<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 4, 1995
-----------------
United States Filter Corporation
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-10728 33-0266015
- ------------------------- ----------- ------------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
73-710 Fred Waring Drive, Suite 222, Palm Desert, California 92260
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 340-0098
------------------
<PAGE>
Item 2. Acquisition of Assets
On May 4, 1995 United States Filter Corporation (the "Company") completed
the acquisition of all of the outstanding capital stock of Arrowhead Industrial
Water, Inc. ("AIW") from The B.F. Goodrich Company ("Goodrich") pursuant to a
stock purchase agreement dated as of February 27, 1995, as amended. The
acquisition was effective as of April 30, 1995.
The purchase price for AIW was $80,000,000 in cash paid at closing (the
"Purchase Price"), plus a cash reconciliation for the period from April 30th to
May 4th, 1995. The Purchase Price is subject to adjustment based upon the net
asset value of AIW, as determined as of April 30, 1995 by comparing AIW's
audited net asset value as of April 30, 1995, as determined by Ernst & Young LLP
(the "Closing Date Audited Value"), with AIW's audited net asset value as of
December 31, 1994 (the "December Audited Value"). The Purchase Price will be
adjusted, downward or upward, as applicable, by the amount of the difference
between the December Audited Value and the Closing Date Audited Value (the
"Closing Date Purchase Price Adjustment"). If either the Company or Goodrich
object to the Closing Date Audited Value and those objections are not fully
resolved, such unresolved items shall be resolved by the firm of Price
Waterhouse.
The Acquisition has been accounted for by the Company as a purchase.
AIW is headquartered in Lincolnshire, Illinois and is a leading independent
supplier of owned and operated on-site industrial water treatment systems in the
United States. It is also a leading provider of emergency and temporary mobile
water treatment systems.
-1-
<PAGE>
Item 7 Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business acquired:
Report of Independent Auditors;
Statement of Assets to be Acquired and Liabilities to be Assumed as
of December 31, 1994 and 1993;
Statement of Revenues and Expenses for the years ended December 31,
1994, 1993 and 1992; and
Notes to Financial Statements.
(b) Pro Forma Financial Information:
Pro Forma combined balance sheet, statements of operations and notes
thereto.
(c) Exhibits
1.0 Stock Purchase Agreement dated as of February 27, 1995, by and
between The B.F. Goodrich Company and United States Filter
Corporation.*
23.1 Consent of Ernst & Young LLP.
* Previously filed as Exhibit 1.0 to the Company's Current Report on
Form 8-K dated March 2, 1995 and incorporated herein by reference.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATES FILTER CORPORATION
By: /s/ Kevin L. Spence
----------------------------
Kevin L. Spence
Vice President
Date: May 17, 1995
-2-
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
The BFGoodrich Company
We have audited the accompanying statement of assets to be acquired and
liabilities to be assumed of Arrowhead Industrial Water Division of The
BFGoodrich Company as of December 31, 1994 and 1993, and the related statement
of revenues and expenses for each of the three years in the period ended
December 31, 1994. These financial statements are the responsibility of the
management of The BFGoodrich Company. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As described in Note A, the accompanying financial statements were prepared
solely to present the assets to be acquired and liabilities to be assumed
pursuant to the Stock Purchase Agreement, and are not intended to be a complete
presentation of the assets and liabilities of the Arrowhead Industrial Water
Division of The BFGoodrich Company.
In our opinion, the statements referred to above present fairly the assets to
be acquired and liabilities to be assumed of Arrowhead Industrial Water
Division of The BFGoodrich Company at December 31, 1994 and 1993, and its
revenues and expenses for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
March 9, 1995
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
STATEMENT OF ASSETS TO BE ACQUIRED AND LIABILITIES TO BE ASSUMED
DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Current assets:
Accounts receivable, less allowance for doubtful accounts
of $327.4 and $174.0 at December 31, 1994 and 1993,
respectively............................................ $ 6,827.7 $ 6,578.9
Inventory................................................ 788.3 715.9
Other current assets..................................... 416.5 341.7
--------- ---------
Total current assets....................................... 8,032.5 7,636.5
Property--net.............................................. 62,378.4 55,092.3
Goodwill................................................... 8,089.8 8,322.6
Identifiable intangible assets............................. 1,727.0 1,980.0
Other assets............................................... 444.1 149.8
--------- ---------
Total assets............................................. 80,671.8 73,181.2
Current liabilities:
Accounts payable......................................... 4,321.9 2,662.8
Accrued liabilities...................................... 3,812.0 4,868.5
--------- ---------
Total current liabilities.................................. 8,133.9 7,531.3
--------- ---------
Net assets................................................. $72,537.9 $65,649.9
========= =========
</TABLE>
See notes to financial statements.
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
STATEMENT OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Services.................................... $39,471.1 $34,432.9 $31,518.8
Sales of equipment.......................... 4,458.6 3,977.8 3,247.5
--------- --------- ---------
Total revenues............................ 43,929.7 38,410.7 34,766.3
Costs and expenses:
Cost of sales and service................... 28,647.8 26,643.5 26,606.7
Depreciation and amortization............... 8,111.2 7,468.9 6,270.4
Administrative expenses..................... 5,343.7 5,547.0 5,271.6
--------- --------- ---------
Operating income (loss)....................... 1,827.0 (1,248.7) (3,382.4)
Interest expense.............................. (1,829.8) (1,245.8) (985.1)
--------- --------- ---------
Loss before income taxes...................... $ (2.8) $(2,494.5) $(4,367.5)
========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
NOTE A: BASIS OF PRESENTATION
Arrowhead Industrial Water Division ("AIW" or the "Company") comprises
primarily Arrowhead Industrial Water, Inc., which is a wholly-owned subsidiary
of The BFGoodrich Company ("BFG"). The Company's primary business is in water
systems and services. AIW provides customers with cost-effective reverse
osmosis water purification systems owned by the Company and managed on-site by
Company employees under long-term service agreements, generally of five to ten
years with renewal options. AIW also operates a fleet of mobile water treatment
units that provide emergency and temporary water treatment services. In
addition, the Company sells water purification systems.
The accompanying Statement of Assets to be Acquired and Liabilities to be
Assumed and Statement of Revenues and Expenses have been prepared from the
historical books and records of the Company. As a result of the Stock Purchase
Agreement (see Note B), these financial statements reflect the net assets of
the business to be acquired and the results of its operations. Assets and
liabilities of AIW that were not acquired or assumed and have no continuing
significance to the business have been omitted from the Statement of Assets to
be Acquired and Liabilities to be Assumed. These include income tax accounts
and liabilities for defined benefit pension and postretirement plans. Expenses
related to these plans of $507.0, $480.5 and $450.5 are included in the
Statement of Revenues and Expenses as part of costs allocated by BFG for the
years ended December 31, 1994, 1993 and 1992, respectively.
AIW is included in the consolidated federal income tax return of BFG for each
of the years ended December 31, 1994, 1993 and 1992. BFG's policy is to account
for all income taxes at the parent company level. As a result, no income tax
assets or liabilities relating to temporary differences and no income tax
expense (benefit) have been reflected in the accompanying financial statements.
BFG provides various treasury functions for AIW and maintains a cash
management program under which cash generated by AIW is transferred to BFG and
working capital requirements of AIW are paid by BFG. Incident to this system,
BFG maintains an interest-bearing intercompany account to record the net amount
owed to or due from AIW. Interest expense in the accompanying Statement of
Revenues and Expenses represents the interest charged to AIW by BFG on this
intercompany account balance at a below- market variable rate of interest.
Certain costs have been allocated to AIW based upon methods that management
of BFG believes are reasonable; however, these allocations are not necessarily
indicative of the expenses that would have been incurred had AIW been operated
as a stand-alone business. BFG allocates costs related to defined benefit
pension and postretirement plans based on actuarial valuations. In addition,
BFG performs certain services on a centralized basis and allocates the cost of
these services to its divisions based on usage, a percentage of sales or other
methods. These services include administration, human resources management,
computer support, accounting and financial reporting, legal services,
engineering and research and development. Allocated costs (including
allocations related to defined benefit pension and postretirement plans)
included in the Statement of Revenues and Expenses were $1,372.0, $1,324.3 and
$1,287.1 for the years ended December 31, 1994, 1993 and 1992, respectively.
NOTE B: STOCK PURCHASE AGREEMENT
As of February 27, 1995, BFG entered into a Stock Purchase Agreement (the
"Agreement") with United States Filter Corporation whereby United States Filter
Corporation agreed to purchase AIW, other than
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
certain assets and liabilities to be retained by BFG as defined in the
Agreement. Assets and liabilities to be retained by BFG primarily consist of
those related to BFG's water treatment chemicals business, cash, deferred
income tax assets, and liabilities for defined benefit pension and
postretirement arrangements.
NOTE C: SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition. Revenue for services is recognized when the service is
performed. Revenue related to sales of equipment and merchandise is recognized
when shipped.
Inventory. Inventory consists primarily of chemicals, membranes, resins,
equipment parts, and work-in-process. Inventory is valued at cost that is not
in excess of market.
Property. Property is stated at cost and is depreciated using the straight-
line method over useful lives ranging from three to twenty-five years. Repairs
and maintenance costs are expensed as incurred. Certain components of
filtration equipment require replacement in periods shorter than the life of
the total equipment. The Company accrues this replacement cost over the
estimated period, generally three to five years, and charges the cost of
replacement components as a reduction of the accrual.
Goodwill and Identifiable Intangible Assets. Arrowhead Industrial Water, Inc.
was acquired by BFG in 1989. Goodwill was recorded for the excess of the 1989
purchase price over the fair value of the net tangible assets and identifiable
intangible assets acquired. Goodwill is amortized using the straight-line
method over forty years. Identifiable intangible assets were recorded at
estimated fair value. These assets include primarily patents, proprietary
technology and trademarks, and are amortized using the straight-line method
over estimated periods benefited of eight to forty years.
Long-lived Assets. AIW's policy is to recognize impairment of long-lived
assets when events or changes in circumstances indicate that the carrying
amount of a related group of assets may not be recoverable. Measurement of the
amount of impairment may be based on appraisal, market values of similar assets
or estimated undiscounted future cash flows resulting from use and ultimate
disposition of the asset.
NOTE D: PROPERTY
Property consisted of the following at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Land................................................. $ 3,473.0 $ 3,473.0
Buildings and improvements........................... 3,969.0 3,667.0
Furniture, fixtures and vehicles..................... 4,416.8 3,641.0
Membranes and resins................................. 11,006.4 8,644.6
Filtration equipment................................. 56,210.7 44,097.7
Construction-in-progress............................. 7,825.9 8,763.8
--------- ---------
Total.............................................. 86,901.8 72,287.1
Accumulated depreciation and amortization............ 24,523.4 17,194.8
--------- ---------
Property--net $62,378.4 $55,092.3
========= =========
</TABLE>
Property depreciation and amortization expense was $7,625.4, $6,983.1 and
$5,793.6 for the years ended December 31, 1994, 1993 and 1992, respectively.
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
NOTE E: GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS
Goodwill and identifiable intangible assets consisted of the following at
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Goodwill............................................... $9,309.7 $ 9,309.7
Patents and technology................................. 1,945.0 1,955.0
Trademarks............................................. 1,000.0 1,000.0
Noncompete agreement................................... 50.0 50.0
-------- ---------
Total................................................ 12,304.7 12,314.7
Accumulated amortization............................... 2,487.9 2,012.1
-------- ---------
$9,816.8 $10,302.6
======== =========
</TABLE>
Amortization expense related to goodwill and identifiable intangible assets
was $485.8, $485.8 and $476.8 for the years ended December 31, 1994, 1993 and
1992, respectively.
NOTE F: ACCRUED LIABILITIES
Accrued liabilities consisted of the following at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Compensation........................................... $ 808.5 $ 989.0
Self-insurance......................................... 205.8 479.2
Taxes other than income................................ 417.7 378.1
Accrued replacement costs.............................. 1,193.7 1,228.9
Accrued workers' compensation.......................... 395.5 195.1
Accrued utilities...................................... 228.4 88.2
Other.................................................. 562.4 1,510.0
-------- --------
$3,812.0 $4,868.5
======== ========
</TABLE>
NOTE G: LEASES
The Company leases certain plant facilities, office space and equipment under
operating leases. The future minimum lease payments, by year and in the
aggregate, under operating leases with initial or remaining noncancelable lease
terms in excess of one year, consisted of the following at December 31, 1994:
<TABLE>
<S> <C>
1995........................................................... $1,695.6
1996........................................................... 1,544.8
1997........................................................... 1,239.3
1998........................................................... 985.0
1999........................................................... 465.9
Thereafter..................................................... 100.3
--------
$6,030.9
========
</TABLE>
Rent expense for the years ended December 31, 1994, 1993 and 1992 was
$2,062.8, $2,235.2 and $2,140.0, respectively.
<PAGE>
ARROWHEAD INDUSTRIAL WATER DIVISION OF THE BFGOODRICH COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(DOLLARS IN THOUSANDS)
NOTE H: RETIREMENT SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in
BFG's voluntary retirement savings plan. Under provisions of this plan,
eligible employees can receive Company matching contributions on up to the
first 6% of their eligible earnings. The Company matches one dollar for each
one dollar of employee contributions (up to 6% of earnings) invested in BFG
common stock, or 50 cents for each one dollar of eligible employee
contributions invested in other available investment options. Company
contributions for the years ended December 31, 1994, 1993 and 1992 amounted to
$557.5, $483.7 and $479.1, respectively.
NOTE I: CONTINGENCIES
There are pending or threatened against the Company various claims and
lawsuits, all arising from the normal course of business. The Company believes
that any liability that may finally be determined should not have a material
effect on net assets.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial data presents the Pro
Forma Combined Balance Sheet at December 31, 1994, giving effect to the
acquisition of AIW and the April 3, 1995 acquisition of The Permutit Group (the
"Acquisitions") as if they had been consummated on that date. Also presented are
the Pro Forma Combined Statements of Operations for the fiscal year ended March
31, 1994 and the nine months ended December 31, 1994, after giving effect to the
Acquisitions as if they had been consummated as of the beginning of the
respective periods presented. The Company's fiscal year ends on March 31 and
AIW's fiscal year ends on December 31. Pro forma data for the year ended March
31, 1994 combines the results of the Company for the year ended March 31, 1994
with the results of AIW for the year ended December 31, 1993, and pro forma data
for the nine months ended December 31, 1994 combines the results of each of the
Company and AIW for such nine-month period. AIW had revenues of approximately
$11,000,000 and a loss before income taxes of approximately $203,000 for the
three months ended March 31, 1994. The Permutit Group's fiscal year ends on
March 31 and as such the pro forma data combines the results of each of the
Company and The Permutit Group for each such twelve- and nine-month period.
The pro forma data is based on the historical combined statements of the
Company, AIW and The Permutit Group, giving effect to the Acquisitions under
the purchase method of accounting and the assumptions and adjustments outlined
in the accompanying Notes to Pro Forma Combined Financial Information. Under
the purchase method of accounting, assets acquired and liabilities assumed will
be recorded at their estimated fair value at the date of Acquisitions. The pro
forma adjustments set forth in the following Unaudited Pro Forma Combined
Financial Statements are estimates and may differ from the actual adjustments
when they become known.
The following Unaudited Pro Forma Combined Financial Data also gives effect to
the issuance by the Company of 6,900,000 shares of its common stock in a public
offering completed May 3, 1995 at $15 per share. The Pro Forma Combined Balance
Sheet at December 31, 1994 gives effect to the issuance of the common stock as
if the offering had been consummated on that date. The Pro Forma Combined
Statements of Operations for the fiscal year ended March 31, 1994 and the nine
months ended December 31, 1994 gives effect to the issuance of the common stock
as if the offering had been consummated as of the beginning of the respective
periods presented.
The pro forma data is provided for comparative purposes only. It does not
purport to be indicative of the results that actually would have occurred if the
Acquisitions had been consummated on the dates indicated or that may be obtained
in the future. The pro forma combined financial data should be read in
conjunction with the notes thereto and the audited financial statements of AIW
contained elsewhere herein and The Permutit Company Limited (a member of The
Permutit Group) and the notes thereto filed in the Company's report or Form 8-K
dated April 3, 1995 and the audited consolidated financial statements of the
Company and the notes thereto filed in the Company's report on Form 10-K for the
year ended March 31, 1994.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
(unaudited)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1994
--------------------------------------------------------------
HISTORICAL PRO FORMA
-------------------------- -----------------------------------
THE ADJUSTMENTS
PERMUTIT INCREASE ADJUSTMENTS
COMPANY AIW GROUP (DECREASE) REFERENCES COMBINED
-------- ------- -------- ----------- ----------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................... $ 11,893 $ -- $ 771 $(2,751) a(i) $ 9,913
Short-term investments. 7,624 -- -- (7,624) a(i) --
Accounts receivable,
net................... 87,325 6,828 3,350 97,503
Cost and estimated
earnings in excess of
billings on
uncompleted contracts. 20,206 -- -- 20,206
Inventories............ 36,623 788 1,356 38,767
Prepaid expenses....... 4,853 417 194 5,464
Deferred taxes......... 2,598 -- -- 2,598
Other current assets... 2,097 -- 329 2,426
-------- ------- ------ --------
Total current
assets............. 173,219 8,033 6,000 176,877
Property, plant and
equipment, net......... 63,440 62,378 1,479 127,297
Investment in leasehold
interest, net.......... 21,634 -- -- 21,634
Goodwill, net........... 97,510 8,090 -- 14,458 a(ii) 120,058
Other assets............ 17,960 2,171 281 20,412
-------- ------- ------ --------
$373,763 $80,672 $7,760 $466,278
======== ======= ====== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....... $ 28,812 $ 4,322 $1,712 $ 34,846
Accrued liabilities.... 40,567 3,812 953 45,332
Current portion of
long-term debt........ 1,078 -- -- 1,078
Notes payable.......... 23,818 -- -- (17,518) d 6,300
Billings in excess of
costs and estimated
earnings on
uncompleted contracts. 15,715 -- -- 15,715
Other current
liabilities........... 7,769 -- 1,355 9,124
-------- ------- ------ --------
Total current
liabilities........ 117,759 8,134 4,020 112,395
Long-term debt,
excluding current
portion................ 7,936 -- -- 7,936
Convertible subordinated
debt................... 105,000 -- -- 105,000
Loan (receivable)
payable--parent........ -- (5,295) 5,295 b --
Deferred taxes.......... 5,774 -- -- 5,774
Other liabilities....... 3,620 -- 361 3,981
-------- ------- ------ --------
240,089 8,134 (914) 332,604
Stockholders' equity:
Convertible preferred
stock................. 25,577 -- -- 25,577
Common stock........... 150 -- -- 69 d 219
Additional paid-in
capital............... 128,496 72,538 9,380 15,531 c, d 225,945
Translation adjustment. 215 -- -- 215
Accumulated deficit.... (20,764) -- (706) 706 c (20,764)
-------- ------- ------ --------
Total stockholders'
equity............. 133,674 72,538 8,674 231,192
-------- ------- ------ --------
$373,763 $80,672 $7,760 $466,278
======== ======= ====== ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, 1994
---------------------------------------------------------------
HISTORICAL PRO FORMA
--------------------------- ----------------------------------
THE ADJUSTMENTS
PERMUTIT INCREASE ADJUSTMENTS
COMPANY AIW GROUP (DECREASE) REFERENCE COMBINED
-------- ------- -------- ----------- ----------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $180,421 $38,411 $19,896 $238,728
Cost of sales........... 132,811 26,644 12,545 $1,437 e (i) 173,437
Depreciation and
amortization........... -- 7,469 -- (7,469) e (i) --
-------- ------- ------- --------
Gross profit........... 47,610 4,298 7,351 65,291
Selling, general and
administrative
expenses............... 52,484 5,547 8,601 6,407 e (i) 73,039
-------- ------- ------- --------
Operating loss......... (4,874) (1,249) (1,250) (7,748)
-------- ------- ------- --------
Other income (expense):
Interest expense....... (2,077) (1,246) (109) (2,122) e (ii) (1,310)
Other.................. 1,174 -- 50 1,224
-------- ------- ------- --------
(903) (1,246) (59) (86)
-------- ------- ------- --------
Loss before income
taxes................. (5,777) (2,495) (1,309) (7,834)
Benefit for income
taxes.................. (3,236) -- (364) (3,600)
-------- ------- ------- --------
Net loss .............. $ (2,541) $(2,495) $ (945) $ (4,234)
======== ======= ======= ========
Net loss per common
share................. $ (0.26) $ (0.26)
======== ========
Weighted average number
of shares outstanding.. 12,453 19,353
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED DECEMBER 31, 1994
----------------------------------------------------------------
HISTORICAL PRO FORMA
--------------------------- -----------------------------------
THE ADJUSTMENTS
PERMUTIT INCREASE ADJUSTMENTS
COMPANY AIW GROUP (DECREASE) REFERENCES COMBINED
-------- ------- -------- ----------- ----------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $194,453 $32,851 $13,916 $241,220
Cost of sales........... 139,164 21,175 8,587 $ 1,711 e(i) 170,637
Depreciation and
amortization........... -- 6,137 -- (6,137) e(i) --
-------- ------- ------- --------
Gross profit........ 55,289 5,539 5,329 70,583
Selling, general and
administrative
expenses............... 45,819 3,848 5,300 4,707 e(i) 59,674
-------- ------- ------- --------
Operating income.... 9,470 1,691 29 10,909
-------- ------- ------- --------
Other income (expense):
Interest expense.... (3,632) (1,491) (65) (2,148) e(ii) (3,040)
Other............... 1,641 -- 6 1,647
-------- ------- ------- --------
(1,991) (1,491) (59) (1,393)
-------- ------- ------- --------
Income (loss) before
income taxes....... 7,479 200 (30) 9,516
Provision (benefit) for
income taxes........... 2,056 -- (119) 727 e(iii) 2,664
-------- ------- ------- --------
Net income.......... $ 5,423 $ 200 $ 89 $ 6,852
======== ======= ======= ========
Net income per
common share....... $ 0.33 $ 0.29
======== ========
Weighted average number
of shares outstanding.. 14,881 21,781
======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma combined
financial data.
<PAGE>
NOTES TO PRO FORMA COMBINED FINANCIAL INFORMATION
a. The pro forma combined balance sheet has been prepared to reflect the
acquisition of AIW and the acquisition of The Permutit Group (the
"Acquisitions") for aggregate estimated all-cash purchase prices comprised of
the following:
<TABLE>
<S> <C>
(in thousands)
AIW....................................................... $ 80,000
The Permutit Group........................................ 10,000
Estimated transaction costs............................... 375
--------------
$ 90,375
==============
</TABLE>
The estimated tangible net book values, as adjusted, of AIW and The Permutit
Group are assumed to be $72,538,000 and $3,379,000, respectively. The fair
values of the net assets of AIW and The Permutit Group as of the closing date
are assumed to be equal to their respective estimated tangible net book values,
as adjusted. The difference between the estimated purchase prices and the
estimated fair values of the net assets of AIW and The Permutit Group is
approximately $14,458,000, which has been recorded as goodwill attributable to
the Acquisitions in the accompanying pro forma combined balance sheet and will
be amortized over 40 years.
For the fiscal year ended March 31, 1994, the historical results of
operations of AIW reflect AIW's operations for the twelve months ended December
31, 1993.
The pro forma combined balance sheet has been adjusted to reflect the above
as follows:
(i) To record the payment of cash and estimated
transaction costs;
(ii) To adjust goodwill for the difference
between the estimated purchase prices and
the estimated fair values of the net assets
acquired;
b. The pro forma combined balance sheet has been adjusted to eliminate the net
loan receivable of The Permutit Company Limited from its parent company.
c. The pro forma combined balance sheet has been adjusted to eliminate the
equity of AIW and The Permutit Group.
d. The pro forma combined balance sheet has been adjusted to reflect the net
proceeds received by the Company from the issuance of 6,900,000 shares of
Company common stock in a public offering completed May 3, 1995 at $15 per
share.
<PAGE>
e. The pro forma combined statements of operations give effect to the
following pro forma adjustments as follows:
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
ENDED ENDED
MARCH 31, DECEMBER 31,
1994 1994
----------- ------------
<S> <C> <C>
(in thousands)
(i) Selling, general and administrative expenses:
-- To allocate AIW's depreciation and
amortization between cost of sales and
selling, general and administrative
expenses $ 622 $ 473
-- To allocate a portion of AIW's cost of
sales to selling, general and
administrative expenses for consistency
with Company historical presentation 6,160 4,514
-- To adjust goodwill amortization, which
will be amortized over 40 years (375) (280)
------ ------
$6,407 $4,707
====== ======
(ii) To adjust interest expense for the effect of
the net proceeds received by the Company
related to the issuance of 6,900,000 shares
of Company common stock May 3, 1995 at $15
per share after the all-cash purchase price
payments made for the Acquisitions, net of
interest expense recorded by AIW, which
interest expense has been eliminated. ($2,122) ($2,148)
====== ======
(iii) To adjust the provision for income taxes to
reflect the combined results of operations. -- $ 727
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of our report dated March 9, 1995,
with respect to the financial statements of the Arrowhead Industrial Water
Division of The BFGoodrich Company included in this Current Report (Form 8-K) of
United States Filter Corporation in the following shelf Registration Statements
and related Prospectuses:
Description of
Registration Number Registration Statement Effective Date
- ------------------- ---------------------- --------------
33-75910 Convertible Subordinated April 29, 1994
Debentures and Common Stock -
Form S-3
33-76042 Common Stock - Form S-3 April 29, 1994
33-85026 Common Stock - Form S-3 November 2, 1994
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Cleveland, Ohio
May 17, 1995
