12,717 6% (860) -15% 1,819 2%
Rocky Mountain 24,689 11% 1,056 18% 5,316 6%
Other 12,897 6% 357 6% 703 1%
-------- ---- ------ ----- ------- ----
$215,649 100% $5,807 100% $81,536 100%
======== ==== ====== ===== ======= ====
Fiscal 1994:
Southeastern $123,452 61% ($3,449) 41% $62,398 76%
Midwestern 32,236 16% (1,602) 19% 7,914 10%
Western 17,130 8% (361) 4% 5,822 7%
Rocky Mountain 16,624 8% 491 -6% 5,248 6%
Other 13,179 7% (3,474) 42% 703 1%
-------- ---- ------- ----- ------- ----
$202,621 100% ($8,395) 100% $82,085 100%
======== ==== ======= ===== ======= ====
</TABLE>
The Company's export sales in fiscal 1996, 1995 and 1994
totaled $1,737,000, $1,120,000 and $1,776,000, respectively.
Export sales consisted principally of water and wastewater
treatment equipment and were made primarily in Canada,
Mexico and Puerto Rico.
Results of Operations
Net Sales
Net sales for fiscal 1996 increased 5.0% as compared to
fiscal 1995, while fiscal 1995 net sales increased 6.4% as
compared to fiscal 1994. Set forth below is sales
information for the past three fiscal years regarding the
Company's principal product classes:
<PAGE> 17
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------------------------------------------------------
1996 1995 1994
---------------------------------------------------------------------------------------------
(Dollars in thousands) Amount Percent Amount Percent Amount Percent
-------------------------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Water distribution
equipment and supplies:
Pipes and fittings...... $ 91,826 40% $ 92,862 43% $ 76,197 38%
Valves, hydrants, water
meters and accessories. 78,286 35% 73,960 34% 68,231 34%
-------- ---- -------- ------ -------- ------
170,112 75% 166,822 77% 144,428 72%
-------- ---- -------- ------ -------- ------
Water and wastewater
equipment:
Treatment equipment..... 22,965 10% 20,721 10% 33,013 16%
Pumping equipment....... 8,102 4% 6,234 3% 6,678 3%
Process materials and
services............... 25,310 11% 21,872 10% 18,502 9%
-------- ---- -------- ------ -------- ------
56,377 25% 48,827 23% 58,193 28%
-------- ---- -------- ------ -------- ------
Total $226,489 100% $215,649 100% $202,621 100%
======== ==== ======== ====== ======== ======
</TABLE>
Net sales by the Company's water distribution business
increased by 2.0% in fiscal 1996 as compared to fiscal 1995
and increased by 15.5% in fiscal 1995 when compared to
fiscal 1994. The increase in net sales in each period is
attributed to increased activity in the commercial and
residential land development and construction markets as a
result of the improvement in the national economy and the
increased efforts by the Company's sales force to increase
sales. This increased activity led to an increased demand
for the Company's water distribution products, which
resulted in both increased sales volume and generally higher
per unit prices. The slower rate of growth during fiscal
1996 reflects the slower rate of growth in the overall
economy during that period.
Net sales by the Company's water and wastewater
treatment business increased by 15.5% in fiscal 1996 as
compared to fiscal 1995 and decreased by 16.1% in fiscal
1995 as compared to fiscal 1994. The increase in water and
wastewater treatment sales for fiscal 1996 as compared to
fiscal 1995 is attributed to the improvement in the economy.
The decrease in water and wastewater treatment sales for
fiscal 1995 is a direct result of the Taulman shutdown in
the fourth quarter of fiscal 1994. Operating results for
fiscal 1995 and fiscal 1996 exclude the operations of the
Turbitrol division of Taulman. See Note 3 of Notes to
Consolidated Financial Statements set forth in Item 8
hereof. Excluding the effects of the Taulman shutdown, net
sales by the remainder of the water and wastewater treatment
business increased by 10.8% in fiscal 1995 as compared to
fiscal 1994. The increase in net sales was due to the
improvement in the economy, which resulted in an increase in
the volume of products sold.
Cost of products sold
The gross profit margin (the difference between net
sales and cost of products sold expressed as a percentage of
net sales) was 16.7% for fiscal 1996 and 14.8% for both
fiscal 1995 and 1994. The overall increase in the margin
for fiscal 1996 as compared to fiscal 1995 resulted from
management s efforts to increase margins through improved
product mix and focus on products with higher margins. The
gross profit margin for fiscal 1995 as compared to fiscal
1994 remained unchanged, although the gross profit margin
for fiscal 1995 excluded the operating results of the
<PAGE> 18
Turbitrol division of Taulman as a result of management s
decision to shut down the Turbitrol division in the fourth
quarter of fiscal 1994. See Note 3 of Notes to Consolidated
Financial Statements set forth in Item 8 hereof.
Selling, general and administrative expenses
When measured as a percentage of net sales, selling,
general and administrative expenses were 11.9%, 11.4%, and
14.0% for fiscal 1996, 1995 and 1994, respectively. The
increase in selling, general and administrative expense as a
percentage of net sales in fiscal 1996 as compared to fiscal
1995 is due to increased levels of incentive compensation,
including stock compensation, earned by management and
employees, which resulted from improved operating results
and increases in the market value of the Company's stock
during the year. The decrease in selling, general and
administrative expense as a percentage of net sales for
fiscal 1995 as compared to fiscal 1994 is attributed to the
6.4% increase in sales and a $3,978,000 decrease in
expenses. The decrease in expenses is primarily due to the
exclusion of the operating results of Taulman from the
fiscal 1995 operating results and management's continuing
efforts to reduce costs where possible.
Interest expense
Interest expense decreased by 23.5% in fiscal 1996 as
compared to fiscal 1995 and increased by 6.6% in fiscal 1995
as compared to fiscal 1994. The decrease in fiscal 1996
compared to fiscal 1995 was due primarily to the reduction
of $4,144,000 or 23.5% in the Company's average borrowing,
while the average borrowing rate remained relatively
unchanged. The reduction in the Company's average
borrowings occurred because of management s efforts to
control costs and levels of inventory and a reduction in the
days to collect accounts receivable. The increase in fiscal
1995 compared to fiscal 1994 was due primarily to an
increase in the average borrowing rate, despite a decline in
the average amount of long-term and short-term debt. During
fiscal 1995, the Company's average borrowing rate increased
160 basis points, or 25.4%, while average borrowings
declined by $3,482,000, or 16.5%, when compared to fiscal
1994. The increase in the average borrowing rate was due to
higher rates which were established in connection with a
renegotiation of the SunTrust Bank revolving loan agreement
during fiscal 1994. See Note 5 of Notes to Consolidated
Financial Statements set forth in Item 8 hereof. The
decrease in average borrowings from fiscal 1995 to fiscal
1994 was a result of management's continued efforts to
control inventories and improvements in average days to
collect accounts receivable.
Provision (benefit) for income taxes
The effective income tax provision (benefit) rates for
fiscal 1996, 1995 and 1994 were 42.9%, 40.6% and (36.4%),
respectively. The effective tax rate for fiscal 1996 was
higher than the federal statutory rate due to the impact of
state income taxes, an increase in the nondeductible portion
of meals and entertainment expenses and the nondeductible
portion of the accrual for compensation expense related to
incentive stock options outstanding. The effective tax rate
for fiscal 1995 was higher than the federal statutory rate
due to the impact of state income taxes and an increase in
the nondeductible portion of meals and entertainment
expenses. The Omnibus Budget Reconciliation Act of 1993
("OBRA"), which was enacted on August 10, 1993, raised the
statutory corporate income rate from 34% to 35% on taxable
income in excess of $10,000,000 and limited deductibility of
<PAGE> 19
meals and entertainment expenses. Based upon OBRA's
enactment date, OBRA did not impact fiscal 1994 results of
operations, but by limiting the deduction of meals and
entertainment costs, OBRA increased income tax expense
during fiscal 1996 and 1995 by approximately $87,000 and
$89,000, or $.03 and $.03 per share, respectively.
In the second quarter of fiscal 1994, the Company
agreed to a settlement with the Internal Revenue Service
("IRS") in connection with its examination of the Company's
federal income tax returns for the four years ended April
30, 1992. The IRS adjustments related principally to the
timing of recognition of certain expense items for tax
purposes. The aggregate amount allocated to various
identifiable intangible assets and their weighted average
lives were not significantly changed. The effects of these
adjustments did not materially impact the Company's results
of operations or financial position.
Liquidity and Capital Resources
The primary sources of liquidity for the Company are
funds generated internally from operations and bank
borrowings. Set forth below for the past three years is
information regarding the sources and amounts of internally
generated funds:
<TABLE>
<CAPTION>
Year Ended April 30,
------------------------------------------------------------
(In thousands) 1996 1995 1994
----------------------------- ------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss)............ $5,749 $3,448 ($5,340)
Depreciation and amortization 1,495 2,110 2,689
Deferred taxes............... 469 (430) (4,536)
Change in the Taulman reserve (2,425) (1,480) 8,895
------ -------- --------
$5,288 $3,648 $1,708
====== ======== ========
</TABLE>
When internally generated funds have been insufficient
to support operations, capital expenditures and
acquisitions, the Company has been able to borrow funds to
meet its needs.
At April 30, 1996, the Company had $24,657,000 of
available borrowing capacity under its revolving loan
agreement with SunTrust Bank. These available funds,
together with a cash balance of approximately $1,720,000,
placed the Company's potential cash availability at
$26,377,000 as of April 30, 1996. See Note 5 of Notes to
Consolidated Financial Statements set forth in Item 8
hereof. Management believes that the Company's internally
generated funds and the amount available under the revolving
term loan agreement are sufficient to support its activities
for the foreseeable future. At the present time, the Company
has no commitments for significant capital expenditures or
acquisitions of other businesses.
The Company's working capital decreased in fiscal 1996
by $4,788,000 when compared to fiscal 1995. The decrease in
working capital was due primarily to decreases of
$2,026,000, $4,606,000 and $976,000 in cash, accounts
receivable and inventories, respectively, offset by a
$4,056,000 decrease in accounts payable. The Company's
working capital decreased in fiscal 1995 by $1,138,000 when
compared to fiscal 1994. This decrease in working capital
was due primarily to an increase in accounts payable of
$2,921,000 offset by a decrease in inventories of
$1,748,000. Set forth below is the Company's working
capital position and certain liquidity comparisons at the
dates indicated:
<TABLE>
<CAPTION>
Year Ended April 30,
----------------------------------------------------------
(In thousands) 1996 1995 1994
------------------------------ ----------------------------------------------------------
<S> <C> <C> <C>
Working capital............... $25,805 $30,593 $31,731
------- ------- -------
Cash.......................... 1,720 3,746 2,100
Accounts receivable, net...... 35,189 39,795 39,158
Inventories................... 17,802 18,778 20,526
------- ------- -------
54,711 62,319 61,784
Accounts payable.............. (20,102) (24,158) (21,237)
Current portion of long-term
debt......................... (135) (249) (216)
------- ------- -------
$34,474 $37,912 $40,331
======= ======= =======
</TABLE>
The two most significant assets of the Company are
accounts receivable and inventory. The Company measures the
effectiveness of its accounts receivable management program
by a calculation which estimates the number of days which it
takes the Company to collect accounts receivable. For
fiscal 1996, the Company's average number of days to collect
its accounts receivable decreased by 7.7 days as compared to
fiscal 1995. The decrease in days outstanding in fiscal
1996 when compared to fiscal 1995 occurred as a result of a
decrease in accounts receivable of approximately $4,606,000,
or 11.6%, despite an increase in net sales of 5.0%. The
decrease in average days outstanding in fiscal 1995 when
compared to fiscal 1994 reflected an increase in accounts
receivable of $637,000, or 1.6%, despite an increase in net
sales of 6.4%. The decrease in the average days to collect
accounts receivable has resulted from continuing management
efforts to collect receivables on a timely basis.
The Company measures the effectiveness of its inventory
management program by a calculation which uses average
quarterly inventory amounts to estimate the number of times
inventory turns on an annual basis. For fiscal 1996 and
1995, the Company's inventory turns increased by
approximately half a complete turn when compared to fiscal
1995 and 1994, respectively. These increases are due to
management's efforts to maintain a lower level of inventory
while continuing to ensure adequate product availability.
<TABLE>
<CAPTION>
Year Ended April 30,
-----------------------------------------------------
1996 1995 1994
------------------------------ -----------------------------------------------------
<S> <C> <C> <C>
Average days to collect
accounts receivable.......... 53.3 61.0 65.6
Inventory turns............... 9.8 9.2 8.7
</TABLE>
Average long-term and short-term borrowings decreased
by $4,144,000, or 23.4%, during fiscal 1996 when compared to
fiscal 1995. Average long-term and short-term borrowings
decreased by $3,482,000, or 16.5%, during fiscal 1995 when
compared to fiscal 1994. These decreases are due to the
improved profitability of the Company, management's efforts
to improve collection of accounts receivable and the
Company's computerized inventory program which enables the
<PAGE> 21
Company to better manage its inventory levels and its
purchasing program. The Company's average borrowing rate
decreased 10 basis points during fiscal 1996 when compared
to fiscal 1995 due to lower rates the Company was able to
obtain under the SunTrust Bank revolving loan agreement
because of the improved financial results. The Company's
average borrowing rate increased 160 basis points during
fiscal 1995 when compared to fiscal 1994 due to higher rates
under the SunTrust Bank revolving loan agreement. See Note
5 of Notes to Consolidated Financial Statements set forth in
Item 8 hereof. The table below sets forth average borrowing
balances and the average interest rate over the past three
fiscal years.
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------------------
(Dollars in thousands) 1996 1995 1994
------------------------------ ---------------------------------------------------------
<S> <C> <C> <C>
Average long-term debt........ $12,924 $17,146 $20,653
Weighted average interest rate 7.8% 7.9% 6.3%
Average short-term borrowings. $607 $529 $504
Weighted average interest rate 7.9% 6.7% 4.4%
</TABLE>
The payment of cash dividends is approved by the Board
of Directors and depends, among other factors, on earnings,
capital requirements, and the operating and financial
condition of the Company. Additionally, under the terms of
the Company's line of credit with SunTrust Bank, any cash
dividend payment requires the prior approval of SunTrust
Bank unless certain financial requirements are met. During
the third quarter of fiscal 1992, as a result of losses
sustained by the Company, the Board of Directors elected to
forego the payment of quarterly cash dividends. Due to
improved operating results during fiscal 1995, the Board of
Directors, with the approval of SunTrust Bank, resumed
payment of semi-annual cash dividends. Cash dividends of
$0.08 per share were paid during the third quarter of fiscal
1995, and cash dividends of $0.14 per share were paid in the
first quarter of fiscal 1996. As a result of continued
improvements in profitability, the Board resumed payment of
quarterly cash dividends in the third quarter of fiscal
1996. During the third and fourth quarters of fiscal 1996,
the Board of Directors authorized cash dividends of $0.15
and $0.10 per share, respectively. On June 14, 1996, the
Board of Directors authorized a cash dividend of $0.11 per
share for the first quarter of fiscal 1997.
Seasonality
The Company typically experiences a seasonal downturn
in the third fiscal quarter of each year. Harsh weather
during the third fiscal quarter usually restricts
construction activities in the Company's more northern and
mountainous sales markets, thereby reducing the demand for
the Company's products in these areas. This seasonality is
normally reflected in reduced sales and earnings of the
Company in the third quarter. Certain portions of the
Company's sales markets, notably South Georgia, Florida,
Texas, Arizona, Nevada and Southern California, are not
significantly affected by the seasonal change. See Note 11
of Notes to Consolidated Financial Statements set forth in
Item 8 hereof.
Impact of Inflation
Inflationary pressures were moderate over most of the
past three years. To date, the Company has been able to
offset most cost increases through periodic price increases,
labor efficiencies and higher productivity.
<PAGE> 22
Recent Accounting Pronouncements
In October 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No.
123, Accounting for Stock - Based Compensation , which the
Company is required to adopt in fiscal 1997. The Company
has not determined whether to adopt the accounting
requirements or the alternative disclosure requirements of
this pronouncement.
<PAGE> 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of DAVIS WATER & WASTE INDUSTRIES, Inc.
In our opinion, the accompanying consolidated balance
sheet and the related consolidated statements of operations,
of changes in stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of
DAVIS WATER & WASTE INDUSTRIES, Inc. and its subsidiaries at
April 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the
period ended April 30, 1996, in conformity with generally
accepted accounting principles. These financial statements
are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted
auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion
expressed above.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Atlanta, Georgia
June 13, 1996
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The consolidated financial statements included in this
report were prepared by the Company in conformity with
generally accepted accounting principles. Management's best
estimates and judgments were used where appropriate.
Management is responsible for the integrity of the financial
statements and for other financial information included in
this report. The financial statements have been audited by
the Company's independent accountants, Price Waterhouse LLP.
As set forth in their report, their audit was conducted in
accordance with generally accepted auditing standards and
formed the basis for their opinion on the accompanying
financial statements. They evaluated the system of internal
accounting controls and performed such tests and other
procedures as they deemed necessary to reach and express an
opinion on the fairness of the financial statements.
The Company maintains a system of internal accounting
controls which is designed to provide a reasonable assurance
that assets are safeguarded and that the financial records
reflect the authorized transactions of the Company. As a
part of this process, the Company has an internal auditor
who evaluates the adequacy and effectiveness of internal
accounting controls.
The Audit Committee of the Board of Directors is
composed of Directors who are neither officers nor employees
of the Company. The Committee meets periodically with
management, the internal auditor and the independent
accountants to discuss auditing, internal accounting control
and financial reporting matters. The internal auditor and
the independent accountants have full and free access to
meet with the Audit Committee, with and without management
being present.
R. Doyle White Stan White
Chairman of the Board, Secretary/Treasurer
President and Chief and Chief Financial Officer
Executive Officer
<PAGE> 24
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended April 30,
---------------------------------------------------------------------
(In thousands, except share data) 1996 1995 1994
----------------------------------------- ---------------------------------------------------------------------
<S> <C> <C> <C>
Net sales................................ $ 226,489 $215,649 $202,621
Cost of products sold (Notes 4).......... 188,720 183,654 172,654
--------- -------- --------
Gross profit margin...................... 37,769 31,995 29,967
Selling, general and administrative...... 26,877 24,483 28,461
Interest expense......................... 1,022 1,335 1,252
Other income, net........................ 206 308 246
Provision for Taulman shutdown and
related intangible assets (Note 3)...... 0 678 8,895
--------- -------- --------
Income (loss) before income taxes........ 10,076 5,807 (8,395)
Provision (benefit) for income taxes..... 4,327 2,359 (3,055)
--------- -------- --------
Net income (loss) $ 5,749 $ 3,448 $ (5,340)
========= ======== ========
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Net income (loss) per share - primary...
$1.78 $1.06 ($1.64)
Net income (loss) per share - fully ========= ======== ========
diluted................................
$1.72 $1.05 ($1.64)
Weighted average shares outstanding - ========= ======== ========
primary................................
3,234,824 3,261,351 3,260,608
Weighted average shares outstanding -
fully diluted..........................
3,340,242 3,284,170 3,260,608
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE> 25
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
April 30,
-----------------------------------------------------
(In thousands, except share data) 1996 1995
---------------------------------------------------------- -----------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 1,720 $ 3,746
Accounts receivable, less allowance for doubtful accounts
($1,261 at April 30, 1996 and $1,135 at April 30, 1995)
(Note 1)................................................ 35,189 39,795
Inventories (Notes 1 and 4).............................. 17,802 18,778
Prepaid expenses......................................... 692 631
Costs and estimated earnings in excess of billings on
uncompleted contracts................................... 1,419 1,097
Prepaid income taxes..................................... 685 0
Deferred income taxes (Note 7)........................... 4,194 5,634
------- -------
Total current assets................................... 61,701 69,681
------- -------
Property, plant and equipment: (Notes 1)
Land..................................................... 1,016 1,040
Buildings and improvements............................... 5,858 5,667
Manufacturing equipment.................................. 5,597 5,633
Transportation and office equipment...................... 8,348 8,066
Construction in progress................................. 281 295
------- -------
21,100 20,701
Less-accumulated depreciation............................. (14,742) (14,407)
------- -------
6,358 6,294
Deferred income taxes (Note 7)............................ 706 0
Other assets.............................................. 5,867 5,561
------- -------
$74,632 $81,536
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 5).................... $ 135 $ 249
Accounts payable.............................................. 20,102 24,158
Accrued salaries and commissions.............................. 6,702 3,735
Other accrued liabilities (Notes 3 and 6)..................... 6,861 8,883
Billings in excess of costs and estimated earnings on
uncompleted contracts........................................ 943 1,449
Customer deposits............................................. 1,153 614
------- -------
Total current liabilities.................................... 35,896 39,088
------- -------
Long-term debt, less current portion (Note 5)................. 6,845 14,787
------- -------
Deferred income taxes (Note 7)................................ 0 265
------- -------
Other accrued liabilities (Notes 6)........................... 2,235 2,064
------- -------
Commitments and contingent liabilities (Note 9)...............
Stockholders' equity (Note 8)
Common stock, $0.01 par value, 50,000,000 shares authorized;
3,265,308 shares issued.....................................
Capital in excess of par value............................... 33 33
Retained earnings............................................ 9,788 9,788
20,201 15,705
------- -------
Treasury stock at cost-29,129 shares at April 30, 1996 and 30,022 25,526
19,379 shares at April 30, 1995..............................
(366) (194)
------- -------
29,656 25,332
------- -------
$74,632 $81,536
======= =======
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE> 26
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
Capital
in excess Total
(In thousands, Common of par Retained Treasury stockholders'
except share data) stock value earnings stock equity
--------------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at April 30, 1993 $33 $9,788 $17,922 $(108) $27,635
Issuance of common stock
in connection with
employee benefit plans.. (43) 181 138
Purchase of treasury
stock................... (124) (124)
Net income............... (5,340) (5,340)
--- ------ ------- ----- -------
Balance at April 30, 1994 33 9,788 12,539 (51) 22,309
Issuance of common stock
in connection with
employee benefit plans.. (21) 122 101
Dividends paid, $.08 per
share................... (261) (261)
Purchase of treasury
stock................... (265) (265)
Net income............... 3,448 3,448
--- ------ ------- ----- -------
Balance at April 30, 1995 33 9,788 15,705 (194) $25,332
Issuance of common stock
in connection with
employee benefit plans.. 10 102 112
Purchase of treasury
stock................... (274) (274)
Dividends paid, $.39 per
share................... (1,263) (1,263)
Net income............... 5,749 5,749
--- ------ ------- ----- -------
Balance at April 30, 1996 $33 $9,788 $20,201 ($366) $29,656
=== ====== ======= ===== =======
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE> 27
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended April 30,
----------------------------------------------------------
(In thousands) 1996 1995 1994
----------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................ $ 5,749 $ 3,448 ($ 5,340)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization.......... 1,494 2,110 2,689
(Decrease) increase in reserve for
Taulman shutdown and write off of
intangible assets..................... (2,425) (1,480) 8,895
Provision for doubtful accounts........ 632 472 665
Loss on sale of property, plant and
equipment............................. 22 0 86
Deferred income taxes.................. 469 (430) (4,536)
Decrease (increase) in accounts
receivable............................ 3,974 (1,109) (1,723)
Decrease (increase) in inventories..... 976 1,748 (2,450)
(Increase) decrease in cost and
estimated earnings in excess of
billings on uncompleted contracts..... (322) (125) 280
(Increase) in other assets............. (1,052) (393) (15)
(Decrease) increase in billings in
excess of cost and estimated earnings
on uncompleted contracts.............. (506) (752) 32
Increase in accounts payable and
accrued expenses...................... 24 3,898 4,290
------- -------- --------
Net cash provided by operating
activities.......................... 9,035 7,387 2,873
------- -------- --------
INVESTING ACTIVITIES
Purchase of property, plant and
equipment............................... (1,656) (1,566) (837)
Proceeds from sale of property, plant and
equipment............................... 76 855 70
------- -------- --------
Net cash (used in) investing activities (1,580) (711) (767)
------- -------- --------
FINANCING ACTIVITIES
Proceeds from revolving and long-term
debt.................................... 62,131 56,292 54,549
Principal payments made on debt.......... (70,187) (60,897) (55,921)
Proceeds from sale of stock.............. 112 100 138
Purchase of treasury stock............... (274) (265) (124)
Dividends paid........................... (1,263) (261) 0
------- -------- --------
Net cash (used in) financing activities (9,481) (5,030) (1,358)
------- -------- --------
CASH
Increase in cash during period........... (2,026) 1,646 748
Cash and cash equivalents at beginning of
year.................................... 3,746 2,100 1,352
------- -------- --------
Cash and cash equivalents at end of year $ 1,720 $ 3,746 $ 2,100
======= ======== ========
</TABLE>
(The accompanying notes are an integral part of these financial statements.)
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - APRIL 30, 1996,
1995, and 1994
Note 1 - Description of Business and Summary of Significant
Accounting Policies:
DESCRIPTION OF BUSINESS
The Company manufactures and markets products relating
to the distribution and treatment of water and wastewater.
BASIS OF PRESENTATION
The accompanying financial statements include the
accounts of the Company and its wholly-owned subsidiary, The
Taulman Company. All significant intercompany balances and
transactions have been eliminated in consolidation. Certain
amounts in the prior year statements have been reclassified
to conform to the current year presentation.
ACCOUNTS RECEIVABLE
Accounts receivable at April 30, 1996 and 1995 include
amounts under long-term contracts of approximately
$2,504,000 and $4,060,000, respectively. Balances billed
but not paid by customers pursuant to retainage provisions
in long-term contracts will be due upon completion of the
contracts and acceptance by the owner and aggregated
approximately $1,493,000 and $2,216,000 at April 30, 1996
and 1995, respectively. Approximately $700,000 of these
retention balances are expected to be collected during the
year ended April 30, 1997, with the remainder to be
collected during the following year.
CONCENTRATION OF CREDIT RISK
The Company grants credit to its customers, who are
primarily involved in the construction and real estate
industries, including independent contractors, developers,
municipalities and industrial customers. To secure its
interest in trade accounts receivable, the Company obtains
bonds or liens where considered prudent. The majority of
the Company's sales are made to customers located in the
Southeast. Other important markets include Texas,
California and the Rocky Mountain states.
INVENTORIES
Inventories are carried at the lower of cost (first-in,
first-out) or market value.
PROPERTY, PLANT AND EQUIPMENT
Fixed assets are stated at cost. Depreciation is
calculated using principally the straight-line method over
the estimated useful lives of the assets. Expenditures for
additions and improvements are charged to property accounts;
maintenance and repairs are charged to expense. Upon
<PAGE> 29
retirement or sale, the cost of the asset and related
accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in income.
The approximate annual rates of depreciation are 4% to
14% for buildings and improvements, 14% to 20% for
manufacturing equipment and 14% to 33 1/3% for
transportation and office equipment.
INTANGIBLE ASSETS
Intangible assets resulting from the acquisition of
certain assets and liabilities of Taulman were being
amortized on a straight line basis over their estimated
useful lives ranging from one to 40 years. As a result of
the shutdown or reorganization of Taulman, these intangibles
were written off in fiscal 1994 (see Note 3).
TREASURY STOCK
Treasury stock is carried at cost determined using the
first-in, first-out method. Any excess of cost over
proceeds from re-issuance of treasury stock is charged to
retained earnings; any excess of proceeds over cost is
credited to retained earnings to the extent of any prior
charges and thereafter credited to capital in excess of par.
REVENUE
Income from short-term contracts for the manufacture or
installation of water and wastewater treatment and pumping
equipment is recognized at time of shipment or when
installation is completed, respectively. Income from long-
term contracts for the manufacture of process equipment and
control systems used in water and wastewater treatment
facilities was recognized on the percentage-of-completion
basis; however, revenues are no longer recognized in the
Company's operations for these types of contracts due to the
shutdown of Taulman. Income is recognized from the sale of
water distribution equipment and supplies and process
materials and supplies at the time of shipment. Commission
income from the sale of products manufactured by others is
recognized when the customer's order is shipped by the third
party manufacturer.
INCOME TAXES
The Company accounts for income taxes under SFAS No.
109, "Accounting for Income Taxes" (FAS 109). FAS 109
requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis
of other assets and liabilities.
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing net
income (loss) by the average number of common shares
outstanding, increased by common equivalent shares
determined using the treasury stock method.
<PAGE> 30
ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principals requires
management to make estimates and assumptions that affect the
reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
STATEMENT OF CASH FLOWS
Cash equivalents are considered to be short term,
highly liquid investments with original maturities of three
months or less.
Supplemental disclosure of cash flows follows:
<TABLE>
<CAPTION>
Year Ended April 30,
-----------------------------------------
(In thousands) 1996 1995 1994
----------------------------------- -----------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest......................... $1,172 $1,429 $1,276
Income taxes..................... 4,278 2,423 1,272
------ ------ ------
$5,450 $3,852 $2,548
====== ====== ======
</TABLE>
Note 2 - Potential Sale of the Company
On June 10, 1996, the Company entered into a definitive
Agreement and Plan of Merger (the "Agreement") with United
States Filter Corporation ("U.S. Filter") whereby USF/DWW
Acquisition Corporation, a wholly-owned subsidiary of U.S.
Filter, would be merged with and into the Company with the
Company as the surviving entity. Each outstanding share of
common stock of the Company, par value $0.01 per share,
would be exchanged for 0.933 share of U.S. Filter common
stock, par value $0.01 per share (the "Exchange Ratio"). In
the event that the Average Market Price per share of U.S.
Filter common stock for the 20 consecutive trading days
beginning on the 25th trading day prior to the vote of the
Company s stockholders on the Merger ("Average Market
Price") is less than $28 per share, the Exchange Ratio shall
be adjusted to $26.12 divided by the Average Market Price.
If the Average Market Price is greater than $34 per share,
the Exchange Ratio shall be adjusted to $31.72 divided by
the Average Market Price. The Company may terminate the
Agreement if the Average Market Price of U.S. Filter common
stock is less than $25.25 and U.S. Filter may terminate the
Agreement if the Average Market Price of the U.S. Filter
common stock is greater than $37.25.
Under the terms of the Agreement, all outstanding
unexercised stock options of the Company, whether or not
then exercisable, would be converted into the right to
receive 0.933 share of U.S. Filter common stock (the "Option
Exchange Ratio"). The Option Exchange Ratio shall be
adjusted in the same manner as the Exchange Ratio for the
Company s common stock based on certain levels of the
Average Market Price of U.S. Filter common stock as
described above.
<PAGE> 31
The consummation of the merger transaction is subject
to approval by the Company s stockholders and certain other
conditions. The transaction is expected to be consummated
by August 31, 1996.
Note 3 - Provision for Taulman Shutdown and Related
Intangible Assets:
During the fourth quarter of fiscal 1994, the Company
adopted a plan to shutdown or reorganize the operations of
Taulman. Substantially all of Taulman's operations are
contained within its Turbitrol Instrumentation and Control
division; these operations are in the process of being shut
down. Taulman Composting Systems, an immaterial component of
Taulman, was combined with the Company's Process division.
The pre-tax loss provision for these actions recorded in
fiscal 1994 includes the write-off of intangible assets
totaling $2,908,000 associated with Taulman and the accrual
of $5,987,000 to provide for anticipated losses during the
shutdown period. Accordingly, the results of operations of
Taulman during fiscal 1996 and 1995 were excluded from the
results of operations of the Company.
Taulman is engaged in the environmental pollution
control business, primarily through the design, manufacture
and sale of process equipment and control systems used in
water and wastewater treatment facilities. Revenues and
expenses on its long-term contracts are recognized on the
percentage-of-completion basis. Taulman has ceased bidding
on new contracts, has terminated its sales force and is
working to complete its current obligations on long-term
contracts during the estimated two and one half year period
from the decision to shut down. The provision for losses
during the shutdown period reflects declining revenues and
relatively high levels of general and administrative costs
necessary to complete the shutdown of these operations.
During fiscal 1996 and 1995, activity within the
reserve for anticipated losses during the shutdown period is
summarized as follows:
<TABLE>
<CAPTION>
Year ended
April 30,
--------------------------------
(In thousands) 1996 1995
--------------------------- ------ ------
<S> <C> <C>
Balance, beginning of year $4,507 $5,987
Operating loss of Taulman (2,425) (2,158)
Adjustment to reserve 0 678
------ ------
Balance, end of year $2,082 $4,507
====== ======
</TABLE>
The adjustment in fiscal 1995 to the reserve
represented an increase in the reserve resulting from a
revised estimate of the anticipated losses during the
shutdown period. There have been no changes to the plan for
shutting down Taulman since the adoption of the plan in the
fourth quarter of fiscal 1994.
The Taulman shutdown represents the discontinuation of
a product line. Therefore, Taulman's results of operations
through the fourth quarter of fiscal 1994 were included as
components of continuing operations in the statement of
operations for fiscal 1994. Taulman's results of operations
during fiscal 1995, 1996 and in future periods have been or
will be charged against the reserve for anticipated losses
during the shutdown period. Certain income, expense, asset
<PAGE> 32
and liability information with respect to Taulman for the
three most recent fiscal years is as follows:
<TABLE>
<CAPTION>
As of or for the year
ended April 30,
------------------------------------------
(In thousands) 1996 1995 1994
------------------------------------- ------------------------------------------
<S> <C> <C> <C>
Net sales............................ $4,843 $11,252 $15,871
Cost of products sold................ 5,370 9,791 14,465
Selling, general and administrative
expense............................. 1,913 3,445 4,302
Assets............................... 3,626 5,252 12,523
Liabilities.......................... 2,730 2,614 10,111
</TABLE>
Assets and liabilities at April 30, 1996, 1995 and 1994
consisted primarily of accounts receivable, inventory,
accounts payable, accrued expenses and intercompany debt.
Intangible assets written off in fiscal 1994 as a part
of the shutdown included a technology licensing agreement of
$1,321,000, noncompete agreements of $1,155,000 and goodwill
of $432,000. The technology licensing agreement was written
off because the Company, in response to changing marketplace
demands, elected to forego its exclusive North American
rights to this waste composting technology during the fourth
quarter of fiscal 1994. Recently developed methods for
waste composting are much more economical and substantially
reduced the demand for the Company's licensed technology.
The noncompete agreements and goodwill were written off
because their value will not be recovered as a result of the
shutdown.
Note 4 - Inventories:
Inventories are summarized as follows:
<TABLE>
<CAPTION>
April 30,
------------------------
(In thousands) 1996 1995
------------------------------------- ------------------------
<S> <C> <C>
Finished goods and products purchased
for resale.......................... $15,925 $16,137
Work-in-process...................... 1,347 2,073
Raw materials and purchased
components.......................... 530 568
------- -------
$17,802 $18,778
======= =======
</TABLE>
Note 5 - Long-Term Debt:
During the first quarter of fiscal 1996, the Company
and SunTrust Bank Central Florida, National Association
("STBNA") entered into a second amendment to the October 13,
1992 loan agreement. The second amendment extended the loan
maturity through April 30, 1997, reduced the principal
amount the Company can borrow to $30,000,000, provided
specific guidelines that the Company must meet to eliminate
the security interest that STBNA has on the Company s
accounts receivable and inventory, eliminated the working
capital requirement and limited the amount of cash that the
Company may spend in connection with acquisitions without
the prior consent of STBNA to $2,500,000 per year during the
term of the loan agreement. The amended loan agreement also
permits the Company to choose between the then current prime
<PAGE> 33
rate or the then current LIBOR rate plus or minus various
basis point rates for advances under the revolving term
loan, depending on the Company achieving certain financial
results. The Company was in compliance with the financial
covenants of the loan agreement as of April 30, 1996.
On June 6, 1996, STBNA extended the loan maturity to
April 30, 1998, and because of the Company s improved
operating results and meeting the established guidelines,
eliminated the security interest on the Company's accounts
receivable and inventory.
As of April 30, 1996, the interest on balances
outstanding under the STBNA revolving term note was payable
at either STBNA's prime commercial rate less 50 basis points
or LIBOR plus 150 basis points. The Company pays a
commitment fee equal to one-fourth of one percent per annum
on the average daily unused portion of the revolving term
note.
The payment of cash dividends is subject to the
approval by the Board of Directors and depends on, among
other factors, earnings, capital requirements, and the
operating and financial condition of the Company. The
payment of cash dividends also requires the prior approval
of STBNA unless certain financial requirements are met.
During the first, third and fourth quarters of fiscal 1996,
the Company s Board of Directors authorized cash dividends
of $0.14, $0.15 and $0.10 per share, which were paid on July
3, 1995, January 5, 1996 and April 12, 1996 to stockholders
of record on June 26, 1995, December 26, 1995 and April 1,
1996, respectively.
Notes payable and long-term debt consist of:
<TABLE>
<CAPTION>
April 30,
--------------------------
(In thousands) 1996 1995
---------------------------------------------------- --------------------------
<S> <C> <C>
Revolving term loan due April 1997 with interest at
prime; maturity was extended to April 30, 1998 by
STBNA in letter dated June 6, 1996................. $5,343 $13,110
Promissory note with interest at prime with monthly
installment payments secured by an airplane........ 0 242
Capitalized lease with interest at 7.70% with
monthly installment payments through April 1998.... 50 75
Capitalized lease with interest at 4.90% with
monthly installment payments through February 1998. 165 248
Capitalized lease with interest at 4.90% with
monthly installment payments through Novermber 1998 61 0
Loans payable to insurance companies with interest
at varying rates secured by cash surrender value of
life insurance policies approximating $1,947 and
$1,818 at April 30, 1996 and 1995, respectively.... 1,361 1,361
------ -------
6,980 15,036
Amounts due within one year 135 249
------ -------
Amounts due after one year $6,845 14,787
====== =======
</TABLE>
Annual maturities of long-term debt in each of the
succeeding five years from April 30, 1996 are approximately
$135; $5,470; $14; $0; and $0 respectively. Loans payable
to insurance companies secured by cash surrender value in
the amount of $1,361 do not have a stated maturity date.
<PAGE> 34
Note 6 - Pension Plan:
The Company has a defined benefit pension plan covering
substantially all of its employees. The benefits are based
on years of service and the employee's highest average
compensation earned during any consecutive five-year period
within the last ten years of employment, reduced by payments
from Social Security. Pension cost is funded at amounts
determined by management but not less than the minimum
funding required by the Employee Retirement Income Security
Act of 1974 (ERISA). At April 30, 1996, the assets of this
Plan included cash equivalents and equity and fixed income
mutual funds. Participants of certain acquired companies
received service credit for vesting in the Plan upon date of
acquisition or termination of any former benefit plans. The
cost of these benefits will be amortized over 18 years,
which is the average remaining service period of the
participants.
The Company also has a supplemental defined benefit
pension plan (the Supplemental Plan) covering all Company
officers. The Supplemental Plan provides for annual
disability benefits in amounts of 50% - 80% of base pay at
the time of the disabling injury, to be paid to participants
who become permanently disabled. This benefit will
terminate at age 65. Additionally, the Supplemental Plan
provides for retirement benefits to participants
representing approximately 50% - 80% of base pay at the date
of retirement, reduced by payments from Social Security.
These retirement benefits will be paid over the expected
lifetime of the participant. The Company has not funded the
Supplemental Plan. This plan is not subject to ERISA
funding requirements. The Company intends to fund the
Supplemental Plan as benefits are paid.
Net periodic pension cost of these plans for fiscal
1996, 1995 and 1994 included the following components:
<TABLE>
<CAPTION>
Year Ended April 30, 1996 Year Ended April 30, 1995 Year Ended April 30, 1994
---------------------------- --------------------------- ---------------------------
Assets Accumulated Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed Accumulated Exceed
(In thousands) Benefits Assets Benefits Assets Benefits Assets
------------------ ---------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost
benefit earned
during the
period........... $ 386 $ 47 $350 $ 40 $362 $ 37
Interest cost on
projected benefit
obligation....... 680 114 613 112 623 114
Actual return on
plan assets...... (1,481) (900) (809)
Net amortization
and deferral..... 567 73 37 73 25 71
------ ---- ----- ----- ----- -----
Net periodic
pension cost..... $ 152 $234 $100 $225 $201 $222
====== ==== ===== ===== ===== =====
</TABLE>
Assumptions used to determine net periodic pension cost
for these plans for fiscal 1996, 1995 and 1994 were:
<TABLE>
<CAPTION>
As of April 30,
--------------------------------------
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Discount rates....................... 7.5% 7.5% 7.5%
Rates of increase in compensation
levels.............................. 4.5% 4.5% 4.5%
Expected long-term rate of return on
assets.............................. 9.0% 9.0% 9.0%
</TABLE>
The following table sets forth these plans' funded
status and amounts recognized on the Company's consolidated
balance sheet at April 30, 1996 and April 30, 1995.
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995
------------------------------ ----------------------------------
Assets Accumulated Assets Accumulated
Exceed Benefits Exceed Benefits
Accumulated Exceed Accumulated Exceed
(In thousands) Benefits Assets Benefits Assets
----------------------------- ------------------------------ ----------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit obligation
Vested........................ $ 7,698 $ 1,637 $6,982 $1,602
Nonvested..................... 317 298
------- ------- ------ -------
$ 8,015 $ 1,637 $7,280 $1,602
======= ======= ====== =======
Plan assets at fair value........ $10,351 $9,156
Projected benefit obligation..... 9,984 $ 1,637 9,007 $1,602
------- ------- ------ -------
Projected benefit obligation less
than (in excess of) plan assets. 367 ( 1,637) 149 ( 1,602)
Unrecognized prior service costs. (136) 291 (149) 367
Unrecognized net loss (gain)..... (39) (114) 433 (74)
Additional liability............. (161) (274)
Unrecognized net asset at
May 1, 1996 being amortized
over 19 years and 15 years
, respectively .................. (722) (16) (812) (19)
-------- ------- ------ -------
Pension (liability) recognized in
the balance sheet............... ($ 530) ($ 1,637) ($ 379) ($1,602)
======== ======= ====== =======
</TABLE>
Note 7 - Income Taxes:
The components of the provision for income tax expense
(benefit) are as follows:
<TABLE>
<CAPTION>
Year Ended April 30,
----------------------------------
1996 1995 1994
----------------------------------
Current tax expense:
<S> <C> <C> <C>
Federal.............. $3,248 $2,297 $1,237
State................ 610 492 244
Deferred tax expense
(benefit)
Federal.............. 395 (362) (3,820)
State................ 74 (68) (716)
------ ------ -------
$4,327 $2,359 ($3,055)
====== ====== =======
</TABLE>
<PAGE> 36
Deferred tax liabilities (assets) recorded under FAS 109 are
comprised of the following at April 30, 1996 and 1995:
<TABLE>
<CAPTION>
April 30,
-------------------------------------
(In thousands) 1996 1995
-------------------------------------------------------- -------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation............................................ $ 122 $ 211
Change in the method of inventory accounting for income
tax purposes........................................... 0 393
------- -------
Gross deferred tax libilities.......................... 122 604
------- -------
Deferred tax assets:
Pension................................................ (832) (725)
Vacation............................................... (317) (365)
Other employee benefit plans........................... (623) (413)
Warranty reserves...................................... (233) (177)
Inventory.............................................. (649) (639)
Allowance for doubtful accounts........................ (479) (431)
Noncompete agreements.................................. (155) (187)
Shutdown reserve for Taulman........................... (1,524) (2,488)
Other.................................................. (210) (548)
------- -------
Gross deferred tax assets............................. (5,022) (5,973)
------- -------
($4,900) ($5,369)
======= =======
</TABLE>
A reconciliation between the actual income tax expense
(benefit) and the amount computed by applying the federal
income tax rate (34.0%) in 1996, 1995 and in 1994 to pre-
tax income from continuing operations follows:
<TABLE>
<CAPTION>
Year Ended April 30,
---------------------------------------------------------
(In thousands) 1996 1995 1994
----------------------------------------- ---------------------------------------------------------
<S> <C> <C> <C>
Computed amount based on federal
statutory rate.......................... $3,426 $1,974 ($2,854)
Increses (reductions) in taxes:
State income taxes, net of federal income
tax benefit............................. 402 232 (332)
Tax on meals and entertainment expense
disallowed.............................. 144 132 54
Other.................................... 373 0 0
Provision (benefit)...................... (18) 21 77
------ ------ -------
$4,327 $2,359 ($3,055)
====== ====== =======
</TABLE>
Note 8 - Stockholders' Equity:
During the third quarter of fiscal 1995, the Board of
Directors approved the Davis Water & Waste Industries, Inc.
1994 Employee Stock Option Plan (the " Employees Plan") and
the Davis Water & Waste Industries, Inc. Directors Stock
Option Plan (the "Directors Plan"). Both Plans were approved
by the stockholders of the Company at the 1995 Annual
Meeting of Stockholders on September 8, 1995.
<PAGE> 37
Under the Employees Plan and the Directors Plan
(collectively, the "Plans"), options to acquire up to
250,000 and 75,000 shares of the Company's common stock,
respectively, may be granted to employees and outside
directors of the Company, respectively, by a committee of
the Board of Directors. No options may be granted after ten
years from the date of approval of the Plans by the Board.
Options granted under the Plans vest evenly over five years
and are exercisable for a period not exceeding ten years
after the date of grant at a price equal to the quoted
market value of the common stock as of the date of grant.
Optionees may exercise the options by paying cash,
exchanging Company shares having a quoted market value equal
to or less than the exercise price, by instructing the
Company to retain shares of stock upon the exercise of the
option with a quoted market value equal to the exercise
price as payment, or exchanging property or services as may
be acceptable to the committee of the Board. The options
are not transferable except to the optionee's beneficiaries.
The Plans may be amended or terminated at the discretion of
the Board. Compensation expense is accrued for the Plans
for options as earned by the optionees as the difference
between the quoted market price at the period end and the
option price multiplied by the number of options. Accrued
compensation expense is adjusted for the changes in the
quoted market value of the stock from period to period. At
April 30, 1996 and 1995, the accrual for compensation under
the Plans aggregated approximately $1,176,000 and $74,000,
respectively.
Under the Employees Plan in December 1994, the Board
granted options to acquire 162,660 shares to certain Company
officers at an option price of $7.75 per share, which was
equal to the quoted market price for the shares of the
Company's common stock at the date of grant. All but 1,000
of the options were outstanding at April 30, 1996. No
options were canceled or expired during fiscal year 1996 and
1,000 shares were exercised. At April 30, 1996, options for
the purchase of 87,340 shares of common stock were available
to be granted under the Employees Plan.
Under the Directors Plan in December 1994, options to
acquire 32,000 shares of common stock were granted to the
outside directors of the Company at an option price of $7.75
per share, which was equal to the quoted market price for
the shares of the Company's common stock at the date of
grant. All such options were outstanding at April 30, 1996.
No options were exercised, canceled or expired during fiscal
1996. At April 30, 1996, options for the purchase of 43,000
shares of common stock were available to be granted under
the Directors Plan.
During fiscal 1989, the stockholders of the Company
approved a qualified employee stock purchase plan (the "1988
ESP Plan"). During fiscal 1992, the stockholders of the
Company approved an amendment to the 1988 ESP Plan
increasing the shares of common stock reserved for issuance
under this plan from 80,000 to 160,000 shares. Under the
terms of the 1988 ESP Plan, all regular full time employees
and officers of the Company may purchase common stock of the
Company quarterly at 85% of the lower of market value on the
offering date or the termination date of the offering
period. The 1988 ESP Plan will terminate at such time as all
shares made available under the plan have been issued.
During fiscal 1996, 1995, and 1994, 9,223, 13,616 and 24,225
shares, respectively, were issued under the plan, and at
April 30, 1996, 15,309 shares of common stock were reserved
and available for issuance.
During August 1988, a Long-Term Incentive Plan (the
"Incentive Plan") was approved by the Company's
stockholders. The Board of Directors had previously
approved the Incentive Plan whereby certain key officers
<PAGE> 38
(the participants) would become eligible to receive
performance shares provided the Company achieves specified
financial goals over four year periods. Performance shares
represent rights to receive common stock or, at the election
of the participant, a combination of cash and common stock.
During fiscal 1995, 349 shares of common stock were
distributed and payments of $2,967 were made to participants
under the 1991-1994 Incentive Plan. During fiscal 1994 and
fiscal 1995, the Board of Directors determined not to
approve a Long-Term Incentive Plan for key officers but
instead proposed the adoption of a stock option plan for the
key employees of the Company (as discussed above).
The cost of the Incentive Plan is limited to twice the
grant price at the grant date of the maximum number of
performance shares issuable. The grant price is determined
by the higher of the book value per share or the average of
the closing price of the Company's common stock for a period
prior to and following the public release of the preceding
year's annual earnings. The grant price of the performance
shares granted during fiscal 1993 was $8.30. The estimated
costs of the Incentive Plan are charged to income over the
applicable four year periods. During the fiscal year ended
April 30, 1996 $50,000 was expensed, and for fiscal years
1995 and 1994, no income or expense was recognized.
The Company purchases shares of its common stock to be
held as treasury stock until needed for issuance through the
Company's employee stock plans and directors and employees
stock option plans discussed above.
On December 15, 1989, the Board of Directors of the
Company adopted a Share Rights Plan and, in connection
therewith, declared a dividend distribution of one Right for
each outstanding share of the Company's common stock to
stockholders of record at the close of business on January
8, 1990. The Company had 3,248,621 shares of its common
stock outstanding at such date. The Share Rights Plan
generally provides that 20 days following a public an-
nouncement that a person or a group of affiliated or
associated persons have become owners of 10% or more of the
Company's common stock (and have thus become an "Acquiring
Person"), each Right will entitle the registered holder to
purchase from the Company common stock at a purchase price
per share equal to 20% of current market value. Any Rights
beneficially owned by an Acquiring Person or any of the
Acquiring Person's affiliates or associates are not
exercisable. The number of shares that each holder of a
Right will be entitled to receive upon exercise is equal to
one share of common stock multiplied by a fraction, the
numerator of which is the number of shares of common stock
outstanding on the date of the first public announcement
that a person has become an Acquiring Person (the "Stock
Acquisition Date") and the denominator of which is the
number of Rights outstanding on the Stock Acquisition Date
that are not beneficially owned by the Acquiring Person or
its affiliates or associates. Until such time as the Rights
become exercisable, (a) the Rights will be evidenced by the
common stock certificates and will be transferred with and
only with such common stock certificates, (b) new common
stock certificates issued after January 8, 1990 will contain
a notation incorporating the Rights Agreement by reference
and (c) the surrender for transfer of any certificates for
common stock will also constitute the transfer of the Rights
associated with the common stock represented by such
certificate. In connection with the merger agreement with
U.S. Filter (Note 2), the Share Rights Plan was amended
whereby the Rights will not become effective upon
consummation of the merger.
<PAGE> 39
Note 9 - Commitments and Contingent Liabilities:
The Company leases certain warehouse facilities and
equipment, principally trucking equipment, under operating
leases. Certain leases provide for additional rental based
on actual usage and many leases have renewal options. Under
some leases the Company agrees to pay insurance costs and
increases in property taxes. Total rent expense amounted to
approximately $2,737,000 in 1996, $3,009,000 in 1995, and
$3,141,000 in 1994, of which $233,000, $251,000 and
$250,000 was for truck rental based on mileage. The Company
leases certain computer equipment and a front end loader
under noncancelable capital lease agreements (see Note 5).
The original capitalized cost of leases included in property
and equipment was $386,629. As of April 30, 1996 the net
book value of leased equipment totaled $303,317. Minimum
lease and rental commitments under non-cancelable capital
and operating leases in effect at April 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Year Ending
April 30 Capital Operating Total
(In thousands) Leases Leases Commitments
----------------------------------- ----------------------------------------------------------
<S> <C> <C> <C>
1997.................... $146 $2,270 $2,416
1998.................... 127 1,812 1,939
1999.................... 15 1,531 1,546
2000.................... 935 935
2001.................... 377 377
2002-2004................ 68 68
----- ------ ------
Total minimum lease payments....... 288 $6,993 $7,281
====== ======
Less-Amount representing interest.. (12)
-----
Present value of minimum lease
payments........................... $276
=====
</TABLE>
The nature of the Company's business results in a
certain amount of litigation. Accordingly, the Company is a
party (as plaintiff and defendant) to a number of lawsuits
incidental to its business, and in certain of such matters,
claims have been asserted against the Company in substantial
amounts. Management believes that the Company has
meritorious defenses to these claims and together with its
insurance carriers, is vigorously defending them.
Note 10 - Fair Value Of Financial Instruments:
Cash and Cash Equivalents
The carrying amount reflected in the consolidated
balance sheet approximates the fair value of cash and cash
equivalents.
Notes Payable and Long-term Debt
<PAGE> 40
Substantially all of the balance of long-term debt is
represented by a variable rate revolving term loan. Because
this variable rate approximates a market rate of interest at
year end, the carrying amount of notes payable and long-term
debt approximates fair value.
Note 11 - Quarterly Financial Data (unaudited)
Summarized unaudited quarterly consolidated financial
data is as follows:
<TABLE>
<CAPTION>
Fully
Primary Diluted
(In thousands, Net Net Net Dividends
except per Net Gross Income Income Income Paid
share amounts) Sales Profit (Loss) Per Share Per Share Per Share
-------------- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 Fiscal
Quarter
First $ 59,683 $ 8,817 $1,162 $0.36 $0.35 $0.14
Second 58,867 10,158 1,816 0.56 0.55 0.00
Third 52,457 8,680 1,156 0.36 0.35 0.15
Fourth 55,482 10,114 1,615 0.48 0.45 0.10
-------- ------- ------ ----- ----- -----
$226,489 $37,769 $5,749 $1.78 $1.72 $0.39
======== ======= ====== ===== ===== =====
1995 Fiscal
Quarter
First $ 50,914 $ 7,250 $ 518 $0.16 $0.16 $0.00
Second 56,056 8,754 1,299 0.40 0.40 0.00
Third 52,730 7,868 776 0.23 0.23 0.08
Fourth 55,949 8,123 855 0.27 0.26 0.00
-------- ------- ------ ----- ----- -----
$215,649 $31,995 $3,448 $1.06 $1.05 $0.08
======== ======= ====== ===== ===== =====
</TABLE>
Primary and fully diluted earnings per share for the
fiscal year ended April 30, 1996 do not equal the sum of
primary and fully diluted earnings per share for each
quarter during fiscal year due to the application of the
treasury stock method for determining the impact of certain
common stock equivalents.
The net income for the fourth quarter of fiscal 1995
includes an additional provision of $678,000 for
management's revised estimate of the Taulman shutdown
reserve. See Note 3 to Notes of the Consolidated Financial
Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No independent certified public accountant of the
Company has resigned, indicated any intent to resign or been
dismissed as the independent certified public accountant of
the Company during the two fiscal years ended April 30, 1996
or subsequent thereto.
<PAGE> 41
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors
Joe E. Beverly Mr. Beverly, age 54, has served as Vice
Chairman of the Board of Synovus
Financial Corp. of Columbus, Georgia and
as Chairman of the Board of Commercial
Bank in Thomasville, Georgia, a
wholly-owned subsidiary of Synovus
Financial Corp., since 1990. He served
as President and a director of
Commercial Bank from 1973 to 1989. Mr.
Beverly has served as a director of the
Company since 1986.
O. Larry Comer Mr. Comer, age 62, has served as Senior
Partner since 1986 of Comer Associates,
an investment partnership. He also has
been Chairman of the Board since 1987 of
Caravelle Boats, Inc., a boat
manufacturer. He has served as a
director of the Company since 1983. Mr.
Comer also is a director of Southern
Bank Group, Inc. and Sumter Bank and
Trust Co., a wholly owned subsidiary of
Synovus Financial Corp.
Robert P. Crozer Mr. Crozer, age 49, has been Vice
Chairman of the Board of Directors of
Flowers Industries, Inc., a diversified
food products company, since 1989. From
1985 to 1989 he served as Corporate Vice
President-Marketing of Flowers
Industries, Inc., and from 1979 to 1989
he served as President and Chief
Operating Officer of its Convenience
Products Group. Mr. Crozer also is a
Director of the Inflo Holdings
Corporation the parent company of the
Keebler Company. Mr. Crozer has served
as a director of the Company since 1981.
H. Forbes Davis Mr. Davis, age 68, served as Vice
President-Research and Development of
the Company from 1989 until his
retirement in 1993 and has served as a
consultant to the Company since that
time. He served as Vice President and
General Manager of the Company's Davis
Process division from 1979 until 1989
and served previously in various other
management and sales positions with the
Company since 1956. He has served as a
director of the Company since 1956.
Jasper C. Davis III Mr. Davis, age 75, has served as a
director of the Company since its
founding in 1956 and served as Chairman
of the Board of the Company from 1956
until his retirement from such position
in 1993. Mr. Davis has served as a
consultant to the Company since his
retirement as an officer of the Company
in 1990. He served as Chief Executive
Officer of the Company from 1956 until
1986 and also served at various times in
the past as President and Chief
Operating Officer of the Company, most
recently from 1980 until 1982.
R. R. Davis Mr. Davis, age 69, has served as Vice
Chairman of the Board since 1982 and has
served as a consultant to the Company
since his retirement as an officer of
<PAGE> 42
the Company in 1991. He previously
served in various other capacities with
the Company, including President. He
has served as a director of the Company
since 1956. He also serves as a director
of Commercial Bank in Thomasville,
Georgia.
Thomas R. Pledger Mr. Pledger, age 58, has been Chairman
of the Board and Chief Executive Officer
of Dycom Industries, Inc., a
telecommunications and electrical
services corporation, since 1991 and was
President and Chief Executive Officer of
Dycom Industries, Inc. from 1984 until
1991. He also has been a director of
Dycom Industries, Inc. since 1981. Mr.
Pledger has served as a director of the
Company since 1988.
R. Doyle White Mr. White, age 65, has served as
President of the Company since 1982, as
Chief Executive Officer of the Company
since 1986 and as Chairman of the Board
of the Company since 1993. He also
served from 1982 to June 1994 as Chief
Operating Officer of the Company, and
from 1978 until 1982, he served as
Senior Vice President and a General
Manager of the Company. Mr. White has
served as a director of the Company
since 1981.
Officers
R. Doyle White Mr. White, age 65, has served as
President of the Company since 1982, as
Chief Executive Officer of the Company
since 1986 and as Chairman of the Board
of the Company since 1993. He also
served from 1982 to June 1994 as Chief
Operating Officer of the Company, and
from 1978 until 1982, he served as
Senior Vice President and a General
Manager of the Company.
Stan White Mr. White, age 54, has served as
Secretary/Treasurer of the Company since
1974.
Larry May Mr. May, age 57, has served as Executive
Vice President and Chief Operating
Officer of the Company since June 1994.
From 1992 until June 1994, he served as
Senior Vice President of the Company.
From 1988 until 1992, he served as Vice
President of the Company's Distribution
Group division.
Robert H. Pless, Jr. Mr. Pless, age 56, has served as Vice
President and General Manager of the
Company's Davco division since 1985.
From 1982 until 1985, he served as
General Manager of the Davco division.
Robert D. Tatum Mr. Tatum, age 40, has served as Vice
President of the Company's Davis Process
division since September 1993 and as
General Manager of the Davis Process
division since 1987.
<PAGE> 43
Robert D. Tatum is a nephew of H. Forbes Davis, Jasper
C. Davis III and R. R. Davis, all of whom are directors of
the Company. R. Doyle White and Stan White are not related.
Generally, the Company's executive officers are elected
annually by the Board of Directors for a term of one year or
until their successors are elected and qualified.
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act of 1934,
as amended, and regulations of the Securities and Exchange
Commission thereunder require the Company's directors and
executive officers and persons who own more than 10% of the
Company's Common Stock, as well as certain affiliates of
such persons, to file initial reports of their ownership of
the Company's Common Stock and subsequent reports of changes
in such ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Directors,
executive officers and persons owning more than 10% of the
Company's Common Stock are required by Securities and
Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) reports they file. Based solely
on its review of the copies of such reports received by it
and written representations that no other reports were
required for those persons, the Company believes that during
the fiscal year ended April 30, 1996, all filing
requirements applicable to its directors, executive officers
and owners of more than 10% of its Common Stock were
complied within a timely manner.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Summary
The following table summarizes by various categories,
for the fiscal years ended April 30, 1996, 1995, and 1994,
the total compensation paid to or accrued by the Company for
the Chief Executive Officer of the Company and all other
executive officers of the Company whose salary and bonus for
the fiscal year ended April 30, 1996 exceeded $100,000.
<PAGE> 44
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
---------------------------------- ------------------------- Compensation
Other
Fiscal Year Annual Securities All Other
Name and Ended Compensation Underlying LTIP Compenation
Principal Position April 30, Salary Bonus(1) (2) Options Payout (3) (4)
----------------------- ---------- --------- -------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Doyle White 1996 $226,000 $226,000 -0- $54,194 $4,797 $107,535
President and Chief 1995 194,092 210,000 48,125 -0- -0- 91,163
Executive Officer 1994 178,100 -0- -0- -0- -0- 82,691
Larry May 1996 149,205 134,285 -0- 35,871 6,673 19,404
Executive Vice President 1995 136,746 125,100 25,925 -0- -0- 14,831
and Chief Operating 1994 113,023 67,644 -0- -0- -0- 15,162
Officer
Stan White 1996 110,355 88,284 -0- 26,839 1,776 7,288
Secretary-Treasurer 1995 100,215 83,200 13,413 -0- -0- 7,069
1994 93,763 -0- -0- -0- -0- 5,786
Robert H. Pless 1996 110,355 88,284 -0- 26,554 12,981 8,067
Vice President 1995 102,897 -0- 5,308 -0- -0- 8,261
1994 97,730 -0- -0- -0- 5,933 6,239
Robert D. Tatum 1996 90,000 63,720 -0- 19,202 -0- 1,246
Vice President 1995 74,407 29,688 -0- -0- -0- 1,338
1994 71,691 36,156 -0- -0- -0- -0-
</TABLE>
(1) Reflects amounts paid for the indicated fiscal years for
the achievement of performance criteria established for such
fiscal years pursuant to the Company's Incentive
Compensation Plan. See "Employee Benefit Plans - Incentive
Compensation Plan" below.
(2) Reflects cash payments made in satisfaction of earned but
unused vacation time.
(3) Reflects the value of awards paid during the indicated
fiscal years for the achievement of performance criteria
established for the preceding four fiscal year period
pursuant to the Company's Long-Term Incentive Plan. See
"Employee Benefit Plans - Long-Term Incentive Plan" below.
(4) Reflects (a) amounts accrued by the Company for the
accounts of Messrs. R. Doyle White, May, Stan White, Tatum
and Pless under the Company's Supplemental Retirement Plans
for Certain Officers and (b) premiums paid by the Company
for term life insurance policies on the lives of Messrs. R.
Doyle White and May, any proceeds of which are payable to
the respective beneficiaries designated by the named
officers. The respective amounts accrued or paid for these
executive officers in the indicated fiscal years were
as follows: Mr. R. Doyle White - (a) $105,366 and (b)
$2,169 in fiscal 1996, (a) $89,318 and (b) $1,845 in fiscal
1995 and (a) $80,846 and (b) $1,845 in fiscal 1994,
respectively; Mr. May - (a) $18,308 and (b) $1,096 in
fiscal 1996, (a) $14,704 and (b) $1,096 in fiscal 1995 and
(a) $13,735 and (b) $1,096 in fiscal 1994, respectively; Mr.
Stan White - (a) $7,288 in fiscal 1996, (a) $7,069 in fiscal
1995 and (a) $5,786 in fiscal 1994; Mr. Tatum - (a) $1,246
in fiscal 1996, (a) $1,338 in fiscal 1995 and (a) $0 in
fiscal 1994; and Mr. Pless - (a) $8,067 in fiscal 1996, (a)
$8,261 in fiscal 1995 and (a) $6,239 in fiscal 1994,
respectively. See "Employee Benefit Plans - Retirement
Plans" below.
<PAGE> 45
Employment Agreements
The Company entered into an Employment Agreement (the
"Employment Agreement") with R. Doyle White effective May 1,
1982 regarding the employment of Mr. R. Doyle White as
President and Chief Executive Officer of the Company. The
Employment Agreement provides that Mr. R. Doyle White's
salary will be established annually by the Board of
Directors and that Mr. R. Doyle White may be paid a bonus
annually in accordance with the Company's Incentive
Compensation Plan for Certain Salaried Employees, which is
described below. Mr. R. Doyle White is entitled under the
Employment Agreement to defer receipt of any portion of his
salary or bonuses. Additionally, the Employment Agreement
obligates the Company to pay Mr. R. Doyle White upon
retirement an amount equal to benefits accrued but
forfeitable under the Company's Employees' Retirement Plan
and benefits that would have been payable if the retirement
plan provided for accrual of benefits on deferred
compensation. See "Employee Benefit Plans" below. Finally,
the Employment Agreement provides for the payment of annual
premiums by the Company on a $146,000 term insurance policy
on Mr. R. Doyle White's life, the proceeds of which are
payable to Mr. R. Doyle White's estate, and for the payment
to Mr. R. Doyle White's estate of salary and bonuses for a
period of six months following his death. All salary,
bonuses and other amounts received as compensation or
deferred by Mr. R. Doyle White during the fiscal years ended
April 30, 1996, 1995 and 1994 are included in the summary
compensation table. Amounts deferred in prior years and
reported as cash compensation received by Mr. R. Doyle White
in prior years, even if distributed to him in fiscal 1996,
1995 and 1994, are excluded from the summary compensation
table because such amounts have been reported in prior
years.
The Company has entered into Compensation and Benefits
Agreements ("CBAs") with R. Doyle White, Larry May, Robert
H. Pless, Robert D. Tatum and Stan White who are executive
officers of the Company. Each CBA specifies the employee
benefits to which the covered officer is entitled. See
"Employee Benefit Plans" below. The CBAs with Messrs. R.
Doyle White, Larry May, Robert H. Pless, Robert D. Tatum and
Stan White permit these officers to participate in the
Company's Incentive Compensation Plan, Long-Term Incentive
Plan, Medical Reimbursement Plan, Employees' Retirement Plan
and Supplemental Retirement Plan for Certain Officers (Plan
No. 1 in the case of Mr. R. Doyle White and Plan No. 2 in
the case of Mr. Larry May, Mr. Robert H. Pless, Mr. Robert
D. Tatum and Mr. Stan White). Mr. R. Doyle White's CBA
provides that if his employment is terminated by the Company
at any time or if he voluntarily resigns from employment on
or after his 64th birthday, or prior to his 64th birthday
with the approval of the Board of Directors, his benefits
payable under the Incentive Compensation Plan and the
Long-Term Incentive Plan shall be prorated through the date
of termination of employment. In addition, if Mr. R. Doyle
White voluntarily resigns after his 64th birthday, his
vesting under the Supplemental Retirement Plan shall be
based on his age at his birthday next following the
effective date of his resignation. If Mr. R. Doyle White is
terminated for other than "good cause" ( as defined in the
CBA) prior to May 1, 1996, he shall be entitled to receive
all compensation and benefits otherwise payable as if the
termination occurred on May 1, 1996. Additionally, Mr. R.
Doyle White's CBA provides that upon a "change of control"
(as defined in the CBA) prior to May 1, 1996, Mr. R. Doyle
White shall be paid immediately all amounts due under the
Incentive Compensation Plan as if Mr. R. Doyle White had
terminated his employment on May 1, 1996. Furthermore, any
bonus payments due to Mr. R. Doyle White shall be paid
within 10 days of completion of the annual audit of the plan
for the year in which the change of control occurs. If Mr.
<PAGE> 46
R. Doyle White voluntarily resigns from employment prior to
his 64th birthday without the approval of the Board of
Directors, his benefits payable under the Incentive
Compensation Plan and the Long-Term Incentive Plan shall not
be prorated through the date of termination and only those
payments, if any, which have been earned for previous fiscal
years shall be made. Mr. Larry May's, Mr. Robert H. Pless',
Mr. Robert D. Tatum's and Mr. Stan White's CBA provides that
if he voluntarily resigns or is terminated from employment
with the Company at any time, he shall be entitled to
receive only those payments, if any, due under the Incentive
Compensation Plan and the Long-Term Incentive Plan which
have been earned for previous fiscal years. Each CBA
provides procedures for notices in the event the Company
desires to terminate the employment of the officer. Mr. R.
Doyle White's CBA requires the Company to give him six
months' notice of termination of his employment, and Mr.
Larry May's, Mr. Robert H. Pless', Mr. Robert D. Tatum's and
Mr. Stan White's CBA requires 30 days' notice by the Company
for termination of his employment. If Mr. R. Doyle White,
Mr. Larry May, Mr. Robert H. Pless, Mr. Robert D. Tatum or
Mr. Stan White is disabled for purposes of the applicable
Supplemental Retirement Plan, his benefits payable under the
Incentive Compensation Plan and the Long-Term Incentive Plan
shall be earned through the end of the fiscal year ending
after the date of disability. The CBAs with Messrs. R.
Doyle White, Larry May, Robert H. Pless, Robert D. Tatum and
Stan White each provide for up to three weeks of vacation
annually.
In May 1996, the Company entered into Change in Control
Employment Agreements with each of Messrs. R. Doyle White,
Larry May, Stan White, Robert H. Pless and Robert D. Tatum
(as well as 45 other officers and employees of the Company)
which would provide certain benefits to the employee in the
event of a change in control of the Company (as such term is
defined in the agreements). In the event of a change in
control of the Company, the Change in Control Employment
Agreements of Messrs. R. Doyle White, Larry May, Stan White,
Robert H. Pless and Robert D. Tatum would provide a change
in control bonus of two times the officer's then-current
annual salary, a severance benefit in certain events of two
times his annual compensation, including bonus, and a
continuation of welfare benefits for two years after the
change in control.
Employee Benefit Plans
1994 Employees Stock Option Plan. Pursuant to the
Company's 1994 Employees Stock Option Plan (the "ESOP"),
employees of the Company and its subsidiaries are eligible
to receive either incentive stock options or nonqualified
stock options for the purchase of shares of the Company's
Common Stock. On December 8, 1994, stock options were
granted to R. Doyle White, Larry May, Stan White, Robert H.
Pless and Robert D. Tatum at an exercise price equal to the
fair market value of a share of Common Stock on the date of
grant. The options vest at a rate of 20% per year and
expire ten years from the date of grant. In the event of a
change of control of the Company (as such term is defined in
the ESOP), all outstanding options will become immediately
vested and exercisable.
No stock options were granted as to any of the above-
named officers during the fiscal year ended April 30, 1996.
The following table sets forth information regarding all
stock options which were exercised by any of the above
named officers during the fiscal year ended April 30, 1996
<PAGE> 47
and the value of all of the stock options held by the above
named officers as of April 30, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year End Fiscal Year End (2)
Acquired on Value ------------------------------ ------------------------------
Name Exercise Relized (1) Exercisable Unexercisable Exercisable Unexercisable
---------------- ----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Doyle White -0- -0- 10,839 43,356 116,519 466,077
Larry May 1,000 7,380 7,174 28,696 77,121 308,482
Stan White -0- -0- 5,368 21,472 57,706 230,824
Robert H. Pless -0- -0- 5,311 21,244 57,093 228,373
Robert D. Tatum -0- -0- 3,840 15,360 41,280 165,120
</TABLE>
(1) Value realized is computed by subtracting the option
exercise price ($7.75 per share) from the market price
of the Common Stock on the date of exercise ($15.13 per
share) and multiplying that figure by the total number of
options exercised.
(2) Such value is computed by subtracting the option
exercise price ($7.75 per share) from the market
price of the Common Stock on April 30, 1996 ($18.50 per
share) and multiplying that figure by the total
number of unexercised options. The above computation
does not necessarily represent the fair value of the options.
Incentive Compensation Plan. The Company maintains an
Incentive Compensation Plan for Certain Salaried Employees
(the "Incentive Plan") that is designed to provide an
incentive for management employees to achieve the Company's
financial goals and strategic objectives as well as to
provide the Company a system for planning and measuring the
performance of participating management employees.
Responsibility for administering the Incentive Plan is
vested in the President of the Company, subject to the
overall authority of the Board of Directors. Participation
in the Incentive Plan is limited to management employees who
contribute to corporate, group or division profits in a
significant way; have major responsibility for control or
allocation of corporate assets; provide (by virtue of
organizational, functional and position level criteria) the
perspective needed to balance short-term profit interests
with the long-term health and strategic interests of the
Company; are in compensation grades with salary ranges fixed
at a minimum of $11,500 per year and which are high enough
to permit participants to maintain a reasonable standard of
living, even though a meaningful and substantial portion of
their total cash package is at risk; and are approved by the
appropriate General Manager and by the President of the
Company.
Pursuant to the Incentive Plan, the participating
employee's supervisor, with the approval of his supervisor,
develops performance standards and objectives for the
employee to attain in the coming fiscal year. The
supervisor bases the performance standards and objectives on
(i) the Company's current and projected financial results,
which are measured by a combination of sales, gross profit,
profit before tax, earnings per share, operating costs or
efficiency ratios, and return on assets, and (ii) functional
standards that are tailored to the individual employee's
position with the Company (e.g., standards and objectives
focusing on department goals). Target incentive awards
<PAGE> 48
based on a percentage of the employee's base salary are
established periodically by the executive officers of the
Company for all positions held by participating employees.
The Incentive Plan does not fix a limit on the amount of the
target incentive award. Such target establishes the amount
of cash incentive the employee may earn if he reaches his
performance standards and objectives. The employee may earn
up to 200% of the target incentive award depending upon the
level of achievement of the performance standards and
objectives. The actual amount of cash incentive that the
employee receives is determined pursuant to a formula set
forth in the Incentive Compensation Plan that considers the
importance of each performance standard and objective as
well as whether the employee has met or exceeded the
performance standards and objectives. Payment of the
incentive awards is made annually on the earlier of the July
15 subsequent to the fiscal year end or at such time as the
Company's independent accountants give their approval to the
Company's financial statements. Approximately 265 employees
participated in the Incentive Plan during the fiscal year
ended April 30, 1996.
Long-Term Incentive Plan. The Company established a
Long-Term Incentive Plan (the "LTIP") effective as of May 1,
1986 to provide additional incentive for and to reward
officers of the Company for the achievement of long-term
Company goals. The Board of Directors elects the
participants from the four presently eligible officers of
the Company, including R. Doyle White, Larry May, Robert H.
Pless and Stan White after considering the recommendations
of the Compensation Committee of the Board of Directors.
All four eligible officers currently participated in the
LTIP during fiscal year ended April 30, 1996.
The LTIP generates stock awards on the basis of Company
performance achieved over specified periods of time
("Performance Cycles"). Generally, Performance Cycles
consist of four fiscal years, with a new Performance Cycle
beginning on May 1 of each year. At the beginning of each
Performance Cycle, each participant receives a contingent,
nontransferable grant of shares of the Company's Common
Stock having a value equal to a predetermined percentage of
the participant's base salary. Participants are designated
as having either a "corporate" responsibility or a
"division" responsibility depending on their scope of
responsibility. Awards are earned at the end of the
Performance Cycle based upon the achievement during the
Performance Cycle of predetermined goals established by the
Board of Directors that relate, depending on the
participant's designation as having either a "corporate"
responsibility or a "division" responsibility, to increases
in the Company's earnings per share, return on equity,
division earnings and/or return on average invested capital
in a division, with the maximum value of any award earned at
the end of the Performance Cycle being equal generally to
200% of the value of the shares of Common Stock contingently
granted at the beginning of the Performance Cycle. Awards
are paid in Common Stock or, at the election of the
participants, in a combination of cash (up to 50% of the
total dollar value of the award) and Common Stock.
No Performance Cycles were initiated for the four year
periods beginning May 1, 1993, 1994, 1995 or 1996.
Retirement Plans. The Company maintains the Employees'
Retirement Plan (the "Retirement Plan"), the Supplemental
Retirement Plan for Certain Officers Plan No. 1 (the
"Supplemental Plan No. 1") and the Supplemental Retirement
Plan for Certain Officers Plan No. 2 (the "Supplemental Plan
No. 2"). The Retirement Plan is a non-contributory
qualified defined benefit plan for the benefit of
substantially all employees of the Company. The amounts of
<PAGE> 49
the Company's contributions to the Retirement Plan are
determined on an actuarial basis to provide benefits based
(i) on the highest average compensation (excluding bonuses
and overtime) earned during any consecutive
five-calendar-year period during the last ten years of
employment and (ii) the years of service to normal
retirement date. Effective May 1, 1989, the Retirement Plan
was amended to change the formula for calculation of
benefits. This amendment was required by law and was
designed to continue approximately the same level of
benefits to nonhighly compensated participants while
providing a reduction in the level of future benefits
provided to highly compensated participants under the
Retirement Plan. The following table describes estimated
annual pension benefits payable under the Retirement Plan to
employees in the specified compensation and
period-of-service classifications, assuming (i) normal
retirement at age 65 as of January 1, 1996 and (ii) a
benefit payment in the form of a life annuity.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFIT (2)
FOR YEARS OF SERVICE INDICATED (3)
Average Annual ----------------------------------------------------------------------------------------
Compensation(1) 15 20 25 30 35
--------------- ----------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
50,000 $ 7,431 $ 9,908 $12,385 $14,862 $17,339
75,000 12,119 16,158 20,198 24,237 28,277
100,000 16,806 22,408 28,010 33,612 39,214
125,000 21,494 28,658 35,823 42,987 50,152
150,000 26,181 34,908 43,635 52,362 61,089
175,000 26,181 34,908 43,635 52,362 61,089
</TABLE>
(1) This figure includes compensation in the form of base salary
but not compensation in the form of bonuses or overtime.
(2) Does not include primary Social Security benefits.
(3) At January 1, 1996, R. Doyle White had 18 credited years
of service, Larry May had 31 credited years of service, Stan
White had 25 credited years of service, Robert D. Tatum had
11 credited years of service and Robert H. Pless had 27
credited years of service under the Retirement Plan.
The Supplemental Plan No. 1 was adopted on May 1, 1990
to provide to certain officers retirement benefits that
supplement other benefits provided by the Company. The
Board of Directors determines the officers eligible to
participate in the Supplemental Plan No. 1 as well as the
participation date for each eligible officer. Currently, R.
Doyle White is the only officer participating in the
Supplemental Plan No. 1. Benefits under the Supplemental
Plan No. 1 vest according to a schedule based on the
participant's age at the date of termination of employment
as determined under the terms of the participant's CBA. A
participant who retires after attaining age 65 will receive
a vested benefit equal to two-thirds of his highest
five-year average annual compensation, reduced by his
anticipated Social Security benefit and the amount of
benefits paid under the Retirement Plan, for a fixed number
of years equal to the participant's life expectancy. The
<PAGE> 50
Supplemental Plan No.1 also provides an early retirement
benefit that is determined under the same formula but is
then reduced by a certain percentage determined under an
additional age based vesting schedule if a participant
retires voluntarily prior to age 65. Retirement benefits
are paid monthly. Disability benefits under the
Supplemental Plan No. 1 provide a participant who the Board
of Directors determines to be disabled with a benefit equal
to 66 2/3% of his annualized base pay (excluding incentive
compensation) reduced by any benefits from a long-term
disability plan provided by the Company or Social Security.
The beneficiary of a participant who dies while employed by
the Company will receive a death benefit for one year equal
to the monthly payment of the participant's base pay at the
time of death, reduced by the preretirement death benefit.
The preretirement death benefit equals the vested retirement
benefit of a participant who dies while employed and after
attaining age 59 and will be paid to the deceased
participant's beneficiary. If a participant dies after his
retirement benefits have commenced under the Supplemental
Plan No. 1, his beneficiary will receive any remaining
installment payments. The Supplemental Plan No. 1 was
amended on December 10, 1993 to provide that in the event of
a "change of control" (as defined therein), the present
value of all benefits which would be accrued to Mr. R. Doyle
White thereunder as of May 1, 1996 shall become immediately
due and payable. No payments have been made pursuant to the
Supplemental Plan No. 1, but the Company accrued $105,366
under the Supplemental Plan No. 1 for the account of R.
Doyle White during the fiscal year ended April 30, 1996.
Such accrued amount is included in the compensation reported
for Mr. R. Doyle White under the heading "All Other
Compensation" in the summary compensation table. See Note
3 thereto.
The Board of Directors also adopted the Supplemental
Plan No. 2 on May 1, 1990. The Supplemental Plan No. 2
provides to certain officers designated by the Board,
including Larry May, Robert H. Pless, Robert D. Tatum and
Stan White, retirement benefits that are supplemental to
other benefits received from the Company. Under the
Supplemental Plan No. 2, a participant who retires after
attaining age 65 will receive a benefit equal to two-thirds
of his highest five-year average annual compensation
multiplied by years of service with the Company, multiplied
by .01875, and then reduced by his anticipated Social
Security benefit and the amount of benefits paid under the
Retirement Plan. Benefits from the Supplemental Plan No. 2
will be paid monthly for the life of the participant unless
the participant elects another form of payment at the time
of admission to the Supplemental Plan No. 2. If a
participant retires from the Company prior to age 65 without
the approval of the Board of Directors, he will receive 90%
of the retirement benefit described above. Disability
provisions of the Supplemental Plan No. 2 will allow a
participant determined to be disabled by the Board of
Directors to receive a benefit equal to 66 2/3% of his
annualized base pay (excluding incentive compensation)
reduced by any benefits from any Company-provided long-term
disability plan or Social Security. The Supplemental Plan
No. 2 provides that a death benefit equal to a participant's
base pay at the time of death will be paid monthly for one
year to the beneficiary if a participant dies while employed
by the Company. The death benefit will be reduced by any
preretirement death benefit. The preretirement death
benefit will be paid upon the death of a participant who
elected a form of distribution other than the life only
option. Under the preretirement death benefit, the
participant's beneficiary will receive the benefit
determined as if the participant retired the day before his
death.
Amounts accrued under the Supplemental Plan No. 2 for
the account of Mr. Larry May, Mr. Robert H. Pless, Mr.
Robert D. Tatum and Mr. Stan White are included in the
<PAGE> 51
compensation reported for him under the heading "All Other
Compensation" in the summary compensation table. See Note
3 thereto.
Director Compensation
Directors who are not employees or paid consultants of
the Company are paid $1,150 for each Board of Directors and
committee meeting attended and an additional fee of $1,150
per month. Directors who are employees or paid consultants
of the Company are not compensated for attendance at Board
or committee meetings. All directors are reimbursed for
expenses incurred in attending meetings.
Pursuant to the Company s 1994 Director Stock Option
Plan (the "DSOP"), directors of the Company who are not
otherwise compensated employees and who are not and never
have been employees of the Company or any parent or
subsidarary are eligible to receive options to purchase
shares of the Company's Common Stock. As of December 8,
1994, each eligible director as of such date (i.e., Messrs.
Joe E. Beverly, O. Larry Comer, Robert P. Crozer and Thomas
R. Pledger) was granted a one-time option to purchase 8,000
shares of the Company's Common Stock. All options were
granted at an exercise price equal to the fair market value
of a share of Common Stock on the date of grant, vest at the
rate of 20% per year and expire ten years from the date of
grant. In the event of a change of control of the Company
(as such term is defined in the DSOP), all outstanding
options will become immediately vested and exercisable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of April
30, 1996 (except as otherwise noted) regarding the ownership
of the Company's Common Stock by each person known to the
Company to be the beneficial owner of more than 5% of the
Company's Common Stock, each executive officer of the
Company whose salary and bonus for the fiscal year ended
April 30, 1996 exceeded $100,000, and all directors and
executive officers of the Company as a group.
<PAGE> 52
<TABLE>
<CAPTION>
Name Shares Beneficially Owned (1)(4) Percent of Class
----------------------------------- -------------------------------- ----------------
<S> <C> <C> <C>
Jasper C. Davis III (2) 548,416 (3) 16.8%
Dimensional Fund Advisors, Inc. (4) 225,600 6.9%
H. Forbes Davis 93,406 (5) 2.9%
R.R. Davis 65,000 (6) 2.0%
R. Doyle White 48,289 (7) 1.5%
Robert H. Pless 17,270 (8) *
O. Larry Comer 10,000 (9) *
Larry May 14,897 (10) *
Robert D. Tatum 9,911 (11) *
Joe E. Beverly 6,350 (12) *
Robert P. Crozer 4,700 (9) *
Stan White 7,058 (13) *
Thomas R. Pledger 2,600 (9) *
All directors and executive officers
as a group (12 persons) 824,157 25.4%
</TABLE>
___________
(*)Denotes less than 1% of the outstanding Common Stock.
(1) Beneficial ownership as reported in this Annual Report on
Form 10-K has been determined in accordance with Securities
and Exchange Commission regulations and includes shares of
Common Stock of the Company that the named person has the
right to acquire within 60 days after April 30, 1996.
Except as otherwise stated in the footnotes below, the named
persons have sole voting and investment power with regard to
the shares shown as owned by such persons.
(2) Mr. Davis' mailing address is P.O. Box 1419, Thomasville,
Georgia 31799-1419.
(3) Includes 78,795 shares with regard to Jasper C. Davis
III which are held by his wife.
(4) The shares shown as beneficially owned by Dimensional
Fund Advisors, Inc. are held in portfolios of DFA Investment
Dimensions Group, Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified
<PAGE> 53
employee benefit plans, for all of which Dimensional Fund
Advisors Inc., a registered investment advisor, serves as
investment manager. Dimensional Fund Advisors, Inc.
disclaims beneficial ownership of all of such shares. The
mailing address for Dimensional Fund Advisors, Inc. is 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401.
Such information is as of December 31, 1995.
(5) Includes 19,939 shares which are held by his wife.
(6) Includes 29,297 shares which are held by his wife.
(7) Includes approximately 87 shares estimated to be issuable
under the Company's Employee Stock Purchase Plan as of June
30, 1996, 289 shares earned under the Company's Long Term
Incentive Plan and 10,839 shares vested and not exercised
under the ESOP.
(8) Includes approximately 80 shares estimated to be issuable
under the Company's Employee Stock Purchase Plan as of June
30, 1996, 782 shares earned under the Company's Long Term
Incentive Plan and 5,311 shares vested and not exercised
under the ESOP.
(9) Includes 1,600 shares vested and not exercised under the
DSOP.
(10) Includes approximately 80 shares estimated to be
issuable under the Company's Employee Stock Purchase Plan as
of June 30, 1996, 402 shares earned under the Company's Long
Term Incentive Plan and 6,174 shares vested and not
exercised under the ESOP.
(11) Includes 2,100 shares which are held in trust for his
child, approximately 39 shares estimated to be issuable
under the Company's Employee Stock Purchase Plan as of June
30, 1996 and 3,840 shares vested and not exercised under the
ESOP.
(12) Includes 150 shares which are held by by his wife and as
to which beneficial ownership is disclaimed and 1,600 shares
vested and not exercised under the DSOP.
(13) Includes approximately 80 shares estimated to be issuable
under the Company's Employee Stock Purchase Plan as
of June 30, 1996, 107 shares earned under the Company's Long
Term Incentive Plan and 5,368 shares vested and not
exercised under the ESOP.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into an Agreement for Consulting
Services with each of Jasper C. Davis III (effective
September 1, 1990), R. R. Davis (effective October 1, 1991)
and H. Forbes Davis (effective July 1, 1993) (together, the
"Consulting Agreements"). Jasper C. Davis III, R. R. Davis
and H. Forbes Davis are directors of the Company, and R. R.
Davis is Vice Chairman of the Board of the Company.
Pursuant to the Consulting Agreements, Jasper C. Davis III,
R. R. Davis and H. Forbes Davis are to advise and assist the
Company in its business and serve on its Board of Directors.
<PAGE> 54
The Consulting Agreements have initial one-year terms which
are automatically renewed for successive one-year terms
unless otherwise terminated. Under Jasper C. Davis III's
Consulting Agreement, as amended, Mr. Davis was compensated
at the rate of $60,000 per year through September 30, 1991,
at the rate of $36,000 per year from October 1, 1991 through
December 31, 1994, and at the rate of $60,000 per year
thereafter, payable in each case in monthly installments.
The Consulting Agreement with R. R. Davis provides for
compensation at the rate of $18,000 per year payable in
monthly installments. Under the Consulting Agreement with
H. Forbes Davis, as amended, Mr. Davis was paid at the rate
of $18,000 per year through December 31, 1994 and at the
rate of $24,000 per year thereafter, payable in each case in
monthly installments. Reasonable and necessary travel
expenses and other disbursements which are incurred in the
performance of duties under the Consulting Agreements are
reimbursed by the Company. In accordance with the
Consulting Agreements, the three consultants do not
participate in any employee benefit plans provided by the
Company (except that they receive payments under the
Company s retirement plans in which they participated prior
to their retirement as officers of the Company).
The Company maintains split dollar whole life insurance
policies for Jasper C. Davis III in the amount of $5,800,000
and for R. R. Davis in the amount of $2,000,000. Also
included as co-insureds on the policies are Marthalene M.
Davis and Ann R. Davis, the wives of Jasper C. Davis III and
R. R. Davis, respectively. The premiums under the policies
are, or have in the past been, paid by the Company, and the
beneficiaries under the policies are the respective estates
of the above-named persons. Upon the death of the primary
insured or the termination of the policies, the Company will
be reimbursed by the respective estates for the aggregate
amount of premiums paid by the Company under the policies,
plus interest from the time of the first payment of
premiums. The interest rate to be charged will be 9% per
year with regard to premium payments made through April 30,
1993 and will be at the prime rate of SunTrust Bank, N.A.
with regard to premium payments made thereafter. During the
fiscal year ended April 30, 1996, the Company paid $18,327
in premiums on the policy for Jasper C. Davis III and made
no payments on the policy for R. R. Davis. If Jasper C.
Davis III and R. R. Davis had died on June 14, 1996, the
amounts owed to the Company would be $1,202,244 and
$318,175, respectively.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K
(a)Documents Filed as Part of This Report.
1.Financial Statements
Consolidated Statement of Operations for each of the
three years in the period ended April 30, 1996
Consolidated Balance Sheet at April 30, 1996 and April
30, 1995
Consolidated Statement of Changes in Stockholders'
Equity for each of the three years in the period ended
April 30, 1996
<PAGE> 55
Consolidated Statement of Cash Flows for each of the
three years in the period ended April 30, 1996
Notes to Consolidated Financial Statements
2.Financial Statement Schedules
The following financial statement schedule and the
report of independent accountants thereon is included
in this report. All other schedules for which
provision is made in the applicable accounting
regulations of the Securities and Exchange Commission
have been omitted because such schedules are not
required under the related instructions or are
inapplicable or because the information required is
included in the consolidated financial statements or
notes thereto. See the Index to Financial Statement
Schedules on page 64 hereof.
Report of Independent Accountants
on Financial Statement Schedules
Schedule II Valuation and Qualifying
Accounts for the Three
Years Ended April 30, 1996
3.Exhibits
The following exhibits are filed with or incorporated
by reference in this report. Where such filing is made
by incorporation by reference to previously filed
registration statement or report, such registration
statement or report is identified in parentheses. The
Company will furnish any exhibit upon request to Stan
White, Secretary/Treasurer, Davis Water & Waste
Industries, Inc., 1820 Metcalf Avenue, Thomasville,
Georgia 31792; telephone (912) 226-5733. There is a
charge of $.50 per page to cover expenses for copying
and mailing.
2 Agreement and Plan of Merger dated as of June 10,
1996 among United States Filter Corporation, USF/DWW
Acquisition Corporation and the Registrant (Exhibit 2.1
to in the Company s Current Report on Form 8-K dated
June 10, 1996)
3(a) Restated Articles of Incorporation of the Company
(Exhibit 3(a) to the Company's Registration Statement on
Form S-1, No. 2-42887)
3(b) Articles of Amendment to Restated Articles of
Incorporation of the Company (Exhibit 3(b) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1987)
<PAGE> 56
3(c) Articles of Amendment to Restated Articles of
Incorporation of the Company (Exhibit 3(c) to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1988)
3(d) Articles of Amendment to Restated Articles of
Incorporation of the Company (Exhibit 3(d) to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1989)
3(e) Articles of Amendment to Restated Articles of
Incorporation of the Company (Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1990)
3(f) By-laws of the Company, as amended through August
24, 1990 (Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended July 31,
1990)
4(a) Rights Agreement dated as of December 31, 1992 by
and between the Company and Wachovia Bank of North
Carolina, N.A., as the Rights Agent (Exhibit 4 to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1993)
4(b) Amendment No. 1 to Rights Agreement dated as of
June 10, 1996 by and between the Company and Wachovia
Bank of North Carolina, N.A., as the Rights Agent -
filed herewith
10(a)* Employment Agreement dated May 1, 1981
between R. Doyle White and the Company (Exhibit 10(a)
to the Company's Annual Report on Form 10-K for the
year ended April 30, 1982)
10(a)(i)* Amendment to Employment Agreement dated
March 15, 1996 between R. Doyle White and the Company-
filed herewith
10(b)* Agreement for Consulting Services dated
September 1, 1990 between Jasper C. Davis III and the
Company (Exhibit 10(b) to the Company's Annual Report
on Form 10-K for the year ended April 30, 1991)
10(c)* Agreement for Consulting Services dated
October 1, 1991 between R. R. Davis and the Company
(Exhibit 10(c) to the Company's Annual Report on Form
10-K for the year ended April 30, 1992)
10(d)* Agreement for Consulting Services dated
January 5, 1994 between H.F.D. Consultants, Inc. (a
corporation wholly owned by H. Forbes Davis) and the
Company (Exhibit 10(u) to the Company's Quarterly
Report on Form 10-Q for the quarter ended January 31,
1994)
10(e)* Form of Compensation and Benefits Agreement
dated May 1, 1990 between the Company and certain
<PAGE> 57
executive officers of the Company (Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1991)
10(f)* Compensation and Benefits Agreement dated
June 5, 1990 between the Company and R. Doyle White
(Exhibit 10(d) to the Company's Annual Report on Form
10-K for the year ended April 30, 1991)
10(g)* Amendment dated December 10, 1993 to the
Compensation and Benefits Agreement between the Company
and R. Doyle White (Exhibit 10(a)(i) to the Company's
Quarterly Report on Form 10-Q for the quarter ended
January 31, 1994)
10(h)* 1988 Employee Stock Purchase Plan, as
amended by First 1991 Amendment (Exhibit 10(f) to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1992)
10(i)* Amended and Restated Employees' Retirement
Plan of Company (Exhibit 3 to the Company's Annual
Report on Form 10-K for the year ended April 30, 1978)
10(j)* Davis Water & Waste Industries, Inc.
Employee Benefits Trust Agreement (Exhibit A to the
Company's Annual Report on Form 10-K for the year ended
April 30, 1985)
10(k)* Supplemental Retirement Plan for Certain
Officers Plan No. 1 (Exhibit 10(h) to the Company's
Annual Report on Form 10-K for the year ended April 30,
1991)
10(l)* Amendment to the Supplemental Retirement
Plan for Certain Officers Plan No. 1 (Exhibit 10(i)(i)
to the Company's Quarterly Report on Form 10-Q for the
quarter ended January 31, 1994)
10(m)* Supplemental Retirement Plan for Certain
Officers Plan No. 2 (Exhibit 10(i) to the Company's
Annual Report on Form 10-K for the year ended April 30,
1991)
10(n)* Medical Reimbursement Plan (Exhibit 10(j)
to the Company's Annual Report on Form 10-K for the
year ended April 30, 1991)
10(o)* Salary Administration Plan for Monthly
Salaried Employees, including the Incentive
Compensation Plan for Certain Salaried Employees
(Exhibit B to the Company's Annual Report on Form 10-K
for the year ended April 30, 1985)
10(p)* Long Term Incentive Plan dated May 1, 1992
(Exhibit 10(p) to the Company's Annual Report on Form
10-K for the year ended April 30, 1993)
<PAGE> 58
10(q) Agency Agreement dated November 21, 1978
between the Company and EMU Unterwasserpumpen GmbH
(Exhibit 10(o) to the Company's Registration Statement
on Form S-1, No. 33-13340)
10(r) Purchase Agreement dated August 31, 1990 by and
among The Taulman Company, TTC Acquisition Corporation,
certain stockholders of The Taulman Company and the
Company (Exhibit 2.1 to the Company's Current Report on
Form 8-K dated August 31, 1990)
10(s) Amendment dated August 31, 1990 to the Asset
Purchase Agreement dated August 31, 1990 by and among,
The Taulman Company, TTC Acquisition Corporation,
certain stockholders of The Taulman Company and the
Company (Exhibit 2.2 to the Company's Current Report on
Form 8-K dated August 31, 1990)
10(t) Loan Agreement dated as of October 13, 1992
between the Company and SunTrust Bank, Central Florida,
N.A. (Exhibit 10(t) to the Company's Annual Report on
Form 10-K for the year ended April 30, 1993)
10(u) Second Amendment to Loan Agreement and First
Amendment to Security Agreement dated as of May 8, 1995
between the Company and SunTrust Bank, Central Florida,
N.A. (Exhibit 10(t)(ii) to the Company's Quarterly
Report on Form 10-Q for the quarter ended July 31,
1995)
10(v) Loan extension dated as of June 6, 1996 by
SunTrust Bank, CentralFlorida, N.A. - filed herewith
10(w)* 1994 Employees Stock Option Plan (Exhibit
10(v) to the Company's Quarterly Report on Form 10-Q
for the quarter ended January 31, 1995)
10(x)* 1994 Directors Stock Option Plan (Exhibit
10(w) to the Company's Quarterly Report on Form 10-Q
for the quarter ended January 31, 1995)
10(y)* Form of Change in Control Employment
Agreement between the Company and each of R. Doyle
White, Larry May, Stan White, Robert H. Pless and
Robert D. Tatum - filed herewith
21 Subsidiaries - filed herewith
23 Consent of Price Waterhouse to incorporation of
accountant's reports into the Company's Registration
Statements on Form S-8, No. 33-43032 and 33-62995 -
filed herewith
24 Powers of Attorney - filed herewith
27 Financial Data Schedule - filed herewith
* The exhibit is a management contract or compensatory plan
or arrangement.
<PAGE> 59
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed by the
Company during the fiscal quarter ended April 30, 1996.
(c) See Item 14(a)(3) above.
(d) See Item 14(a)(2) above.
----------------------
<PAGE> 60
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on June 20, 1996.
DAVIS WATER & WASTE INDUSTRIES, Inc.
(Registrant)
By: /s/ R. Doyle White
------------------------
R. Doyle White
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 61
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities indicated on June 20, 1996.
Signature Title
/s/R. Doyle White Chairman of the Board,
------------------------------- President and Chief Executive
R. Doyle White Officer
/s/Stan White Secretary/Treasurer, Principal
-------------------------------- Financial Officer and Principal
Stan White Accounting Officer
<PAGE> 62
/s/ Joe E. Beverly* Director
------------------------
Joe E. Beverly
/s/ O. Larry Comer* Director
------------------------
0. Larry Comer
/s/ Robert P. Crozer* Director
------------------------
Robert P. Crozer
/s/ H. Forbes Davis* Director
------------------------
H. Forbes Davis
/s/ Jasper C. Davis* Director
------------------------
Jasper C. Davis
/s/ R. R. Davis* Vice Chairman of the Board
------------------------
R. R. Davis
/s/ Thomas R. Pledger* Director
------------------------
Thomas R. Pledger
*By: /s/ Stan White
------------------------
Stan White
Attorney in Fact
<PAGE> 63
<TABLE>
<CAPTION>
DAVIS WATER & WASTE INDUSTRIES, Inc.
INDEX OF FINANCIAL STATEMENT SCHEDULES
Schedule No. Schedule Page
------------ ----------- ----
<S> <C> <C>
Report of Independent 65
Accountants on Financial
Statement Schedules
II Valuation and Qualifying 66
Accounts for the Three
Years Ended April 30, 1996
</TABLE>
<PAGE> 64
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors
of Davis Water & Waste Industries, Inc.
Our audits of the consolidated financial statements referred
to in our report dated June 13, 1996 appearing on page 24 of
this 1996 Annual Report on Form 10-K also included an audit
of the Financial Statement Schedule listed in Item 14(a) of
this Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with
the related consolidated financial statements.
Price Waterhouse LLP
Atlanta, Georgia
June 13, 1996
<PAGE> 65
<TABLE>
<CAPTION>
SCHEDULE II
DAVIS WATER & WASTE INDUSTRIES, Inc.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED APRIL 30, 1996
Column A Column B Column C Column D Column E
--------------------------------------------------------------------------------------------------------------------
Balance at Additions
beginning of charged to Deductions from Balance at
Description period cost & expense reserves (A) end of period
-------------------------- ------------ --------------- ------------ -------------
<S> <C> <C> <C> <C>
Doubtful accounts
receivable for the
year ended:
April 30, 1996 $1,135,000 $632,000 $506,000 $1,261,000
April 30, 1995 $1,338,000 $472,000 $675,000 $1,135,000
April 30, 1994 $1,543,000 $665,000 $870,000 $1,338,000
Inventory reserves
for the year ended:
April 30, 1996 $939,000 $ 909,000 $1,087,000 $761,000
April 30, 1995 $ 52,000 $1,545,000 $ 658,000 $939,000
April 30, 1994 $192,000 $ 0 $ 140,000 $ 52,000
</TABLE>
-------------------------------
(A) Uncollectible accounts written off, net of recoveries.
<PAGE> 66
DAVIS WATER & WASTE INDUSTRIES, Inc.
INDEX OF EXHIBITS
The following exhibits are filed as part of or incorporated
by reference in this report. Where such filing is made by
incorporation by reference to a previously filed
registration statement or report, such registration
statement or report is identified in parentheses.
Exhibit No. Description Page
----------- ----------- ----
2 Agreement and Plan of Merger dated as of
June 10, 1996 among United States Filter
Corporation, USF/DWW Acquisition
Corporation and the Registrant (Exhibit
2.1 to the Company's Current Report on
Form 8-K dated June 10, 1996)
3(a) Restated Articles of Incorporation of
the Company (Exhibit 3(a) to the
Company's Registration Statement on Form
S-1, No. 2-42887)
3(b) Articles of Amendment to Restatement
Articles of Incorporation of the Company
(Exhibit 3(b) to the Company's Quarterly
Report on Form 10-Q for the quarter
ended January 31, 1987)
3(c) Articles of Amendment to Restated
Articles of Incorporation of the Company
(Exhibit 3(c) to the Company's Annual
Report on Form 10-K for the year ended
April 30, 1988)
3(d) Articles of Amendment to Restated
Articles of Incorporation of the Company
(Exhibit 3(d) to the Company's Annual
Report on Form 10-K for the year ended
April 30, 1989)
3(e) Articles of Amendment to Restated
Articles of Incorporation of the Company
(Exhibit 3.1 to the Company's Quarterly
Report on Form 10-Q for the quarter
ended July 31, 1990)
3(f) By-Laws of the Company, as amended
through August 24, 1990 (Exhibit 3.2 to
the Company's Quarterly Report on Form
10-Q for the quarter ended July 31,
1990)
4(a) Rights Agreement dated as of December
31, 1992 by and between the Company and
Wachovia Bank of North Carolina, N.A.,
as the Rights Agent (Exhibit 4 to the
Company's Annual Report on Form 10-k for
the year ended April 30, 1993)
4(b) Amendment No. 1 to Rights Agreement
dated as of June 10, 1996 by and between
the Company and Wachovia Bank of North
Carolina, N.A., as the Rights Agent -
filed herewith 71
<PAGE> 67
Exhibit No. Description Page
----------- ----------- ----
10(a)* Employment Agreement dated May 1, 1981
between R. Doyle White and the Company
(Exhibit 10(a) to the Company's Annual
Report on Form 10-K for the year ended
April 30, 1982)
10(a)(i)* Amendment to Employment Agreement dated
March 15, 1996 between R. Doyle White
and the Company - filed herewith 75
10(b)* Agreement for Consulting Services dated
September 1, 1990 between Jasper C.
Davis III and the Company (Exhibit 10(b)
to the Company's Annual Report on Form
10-K for the year ended April 30, 1991)
10(c)* Agreement for Consulting Services dated
October 1, 1991 between R. R. Davis and
the Company (Exhibit 10(c) to the
Company's Annual Report on Form
10-K for the year ended April 30, 1992)
10(d)* Agreement for Consulting Services dated
January 5, 1994 between H.F.D.
Consultants, Inc. (a corporation wholly
owned by H. Forbes Davis) and the
Company (Exhibit 10(u) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended January 31,
1994)
10(e)* Form of Compensation and Benefits
Agreement dated May 1, 1990 between the
Company and certain executive officers
of the Company (Exhibit 10(c) to the
Company's Annual Report on Form 10-K for
the year ended April 30, 1991)
10(f)* Compensation and Benefits Agreement
dated June 5, 1990 between the Company
and R. Doyle White (Exhibit 10(d) to
the Company's Annual Report on Form 10-K
for the year ended April 30, 1991)
10(g)* Amendment dated December 10, 1993 to the
Compensation and Benefits Agreement
between the Company and R. Doyle White
(Exhibit 10(a)(i) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended January 31, 1994)
10(h)* 1988 Employee Stock Purchase Plan, as
amended by First 1991 Amendment (Exhibit
10(i)* 10(f) to the Company's Annual Report on
Form 10-K for the year ended April 30,
1992)
10(i)* Amended and Restated Employee Retirement
Plan of the Company (Exhibit 3 to the
Company's Annual Report on Form 10-K for
the year ended April 30, 1978)
10(j)* Davis Water & Waste Industries, Inc.
Employee Benefits Trust Agreement
(Exhibit A to the Company's Annual
Report on Form 10-K for the year ended
April 30, 1985)
10(k)* Supplemental Retirement Plan for Certain
Officers Plan No. 1 (Exhibit 10(h) to
the Company's Annual Report on Form 10-K
for the year ended April 30, 1991)
<PAGE> 68
Exhibit No. Description Page
----------- ----------- ----
10(l)* Amendment to the Supplemental Retirement
Plan for Certain Officers Plan No. 1
(Exhibit 10(i)(i) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended January 31, 1994)
10(m)* Supplemental Retirement Plan for Certain
Officers Plan No. 2 (Exhibit 10(i) to
the Company's Annual Report on Form 10-K
for the year ended April 30, 1991)
10(n)* Medical Reimbursement Plan - (Exhibit
10(j) to the Company's Annual Report on
Form 10-K for the year ended April 30,
1991)
10(o)* Salary Administration Plan for Monthly
Salaried Employees, including the
Incentive Compensation Plan for Certain
Salaried Employees (Exhibit B to the
Company's Annual Report on Form 10-K for
the year ended April 30, 1985)
10(p)* Long Term Incentive Plan dated May 1,
1992 (Exhibit 10(p) to the Company's
Annual Report on Form 10-K for the year
ended April 30, 1993)
10(q) Agency Agreement dated November 21, 1978
between the Company and EMU Unterwas-
serpumpen GmbH (Exhibit 10(o) to the
Company's Registration Statement on Form
S-1, No. 33-13340)
10(r) Purchase Agreement dated August 31, 1990
by and among, The Taulman Company, TTC
acquisition Corporation, certain
stockholders of The Taulman Company and
the Company (Exhibit 2.1 to the
Company's Current Report on Form 8-K
dated August 31, 1990)
10(s) Amendment dated August 31, 1990 to the
Asset Purchase Agreement dated August 3,
1990 by and among TTC Acquisition
Corporation, The Taulman Company,
certain stockholders of The Taulman
Company and the Company (Exhibit 2.2 to
the Company's Current Report on Form 8-K
dated August 31, 1990)
10(t) Loan Agreement dated as of October 13,
1992 between the Company and SunTrust
Bank, Central Florida, N.A. (Exhibit 10(t)
to the Company's Annual Report on Form 10-K
for the year ended April 30, 1993)
10(u) Second Amendment to Loan Agreement and
First Amendment to Security Agreement
dated as of May 8, 1995 between the
Company and SunTrust Bank, Central
Florida, N.A. (Exhibit 10(t)(ii) to the
Company's Quarterly Report on Form 10-Q
for the quarter ended July 31, 1995)
10(v) Loan extension dated as of June 6, 1996
by SunTrust Bank, Central Florida, N.A.
- filed herewith 77
<PAGE> 69
Exhibit No. Description Page
----------- ----------- ----
10(w)* 1994 Employees Stock Option Plan
(Exhibit 10(v) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended January 31, 1995)
10(x)* 1994 Directors Stock Option Plan
(Exhibit 10(w) to the Company's
Quarterly Report on Form 10-Q for the
quarter ended January 31, 1995)
10(y) Form of Change in Control Employment
Agreement between the Company and each
of R. Doyle White, Larry May, Stan
White, Robert H. Pless and Robert D.
Tatum - filed herewith 79
21 Subsidiaries - filed herewith
23 Consent of Price Waterhouse to
incorporation of accountant's reports
into the Company's Registration
Statements on Form S-8, No. 33-43032 and
33-62995 - filed herewith 89
24 Powers of Attorney - filed herewith 91
27 Financial Data Schedule - filed herewith 93
_________________________________
* The exhibit is a management contract or compensatory plan
or arrangement.
<PAGE> 70
EXHIBIT 4(b)
Amendment No.1 to Right Agreement
<PAGE> 71
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
Amendment, dated as of June 10, 1996, to the Rights
Agreement, dated as of December 31, 1992 (the "Agreement"),
between Davis Water & Waste Industries, Inc., a Georgia
corporation (the "Company"), and Wachovia Bank of North
Carolina, N.A., a national banking association (the "Rights
Agent").
WITNESSETH
WHEREAS, the Company proposes to enter into an
Agreement and Plan of Merger, dated as of June 10, 1996 (the
"Merger Agreement"), with United States Filter Corporation,
a Delaware corporation ("Parent"), and its wholly owned
subsidiary, USF/DWW Acquisition Corporation, a Delaware
corporation, pursuant to which the Company will represent
and warrant, among other things, that the Agreement has been
amended as provided herein, the effect of which is to
provide that neither (i) the execution and delivery of or
the consummation of the transactions contemplated by the
Merger Agreement, nor (II) the execution and delivery of or
the consummation of the transactions contemplated by the
Shareholder Agreements, dated as of June 10, 1996 (the
"Shareholder Agreements"), between Parent and certain
shareholders of the Company will result in a Stock
Acquisition Date nor a Distribution Date nor in any other
way affect any change or modification of the terms of the
Rights or the rights of the holders thereof, and
WHEREAS, the Board of Directors of the Company has
determined that it is necessary and desirable to amend,
pursuant to Section 26 of the Agreement, the Agreement to
comply with the terms of the Merger Agreement, and a
majority of the Continuing Directors, at a meeting of such
Board duly called and held, voted in favor of the adoption
of this Amendment.
<PAGE> 72
NOW, THEREFORE, in consideration of the foregoing, the
mutual agreements herein set forth and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as
follows:
1.Section 1(a) of the Agreement is hereby amended by adding the
following sentence at the end thereof:
"Notwithstanding the foregoing, no Person shall become
an 'Acquiring Person' as the result of the execution
and delivery of or the consummation of the transactions
contemplated by the Agreement and Plan of Merger dated
as of June 10, 1996 among United States Filter
Corporation, a Delaware corporation, USF/DWW
Acquisition corporation, a Delaware corporation, and
the Company (the "Merger Agreement") or any of the
Shareholder Agreements, dated as of June 10, 1996 (the
"Shareholder Agreements"), between United States Filter
Corporation and certain shareholders of the Company."
2.Section 1(e) of the Agreement is hereby amended by adding the
following sentence at the end thereof:
"Notwithstanding the foregoing, no Person shall be
deemed the 'Beneficial Owner' of, or to 'Beneficially
Own', any securities on account of the execution and
delivery of the Merger Agreement or any Shareholder
Agreement or the consummation of the transactions
contemplated thereby."
3.Section 3(a) of the Agreement is hereby amended by adding the
following sentence at the end thereof:
"Notwithstanding the foregoing, no announcement of the
execution and delivery of the Merger Agreement or of
the calling of a shareholders meeting to approve and
adopt the Merger Agreement nor the filing of the
Registration Statement (as defined in the Merger
Agreement) or any amendment thereto nor any
distribution of the prospectus contained therein nor
any other action taken to facilitate the consummation
of the transactions contemplated by the Merger
Agreement shall be deemed the publication, sending or
giving of an exchange offer for the purposes of this
Section 3."
<PAGE> 73
4.Section 11(a) of the Agreement is hereby amended by adding a new
subsection (v) as follows:
"(v) The execution and delivery of and the consummation
of the transactions contemplated by the Merger
Agreement and the Shareholders Agreement have been
approved as of June 7, 1996 by all members of the Board
of Directors of the Company for all purposes under this
Section 11(a)."
5.Section 23 of the Agreement is hereby amended by adding a new
subsection (c) and relabeling the current subsection (c) as
subsection (d):
"(c) Without any further action by the Board of
Directors of the Company, immediately prior to the
Effective Time (as defined in the Merger Agreement),
all then outstanding rights shall be automatically
redeemed at the then Redemption Price."
6.Terms used herein without definition shall have the meanings
assigned to them in the Agreement. Other than as a mended
hereby, all other provisions of the Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested as of the day and
year first above written.
Attest: DAVIS WATER & WASTE INDUSTRIES, INC.
By: /s/ Stan White By: /s/ R. Doyle White
------------------------ ---------------------------------
Title: Secretary/Treasurer Title: Chairman, President and CEO
--------------------- ------------------------------
<PAGE> 74
EXHIBIT 10(a)(i)
Amendment to Employment Agreement
<PAGE> 75
EXTENSION OF EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into
this 15th day of March, 1996 by and between Davis Water &
Waste Industries, Inc. (hereinafter the "Company") and R.
Doyle White (hereinafter "Executive").
Executive is Chairman of the Board of Directors,
President and Chief Executive Officer of the Company and
reached age 65 in January 1996. His existing Compensation
and Benefits Agreement with the Company contemplates his
retiring on April 30, 1996 (the end of the Company's 1996
fiscal year). At the request of the Company's Board of
Directors, Executive has agreed to remain employed in his
current capacity through April 30, 1997.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, the parties
hereby agree as follows:
Extension of Employment. Executive will remain
employed as Chairman of the Board of Directors, President
and Chief Executive Officer of the Company through April 30,
1997 in accordance with the terms of his current
Compensation and Benefits Agreement with the Company. Such
Compensation and Benefits Agreement, as heretofore amended,
shall be and hereby is extended through April 30, 1997.
IN WITNESS WHEREOF, the parties hereto have duly
executed and delivered this Agreement as of the date first
above written.
DAVIS WATER & WASTE INDUSTRIES, INC.
By: /s/ Robert P. Crozer
---------------------------------------
Title: Chairman, Compensation Committee
--------------------------------
/s/ R. Doyle White
---------------------------------------
R. Doyle White
<PAGE> 76
EXHIBIT 10(u)
Loan Extension
<PAGE> 77
SunTrust Bank Central Florida, N.A.
Post Office Box 3833
Orlando, Florida 32802
SUNTRUST
June 6, 1996
Mr. Stan White
Secretary/Treasurer
Davis Water & Waste Industries, Inc.
1828 Metcalf Avenue
Thomasville, GA 31799-1419
Dear Stan:
SunTrust Bank, Central Florida, N.A. (f/k/a Sun Bank,
National Association) (the "Bank") is pleased to notify
Davis Water & Waste Industries that pursuant to Section 2.01
of the Amended and Restated Loan Agreement dated as of
October 13, 1992, as amended by the First and Second
Amendments dated July 20, 1994, and May 8, 1995,
respectively, (the "Agreement) the Bank has extended the
Revolving Period of the line of credit for twelve months to
April 30, 1998.
The Bank is also pleased to notify Davis Water & Waste
Industries that the Bank has
approved the early release of Collateral under Section 2. 1
0 of the Agreement.
By way of copy of this letter, I will notify Bank's Counsel
to begin drafting the appropriate amendments and documents
to extend the maturity of the line and to release the
Collateral. Please do not hesitate to phone me with any
questions regarding this matter.
Very truly
/s/ Tony Ross
J. Anthony Ross
Vice President
Corporate Banking / Florida Division
(407) 237-6788 / 1-800-432-4760 ext. 6788
cc: Charles T. Brumback, Jr., Esq.
Akerman, Senterfitt, & Eidson, P.A.
<PAGE> 78
EXHIBIT 10(y)
Form of Change in Control Employment Agreement
<PAGE> 79
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
AGREEMENT by and between Davis Water & Waste
Industries, Inc., a Georgia corporation (the "Company") and
________________ (the "Executive"), dated as of the ___ day
of ______, 199_.
The Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will
have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Company. The
Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened
Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will
be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date
during the Change of Control Period (as defined in Section
l(b)) on which a Change of Control (as defined in Section 2)
occurs. Anything in this Agreement to the contrary notwithstanding,
if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date
on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a
Change of Control or (ii) otherwise arose in connection with
or anticipation of a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean
the date immediately prior to the date of such termination
of employment.
(b) The "Change of Control Period" shall mean the
period commencing on the date hereof and ending on the
anniversary of the date hereof; provided, however, that
commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and
each annual anniversary thereof shall be hereinafter referred
to as the "Renewal Date"), unless previously terminated, the
Change of Control Period shall be automatically extended so as
to terminate one year from such Renewal Date, unless at least
60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be
so extended.
2. Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to
vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company, (iv) any acquisition of less than 25% of the
Outstanding Company Common Stock or the Outstanding Company
Voting Securities which causes a Person to become the
beneficial owner of 25% or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities if
such acquisition is approved in advance by two-thirds of the
Incumbent Board or (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i),
(ii) and (iii) of subsection (c) of this Section 2; or
<PAGE> 80
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a "Business Combination"),
in each case, unless, following such Business Combination, (i)
all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust)
of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and (iii) at
least a majority of the members of the board of directors of
the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination.
3. Employment Period. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and
reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned at
any time during the 120-day period immediately preceding the
Effective Date, and (B) the Executive's services shall be
performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive
is entitled, the Executive agrees to devote reasonable attention
and time during normal business hours to the business and affairs
of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During
the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as
such activities do not interfere with the performance of the
Executive's responsibilities as an employee of the Company
in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities
<PAGE> 81
(or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation.
(i) Change-in-Control Payment. Provided that
the Executive is employed by the Company on the Effective Date,
and not contingent on the Executive's termination of employment
following the Effective Date or anything else, the Executive
shall receive a one-time lump-sum payment equal to two times
his annual base salary in effect immediately prior to the
Effective Date. Such payment shall be made no later than
the date which is 30 days following the Effective Date.
(ii) Base Salary. During the Employment Period,
the Executive shall receive an annual base salary ("Annual Base
Salary"), which shall be paid at a monthly rate, at least equal
to 12 times the highest monthly base salary paid or payable to the
Executive by the Company and its affiliated companies in
respect of the 12-month period immediately preceding the
month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed
no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under
common control with the Company.
(iii) Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year
ending during the Employment Period, an annual bonus (the "Annual
Bonus") in cash at least equal to ____% of the Executive's
Annual Base Salary. Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iv) Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement plans,
practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated
companies, and on the same basis as such peer executives,
but in no event shall such plans, practices, policies and
programs provide the Executive with retirement benefit
opportunities less favorable, in the aggregate, than the
most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans,
practices, policies and programs as in effect on the
Effective Date or if more favorable to the Executive, those
provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated
companies.
(v) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies.
(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance
with the policies, practices and procedures of the Company
and its affiliated companies to the extent applicable
generally to other peer executives of the Company and its
affiliated companies.
(vii) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance
with the plans, practices, programs and policies of the
Company and its affiliated companies in effect for other
peer executives of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive's employment
shall terminate automatically upon the Executive's death during
the Employment Period. If the Company determines in good faith
that the Disability of the
<PAGE> 82
Executive has occurred during the Employment Period (pursuant
to the definition of Disability set forth below), it may
give to the Executive written notice in accordance with Section
12(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence
of the Executive from the Executive's duties with the Company on
a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to
the Executive or the Executive's legal representative.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the
Executive to perform substantially the Executive's duties with
the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance
is delivered to the Executive by the Board which
specifically identifies the manner in which the Board
believes that the Executive has not substantially performed
the Executive's duties, or
(ii) the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on
the part of the Executive, shall be considered "willful"
unless it is done, or omitted to be done, by the Executive
in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of
the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a senior officer of the
Company or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph
(i) or (ii) above, and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 4(a) of this Agreement, or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement, other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than as provided in
Section 4(a)(i)(B) hereof or the Company's requiring the Executive
to travel on Company business to a substantially greater
extent than required immediately prior to the Effective
Date;
(iv) any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted
by this Agreement; or
<PAGE> 83
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall
be conclusive.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason, shall
be communicated by Notice of Termination to the other party
hereto given in accordance with Section 12(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be
not more than 30 days after the giving of such notice). The
failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's
rights hereunder.
(e) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of
receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of
such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or
the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for
Cause, death or Disability, or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in
a lump sum in cash within 30 days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the Executive's Annual
Bonus for the year in which the termination of employment occurs
and (y) a fraction, the numerator of which is the number of days
in the current fiscal year through the Date of Termination, and
the denominator of which is 365, and (3) any compensation
previously deferred by the Executive (together with any
accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2),
and (3) shall be hereinafter referred to as the "Accrued
Obligations"); and
B. the amount equal to the product of (1)
the number of days remaining in the Employment Period from
and after the Date of Termination (the "Remaining Employment
Period"), and (2) the Executive's Annual Base Salary divided
by 365;
C. the amount equal to the product of (1)
the number of days in the Remaining Employment Period, and
(2) 1/365 times the Executive's Annual Bonus for the year in
which the termination of employment occurs;
(ii) for the Remaining Employment Period, or
such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided
to them in accordance with the plans, programs, practices and
policies described in Section 4(b)(v) of this Agreement if the
Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time
<PAGE> 84
thereafter with respect to other peer executives of
the Company and its affiliated companies and their families,
provided, however, that if the Executive becomes re-employed
with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes
of determining eligibility and years-of-service credit (but
not the time of commencement of benefits) of the Executive
for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to
have remained employed throughout the Remaining Employment
Period and to have retired on the last day of such period;
(iii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive
any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other
Benefits").
(b) Death. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this
Section 6(b) shall include without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to
receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to
the estates and beneficiaries of peer executives of the
Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives
and their beneficiaries at any time during the 120-day
period immediately preceding the Effective Date or, if more
favorable to the Executive's estate and/or the Executive's
beneficiaries, as in effect on the date of the Executive's
death with respect to other peer executives of the Company
and its affiliated companies and their beneficiaries.
(c) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate without
further obligations to the Executive, other than for payment of
Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their
families at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and
their families.
(d) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause during
the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the
Date of Termination, (y) the amount of any compensation previously
deferred by the Executive, and (z) Other Benefits, in each
case to the extent theretofore unpaid. If the Executive
voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the
Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all
Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement
shall prevent or limit the Executive's continuing or future
participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to
Section 12(f), shall anything herein limit or otherwise
affect such rights as the Executive may have under any
contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or
agreement with the Company or any of
<PAGE> 85
its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except
as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or
others. In no event shall the Executive be obligated to
seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company,
the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or
any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable federal
rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
9. Voluntary Reduction of Payments by the Executive.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then
the Executive may, in his sole discretion, elect not to
receive some or all of the Payment to the extent necessary
to avoid being subject to the Excise Tax.
(b) The determination of whether an Excise Tax would
be imposed and the amount of such Excise Tax shall be made by
the Company's regular certified public accounting firm or such
other certified public accounting firm as may be designated by
the Executive (the "Accounting Firm") which shall provide
detailed supporting calculations within 15 business days
after the date of the Change of Control, or such earlier
time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control,
the Executive shall appoint another nationally recognized
accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to
as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company.
Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code
at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Payments which the
Executive was entitled to, but elected pursuant to Section
9(a) not to receive, could have been made without the
imposition of the Excise Tax ("Underpayment"). In such
event, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company
or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
<PAGE> 86
(b) This Agreement shall inure to the benefit of and
be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such
succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
12. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia, without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended
or modified otherwise than-by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
____________________
____________________
____________________
If to the Company:
Davis Water & Waste Industries, Inc.
P.O. Box 1419
1820 Metcalf Avenue
Thomasville, Georgia 31799-1419
Attention: President
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the
failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason
pursuant to Section 5(c)(i)-(v) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written
agreement between the Executive and the Company, the employment
of the Executive by the Company is "at will" and, subject to
Section 1(a) hereof, prior to the Effective Date, the
Executive's employment may be terminated by either the
Executive or the Company at any time prior to the Effective
Date, in which case the Executive shall have no further
rights under this Agreement. From and after the Effective
Date this Agreement shall supersede any other agreement
between the parties with respect to the subject matter
hereof.
<PAGE> 87
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to
be executed in its name on its behalf, all as of the day and
year first above written.
_____________________________
DAVIS WATER & WASTE INDUSTRIES, INC.
By: __________________________
<PAGE> 88
EXHIBIT 21
Subsidiaries
<PAGE> 89
DAVIS WATER & WASTE INDUSTRIES, INC.
SUBSIDIARIES
Other Names Under
Name State/Country of Incorporation Which Doing Business
- ---- ------------------------------ --------------------
The Taulman Company Georgia, U.S.A. Turbitrol Company
Grupo de Tratamiento
de Agus Davis, S. A.
de C. V. Mexico
<PAGE> 90
EXHIBIT 23
Consent of Price Waterhouse to incorporation of accountant's
reports into the Company's Registration Statements on Form
S-8, No. 33 - 43032 and 33 - 62995
<PAGE> 91
Consent of Independent Accounts
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (No. 33 - 43032 and 33 -
62995) of Davis Water & Waste Industries, Inc. (the Company)
of our report dated June 13, 1996 appearing on page 24 of
this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedules, which appears on page 65 of this Form
10-K.
PRICE WATERHOUSE LLP
Atlanta, Georgia
June 26, 1996
<PAGE> 92
EXHIBIT 24
Powers of Attorney
<PAGE> 93
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 24th day of June, 1996
/s/ Joe E. Beverly
-------------------------------
Joe E. Beverly
<PAGE> 94
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 24th day of June, 1996
/s/ O. Larry Comer
--------------------------------
O. Larry Comer
<PAGE> 95
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 6th day of June, 1996
/s/ Robert P. Crozer
-------------------------------
Robert P. Crozer
<PAGE> 96
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 22nd day of June, 1996
/s/ H. Forbes Davis
-------------------------------
H. Forbes Davis
<PAGE> 97
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The _____ day of _________________, 19____.
-----------------------------
Jasper C. Davis
<PAGE> 98
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 25th day of June, 1996
/s/ R. R. Davis
-------------------------------
R. R. Davis
<PAGE> 99
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints R. Doyle White and Stan White and
each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign
the Annual Report on Form 10-K of Davis Water & Waste
Industries, Inc. for the fiscal year ended April 30, 1996,
and any and all amendments thereto, and to file the same
with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission and
the New York Stock Exchange, granting unto said attorneys-
in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
The 21st day of June, 1996
/s/ Thomas R. Pledger
-------------------------------
Thomas R. Pledger
<PAGE> 100
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<NAME> DAVIS WATER & WASTE INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-END> APR-30-1996
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0
0
<OTHER-SE> 29,623
<TOTAL-LIABILITY-AND-EQUITY> 74,632
<SALES> 226,489
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<EPS-PRIMARY> 1.78
<EPS-DILUTED> 1.72
</TABLE>
