<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 JUNE 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 August
7, 1996, is shares.
Total number of pages 17
----
THERE IS ONE EXHIBIT FILED WITH THIS REPORT.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,483,000 16,685,000
Short-term investments 1,443,000 65,000
Accounts receivable, net 171,510,000 183,666,000
Costs and estimated earnings in excess
of billings on uncompleted contracts 44,242,000 32,156,000
Inventories 60,722,000 57,511,000
Prepaid expenses 8,595,000 7,230,000
Deferred taxes 3,577,000 3,577,000
Other current assets 10,537,000 9,388,000
------------ -----------
Total current assets 308,109,000 310,278,000
------------ -----------
Property, plant and equipment, net 163,387,000 159,631,000
Investment in leasehold interests, net 27,392,000 27,688,000
Cost in excess of net assets of businesses acquired, net 279,024,000 271,891,000
Other assets 37,875,000 33,091,000
------------ -----------
$815,787,000 802,579,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 65,514,000 80,122,000
Accrued liabilities 87,365,000 86,391,000
Current portion of long-term debt 1,542,000 7,757,000
Billings in excess of costs and estimated
earnings on uncompleted contracts 19,510,000 14,854,000
Other current liabilities 19,466,000 23,202,000
----------- -----------
Total current liabilities 193,397,000 212,326,000
----------- -----------
Notes payable 42,507,000 30,413,000
Long-term debt, excluding current portion 7,767,000 8,286,000
Convertible subordinated debentures 199,975,000 200,000,000
Deferred taxes 1,929,000 1,929,000
Other liabilities 13,876,000 10,780,000
----------- -----------
Total liabilities 459,451,000 463,734,000
----------- -----------
</TABLE>
(Continued)
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
Stockholders' equity:
Common stock, $.01 par value; 75,000,000 shares
authorized; 43,738,571 and 42,178,173 shares
issued and outstanding at June 30, 1996 and
March 31, 1996, respectively 437,000 422,000
Additional paid-in capital 352,787,000 341,715,000
Currency translation adjustment 2,009,000 1,836,000
Retained earnings (accumulated deficit) 1,103,000 (5,128,000)
------------ -----------
Total stockholders' equity 356,336,000 338,845,000
------------ -----------
$815,787,000 802,579,000
============ ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Revenues $150,801,000 98,489,000
Cost of sales 104,060,000 68,456,000
------------ ----------
Gross profit 46,741,000 30,033,000
Selling, general and
administrative expenses 33,498,000 23,724,000
------------ ----------
Operating income 13,243,000 6,309,000
Other income (expense):
Interest expense (4,280,000) (2,653,000)
Other income 585,000 705,000
------------ ----------
(3,695,000) (1,948,000)
------------ ----------
Income before income taxes 9,548,000 4,361,000
Income taxes 2,631,000 1,184,000
------------ ----------
Net income $ 6,917,000 3,177,000
============ ==========
Net income per common share $ 0.15 0.10
============ ==========
Weighted average number of
common shares outstanding 45,133,000 30,881,000
============ ==========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
UNITED STATES FILTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,917,000 3,177,000
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 9,821,000 4,744,000
Provision for doubtful accounts 419,000 646,000
Gain on sale of property and equipment (5,000) (177,000)
Stock option compensation - 28,000
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable 15,541,000 (5,879,000)
Increase in costs and estimated earnings
on uncompleted contracts (12,086,000) (10,968,000)
Increase in inventories (3,153,000) (4,568,000)
Increase in other assets (7,306,000) (3,899,000)
Decrease in accounts payable and accrued expenses (13,791,000) (5,322,000)
Increase (decrease) in billings in excess of costs
and estimated earnings or uncompleted contracts 4,656,000 (2,068,000)
Increase (decrease) in other liabilities (1,889,000) 7,078,000
------------ ------------
Net cash used in operating activities (876,000) (17,208,000)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of property, plant & equipment (11,159,000) (3,818,000)
Payment for purchase of acquisitions, net of cash acquired (5,209,000) (91,739,000)
Investment in leasehold interests
Proceeds from disposal of equipment 79,000 1,282,000
Purchase of short-term investments (1,378,000) (2,979,000)
------------ ------------
Net cash used in investing activities (17,667,000) (97,254,000)
------------ ------------
</TABLE>
(Continued)
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
UNITED STATES FILTER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on debt (3,399,000) (237,000)
Dividends paid on preferred stock (40,000) (40,000)
Proceeds from borrowings on notes payable
and long-term debt 12,094,000 6,155,000
Proceeds from issuance of common stock 686,000 98,114,000
----------- -----------
Net cash provided by financing activities 9,341,000 103,992,000
----------- -----------
Net decrease in cash (9,202,000) (10,470,000)
Cash balance at March 31, 1996 and 1995 16,685,000 16,274,000
----------- -----------
Cash balance at June 30, 1996 and 1995 $ 7,483,000 5,804,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 3,123,000 3,341,000
=========== ===========
Cash paid during the period for income taxes $ 273,000 357,000
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
UNITED STATES FILTER CORPORATION
AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND MARCH 31, 1996
(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 of the Company,
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, a copy of which may be obtained from the
Company. The results of operations for interim periods are not
necessarily indicative of the results of operations for full fiscal
years.
Income per Common Share
-----------------------
Income per common share is computed based on the weighted average
number of shares outstanding. Common stock equivalents, consisting of
convertible preferred stock, options and warrants are included in the
computation of income per share when their effect is dilutive.
All income per share data in the accompanying consolidated financial
statements have been restated to reflect a three for two common stock
split paid by way of stock dividend on July 15, 1996.
Primary and fully diluted income per common share for the three months
ended June 30, 1996 and 1995, respectively, were calculated as follows:
7
<PAGE>
<TABLE>
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Net income $ 6,917,000 3,177,000
Dividends on preferred stock - (179,000)
----------- ----------
Adjusted net income applicable to
common shares $ 6,917,000 2,998,000
=========== =========
Weighted average shares outstanding 43,552,000 30,191,000
Add:
Exercise of stock options and warrants reduced
by the number of shares purchased with
proceeds 1,581,000 690,000
----------- ----------
Adjusted weighted average shares
outstanding 45,133,000 30,881,000
=========== ==========
Income per common share:
Net income $ 0.15 0.10
Dividends on preferred stock - (0.00)
----------- ----------
Adjusted income per common share $ 0.15 0.10
=========== ==========
</TABLE>
Note 2. Inventories
-----------
Inventories at June 30, 1996 and March 31, 1996
consist of the following:
<TABLE>
<CAPTION>
June 30, 1996 March 31, 1996
------------- --------------
<S> <C> <C>
Raw materials $23,282,000 21,048,000
Work-in-process 15,773,000 16,650,000
Finished goods 21,667,000 19,813,000
----------- ----------
$60,722,000 57,511,000
=========== ==========
</TABLE>
8
<PAGE>
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 585,074 shares (877,611 shares on a post-split basis) 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 114,994 shares
(172,491 shares on a post-split basis) 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 combined consolidated financial statements and notes
thereto for all periods presented have been restated to include the
accounts and operations of Zimpro. Separate results of operations of
the combined entities for the three months ended June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
Three Months
Ended
June 30, 1995
--------------
<S> <C>
Revenues:
U.S. Filter (as previously reported) $91,539,000
Zimpro 6,950,000
-----------
Combined $98,489,000
===========
Net Income (loss)
U.S. Filter (as previously reported) $ 3,359,000
Zimpro (182,000)
-----------
Combined $ 3,177,000
===========
Income per common share and
common equivalent share:
As previously reported $ 0.11
===========
As restated $ 0.10
===========
</TABLE>
9
<PAGE>
On June 10, 1996, the Company entered into a definitive merger
agreement with Davis Water & Waste Industries, Inc. ("Davis") in
connection with a proposed acquisition by the Company of all of the
outstanding capital stock of Davis. Pursuant to the terms of the
definitive agreement the Company will exchange 1.3995 shares of its
common stock for each of the approximately 3,443,000 shares of Davis,
subject to adjustment.
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.
The proposed transaction is expected to be completed on August 23,
1996, subject to Davis shareholder approval and other conditions
precedent, and will be accounted for as a pooling of interests. The
Company's future consolidated financial statements will be restated to
include the accounts and results of Davis.
Davis had revenues of $202,621,000, $215,649,000 and $226,489,000
for the fiscal years ended April 30, 1994, 1995, and 1996,
respectively. Additionally, Davis had net income (losses) of
($5,340,000), $3,448,000 and $5,749,000 for the fiscal years ended
April 30, 1994, 1995, 1996, respectively.
Note 4. Stockholders' Equity
--------------------
On July 15, 1996, the Company paid in the form 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.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
---------------------
Revenues. Revenues for the three months ended June 30, 1996 were
$150,801,000, an increase of $52,312,000 from $98,489,000 for the
comparable period of the prior fiscal year. This increase was due
primarily to acquisitions completed by the Company after the first
quarter ended June 30, 1995. Revenues from capital equipment sales for
the three months ended June 30, 1996 represented 52% of total revenues,
while revenues from services and operations represented 30%, and
revenues from replacement parts and consumables represented 18%.
Gross Profit. Gross profit increased 55.6% to $46,741,000 for the
three months ended June 30, 1996 from $33,033,000 for the comparable
period of the prior fiscal year. Total gross profit as a percentage of
revenue ("gross margin") increased to 31.0% for the three months ended
June 30, 1996, compared to 30.5% for the comparable period of the prior
fiscal year. The increase in gross margin through June 30, 1996 was due
to both a continued strengthening of gross margins in the recurring and
higher margin service-based revenue business and to increased economies
of scale in manufacturing operations.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $33,498,000 for the three months
ended June 30, 1996 from $23,724,000 for the comparable period of the
prior fiscal year. This increase was primarily due to the addition of
sales and administrative personnel accompanying the Company's recent
acquisitions. As a percentage of revenues, selling, general and
administrative expenses decreased to 22.2% during the three months
ended June 30, 1996, as compared to 24.1% for the comparable period of
the prior fiscal year. The decrease in the percentage of selling,
general and administrative expenses to revenues for the three months
ended June 30, 1996 was due primarily to the benefits derived from
economies of scale resulting from growth in revenues, the continued
implementation of cost controls and elimination of certain
redundancies.
11
<PAGE>
Interest Expense. Interest expense increased to $4,280,000 for the
three months ended June 30, 1996 from $2,653,000 for the comparable
period of the prior fiscal year. Interest expense for the three months
ended June 30, 1996 consists primarily of interest on the Company's
5.0% Convertible Subordinated Debentures issued October 20, 1993 and
6.0% Convertible Subordinated Notes issued September 18, 1995,
respectively, and increased borrowings under the Company's bank line of
credit to finance its revenue expansion and recent acquisitions. At
June 30, 1996, the Company had cash and short-term investments of
$8,926,000.
Income Taxes. Income tax expense increased to $2,631,000 for the
three months ended June 30, 1996 from $1,184,000 for the comparable
period of the prior fiscal year. This increase was attributable to
increased net income. The Company's effective tax rate for the three
months ended June 30, 1996 was 27.6%. As of March 31, 1996, the Company
had net operating loss carryforwards in France of approximately
$19,952,000 and other European countries of approximately $7,338,000
for which no financial statement benefit has been recognized. Future
recognition of these carryforwards will be reflected if the above
operations generate sufficient earnings before the expiration periods
of the loss carryforwards. In addition, the benefit of the French loss
carryforwards must be shared equally between the Company and Alcoa
until March 31, 1997, pursuant to an agreement between the Company and
Alcoa related to the Company's acquisition of SCT in 1992.
Net Income. Net income increased to $6,917,000 for the three months
ended June 30, 1996 from $3,177,000 for the comparable period of the
prior fiscal year. Net income per common share increased to $0.15 per
share (based upon 45,133,000 weighted average common shares
outstanding) for the three months ended June 30, 1996 from $0.10 per
common share (based upon 30,881,000 weighted average common shares
outstanding) for the comparable period of the prior fiscal year, after
deducting $179,000 for dividends on the Company's preferred shares for
the three-month period ended June 30, 1995.
12
<PAGE>
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 June 30, 1996, the Company had working capital of $114,712,000,
including cash and short-term investments of $8,926,000. The Company's long-term
debt at June 30, 1996 included $59,975,000 of convertible subordinated
debentures bearing interest at 5.0% per annum due in year 2000, $140,000,000 of
convertible subordinated debt due in year 2005 and bearing interest at 6.0% per
annum, and notes payable totaling $9,309,000 and bearing interest at rates
ranging from 2.0% to 11.5%. As of June 30, 1996, the Company had an available
bank line of credit of $135,000,000, of which there were outstanding borrowings
of $42,507,000 and outstanding letters of credit of $14,753,000.
As of March 31, 1996, the Company had net operating loss carryforwards
generated from SCT of approximately $19,952,000, for which no financial
statement benefit has been recognized. Approximately $1,946,000 of the net
operating loss carryforwards will expire in the fiscal years 1997 to 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 1997 to 2002 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 loss carryforwards will
occur if the operations of SCT 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 Alcoa.
The Company also has available at March 31, 1996, other net operating loss
carryforwards for Federal income tax purposes of approximately $13,327,000 which
expire in 2007 to 2010.
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 for working capital, revenue growth, scheduled debt
repayment and capital investment objectives for the next twelve months.
13
<PAGE>
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 40
United States based and international businesses with strong market positions
and substantial water treatment expertise. 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 in Europe, Asia, Latin America, and
other areas 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 and possible social, political and economic instability.
Reliance on Key Personnel. The Company's operations are 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 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.
The Company's revenues from capital equipment sales were approximately 60% of
total revenues for the fiscal year ended March 31,1995, and 49% for the fiscal
year ended March 31, 1996. 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.
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. 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
14
<PAGE>
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 subject to the allegations. The Company has rights of indemnification from
Anjou which may be available with respect to these matters. The Company's
activities as owner and operator of a hazardous waste treatment and recovery
facility are subject to stringent laws and regulations and compliance reviews.
Failure of this facility to comply with those regulations could result in
substantial fines and the suspension or revocation of the facility's hazardous
waste permit. 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 purification 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,
service, 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 companies that are divisions or subsidiaries of
larger companies which have significantly greater resources that the Company,
which, among other things, could be a competitive disadvantage to the Company in
securing certain projects.
Technological and Regulatory Change. The water purification 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 purification and
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.
15
<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
N/A
Item 5. OTHER INFORMATION
N/A
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
2.1 Agreement and Plan of Merger, dated as of June
10, 1996, among United States Filter
Corporation, U.S. Filter/DWW Acquisition
Corporation, and Davis Water & Waste Industries,
Inc./1/
99.1 Joint Press Release, dated June 10, 1996, issued
by United States Filter Corporation and Davis
Water & Waste Industries, Inc./2/
b) Reports on Form 8-K
The Company filed three Current Reports on form 8-K during the
quarter ended June 30, 1996, one dated May 31, 1996, as amended
on form 8-K/A dated June 28, 1996, under Item 2 of that form, one
dated June 10, 1996 under Item 5 of that Form, and one dated June
27, 1996 under Item 5 of that Form. Financial statements were
included in the Current Report on Form 8-K dated May 31, 1996
under Item 7 of that Form and in the Current Report on Form 8-K
dated June 27, 1996 under Item 7 of that Form.
- ----------------
/1/ Previously filed with the Company's Current Report on Form 8-K dated June
10, 1996 and incorporated herein by reference.
/2/ Previously filed with the Company's Current Report on Form 8-K dated June
10,1996 and incorporated herein by reference.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the U.S. 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: August 13, 1996 Kevin L. Spence
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,483,000
<SECURITIES> 1,443,000
<RECEIVABLES> 179,959,000
<ALLOWANCES> (8,449,000)
<INVENTORY> 60,722,000
<CURRENT-ASSETS> 308,109,000
<PP&E> 208,092,000
<DEPRECIATION> (44,705,000)
<TOTAL-ASSETS> 815,787,000
<CURRENT-LIABILITIES> 193,397,000
<BONDS> 207,742,000
0
0
<COMMON> 437,000
<OTHER-SE> 355,899,000
<TOTAL-LIABILITY-AND-EQUITY> 815,787,000
<SALES> 150,801,000
<TOTAL-REVENUES> 150,801,000
<CGS> 104,060,000
<TOTAL-COSTS> 104,060,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 419,000
<INTEREST-EXPENSE> 4,280,000
<INCOME-PRETAX> 9,548,000
<INCOME-TAX> 2,631,000
<INCOME-CONTINUING> 6,917,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,917,000
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
