<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
{X} Quarterly report pursuant to Section 13 and 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended SEPTEMBER 30, 1996
------------------
or
{ } Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 1-10728
-------
UNITED STATES FILTER CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 33-0266015
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
40-004 COOK STREET, PALM DESERT, CA 92211
------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 340-0098
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of common stock, $.01 par value, outstanding as of November
10, 1996, is 57,905,964 shares.
Total number of pages 16
------------
THERE ARE FOUR EXHIBITS FILED WITH THIS REPORT.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1996 March 31, 1996
------------------ --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,488,000 18,405,000
Short-term investments 816,000 65,000
Accounts receivable, net 213,594,000 218,855,000
Costs and estimated earnings in excess of billings on uncompleted
contracts 52,802,000 33,575,000
Inventories 88,230,000 75,313,000
Prepaid expenses 11,981,000 7,922,000
Deferred taxes 7,771,000 7,771,000
Other current assets 9,614,000 10,073,000
------------ -----------
Total current assets 404,296,000 371,979,000
------------ -----------
Property, plant and equipment, net 178,362,000 165,989,000
Investment in leasehold interests, net 27,057,000 27,688,000
Cost in excess of net assets of businesses acquired, net 276,627,000 271,891,000
Other assets 50,317,000 38,958,000
------------ -----------
$936,659,000 876,505,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $101,329,000 100,224,000
Accrued liabilities 102,000,000 102,415,000
Current portion of long-term debt 1,386,000 7,892,000
Billings in excess of costs and
estimated earnings on uncompleted contracts 19,631,000 15,797,000
Other current liabilities 11,344,000 21,894,000
------------ -----------
Total current liabilities 235,690,000 248,222,000
------------ -----------
Notes payable 81,156,000 35,756,000
Long-term debt, excluding current portion 7,617,000 9,788,000
Convertible subordinated debentures 193,565,000 200,000,000
Deferred taxes 1,223,000 1,223,000
Other liabilities 17,405,000 13,015,000
------------ -----------
Total liabilities 536,656,000 508,004,000
------------ -----------
Shareholders' equity:
Common stock, par value $.01. Authorized 150,000,000
shares; 49,280,734 and 47,873,133 shares issued and outstanding
at September 30, 1996 and March 31, 1996, respectively 493,000 338,000
Additional paid-in capital 370,625,000 351,254,000
Currency translation adjustment 2,691,000 1,836,000
Retained earnings 26,194,000 15,073,000
------------ -----------
Total shareholders' equity 400,003,000 368,501,000
------------ -----------
$936,659,000 876,505,000
============ ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
September 30, September 30,
----------------------------- -----------------------------
1996 1995 1996 1995
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Revenues $225,210,000 173,927,000 433,719,000 332,099,000
Costs of sales 163,224,000 127,771,000 315,398,000 247,093,000
------------ ----------- ----------- -----------
Gross profit 61,986,000 46,156,000 118,321,000 85,006,000
Selling, general and
administrative expenses 44,620,000 34,136,000 86,140,000 64,368,000
Merger expenses 5,581,000 - 5,581,000 -
------------ ----------- ----------- -----------
50,201,000 34,136,000 91,721,000 64,368,000
------------ ----------- ----------- -----------
Operating income 11,785,000 12,020,000 26,600,000 20,638,000
Other income (expense):
Interest expense (3,582,000) (3,536,000) (7,972,000) (6,548,000)
Other 383,000 634,000 1,004,000 1,363,000
------------ ----------- ----------- -----------
(3,199,000) (2,902,000) (6,968,000) (5,185,000)
------------ ----------- ----------- -----------
Income before taxes 8,586,000 9,118,000 19,632,000 15,453,000
Income taxes 2,361,000 2,747,000 5,404,000 4,743,000
------------ ----------- ----------- -----------
Net income $ 6,225,000 6,371,000 14,228,000 10,710,000
============ =========== =========== ===========
Net income per common share $ 0.12 0.15 0.28 0.27
============ =========== =========== ===========
Weighted average number of
shares outstanding 51,108,000 40,124,000 50,629,000 37,911,000
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,228,000 10,710,000
Adjustments to reconcile net income to net cash
used in operating activities:
Provision for bad debts 1,049,000 1,320,000
Depreciation and amortization 20,509,000 11,439,000
Deferred income taxes - 194,000
Stock option compensation - 56,000
Decrease in closure reserves - (1,175,000)
(Gain) loss on sale of assets (5,000) 128,000
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable 9,016,000 (2,446,000)
Increase in costs and estimated earnings
on uncompleted contracts (19,227,000) (12,409,000)
Increase in inventories (12,859,000) (11,361,000)
Increase in other assets (15,684,000) (752,000)
Increase (decrease) in accounts payable and
accrued expenses 3,726,000 (3,477,000)
Increase (decrease) in billings in excess of costs and
estimated earnings or uncompleted contracts 3,834,000 (3,968,000)
Decrease in other liabilities (6,559,000) (1,273,000)
------------ ------------
Net cash used in operating activities (1,972,000) (13,014,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of property, plant & equipment (29,905,000) (13,520,000)
Payment for purchase of acquisitions, net of cash acquired (7,369,000) (111,042,000)
Proceeds from disposal of equipment 203,000 1,287,000
Purchase of short-term investments (751,000) (117,000)
------------ ------------
Net cash used in investing activities (37,822,000) (123,392,000)
------------ ------------
</TABLE>
(Continued)
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock - 97,510,000
Net proceeds from sale of convertible subordinated debentures - 136,249,000
Repurchase of preferred stock - (4,709,000)
Principal payments on debt (5,342,000) (54,690,000)
Net proceeds from borrowings on notes payable 45,400,000 32,519,000
Proceeds from exercise of common stock options 1,215,000 799,000
Dividends paid (396,000) (891,000)
----------- -----------
Net cash provided by financing activities 40,877,000 206,787,000
----------- -----------
Net increase in cash 1,083,000 70,381,000
Cash balance at March 31, 1996 and 1995 18,405,000 20,020,000
----------- -----------
Cash balance at September 30, 1996 and 1995 $19,488,000 90,401,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 8,654,000 5,087,000
=========== ===========
Cash paid during the period for income taxes $ 4,553,000 2,519,000
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Operations and Significant Accounting Policies
----------------------------------------------
The accompanying condensed consolidated financial statements have been prepared
by the Company pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
regulations. The condensed consolidated financial statements reflect all
adjustments and disclosures which are, in the opinion of management, necessary
for a fair presentation of the information contained therein. All such
adjustments are of a normal recurring nature. The condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto that are contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1996. The results
of operations for the interim periods are not necessarily indicative of the
results of the full fiscal year.
Income per Common Share
- -----------------------
Income per common share is computed based on the weighted average number of
shares outstanding. Common stock equivalents, consisting of options are included
in the computation of income per share when their effect is dilutive. All income
per share data in the accompanying condensed consolidated financial statements
have been restated to reflect a three for two common stock split paid by way of
a stock dividend on July 15, 1996.
Primary and fully diluted income per common share for the three and six month
periods ended September 30, 1996 and 1995, were calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1996 1995 1996 1995
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 6,225,000 6,371,000 14,228,000 10,710,000
Dividends on preferred stock - (179,000) - (358,000)
----------- ---------- ---------- ----------
Adjusted net income applicable to
common shares $ 6,225,000 6,192,000 14,228,000 10,352,000
=========== ========== ========== ==========
Weighted average shares outstanding 48,944,000 39,029,000 48,671,000 37,019,000
Add:
Exercise of options and warrants reduced by
the number of shares purchased with
proceeds 2,164,000 1,095,000 1,958,000 892,000
----------- ---------- ---------- ----------
Adjusted weighted average shares
outstanding 51,108,000 40,124,000 50,629,000 37,911,000
=========== ========== ========== ==========
Income per common share:
Net income $ 0.12 0.16 0.28 0.28
Dividends on preferred stock - (0.01) - (0.01)
----------- ---------- ---------- ----------
Adjusted income per common share $ 0.12 0.15 0.28 0.27
=========== ========== ========== ==========
</TABLE>
6
<PAGE>
Note 2. Inventories
-----------
Inventories at September 30, 1996 and March 31, 1996 consist of the following:
<TABLE>
<CAPTION>
September 30, 1996 March 31, 1996
------------------ --------------
<S> <C> <C>
Raw Materials $25,525,000 21,578,000
Work-in-Process 25,906,000 17,997,000
Finished Goods 36,799,000 35,738,000
----------- ----------
$88,230,000 75,313,000
=========== ==========
</TABLE>
Note 3. Acquisitions
------------
On May 31, 1996, a wholly owned subsidiary of the Company merged with and into
Zimpro Environmental, Inc. ("Zimpro"), in a tax free reorganization. In
connection with this acquisition, the Company issued 877,611 shares of the
Company's common stock for all of the outstanding common and preferred shares of
Zimpro pursuant to an Agreement and Plan of Merger among the Company, Landegger
Environmental Holdings, Inc., The Black Clawson Company, a trust, and two
limited partnerships in the John Hancock Capital Growth Fund ("The Hancock
Funds") (collectively the "Stockholders"). In addition, the Company liquidated
existing indebtedness to The Hancock Funds in exchange for 172,491 shares of
Company common stock and $1,000,000 in cash.
Zimpro, based in Wisconsin, manufactures wastewater treatment equipment with
proprietary technologies in wet air oxidation, landfill leachate treatment
systems, ground water remediation, filtration and sludge treatment systems.
This transaction has been accounted for as a pooling of interests and,
accordingly, the consolidated financial statements and notes thereto for all
periods presented have been restated to include the accounts and operations of
Zimpro.
On August 23, 1996, the Company completed the acquisition of Davis Water & Waste
Industries, Inc. ("Davis"). The Company issued 4,817,349 shares of the Company's
common stock in exchange for all of the outstanding common shares and rights to
acquire common shares of Davis pursuant to an Agreement and Plan of Merger
between the Company and Davis.
Davis manufactures and markets products relating to the distribution of water
and wastewater. Davis also designs, engineers, manufactures, sells and installs
water and wastewater treatment equipment to comply with applicable health and
water quality standards.
This transaction has been accounted for as a pooling of interests and,
accordingly, the consolidated financial statements and notes thereto for all
periods presented have been restated to include the accounts and operations of
Davis.
7
<PAGE>
Separate results of operations of the combined entities for the three and six
months ended September 30, 1995 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1995 1995
------------------ -----------------
<S> <C> <C>
Revenues:
U.S. Filter (as previously reported) 108,308,000 199,847,000
Zimpro 6,752,000 13,702,000
Davis 58,867,000 118,550,000
----------- -----------
Combined 173,927,000 332,099,000
=========== ===========
Net Income (loss)
U.S. Filter (as previously reported) 4,509,000 7,868,000
Zimpro 46,000 (136,000)
Davis 1,816,000 2,978,000
----------- -----------
Combined 6,371,000 10,710,000
=========== ===========
Net income per common share and common
equivalent share:
As previously reported 0.13 0.23
=========== ===========
As restated 0.15 0.27
=========== ===========
</TABLE>
Merger expenses incurred to consummate the Davis transaction totaled $5,581,000
and consisted primarily of investment banking fees, printing, stock transfer
fees, legal fees, accounting fees, governmental filing fees and certain other
costs related to existing Davis pension plans and change in control payments.
Note 4. Stockholders' Equity
--------------------
On July 15, 1996, the Company effected, by way of a stock dividend, a three for
two split of the Company's common stock. All references to income per share and
other common stock information in the accompanying condensed consolidated
financial statements and notes thereto have been restated to reflect the stock
dividends.
Note 5. Subsequent Events
-----------------
On October 25, 1996, the Company acquired all of the outstanding capital stock
of The Utility Supply Group, Inc. ("USG") in a tax-free merger pursuant to an
Agreement and Plan of Merger. The Company issued 771,157 shares of its common
stock in exchange for all of the outstanding capital stock of USG. The Company
also assumed and/or repaid approximately $21,750,000 in third party debt. USG is
a leading provider of water and wastewater related products and services to
industrial and municipal customers through 30 offices in the United States.
USG had revenues of $156,838,000 and net income of $1,049,000 for the year ended
December 31, 1995. The transaction will be accounted for as a purchase.
On October 28, 1996, the Company acquired all of the outstanding capital stock
of WaterPro Supplies Corporation ("WaterPro") pursuant to a Stock Purchase
Agreement. The Company issued as the entire consideration an aggregate of
3,201,507 shares of its common stock in exchange for all of the capital stock of
WaterPro (1,157,734 shares) and in consideration for the repayment of related
party debt (2,043,773 shares). WaterPro is the largest national distributor of
water and wastewater related products and services for municipal water, sewer
authorities and underground contractors, and has 43 locations throughout the
United States.
WaterPro had revenues of $187,540,000 and net income of $2,329,000 for the
period April 7, 1995 to December 31, 1995. The transaction will be accounted for
as a purchase.
8
<PAGE>
On September 14, 1996, the Company entered into a Purchase and Sale Agreement
with Wheelabrator Technologies Inc. ("Wheelabrator") in connection with a
proposed acquisition by the Company of Wheelabrator's Water Systems and
Manufacturing Group ("WSMG"). Pursuant to the terms of the definitive agreement,
the Company will pay approximately $369,600,000 in cash for WSMG, subject to
adjustment, which provides a broad range of water and wastewater engineering,
technology and systems.
In addition, the Company and Wheelabrator announced they had executed a letter
of intent to establish a joint venture to develop, finance, own and operate
water and wastewater infrastructure in North America.
WSMG had revenues of $293,207,000, $364,335,000 and $452,134,000 for the years
ended December 31, 1993, 1994 and 1995, respectively. In addition, WSMG had net
income of $13,454,000, $13,226,000 and $16,361,000 for the years ended December
31, 1993, 1994, 1995, respectively. The proposed transaction is expected to be
completed in November 1996, and will be accounted for as a purchase.
On October 7, 1996, the Company entered into a Purchase and Sale Agreement with
United Utilities PLC ("UU") and certain of its subsidiaries in connection with a
proposed acquisition by the Company of UU's Process Equipment Division ("PED").
In accordance with the terms of the definitive agreement, the Company will pay
(Pounds)100,500,000 in cash (approximately $160,050,000 based on assumed
currency exchange rates), subject to adjustment, and (Pounds)25,000,000 in
shares of the Company's common stock (approximately $41,250,000 based on assumed
currency exchange rates) for PED, which provides a broad range of water and
wastewater engineering technology and systems.
PED had revenues of $254,955,000 and $267,358,000 for the years ended March 31,
1995 and 1996, respectively, and net losses of $13,576,000 and $39,496,000 for
the years ended March 31, 1995 and 1996 respectively. The proposed transaction
is expected to be completed in January 1997, and will be accounted for as a
purchase.
On September 12, 1996, the Company provided notice, pursuant to terms of its
Indenture dated October 20, 1993, of its intent to redeem on October 25, 1996
all of its outstanding 5% Convertible Subordinated Debentures due 2000. As of
October 25, 1996, all holders of the debentures converted the debentures into a
total of approximately 4,390,000 shares of Company common stock pursuant to the
terms of the Debentures.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Revenues for the three months ended September 30, 1996 were $225,210,000, an
increase of $51,283,000 or 29.5% from the $173,927,000 for the three months
ended September 30, 1995. For the six months ended September 30, 1996, revenues
increased $101,620,000 or 30.6% from the corresponding period in the prior year.
These increases were due primarily to acquisitions completed by the Company
subsequent to September 30, 1995. For the three months ended September 30, 1996,
revenues from capital equipment sales represented 39.0% of total revenues, while
revenues from services and operations represented 22.8% of total revenues,
revenues from distribution represented 21.2% of total revenues and revenues from
replacement parts and consumables represented 17.0% of total revenues.
Gross profit as a percentage of revenue ("gross margin") was 27.5% for the three
months ended September 30, 1996 compared to 26.5% in the corresponding period in
the prior year. For the six months ended September 30, 1996, the Company's gross
margin was 27.3% as compared to 25.6% for the corresponding period in the prior
year. This increase in gross margin was due primarily to the shift in revenue
mix to recurring and higher margin service-based revenues.
For the three months ended September 30, 1996, selling, general and
administrative expenses, excluding merger expenses, increased $10,484,000 to
$44,620,000 as compared to the $34,136,000 in the comparable period in the prior
year. During this period, selling, general and administrative expenses were
19.8% of revenues compared to 19.6% for the comparable period in the prior year.
For the six months ended September 30, 1996, selling, general and administrative
expenses were 19.9% compared to 19.4% for the corresponding period in the prior
year.
Merger expenses were incurred during the three months ended September 30, 1996
relating to the Company's acquisition of Davis which was accounted for as a
pooling of interests. These merger expenses, which totaled $5,581,000, consisted
primarily of investment banking fees, printing, stock transfer fees, legal fees,
accounting fees, governmental filing fees and certain other costs related to
existing Davis pension plans and change of control payments.
Interest expense increased to $3,582,000 for the three months ended September
30, 1996 from $3,536,000 for the corresponding period in the prior year.
Interest expense increased to $7,972,000 for the six months ended September 30,
1996 from $6,548,000 for the corresponding period in the prior year. Interest
expense for the three and six months ended September 30, 1996 consisted
primarily of interest on the Company's (i) 5% Convertible Subordinated
Debentures due 2000 (all of which have been, as of October 25, 1996, converted
into shares of the Company's common stock), (ii) Subordinated Notes which were
delivered in connection with the exercise of warrants to acquire common stock on
September 18, 1995, (iii) 6% Convertible Subordinated Notes issued on September
18, 1995 due 2005, and (iv) borrowings under the Company's bank line of credit.
At September 30, 1996, the Company had cash and short-term investments of
$20,304,000.
Income tax expense decreased to $2,361,000 for the three months ended September
30, 1996, from $2,747,000 in the corresponding period in the prior year. Income
tax expense increased to $5,404,000 in the six months ended September 30, 1996,
from $4,743,000 in the corresponding period in the prior year. The Company's
effective tax rate for the three and six months ended September 30, 1996 was
27.5%.
10
<PAGE>
Net income for the three months ended September 30, 1996 was $6,225,000, a
decrease of $146,000 from the $6,371,000 for the three months ended September
30, 1995. Excluding the merger expenses of $5,581,000 incurred by the Company to
complete the Davis acquisition, net income was $10,271,000, an increase of 61.2%
over the same period in the prior year. For the six months ended September 30,
1996, net income increased $3,518,000 to $14,228,000 from $10,710,000 for the
same period in the prior year. Excluding Davis merger expenses, net income for
the six months ended September 30, 1996 totaled $18,279,000, an increase of
70.7% over the same period in the prior year. Net income per common share for
the three and six months ended September 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ----------------
1996 1995 1996 1995
------ ------ ------ -------
<S> <C> <C> <C> <C>
Before merger expenses $0.20 $0.15 $0.36 $0.27
After merger expenses $0.12 $0.15 $0.28 $0.27
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's principal sources of funds are cash and other working capital,
cash flow generated from operations and borrowings under the Company's bank line
of credit. At September 30, 1996, the Company had working capital of
$168,606,000, including cash and short-term investments of $20,304,000. The
Company's long-term debt at September 30, 1996 included $53,565,000 of 5%
Convertible Subordinated Debentures due 2000 (all of which were converted into
shares of the Company's common stock on October 25, 1996), $140,000,000 of 6%
Convertible Subordinated Notes due 2005 and other long-term debt totaling
$9,003,000 and bearing interest at rates ranging from 2.0% to 11.5%.
As of September 30, 1996, the Company had an existing bank line of credit of
$135,000,000, of which there were outstanding borrowings of $81,156,000 and
outstanding letters of credit of $14,446,000. The Company expects to obtain all
or part of the funds necessary to complete the WSMG acquisition and the PED
acquisition from borrowings under bank credit facilities. The Company has
received a commitment letter from The First National Bank of Boston pursuant to
which, subject to the satisfaction of various conditions, credit facilities of
up to $700,000,000 would be made available to the Company to finance
acquisitions (including the WSMG acquisition and the PED acquisition), to
refinance any borrowings under the Company's current credit agreement, and for
working capital and other general corporate purposes. Borrowings under these
committed credit facilities would bear interest at variable rates of up to 2.25%
above certain Eurocurrency rates or 0.05% above The First National Bank of
Boston's base rate and have a five year maturity.
As of March 31, 1996, the Company had net operating loss carryforwards generated
from Societe des Ceramiques Techniques S.A. ("SCT") of approximately
$19,952,000, for which no financial statement benefit has been recognized.
Approximately $1,946,000 of net operating loss carryforwards will expire in
fiscal years 1997 and 1998, while the remainder have an indefinite carryforward
period. The Company also has net operating loss carryforwards in other European
countries of approximately $7,338,000 which expire from fiscal 1997 to 2002 for
which no financial statement benefit has been recognized. The Company also has
net operating loss carryforwards generated from Zimpro of approximately
$2,905,000 for which no financial statement benefit has been recognized. No
benefit has been given to these net operating loss carryforwards because of the
limited carryforward periods or the uncertain business conditions relating to
the operations giving rise to such carryforwards. Future recognition of these
net operating carryforwards will occur if the operations of SCT and Zimpro
generate sufficient earnings before the expiration of the respective net
operating loss carryforwards. In addition, in the case of SCT, until March 31,
1997, the benefit, if any, of such carryforwards is to be shared equally between
the Company and Aluminum Company of America.
The Company also has available at March 31, 1996, other net operating loss
carryforwards for U.S. federal income tax purposes of approximately $13,552,000
which expire from fiscal 2007 to 2010.
11
<PAGE>
Pursuant to an agreement entered into in conjunction with the acquisition of
WaterPro, all former WaterPro stockholders and former WaterPro debtholders, who
together hold an aggregate of 3,201,507 shares of the Company's common stock,
have the right, exercisable during the 90-day period commencing on the sixtieth
day after the date of consummation of the acquisition transaction, to require
the Company to purchase all or any portion of such shares of Common Stock at a
purchase price equal to $33.24 per share.
Pursuant to an agreement to be entered into in conjunction with the pending
acquisition of PED, the Company has agreed to pay in cash the portion of the
purchase price otherwise payable in shares of Common Stock if such shares are
not at the time of issuance immediately saleable pursuant to the Company's shelf
Registration Statement on Form S-4. In addition, the Agreement provides that if
such shares are issued and then sold within a specified number of days after
consummation of the acquisition for aggregate net proceeds of less than
$39,000,000 (based on exchange rates for British pounds sterling as of November
12, 1996), the Company will pay the deficiency to PED in cash, and if the
aggregate net proceeds exceed such amount, PED will pay the excess to the
Company in cash.
The Company believes its current cash position, cash flow from operations, and
available borrowings under the Company's line of credit will be adequate to meet
its anticipated cash needs from working capital, revenue growth, scheduled debt
repayment and capital investment objectives for at least the next twelve months.
Certain Trends and Uncertainties
- ---------------------------------
Acquisition Strategy. In pursuit of its strategic objective of becoming the
leading global single-source provider of water treatment systems and services,
the Company has, since 1991, acquired and successfully integrated more than 45
United States based and international businesses with strong market positions
and substantial water and wastewater treatment expertise. The Company plans to
continue to pursue acquisitions that complement its technologies, products and
services, broaden its customer base and expand its global distribution network.
The Company's acquisition strategy entails the potential risks inherent in
assessing the value, strengths, weaknesses, contingent or other liabilities and
potential profitability of acquisition candidates and in integrating the
operations of acquired companies. Although the Company generally has been
successful in pursuing these acquisitions, there can be no assurance that the
acquisition opportunities will continue to be available, that the Company will
have access to the capital required to finance potential acquisitions, that the
Company will continue to acquire businesses or that any business acquired will
be integrated successfully or prove profitable.
International Transactions. The Company has made and expects it will continue to
make acquisitions and to obtain contracts outside the United States. While these
activities may provide important opportunities for the Company to offer its
products and services internationally, they also entail the risks associated
with conducting business internationally, including the risks of currency
fluctuations, slower payment of invoices, nationalization and possible social,
political and economic instability.
Reliance on Key Personnel. The Company's operations are, and will be, dependent
on the continued efforts of senior management, in particular, Richard J.
Heckmann, its Chairman, Chief Executive Officer and President. Should any of the
senior managers be unable to continue in their present roles, the Company's
prospects could be adversely affected.
Profitability of Fixed Price Contracts. A significant portion of the Company's
revenues are, and will be, generated under fixed price contracts. To the extent
that original cost estimates are inaccurate, costs to complete increase,
delivery schedules are delayed or progress under a contract is otherwise
impeded, revenue recognition and profitability from a particular contract may be
adversely affected. The Company routinely records upward or downward adjustments
with respect to fixed price contracts due to changes in estimates of costs to
complete such contracts. There can be no assurance that future downward
adjustments will not be material.
Cyclicality of Capital Equipment Sales. The sale of capital equipment within the
wastewater treatment industry is cyclical and influenced by various economic
factors including interest rates and general fluctuations of the business cycle.
A significant portion of the Company's revenues are, and will, be derived from
capital equipment sales. While the Company sells capital equipment to customers
in diverse industries and in global markets, cyclicality of capital equipment
sales and instability of general economic conditions could have an adverse
effect on the Company's revenues and profitability.
The sale of water and wastewater distribution equipment and supplies is also
cyclical and influenced by various economic factors including interest rates,
land development and housing construction industry cycles. Sales of such
equipment and supplies are also subject to seasonal fluctuations in certain
climates. As a result of the acquisitions of Davis, USG and
12
<PAGE>
WaterPro, the sale of water and wastewater distribution equipment and supplies
is expected to become a significant component of the Company's business.
Cyclicality and seasonality of water and wastewater distribution equipment and
supplies sales could have an adverse effect on the Company's revenues and
profitability.
13
<PAGE>
Potential Environmental Risks. The Company's business and products may be
significantly influenced by the constantly changing body of environmental
laws and regulations, which require that certain environmental standards
be met and impose liability for the failure to comply with such standards.
The Company is also subject to inherent risks associated with
environmental conditions at facilities owned, and the state of compliance
with environmental laws, by businesses acquired by the Company. While the
Company endeavors at each of its facilities to assure compliance with
environmental laws and regulations, there can be no assurance that the
Company's operations or activities, or historical operations by others at
the Company's locations, will not result in civil or criminal enforcement
actions or private actions that could have a material adverse effect on
the Company. In that regard, allegations have been made by federal and
state environmental regulatory authorities of multiple violations by a
wholly owned subsidiary of the Company with respect to applicable
wastewater pretreatment standards at a Connecticut ion exchange
regeneration facility acquired by the Company in October 1995 from Anjou
International Company ("Anjou"). A grand jury investigation is pending
which is believed to relate to the same conditions that were the subject
of the civil actions. The Company has rights of indemnification from
Anjou which may be available with respect to these matters. In addition,
the Company's activities as owner and operator of certain hazardous waste
treatment, storage and recovery facilities are subject to stringent laws
and regulations and compliance reviews. Failure of these facilities to
comply with those regulations could result in substantial fines and the
suspension or revocation of the facility's hazardous waste permit. In
other matters, the Company has been notified by the United States
Environmental Protection Agency that it is a potentially responsible party
under the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"). It is possible that the Company could receive
other such notices under CERCLA or other analogous state laws in the
future. The Company does not believe that its liability, if any, relating
to such matters will be material. In addition, to some extent, the
liabilities and risks imposed by environmental laws on the Company's
customer's may adversely impact demand for certain of the Company's
products or services or impose greater liabilities and risks on the
Company, which could also have an adverse effect on the Company's
competitive or financial position
Competition. The water and wastewater treatment industry is fragmented and
highly competitive. The Company competes with many United States-based and
international companies in its global markets. The principal methods or
competition in the markets in which the Company competes are technology, prompt
availability of local service capability, price, product specifications,
customized design, product knowledge and reputation, ability to obtain
sufficient performance bonds, timely delivery, and relative ease of system
operations and maintenance, and the prompt availability of replacement parts.
The municipal contract bid process, pricing and ability to meet bid
specifications are the primary considerations. While no competitor is considered
dominant, there are competitors which have have significantly greater resources
than the Company, which, among other things, could be a competitive disadvantage
to the Company in securing certain projects.
Technological and Regulatory Change. The water and wastewater treatment business
is characterized by changing technology, competitively imposed process standards
and regulatory requirements, each of which influences the demand for the
Company's products and services. Changes in regulatory or industrial
requirements may render certain of the Company's treatment products and
processes obsolete. Acceptance of new products may also be affected by the
adoption of new government regulations requiring stricter standards. The
Company's ability to anticipate changes in technology and regulatory standards
and to successfully develop and introduce new and enhanced products on a timely
basis will be a significant factor in the Company's ability to grow and remain
competitive. There can be no assurance that the Company will be able to achieve
the technological advances that may be necessary for it to remain competitive or
that certain of its products will not become obsolete. In addition, the Company
is subject to the risks generally associated with new product introduction and
applications, including lack of market acceptance, delays in development or
failure of products to operate properly.
Municipal Market. Completion of the Company's pending acquisitions will increase
significantly the percentage of the Company's revenues derived from municipal
customers. While municipalities represent an important market in the water and
wastewater treatment industry, contractor selection processes and funding for
projects in the municipal sector entail certain risks not typically encountered
with industrial customers. Competition for selection of a municipal contractor
typically occurs through a formal bidding process which can require the
commitment of significant resources and greater lead times than industrial
projects. In addition, demand in the municipal market is dependent upon the
availability of funding at the local level, which may be the subject of
increasing pressure as local governments are expected to bear a greater share of
the cost of public services.
14
<PAGE>
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
NONE
Item 2. CHANGES IN SECURITIES
N/A
Item 3. DEFAULTS UPON SENIOR SECURITIES
N/A
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(i) The following directors were reelected to terms expiring in
1999:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
James E. Clark - Class III Director 24,214,119 161,960
Richard J. Heckmann - Class III Director 24,211,163 164,916
Robert S. Hillas - Class III Director 24,214,954 161,124
</TABLE>
(ii) An amendment to the Company's 1991 Employee Stock Option Plan
to increase the number of authorized shares thereunder by 750,000
shares:
For Against Withheld
---------- ------- --------
22,750,389 723,444 66,385
(iii) An amendment to the Company's 1991 Directors Stock Option Plan to
increase the number of authorized shares thereunder by 375,000 shares:
For Against Withheld
---------- ------- --------
22,852,806 611,444 75,967
(iv) An amendment to the Company's Articles of Incorporation to
increase the number of total authorized shares to 150,000,000 common
shares:
For Against Withheld
---------- ------- --------
23,872,522 452,399 51,157
(v) Ratification of the appointment of KPMG Peat Marwick LLP as
independent accountants for the Company:
For Against Withheld
---------- ------- --------
24,321,259 9,301 45,519
15
<PAGE>
Item 5. OTHER INFORMATION
N/A
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
The following exhibits are filed herewith or incorporated herein by
reference:
3.0 Restated Certificate of Incorporation, as amended.
10.0 United States Filter Corporation 1991 Employee Stock Option Plan,
as amended through September 13, 1996.
10.1 United States Filter Corporation 1991 Directors Stock Option
Plan, as amended through September 13, 1996.
27.0 Financial Data Schedule
b) Reports on Form 8-K
The Company filed six Current Reports on Form 8-K during the quarter
ended September 30, 1996 as follows:
(1) July 15, 1996 reporting a three-for-two stock split by way of stock
dividend paid on July 15, 1996.
(2) July 15, 1996 filing certain accountants' consents;
(3) August 23, 1996 reporting consummation of the acquisition of Davis
Water & Waste Industries, Inc.;
(4) September 6, 1996 reporting the execution of definitive agreements
for the acquisition The Utility Supply Group, Inc., WaterPro
Supplies Corporation and certain assets of Wheelabrator
Technologies Inc.;
(5) October 28, 1996 reporting consummation of the acquisition of
WaterPro Supplies Corporation and filing certain financial
statements and pro forma financial information for certain pending
and completed acquisitions; and
(6) November 6, 1996 filing an accountants' consent.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATES FILTER CORPORATION
By: /s/ KEVIN L. SPENCE
----------------------------
Dated: November 14, 1996 Kevin L. Spence
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)
17
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
- ------- ----------- -----------
3.0 Restated Certificate of Incorporation, as amended.
10.0 United States Filter Corporation 1991 Employee Stock Option Plan, as
amended through September 13, 1996.
10.1 United States Filter Corporation 1991 Directors Stock Option Plan, as
amended through September 13, 1996.
27.0 Financial Data Schedule
18
<PAGE>
EXHIBIT 3.0
RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED STATES FILTER CORPORATION
UNITED STATES FILTER CORPORATION (incorporated on November 12, 1987 as Novan
Energy, Inc.), a corporation duly organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, desiring to give
notice of corporate action effectuating the restatement of its Articles of
Incorporation, sets forth the following facts:
ARTICLE I
Name of Corporation
The name of this corporation is:
UNITED STATES FILTER CORPORATION
ARTICLE II
Definitions
A. "Affiliate" and "Associate" have the meanings set forth in Rule 12b-2
under the Securities Exchange Act of 1934 as in effect on January 1, 1987.
B. "Beneficially Owns" has the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934 as in effect on January 1, 1987.
C. "Continuing Director" means as to any Related Person, any member of the
Board of Directors of the Corporation (the "Board") who (i) is unaffiliated
with and is not the Related Person and (ii) became a member of the Board prior
to the time that the Related Person became a Related Person, and any successor
of a Continuing Director who is recommended to succeed a Continuing Director
by a majority of Continuing Directors then on the Board.
D. "Disinterested Shares" means, as to any Related Person, shares of Voting
Stock held by shareholders other than such Related Person.
E. "Related Person" means and includes any individual, corporation,
partnership or other person or entity, or any group of two or more of the
foregoing that have agreed to act together, which, together with its
Affiliates and Associates, Beneficially Owns, in the aggregate, five percent
(5%) (the "Threshold Percentage") or more of the outstanding Voting Stock, and
any Affiliate or Associate of any such individual, corporation, partnership or
other person, entity or group; provided, however, that the term "related
person" shall not include Gary Leger, Lou Purmort, Joseph Mendel, Richard J.
Heckmann, Richard Bertea, Richard R. Kreitler, Richard Neslund, Charles B.
Slack, Cliff Traff, Jr., Verne H. Winchell.
F. "Subsidiary" means any corporation in which the Corporation owns,
directly or indirectly, securities which entitle the Corporation to elect a
majority of the Board of Directors of such corporation or which otherwise give
to the Corporation the power to control such corporation.
G. "Voting Stock" means all outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors of the
Corporation and each reference to a percentage or portion of shares of Voting
Stock shall refer to such percentage or portion of the votes entitled to be
cast by such shares.
<PAGE>
ARTICLE III
Registered Office
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, and the name of its registered agent at that
address is The Corporation Trust Company.
ARTICLE IV
Purpose
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
the State of Delaware.
ARTICLE V
Authorized Capital Stock
Section 1. Authorized Stock. The Corporation shall be authorized to issue
two classes of shares to be designated, respectively, "Preferred Stock" and
"Common Stock"; the total number of shares which the Corporation shall have
authority to issue is Sixteen Million (16,000,000) shares; the total number of
shares of Preferred Stock shall be One Million (1,000,000) and each share
shall have a par value of ten cents ($.10); and the total number of authorized
shares of Common Stock shall be Fifteen Million (15,000,000) and each one
shall have a par value of one cent ($.01).
Section 2. Preferred Stock. The shares of Preferred Stock may be issued from
time to time in one or more series. The Board of Directors is hereby vested
with authority to fix by resolution or resolutions the designations and the
powers, preferences and relative, participating, optional or other special
rights, and without limitation the rights with respect to dividends,
conversion rights, redemption price and liquidation preference, of any series
of shares of Preferred Stock, and to fix the number of shares constituting any
such series, and to increase or decrease the number of shares thereof then
outstanding. In case the number of shares of any such series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series.
ARTICLE VI
Number of Directors
The number of directors which shall constitute the whole Board of Directors
of the Corporation shall be as determined in accordance with the Bylaws of the
Corporation, as the same may be amended from time to time. Elections of
directors need not be by written ballot unless the Bylaws of the Corporation
shall so provide.
ARTICLE VII
Limitation of Director Liability
To the fullest extent permitted by the General Corporation Law of Delaware
as the same exists or may hereafter be amended, a director of this Corporation
shall not be liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
ARTICLE VIII
No Actions by Written Consent of Shareholders
No action required to be taken or which may be taken at any annual or
special meeting of stockholders of the corporation may be taken without a
meeting, and the power of stockholders to consent in writing without a meeting
to the taking of any action is specifically denied.
<PAGE>
ARTICLE IX
Call of Special Meetings
Special meetings of the stockholders of the Corporation for any purpose or
purposes may be called at any time by the Board, or by a majority of the
members of the Board; provided, however, that where a proposal requiring
stockholder approval is made by or on behalf of a Related Person or director
affiliated with a Related Person, or where a Related Person otherwise seeks
action requiring stockholder approval, then the affirmative vote of a majority
of the Continuing Directors shall also be required to call a special meeting
of stockholders for the purpose of considering such proposal or obtaining such
approval. Such special meetings may not be called by any other person or
persons or in any other manner.
ARTICLE X
Amendment of Corporate Documents
Section 1. Certificate of Incorporation. In addition to any affirmative vote
required by applicable law and any voting rights granted to or held by the
holders of Preferred Stock, any alteration, amendment, repeal or rescission
(any "Change") of any provision of this Certificate of Incorporation must be
approved by a majority of the directors of the Corporation then in office and
by the affirmative vote of the holders of a majority of the outstanding Voting
Stock of the Corporation; provided, however, that if any such Change relates
to Articles II, VI, VII, VIII, IX hereof or to this Article X, such Change
must also be approved either (i) by a majority of the authorized number of
directors and, if one or more Related Persons exist, by a majority of the
directors who are Continuing Directors with respect to all Related Persons, or
(ii) by the affirmative vote of the holders of not less than eighty percent
(80%) of the outstanding Voting Stock of the Corporation, and if the Change is
proposed by or on behalf of a Related Person or a director affiliated with a
Related Person, by the affirmative vote of the holders of a majority of the
Disinterested Shares.
Subject to the foregoing, the Corporation reserves the right to amend,
alter, repeal or rescind any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders herein are granted subject to this reservation.
Section 2. Bylaws. Any proposed Change of the Bylaws of the Corporation must
be approved either (i) by a majority of the authorized number of directors
and, if one or more Related Persons exist, by a majority of the directors who
are Continuing Directors with respect to all Related Persons, or (ii) by the
affirmative vote of the holders of not less than eighty percent (80%) of the
outstanding Voting Stock of the Corporation and, if the Change is proposed by
or on behalf of a Related Person or a director affiliated with a Related
Person, by the affirmative vote of the holders of a majority of the
Disinterested Shares.
Subject to the foregoing, the Board of Directors is expressly authorized to
make, repeal, alter, amend and rescind the Bylaws of this Corporation, subject
to any limitations expressed in such Bylaws.
ARTICLE XI
Corporate Power
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders
herein are granted subject to this reservation.
ARTICLE XII
Creditor Compromise or Arrangement
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this
<PAGE>
Corporation under the provisions of Section 291 of Title 8 of the Delaware
Code or on the application of trustees in dissolution or of any receiver or
receivers appointed for this Corporation under the provisions of Section 279
of Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this Corporation as a consequence
of such compromise or arrangement, the said compromises or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
The Board of Directors of this Corporation has duly authorized by resolution
this restatement of the Corporation's Articles of Incorporation which restates
and integrates and does not further amend the provisions of the Corporation's
Certificate of Incorporation as theretofore amended or supplemented, and there
is no discrepancy between those provisions and the provisions of the restated
Certificate.
This Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Section 245 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said UNITED STATES FILTER CORPORATION has caused this
Restated Certificate of Incorporation to be signed by Richard J. Heckmann, its
President and attested by Michael J. Reardon, its Secretary, as of the 14th
day of March, 1991.
/s/ Richard J. Heckmann
-------------------------------
Richard J. Heckmann, President
Attest: /s/ Michael J. Reardon
-------------------------------
Michael J. Reardon, Secretary
The undersigned declare under penalty of perjury under the laws of the State
of Delaware, that the instrument is the act and deed of the corporation, and
that the facts stated therein are true.
Executed at Whittier, California, as of March 14, 1991.
/s/ Richard J. Heckmann
-------------------------------------
Richard J. Heckmann, President
/s/ Michael J. Reardon
-------------------------------------
Michael J. Reardon, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That Section 2 of Article V of the Restated Certificate of
Incorporation of the Corporation is hereby amended to read in its entirety as
follows:
"Section 2. Preferred Stock. The shares of Preferred Stock may be
issued from time to time in one or more series. The Board of Directors
is hereby vested with authority to fix by resolution or resolutions the
designations and the powers, preferences and relative, participating,
optional or other special rights, and without limitation the rights
with respect to voting, dividends, conversion rights, redemption price
and liquidation preference, of any series of shares of Preferred Stock,
and to fix the number of shares constituting any such series, and to
increase or decrease the number of shares thereof then outstanding. In
case the number of shares of any such series shall be so decreased, the
shares constituting such decrease shall resume the status which they
had prior to the adoption of the resolution or resolutions originally
fixing the number of shares of such series."
SECOND: The amendment set forth has been duly approved by the Board of
Directors of the Corporation and by the Stockholders entitled to vote thereon.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I, the undersigned, being a Vice President of the
Corporation, for the purpose of amending the Restated Certificate of
Incorporation of the Corporation pursuant to Section 242 of the Delaware
General Corporation Law, do make and file this Certificate of Amendment,
hereby declaring and certifying that the facts herein stated are true and
accordingly have hereunto set my hand, this 29th day of September, 1992.
By: /s/ Donald L. Bergmann
-------------------------------
Donald L. Bergmann
Vice President
Attest: /s/ Dorrie B. Osborne
-------------------------------
Dorrie B. Osborne
Assistant Secretary
<PAGE>
CERTIFICATE RELATING TO
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS,
AND LIMITATIONS OF PREFERRED STOCK FILED ON JULY 18, 1990
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
United States Filter Corporation, a corporation organized and existing under
the by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That on July 18, 1990, the Corporation filed with the Secretary of
State of Delaware a Certificate of Designation, Preferences, Rights and
Limitations of Preferred Stock, $.10 Par Value of American Toxxic Control,
Inc. ("Certificate of Designation"), the name of which corporation was
subsequently changed to United States Filter Corporation. The Certificate of
Designation authorized the issuance of 1,000,000 shares of Preferred Stock,
$.10 par value ("Preferred Stock") of the Corporation.
SECOND: That the Board of Directors of the Corporation, acting by a
unanimous consent dated November 30, 1993, adopted the following resolution in
respect of the shares subject to the Certificate of Designation:
RESOLVED, that none of the authorized shares designated "Preferred
Stock, $.10 par value," by virtue of the Certificate of Designation,
Preferences, Rights and Limitations of Preferred Stock, $.10 Par Value
of the Corporation filed with the Secretary of State of Delaware on
July 18, 1990 are presently outstanding, and that none of such shares
will be issued subject to such Certificate of Designation, Preferences,
Rights and Limitations.
THIRD: Pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, upon its effectiveness, this certificate shall have the
effect of eliminating from the Certificate of Incorporation of the
Corporation, as amended, all matters set forth in the Certificate of
Designation with respect to the Preferred Stock.
IN WITNESS WHEREOF, United States Filter Corporation has caused this
certificate to be signed by its Vice President and attested by its Assistant
Secretary, and the undersigned affirms the foregoing as true and correct under
the penalties of perjury as of this 30th day of November, 1993.
UNITED STATES FILTER CORPORATION
By: /s/ Donald L. Bergmann
-------------------------------
Donald L. Bergmann
Vice President
ATTEST:
By: /s/ Dorrie B. Osborne
-------------------------------
Dorrie B. Osborne Assistant
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That Section 1 of Article V of the Restated Certificate of
Incorporation of the Corporation is hereby amended in its entirety to read as
follows:
"Section 1. Authorized Stock. The Corporation shall be authorized to
issue two classes of shares to be designated, respectively, "Preferred
Stock" and "Common Stock"; the total number of shares which the
Corporation shall have authority to issue is twenty-eight million
(28,000,000) shares; the total number of authorized shares of Preferred
Stock shall be three million (3,000,000) and each share shall have a
par value of ten cents ($.10); and the total number of authorized
shares of Common Stock shall be twenty-five million (25,000,000) and
each share shall have a par value of one cent ($.01)."
SECOND: That Article VI of the Restated Certificate of Incorporation of the
Corporation is hereby amended in its entirety to read as follows:
"ARTICLE VI
Numbers of Directors; Classification
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of such number
of directors as is determined from time to time by resolution adopted
by affirmative vote of majority of the entire Board of Directors;
provided, however, that in no event shall the number of directors be
less than three. The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board of Directors. At the 1993
Annual Meeting of Stockholders, Class I directors shall be elected for
a one-year term, Class II directors for a two-year term and Class III
directors for a three-year term. At each succeeding annual meeting of
stockholders beginning in 1994, successors to the class of directors
whose term expires at the annual meeting shall be elected for a three-
year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the
number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall
coincide with the remaining term of any incumbent director. A director
shall hold office until the annual meeting for the year in which his or
her term expires and until his or her successor shall be elected and
shall qualify, subject, however, to prior death, resignation,
incapacitation or removal from office. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business.
Except as otherwise required by law, any vacancy in the Board of
Directors that results from an increase in the number of directors
shall be filled by only a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same remaining term as that of
his or her predecessor. A director may be removed only for cause by
either the stockholders or by the vote of a majority of the directors
then in office.
<PAGE>
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at
an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Certificate of Incorporation
applicable thereto, such directors so elected shall not be divided into
classes pursuant to this Article VI, and the number of directors shall
not be counted in determining the maximum number of directors permitted
under the foregoing provisions of the Article VI, in each case unless
expressly provided by such terms."
THIRD: The amendments set forth have been duly approved by the Board of
Directors of the Corporation and by the Stockholders entitled to vote thereon.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I, the undersigned, being a Vice President of the
Corporation, for the purpose of amending the Restated Certificate of
Incorporation of the Corporation pursuant to Section 242 of the Delaware
General Corporation Law, do make and file this Certificate of Amendment,
hereby declaring and certifying that the facts herein stated are true and
accordingly have hereunto set my hand, as of this 1st day of December, 1993.
By: /s/ Donald L. Bergmann
-------------------------------
Donald L. Bergmann
Vice President
Attest: /s/ Dorrie B. Osborne
---------------------------
Dorrie B. Osborne
Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That Section 1 of Article V of the Restated Certificate of
Incorporation of the Corporation is hereby amended to read in its entirety as
follows:
"Section 1. Authorized Stock. The Corporation shall be authorized to
issue two classes of shares to be designated, respectively, "Preferred
Stock" and "Common Stock"; the total number of shares which the
Corporation shall have authority to issue is seventy-eight million shares
(78,000,000); the total number of shares of Preferred Stock shall be three
million (3,000,000) and each share shall have a par value of ten cents
($.10); and the total number of authorized shares of Common Stock shall be
seventy-five million (75,000,000) and each share shall have a par value of
one cent ($.01)."
SECOND: The amendment set forth has been duly approved by the Board of
Directors of the Corporation and by the Stockholders entitled to vote thereon.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I, the undersigned, being a Vice President of the
Corporation, for the purpose of amending the Restated Certificate of
Incorporation of the Corporation pursuant to Section 242 of the Delaware
General Corporation Law, do make and file this Certificate of Amendment,
hereby declaring and certifying that the facts herein stated are true and
accordingly have hereunto set my hand, as of this 14th day of March, 1994.
By: /s/ Kevin L. Spence
-------------------------------
Kevin L. Spence
Vice President
Attest: /s/ Dorrie B. Osborne
-------------------------------
Dorrie B. Osborne
Assistant Secretary
<PAGE>
CERTIFICATE OF ELIMINATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is United States Filter Corporation.
SECOND: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted eliminating the designation of a "Series B
Voting Convertible Preferred Stock" as set forth in the Certificate of
Designations, Preferences, Rights and Limitations filed on October 3, 1994.
The resolutions setting forth the elimination are as follows:
NOW, THEREFORE, BE IT RESOLVED, that no shares of the Series B Voting
Convertible Preferred Stock are outstanding; and
RESOLVED FURTHER, that no shares of the Series B Voting Convertible
Preferred Stock will be issued subject to that Certificate of
Designations, Preferences, Rights and Limitations filed by the Company
with the Delaware Secretary of State on October 3, 1994; and
RESOLVED FURTHER, that a Certificate of Elimination be filed with the
Delaware Secretary of State eliminating the designation of the Series B
Voting Convertible Preferred Stock.
THIRD: These resolutions were duly adopted in accordance with Section 151(g)
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, United States Filter Corporation has caused this
Certificate to be executed by a duly authorized officer this 3rd day of
November, 1995.
UNITED STATES FILTER CORPORATION
By: /s/ Damian C. Georgino
----------------------------------
Damian C. Georgino
Vice President, General
Counsel and Secretary
<PAGE>
CERTIFICATE OF ELIMINATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is United States Filter Corporation.
SECOND: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted eliminating the designation of a "Series A
Voting Convertible Preferred Stock" as set forth in the Certificate of
Designations, Preferences, Rights and Limitations filed on December 31, 1991.
The resolutions setting forth the elimination are as follows:
NOW, THEREFORE, BE IT RESOLVED, that no shares of the Series A Voting
Convertible Preferred Stock are outstanding; and
RESOLVED FURTHER, that no shares of the Series A Voting Convertible
Preferred Stock will be issued subject to that Certificate of
Designations, Preferences, Rights and Limitations filed by the Company
with the Delaware Secretary of State on December 31, 1991; and
RESOLVED FURTHER, that a Certificate of Elimination be filed with the
Delaware Secretary of State eliminating the designation of the Series A
Voting Convertible Preferred Stock.
THIRD: These resolutions were duly adopted in accordance with Section 151(g)
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, United States Filter Corporation has caused this
Certificate to be executed by a duly authorized officer this 14th day of June,
1996.
UNITED STATES FILTER CORPORATION
By: /s/ Damian C. Georgino
----------------------------------
Damian C. Georgino
Vice President, General
Counsel and Secretarty
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
UNITED STATES FILTER CORPORATION
United States Filter Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That Section 1 of Article V of the Restated Certificate of
Incorporation of the Corporation is hereby amended to read in its entirety as
follows:
"Section 1. Authorized Stock. The Corporation shall be authorized to issue
-----------------
two classes of shares to be designated, respectively, "Preferred Stock" and
"Common Stock"; the total number of shares which the Corporation shall have the
authority to issue is one hundred fifty three million (153,000,000) shares; the
total number of authorized shares of Preferred Stock shall be three million
(3,000,000) and each share shall have a par value of ten cents ($.10); and the
total number of authorized shares of Common Stock shall be one hundred fifty
million (150,000,000) and each share shall have a par value of one cent ($.01)."
SECOND: The amendment set forth has been duly approved by the Board of
Directors of the Corporation and by the Stockholders entitled to vote thereon.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I, the undersigned, Vice President, General Counsel and
Secretary of the Corporation, for the purpose of amending the Restated
Certificate of Incorporation of the Corporation pursuant to Section 242 of the
Delaware General Corporation Law, do make and file this Certificate of
Amendment, hereby declaring and certifying that the facts herein stated are true
and accordingly have hereunto set my hand, as of this 16th day of September
1996.
Attest: By: /s/ Damian C. Georgino
------------------------------------
Damian C. Georgino
/s/ Michael B. Hulme Vice President, General Counsel
- ------------------------------ and Secretary
Michael B. Hulme
Assistant General Counsel and
Assistant Secretary
<PAGE>
EXHIBIT 10.0
UNITED STATES FILTER CORPORATION
1991 EMPLOYEE STOCK OPTION PLAN /1/
1. Purpose. The United States Filter Corporation 1991 Employee Stock
-------
Option Plan (the "Plan") is hereby established to grant to officers, directors
and key employees of United States Filter Corporation and its Subsidiaries
(individually and collectively, the "Company") a favorable opportunity to
acquire Common Stock of United States Filter Corporation (the "Stock"), and to
create an incentive for such persons to remain in the employ of the Company and
to contribute to its success.
As used in the Plan, the term "Code" shall mean the Internal Revenue Code
of 1986, as amended, and any successor statute, and the terms "Parent" and
"Subsidiary" shall have the meaning set forth in Sections 424(e) and (f) of the
Code.
2. Administration. The Plan shall be administered by the Compensation
--------------
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall determine the meaning and application of the provisions of the
Plan and all option agreements executed pursuant thereto, and its decisions
shall be conclusive and binding upon all interested persons. The Committee may
not grant an option to any member of the Committee. An option may be granted to
a member of the Committee only by action of the Board of Directors of the
Company. Subject to the provisions of the Plan, the Committee shall have the
sole authority to determine:
(a) The persons to whom options to purchase Stock shall be granted;
(b) The number of options to be granted to each person;
(c) The price to be paid for the Stock upon the exercise of each
option;
(d) The period within which each option shall be exercised; and
(e) The terms and conditions of each stock option agreement entered
into between the Company and persons to whom the Company has granted an option.
3. Eligibility. Officers, directors and key employees of the Company, as
-----------
determined by the Committee, shall be eligible to receive grants of options
under the Plan. No individual may be granted, in any calendar year, options
under the Plan to purchase more than 150,000 shares of Common Stock.
- ---------------------------
/1/ As amended by the Board of Directors through June 14, 1996.
<PAGE>
4. Stock Subject to Plan. There shall be reserved for issue upon the
---------------------
exercise of options granted under the Plan 4,342,746 shares of Common Stock or
the number of shares of Stock, which, in accordance with the provisions of
Section 9 hereof, shall be substituted therefor. Such shares may be authorized
but unissued shares or treasury shares. If an option granted under the Plan
shall expire or terminate for any reason without having been exercised in full,
unpurchased shares subject thereto shall again be available for the purposes of
the Plan.
5. Terms of Options.
----------------
(a) Incentive Stock Options. It is intended that options granted
-----------------------
pursuant to this Section 5(a) qualify as incentive stock options as defined in
Section 422 of the Code. Incentive stock options shall be granted only to
employees of the Company. Each stock option agreement evidencing an incentive
stock option shall provide that the option is subject to the following terms and
conditions and to such other terms and conditions not inconsistent therewith as
the Committee may deem appropriate in each case:
(1) Option Price. The price to be paid for each share of Stock
------------
upon the exercise of each incentive stock option shall be determined by the
Committee at the time the option is granted, but shall in no event be less than
100% of the fair market value of the shares on the date the option is granted,
or not less than 110% of the fair market value of such shares on the date such
option is granted in the case of an individual then owning (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or of its Parent or Subsidiaries. As used
in this Plan the term "date the option is granted" means the date on which the
Committee authorizes the grant of an option hereunder or any later date
specified by the Committee. Fair market value of the shares shall be (i) the
mean of the high and low prices of shares of Stock sold on a national stock
exchange on the date the option is granted (or if there was no sale on such
date, the highest asked price for the Stock on such date), or (ii) if the Stock
is not listed on any national stock exchange on the date the option is granted,
the mean between the "bid" and "asked" prices of the Stock in the National Over-
The-Counter Market on the date the option is granted, or (iii) if the Stock is
not traded in any market, that price determined by the Committee to be fair
market value, based upon such evidence as it may think necessary or desirable.
(2) Period of Option. The period or periods within which an
----------------
option may be exercised shall be determined by the Committee at the time the
option is granted, but in no event shall any option granted hereunder be
exercised more than ten years from the date the option was granted, nor more
than five years from the date the option was granted in the case of an
individual then owning (within the meaning of Section 424(d) of the Code) more
than
-2-
<PAGE>
10% of the total combined voting power of all classes of stock of the Company or
of its Parent or Subsidiaries.
(3) Payment for Stock. The option exercise price for each share
-----------------
of Stock purchased under an option shall be paid in full at the time of
purchase. The Committee may provide that the option price be payable, at the
election of the holder of the option and with the consent of the Committee, in
whole or in part either in cash or by delivery of Stock in transferable form,
such Stock to be valued for such purpose at its fair market value on the date on
which the option is exercised. No share of Stock shall be issued until full
payment therefor has been made, and no employee shall have any rights as an
owner of Stock until the date of issuance to him of the stock certificate
evidencing such Stock.
(4) Limitation on Amount. Subject to the overall limitations of
--------------------
Section 4 hereof (relating to the aggregate shares subject to the Plan), the
aggregate fair market value (determined as of the time the option is granted) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by the Optionee during any calendar year (under the Plan and
all other incentive stock option plans of the Company, any Parent or
Subsidiaries) shall not exceed $100,000.
(b) Nonqualified Stock Options. Each nonqualified stock option granted
--------------------------
under the Plan shall be evidenced by a stock option agreement between the person
to whom such option is granted and the Company. Such stock option agreement
shall provide that the option is subject to the following terms and conditions
and to such other terms and conditions not inconsistent therewith as the
Committee may deem appropriate in each case:
(1) Option Exercise Price. The exercise price to be paid for
---------------------
each share of Stock upon the exercise of an option shall be determined by the
Committee at the time the option is granted, but shall in no event be less than
100% of the fair market value of the shares on the date the option is granted.
As used in this Plan, the term "date the option is granted" means the date on
which the Committee authorizes the grant of an option hereunder or any later
date specified by the Committee. Fair market value of the shares shall be (i)
the mean of the high and the low prices of shares of Stock sold on a national
stock exchange on the date the option is granted (or if there was no sale on
such date, the highest asked price for the Stock on such date), or (ii) if the
Stock is not listed on a national stock exchange on the date the option is
granted the mean between the "bid" and "asked" prices of the Stock in the
National Over-The-Counter market on the date the option is granted, or (iii) if
the Stock is not traded in any market, that price determined by the Committee to
be fair market value, based upon such evidence as it may think necessary or
desirable.
-3-
<PAGE>
(2) Period of Option. The period or periods within which an
----------------
option may be exercised shall be determined by the Committee at the time the
option is granted, but shall in no event exceed ten years from the date the
option is granted.
(3) Payment for Stock. The option exercise price for Stock
-----------------
purchased under an option shall be paid in full at the time of purchase. The
Committee may provide that the option exercise price be payable, at the election
of the holder of the option, with the consent of the Committee, in whole or in
part either in cash or by delivery of Stock in transferable form, such Stock to
be valued for such purpose at its fair market value on the date on which the
option is exercised. No share of Stock shall be issued until full payment
therefor has been made, and no employee shall have any rights as an owner of
shares of Stock until the date of issuance to him of the stock certificate
evidencing such Stock.
6. Nontransferability. The options granted pursuant to the Plan shall
------------------
be nontransferable except by will or the laws of descent and distribution, and
shall be exercisable during the optionee's lifetime only by him and after his
death, by his personal representative or by the person entitled thereto under
his will or the laws of intestate succession.
7. Termination of Employment. Upon termination of the optionee's
-------------------------
employment, except as the Committee shall otherwise authorize at the time of
grant and any time thereafter, his rights to exercise options then held by him
shall be only as follows:
(a) Death or Disability. Upon the death of any person holding options
-------------------
granted under this Plan, his options shall be exercisable, by the holder's
representative or by the person entitled thereto under his will or the laws of
intestate succession, only if and to the extent they are exercisable on the date
of his death, and such options shall terminate twelve months after the date of
his death (or such shorter period as the Committee may prescribe in his option
agreement). Upon the disability of an optionee his options shall be exercisable
only if and to the extent they are exercisable on the date of his disability,
and such options shall terminate twelve months after the date of his disability
(or such shorter period as the Committee may prescribe in his option agreement).
However, in no event shall any option be exercised more than ten years from the
date the option was granted. For purposes of this Section 7(a), an individual
is disabled if he is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
(b) Retirement. Upon the retirement of an officer, director or
----------
employee or the cessation of services provided by a nonemployee (either pursuant
to a Company retirement plan, if any,
-4-
<PAGE>
or pursuant to the approval of the Committee) or if any officer, director,
employee or non-employee optionee leaves the Company, a Parent or a Subsidiary,
for any reason other than as set forth in Section 7(a), 7(c) or 7(d) hereof, his
options shall be exercisable only if and to the extent they are exercisable on
the date of his retirement or cessation of services and such options shall
terminate three months after the date of his retirement or cessation of services
as the case may be (or such shorter period as the Committee may prescribe in his
option agreement). The optionee's option shall terminate upon the expiration of
such period unless the holder of the options dies prior thereto, in which event
he shall be deemed to have died on the date of his retirement or cessation of
services; provided, however, in no event shall such options be exercised more
than ten years from the date they are granted.
(c) Transfer to Related Corporation. In the event that an officer,
-------------------------------
director or employee leaves the employ of the Company to become an officer,
director or employee of any Subsidiary, or an officer, director or employee
ceases to serve as an officer or director or leaves the employ of a Subsidiary
to become an officer, director or employee of the Company or another Subsidiary,
such officer, director or employee shall be deemed to continue as an officer,
director or employee for all purposes of this Plan.
(d) Other Termination. In the event an officer, director or employee
-----------------
ceases to serve as an officer or director or leaves the employ of the Company, a
Parent or a Subsidiary, or a nonemployee ceases to provide services to the
Company, of his own volition, or if his relationship with the Company, a Parent
or a Subsidiary is terminated by the Company for cause, his options shall
terminate at the earlier of the date his employment terminates or he ceases
providing services to the Company, a Parent or a Subsidiary, or the date he
receives written notice that his employment or rendering of services is or will
be terminated.
8. Acceleration upon Termination or Sale of Company. The Committee may
------------------------------------------------
determine to accelerate the exercisability of any or all options after
termination of employment. In the event the Parent or its stockholders enter
into an agreement to dispose of all or substantially all of the assets or
capital stock of the Parent by means of a sale, merger, consolidation,
reorganization, liquidation or otherwise, an option granted under the Plan will,
in the discretion of the Committee, if so authorized by the Board of Directors
and conditioned upon consummation of such disposition of assets or stock, become
immediately exercisable during the period commencing as of the date of the
execution of such agreement and ending as of the earlier of the stated
termination date of the option or the date on which the disposition of assets or
stock contemplated by the agreement is consummated.
-5-
<PAGE>
9. Adjustment of Shares.
--------------------
(a) In the event of changes in the outstanding Stock by reason of
stock dividends, stock splits, reverse stock splits, split-ups, consolidations,
recapitalizations, reorganizations or like events (as determined by the
Committee), an appropriate adjustment shall be made by the Committee in the
number of shares reserved under the Plan, in the number of shares set forth in
Section 4 hereof, and in the number of shares and the option price per share
specified in any stock option agreement with respect to any unpurchased shares.
The determination of the Committee as to what adjustments shall be made shall be
conclusive. Adjustments for any options to purchase fractional shares shall also
be determined by the Committee. The Committee shall give prompt notice to all
optionees of any adjustment pursuant to this Section.
(b) Section 9(a) above to the contrary notwithstanding, in the event
of any merger, consolidation or other reorganization of United States Filter
Corporation in which United States Filter Corporation is not the surviving or
continuing corporation (as determined by the Committee) or in the event of the
liquidation or dissolution of United States Filter Corporation, all options
granted hereunder shall terminate on the effective date of the merger,
consolidation, reorganization, liquidation, or dissolution unless the agreement
with respect thereto provides for the assumption of such options by the
continuing or surviving corporation. Any other provision of this Plan to the
contrary notwithstanding, all outstanding options granted hereunder shall be
fully exercisable for a period of 30 days prior to the effective date of any
such merger, consolidation, reorganization, liquidation, or dissolution unless
such options are assumed by the continuing or surviving corporation.
10. Securities Law Requirements. The Committee may require prospective
---------------------------
optionees, as a condition of either the grant or the exercise of an option, to
represent and establish to the satisfaction of the Committee that all shares of
Stock acquired upon the exercise of such option will be acquired for investment
and not for resale. The Company may refuse to permit the sale or other
disposition of any shares acquired pursuant to any such representation until it
is satisfied that such sale or other disposition would not be in contravention
of applicable state or federal securities law.
11. Tax Withholding. The Company may require an optionee to pay to the
---------------
Company all applicable federal, state and local taxes which the Company is
required to withhold with respect to the exercise of an option granted
hereunder.
12. Amendment. The Board of Directors may amend the Plan at any time,
---------
except that without shareholder approval:
-6-
<PAGE>
(a) The number of shares of Stock which may be reserved for issuance
under the Plan shall not be increased except as provided in Section 9 hereof;
(b) The option price per share of Stock may not be fixed at less than
100% of the fair market value of a share of Stock on the date the option was
granted;
(c) The maximum period of ten years during which the options may be
exercised may not be extended;
(d) The class of persons eligible to receive options under the Plan as
set forth in Section 3 shall not be changed; and
(e) This Section 12 may not be amended in a manner that limits or
reduces the amendments which require shareholder approval.
13. Termination. The Plan shall terminate automatically on February 27,
-----------
2001. The Board of Directors may terminate the Plan at any earlier time. The
termination of the Plan shall not affect the validity of any option agreement
outstanding at the date of such termination, but no option shall be granted
after such date.
14. Effective Date. The Plan shall be effective upon its adoption by the
--------------
Board of Directors of the Company. Options may be granted but not exercised
prior to stockholder approval of the Plan. If any options are so granted and
stockholder approval shall not have been obtained on or before February 27,
1992, such options shall terminate retroactively as of the date they were
granted.
-7-
<PAGE>
EXHIBIT 10.1
UNITED STATES FILTER CORPORATION
1991 DIRECTORS STOCK OPTION PLAN /1/
1. Purpose. The United States Filter Corporation 1991 Directors Stock
-------
Option Plan (the "Plan") is hereby established to grant to nonemployee directors
of United States Filter Corporation (the "Company") a favorable opportunity to
acquire Common Stock ("Stock") of the Company and to create an incentive for
such persons to serve on the Board of Directors of the Company and to contribute
to its long-term growth and profitability objectives.
As used in the Plan, the term "Code" shall mean the Internal Revenue Code
of 1986, as amended. The term "Participant" shall mean a member of the Board of
Directors of the Company who is not an officer or full-time salaried employee of
the Company. Masculine terms used herein may be read as feminine, singular
terms as plural and plural terms as singular, as necessary to give effect to the
Plan.
2. Administration. The plan shall be administered by the Compensation
--------------
Committee of the Board of Directors of the Company (the "Committee"). The
Committee shall determine the meaning and application of the provisions of the
Plan and all option agreements executed pursuant thereto, and its decisions
shall be conclusive and binding upon all interested persons. Subject to the
provisions of the Plan, the Committee shall have the sole authority to grant
options hereunder, to prescribe, amend and rescind rules and regulations
relating to the Plan, to determine the terms and conditions of each stock option
agreement entered into between the Company and any Participant, and to make all
other determinations necessary or advisable in the implementation and
administration of the Plan.
3. Eligibility. All nonemployee directors of the Company shall
-----------
participate in the Plan.
4. Stock Subject to Plan. There shall be reserved for issue upon the
---------------------
exercise of options granted under the Plan 870,500 shares of Common Stock or the
number of shares of Stock, which, in accordance with the provisions of Section 8
hereof, shall be substituted therefor. Such shares may be authorized but
unissued shares or treasury shares. If an option granted under the Plan shall
expire or terminate for any reason without having been exercised in full,
unpurchased shares subject thereto shall again be available for the purposes of
the plan.
5. Terms of Options. Each option granted under the Plan shall be
----------------
evidenced by a stock option agreement between the person
- ---------------------------
/1/ As amended by the Board of Directors through June 14, 1996
<PAGE>
to whom such option is granted and the Company. Such stock option agreement
shall provide that the option is subject to the following terms and conditions
and to such other terms and conditions not inconsistent therewith as the
Committee may deem appropriate in each case:
(a) Option Exercise Price. The exercise price to be paid for each
---------------------
share of Stock upon the exercise of an option shall be 100% of the fair market
value of the shares on the date the option is granted. As used in this Plan, the
term "date the option is granted" means the first business day in April as of
which the option is granted in accordance with Section 5(b). Fair market value
of the shares shall be (i) the mean of the high and the low prices of shares of
Stock sold on a national stock exchange on the date the option is granted (or if
there was no sale on such date the highest asked price for Stock on such date)
or (ii) if the Stock is not listed on a national stock exchange on the date the
option is granted the mean between the "bid" and "asked" prices of the Stock in
the National Over-The-Counter market on the date the option is granted.
(b) Amount and Date of Grant. Each Participant shall receive
------------------------
a grant of options for shares of Stock as follows: (1) on the first business day
(i.e., the first day on which Stock of the Company may be traded on a national
stock exchange) of April in each calendar year in which such Participant is
serving on the Board of Directors, 12,000 shares, and (ii) following a
Participant's initial election to the Board of Directors of the Company,
provided that if a Participant's initial election to the Board of Directors
occurs after September 30 of the year first elected, such initial grant shall be
6,000 and not 12,000 shares of Stock.
(c) Period of Option. Options granted hereunder shall have a term of
----------------
four years from the date of grant.
(d) Exercisability. Each option granted under the Plan shall be
--------------
exercisable in full at any time and from time to time commencing as of the date
of grant.
(e) Payment for Stock. The option exercise price for Stock purchased
-----------------
under an option shall be paid in full at the time of purchase. The option
exercise price be payable, at the election of the holder of the option, in whole
or in part either in cash or by delivery of Stock in transferable form, such
Stock to be valued for such purpose at its fair market value on the date on
which the option is exercised. No share of Stock shall be issued until full
payment therefor has been made, and no Participant shall have any rights as an
owner of shares of Stock until the date of issuance to him of the stock
certificate evidencing such Stock.
6. Nontransferability. Options granted pursuant to the Plan shall be
------------------
nontransferable except by will or the laws of descent and
-2-
<PAGE>
distribution, and shall be exercisable during the optionee's lifetime only by
him, and after his death, by his personal representative or by the person
entitled thereto under his will or the laws of intestate succession.
7. Termination of Service. Upon termination of the optionee's service on
----------------------
the Board of Directors for any reason ("Termination of Service"), his rights to
exercise options then held by him shall be only as follows:
(a) Death or Disability. Upon the death of any person holding options
-------------------
granted under this Plan, his options shall be exercisable, by the holder's
representative or by the person entitled thereto under his will or the laws of
intestate succession, only if and to the extent they are exercisable on the date
of his death, and such options shall terminate twelve months after the date of
his death.
(b) Termination for Cause. A Participant's right to exercise
---------------------
stock options shall be rescinded if the Participant has been found to be engaged
directly or indirectly in any conduct or activity which is in competition with
the Company or is otherwise adverse to or not in the best interest of the
Company.
(c) Termination of Service. Upon the Termination of Service of a
----------------------
Participant for any reason other than as set forth in Section 7(a) or 7(b)
hereof, his options shall be exercisable only if and to the extent they are
exercisable on the date of his Termination of Service and such options shall
terminate 30 days after the date of his Termination of Service unless the holder
of the options dies prior thereto, in which event he shall be deemed to have
died on the date of his Termination of Service; provided, however, in no event
shall such options be exercised more than five years from the date they are
granted.
8. Adjustment of Shares.
--------------------
(a) In the event of changes in the outstanding Stock by reason of stock
dividends, stock splits, reverse stock splits, split-ups, consolidations,
recapitalizations, reorganizations or like events, an appropriate adjustment
shall be made in the number of shares reserved under the Plan, in the number of
shares set forth in Section 4 hereof, and in the number of shares and the
option price per share specified in any stock option agreement with respect to
any unpurchased shares. The Company shall give prompt notice to all optionees
of any adjustment pursuant to this Section.
(b) Section 8(a) above to the contrary notwithstanding, in the event of
any merger, consolidation or other reorganization of the Company in which the
Company is not the surviving or continuing corporation or in the event of the
liquidation or dissolution of the Company, all options granted hereunder shall
terminate on the effective date of the merger, consolidation,
-3-
<PAGE>
reorganization, liquidation, or dissolution unless the agreement with respect
thereto provides for the assumption of such options by the continuing or
surviving corporation. Any other provision of this Plan to the contrary
notwithstanding, all outstanding options granted hereunder shall be fully
exercisable for a period of 30 days prior to the effective date of any such
merger, consolidation, reorganization, liquidation, or dissolution unless such
options are assumed by the continuing or surviving corporation.
9. Securities Law Requirements. The Company may require prospective
---------------------------
optionees, as a condition of either the grant or the exercise of an option, to
represent and establish to the satisfaction of the General Counsel of the
Company that all shares of Stock acquired upon the exercise of such option will
be acquired for investment and not for resale. The Company may refuse to permit
the sale or other disposition of any shares acquired pursuant to any such
representation until it is satisfied that such sale or other disposition would
not be in contravention of applicable state or federal securities law.
10. Tax Withholding. If appropriate, the Company shall require an
---------------
optionee to pay to the Company all applicable federal, state and local taxes
which the Company is required to withhold with respect to the exercise of an
option granted hereunder.
11. Amendment. The Board of Directors may amend the Plan at any time,
---------
except that without shareholder approval:
(a) The number of shares of Stock which may be reserved for issuance
under the Plan shall not be increased except as provided in Section 8 hereof;
(b) The option price per share of Stock may not be fixed at less than
the price specified in Section 5(a) hereof;
(c) The maximum period during which the options may be exercised may
not be extended;
(d) The Class of persons eligible to receive options under the Plan as
set forth in Section 3 shall not be changed;
(e) This Section 11 may not be amended in a manner that limits or
reduces the amendments which require shareholder approval; and
(f) The provisions of the Plan shall not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder.
12. Termination. The Plan shall terminate automatically on February 27,
-----------
2001. The Board of Directors may terminate the Plan at any earlier time. The
termination of the Plan shall not affect
-4-
<PAGE>
the validity of any option agreement outstanding at the date of such
termination, but no option shall be granted after such date.
13. Effective Date. The Plan shall be effective upon its adoption by the
--------------
Board of Directors of the Company. Options may be granted but not exercised
prior to stockholder approval of the Plan. If any options are so granted and
stockholder approval shall not have been obtained on or before February 27,
1992, such options shall terminate retroactively as of the date they were
granted.
-5-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENTS OF INCOME OF UNITED STATES
FILTER CORPORATION AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1997
<PERIOD-START> JUL-01-1996 APR-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 19,488,000 0
<SECURITIES> 816,000 0
<RECEIVABLES> 223,391,000 0
<ALLOWANCES> 9,797,000 0
<INVENTORY> 88,230,000 0
<CURRENT-ASSETS> 404,296,000 0
<PP&E> 243,517,000 0
<DEPRECIATION> 65,155,000 0
<TOTAL-ASSETS> 936,659,000 0
<CURRENT-LIABILITIES> 235,690,000 0
<BONDS> 202,568,000 0
0 0
0 0
<COMMON> 493,000 0
<OTHER-SE> 399,510,000 0
<TOTAL-LIABILITY-AND-EQUITY> 936,659,000 0
<SALES> 225,210,000 433,719,000
<TOTAL-REVENUES> 225,210,000 433,719,000
<CGS> 163,224,000 315,398,000
<TOTAL-COSTS> 163,224,000 315,398,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 381,000 1,049,000
<INTEREST-EXPENSE> 3,582,000 7,972,000
<INCOME-PRETAX> 8,586,000 19,632,000
<INCOME-TAX> 2,361,000 5,404,000
<INCOME-CONTINUING> 6,225,000 14,228,000
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 6,225,000 14,228,000
<EPS-PRIMARY> .12 .28
<EPS-DILUTED> .12 .28
</TABLE>
